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Coffee and Tea Reports from the Front Lines

ICO Calls for U.S to Return

United States - In his first statement to the U.S. coffee industry during the Annual Convention of the National Coffee Association of USA (NCA) which took place in March 2002 in Florida, the executive director of the International Coffee Organization (ICO), Néstor Osorio emphasized the importance of a return to the ICO by the U.S. government.

Osorio called for greater cooperation between producing and consuming countries in order to resolve the serious problems affecting the world’s 25 million coffee producers. The executive director was invited to attend the most important summit of the U.S. coffee industry, at which special recognition was given to the work of the general manager of the Federación Nacional de Cafeteros de Colombia, Jorge Cárdenas Gutiérrez, in his 39 years of service.

Osorio made a new appeal to the U.S. government to return to the organization as an active member as soon as possible.

At the end of last year the NCA requested President George W. Bush to study the possibility of returning to the ICO, from which it withdrew a decade ago. Osorio recalled that the ICO had been established under the auspices of the U.S. and that U.S. participation over some 30 years had been decisive in ensuring cooperation between producers and consumers and had played a vital role in achieving remunerative prices for growers.

The ICO’s director called for the cooperation of all countries in developing a series of programs designed to promote diversification in coffee areas, to develop the promotion of consumption, to carry out strict quality control of export coffee, and to ensure conservation of the environment. He said that considerable cooperation from the industry would be needed to ensure the successful implementation of these programs which, in the future, could be the salvation not only of producing countries but of the roasting industry in consuming countries.

The International Coffee Organization (ICO) is an intergovernmental organization, established in 1963, created under the auspices of the U.N. to serve the international coffee community.

Brazil To Store Excess Coffee
Brazil - Coffee growers will have $287.5 million to store up to eight million 60-kilo sacks of coffee, approved by the National Monetary Council (CMN). The resources are from the Fund for the Defense of the Coffee Economy (FunCafé) and will be for voluntary storage by the producers of arabica and robusta coffees. “The measure is necessary because of the super harvest this year,” said Agriculture Minister Marcus Vinícius Pratini de Moraes.

The price of coffee is the lowest in 10 years. This year Brazil will harvest 40 million sacks. The financing will have 9.5% annual interest, with an 18 month storage period extendabe for a similar period. Representatives of the Brazilian National Confederation of Agriculture and Livestock (CAN) had asked the minister for $450 million to store 10 million sacks. Still, Joao Roberto Pulit, president of the FunCafé committee of the CAN, thought the announcement positive because the minister assumed the obligation to seek more funds, if necessary.

In other sector news, $792 million worth of research funding was announced coordinated by the Campinas Agroeconomic Institution (IAC), to identify the genetic map of coffee. The objective is to improve quality and productivity.

India Tea Exports Fall
India - India’s tea exports fell over 13% in 2001 compared to the previous year and has continued the downtrend in January 2002 with a 23% fall over the same month last year, the state-run Tea Board said, “Exports in January 2002 were 10.9m kg compared to 14.15m kg in the same month in 2001,” a Tea Board official said. Tea exports from India, the world’s largest tea producer, have suffered due to fierce competition from Indonesia, Bangladesh and Sri Lanka and lower demand from traditional buyers such as Russia and Britain.

Tea production, which rose slightly on a year-on-year basis in 2001, was 19.1 m kg in January, down over 8% from 20.8m kg during the same period last year, said the official, who did not want to be identified.

The Indian Tea Association said in January that it was eyeing the market in Afghanistan to increase its exports. Tea exports from India, which stood at 179.8m kg last year, have the potential to grow to 270m kg by ’06, consulting firm. Accenture said in a report late in January.

Germans Want Their Coffee “To Go”
Germany - “Coffee to go” has arrived in Germany from across the Atlantic, reports New Europe. “Five or certainly 10 years ago it was much more normal to sit in a café for several hours than it is nowadays,” says Joann, who works in a central Berlin coffee bar owned by the Canadian coffee and bakery chain Tim’s. “There is trend towards a more fast-paced life. But people still act surprised when you ask if the coffee is to go. You mean I can take it with me?” they ask.

According to DPA, the German Coffee Association says the number of coffee bars in Germany offering takeaway coffee has reached more than 400 in the past few years, and that number is set to grow even more rapidly. Certainly the U.S. is the model for continental Europe’s new “coffee to go” culture: each of the new café bars offers bagels, muffins, brownies and cookies to go with the coffee. To emphasize the change in the culture of coffee drinking in Berlin, one of the new half-dozen café bar chains that have emerged in the city over the past four or five years even calls itself “Coffee To Go.”

Russian Coffee Prices to Stay Flat, Say Experts
Russia - Coffee prices in Russia will remain at the earlier level in the near future, Russian coffee market experts said commenting on Western media reports on the next price drop on the New York exchange.

“A drop in prices on green beans in New York basically cannot effect the value of finished product in Russia,” Interfax quoted Alexander Malchik, president of the Russian Coffee Producers Union and the company Montana Coffee, which owns a roasting plant in Moscow, as saying. The proportion of unroasted beans in the value of finished product is sufficiently small. “Just suppose, if the value of finished product is $60 million, the proportion of green beans here does not exceed $five million. If there is some kind of price change, it would be no earlier than in half a year,” he said. This is attributable to the fact that coffee purchase contracts are concluded several months in advance. Thus, coffee is currently being produced from beans bought at higher prices.

“Russian retail prices on coffee already have nowhere to fall, they are significantly lower than in European countries,” the news agency quoted Igor Khramov, director general of the company Blyuz, which has a roasting plant in Dubna (Moscow region), as saying.

However, Khramov forecasted the next one and a half to two years would see quality coffee get more expensive. “In order to produce good coffee it is necessary most of all to irrigate plantations, but this is a very costly procedure, and with the constant drop of world coffee bean prices many producers simply do not have enough resources for this,” Khramov said. As a result, coffee quality has declined.

The drop of coffee prices in New York will not lead to a reduction in the cost of instant coffee, said Yuri Snegirev, the marketing director at the company Kraft Foods, which has a coffee packaging plant in the Leningrad region. The raw materials part in the cost of instant coffee is even lower than in the cost of natural coffee, he said. Its final cost in large part is determined by expenditures on production, packaging and transportation. Current per capita coffee consumption in Russia is from 300 to 700 grams per year.

Tea & Coffee - May/June 2002

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