Ethiopian coffee exporters, accused of hoarding in Africa’s biggest producer, must accept lower global prices and sell stocks, the head of Ethiopia’s new commodity exchange said on Friday.
Ethiopian Prime Minister Meles Zenawi issued a stern warning to exporters during a private meeting with industry players last week, threatening to “cut off their hands” if they did not release stocks they were holding in the hope of better prices. Eleni Gabre-Madhin, chief executive officer of the Ethiopia Commodity Exchange (ECX), said Meles used very strong language and had likened the exporters’ behaviour to a strike. “He gave them a stern talking to, and I think it was all done to say ‘You need to adjust to the new reality’,” she told Reuters in an interview. “I think the message was fairly clear: the market is out of line, there is evidence of stock-keeping or stockholding, and it looks like it’s for reasons that are not going to turn around.”
Ethiopia prides itself as the birthplace of coffee. It earned more than $525 million from exports of 170,888 tonnes of mostly high quality arabicas in 2007/2008 (June/July) — about 60 percent of the Horn of Africa country’s foreign exchange revenue. Some 15 million smallholder farmers grow the beans, mostly in the misty forested highlands of its southwestern region. But Eleni said overall production this season was forecast to drop 14.7 percent from an annual average of 330,000 tonnes, and some southern zones had seen almost total crop failure. “This is very dramatic,” she said. “But, unfortunately, we don’t think expectations have been adjusted.” “DOUBLE SQUEEZE”
The ECX was set up to replace a murky auction system that was often abused by market players, and it began trading coffee at the start of December. Since then, it has traded beans worth 196 million Ethiopian birr ($17.90 million). Meanwhile, coffee prices on the global market have fallen by more than a third in the last 12 months. Benchmark arabica futures on ICE were trading around $1.205 per lb on Friday, down 29 percent from a peak of $1.696 in February 2008. “There is awareness that there is a production shortfall domestically, so we’re in a kind of double squeeze, as I see it, between downward pressure from the world market and an upward pressure from the domestic market,” Eleni said. “So that is at the heart of this misalignment of our market right now.” The local currency has also plummeted 10 percent over just the last month, which she said had also encouraged some buyers to delay purchases in the hope of cheaper deals. The ECX, which has also been trading agricultural commodities like maize, wheat, corn and sesame since April, requires sellers to produce warehouse receipts and buyers to show pre-trade deposits in banks.
This month it increased its storage charges to commercial levels to remove what Eleni called a “perverse incentive” to hold onto stocks, while also reducing storage periods. Since the global credit crunch was likely to curb foreign investment and development aid to Ethiopia, she said Meles felt entitled to speak frankly to exporters who received concessional loans and other support from his government. “He said ‘I would be the last person to tell you not to make profits’,” she said. “However, he said that if what you do … hurts our national economy, then as a society we have to put some checks and balances in place. He was very gentle, but his point was clear.
With prices of gourmet coffee approaching sticker-shock levels, scientists in Illinois are reporting development of a method to “fingerprint” coffee to detect when corn has been mixed in to short-change customers. Such adulteration of Brazilian coffee is among the most serious problems affecting coffee quality – with cereal grains, coffee twigs, and brown sugar sometimes mixed into the genuine article. The research focuses on detecting corn, probably the most widely used adulterant.
The study describes development and use on six popular coffee brands of a method for analysing one form of vitamin E in Brazilian coffee. Because roasted corn samples have high concentrations of vitamin E, it serves as a fingerprint for adulteration with corn. In laboratory tests they found that one brand of Brazilian coffee contained almost 9 percent corn. Although noting that their results are preliminary, the scientists say their new method appears to be “a significant improvement” over existing tests to detect corn adulteration. Source: Science Daily.
Coffee lovers the world over are unknowingly drinking coffee that was illegally grown inside one of the world’s most important national parks for tigers, elephants and rhinos, according to an investigative report released by World Wildlife Fund (WWF). Illegally grown coffee from Indonesia is mixed with legally grown coffee beans and sold to such companies as Kraft Foods and Nestle among other major companies in the United States and abroad.
WWF tracked the illegal cultivation of coffee inside Indonesia’s remote Bukit Barisan Selatan National Park (BBS) all the way through its export routes to multinational coffee companies and the shelves of grocery stores across the United States, Europe and Asia using satellite imaging, interviews with coffee farmers and traders, and by monitoring coffee trade routes.
Trade of illegal coffee is possible because neither exporters nor importers have any mechanisms in place to prevent the illegal beans from entering the supply chains. Bukit Barisan Selatan, a World Heritage Site on the southern tip of Sumatra Island, is one of the few protected areas where Sumatran tigers, elephants and rhinos coexist. It has already lost nearly 30% of its forest cover to illegal agriculture, most of which is for coffee production.
Indonesia is the world s second-largest exporter of robusta, a kind of bean often used in instant and packaged coffee sold in supermarkets. At least half the country s coffee is exported through the port of Lampung, adjacent to the national park. WWF s investigation found farmers growing coffee on more than 173 square miles of park land (about two-thirds the size of Chicago) and producing more than 19,600 tons of coffee there each year. Most wildlife has already abandoned the sections of the park that have been illegally converted to coffee plantations. Illegally grown coffee is exported to at least 52 countries.
To produce one pound of roasted coffee beans about 2,000 hand-picked coffee cherries are needed. There are two beans per cherry. A coffee picker harvests about 150 pounds of coffee cherries or about 30 pounds of roasted beans per day.
The Kona Coffee Council is looking at changing the designation of what legally can be called Kona Coffee. Today it only has to have 10% of actual Kona Coffee beans and a blend of the rest. Volcanica’s coffee is 100% pure peaberry
Kona Coffee purchased direct from the farm on the big island. Here is an article about the issue.
Two bills have been introduced in the state Legislature that would create stricter requirements for coffee carrying the Kona label. One would require such coffee to contain at least 50 percent Kona coffee; the other 75 percent Kona. The current law allows the Kona name on packages containing only 10 percent Kona coffee, although that coffee must be called a blend.
Only pure Kona coffee can be labeled 100 percent Kona.
Although the proposed labeling requirements could help farmers who sell unprocessed coffee cherries by creating more demand, it could hurt blenders who mix the Kona coffee with cheaper imported beans and sell the result as a Kona blend. The Kona Coffee Council’s election brought only three new members onto the 11-member board, but some current board members fear that will be enough to tip the balance of power away from those who support the bills. Read the full article.
The coffee harvest in Costa Rica has begun and we have received many photos. The new shipments have arrived from the Don Evelio Coffee Estate in the Tarrazu region. Check out the photos of the Costa Rica Coffee Harvest.
Here is a great article my brother sent me that puts a chill on any thought of opening your own coffee shop or service business.
I opened a charming neighborhood coffee shop. Then it destroyed my life.
By Michael Idov
You know that charming little cafe on New York’s Lower East Side that just closed after a mere six months in business—where coffee was served on silver trays with a glass of water and a little chocolate cookie? The one that, as you calmly and correctly observed, was doomed from its inception because it was too precious and too offbeat? The one you still kind of fell for, the way one falls for a tubercular maiden? Yeah, that one was mine.
The scary part is that you think you can do better.
I never realized how ubiquitous the dream of opening a small coffeehouse was until I fell under its spell myself. Friends’ eyes misted over when my wife and I would excitedly recite our concept (“Vienna roast from Vienna! It’s lighter and sweeter than bitter Italian espresso—no need to drown it in milk!”). It seemed that just about every boho-professional couple had indulged in this fantasy at some point or another. Read full article.