Cappuccino Trail: The Global Economy In A Cup, Films for ...



Cappuccino Trail: The Global Economy In A Cup, Films for the Humanities and Sciences, Princeton, NJ, 2002

“A 150-pound bag of coffee beans might earn a farmer $50; the “street value” of that same bag- 10,000 cups of coffee – is around $20,000. By following the trail of two coffee beans grown in the Peruvian Andes, this program takes a unique look at the ubiquitous stimulant which, after oil, is the most globally traded commodity. One of the beans takes the route of the open market where its price is determined by commodities traders and analysts, such as Merrill Lynch’s Judy Gaines, the industry oracle who discusses the market’s volatility. The other bean finds its way into Café Direct, a new gourmet coffee launched in Britain by a company dedicated to paying fair prices to farmers for their high-quality organic crop.”

In the video we saw the new managing director of Café Direct (Penny Newman) traveling into the region of Maccu Picchu in Peru, to visit farmers in the coffee cooperative there, and to make an agreement with them to purchase their green coffee beans at $1.60 per pound [in March 2006, Café Direct is offering $1.26 per pound for Arabica coffee, and $1.41 per pound for organic arabica coffee]. From these beans, Café Direct would create a well-packaged mountain organic coffee. We saw footage of a devastating El Nino weather event of January 1998 which killed people in the valleys leading up to Maccu Picchu in Peru, devastated their homes and villages, and cut the railway line, their main trading lifeline to the outside world (their coffee travels eight hours through the Andes mountains, five days to the port in Lima, and then however long its ocean voyage takes to New York, London, and other major world centers). We also saw Michael Fairholm of Urban Espresso teaching a master class on how to prepare fine cups of coffee that would have people returning for a second cup. Important elements of preparation, designed to bring out the flavors of the complex oils and other substances in the roasted bean, were the fineness of the grind, the pressure at which the ground coffee is “tamped” into the brewing apparatus, the temperature of the water used for extraction, the length of time given to extraction (25 seconds), the speed at which the extracted coffee liquor pours into the cups, the temperature of the cups, and the way the frothy boiling milk is added to the top of the coffee liquor. From him we also learned that if the price that the farmers receive increases, it scarcely makes any difference to the price of a cup of coffee in a coffee shop because it represents only a tiny fraction of that price. We also saw Lawrence and his niece Natasha shopping in a British Safeway supermarket, trying to decide which coffee to buy for their weekend party, from among scores of competing brands. As the video noted, with all kinds of produce being grown and imported from all over the world into our supermarkets, we have become “Foodies Without Frontiers.”

Comments about coffee from the video:

• Coffee is a legal stimulant.

• Coffee originated in Ethiopia, and was taken around the world during colonial times, in a context of “power, exploitation, and deprivation.” It is now traded globally in a context of “oversupply, falling prices, and global poverty.”

• Coffee grows in a narrow band around the equator. The finest coffees grow at altitudes greater than 1,500 metres (5,000 feet)

• The two main types of coffee are “arabica” and “robusta”. Robusta has a much higher level of caffeine, and is not as well liked as the milder arabica, which grows at higher altitudes, and commands higher prices in the market.

• Coffee is “a generic brown liquid, 99 percent water, which has been turned into a branded commodity” with a 2,000 percent markup. This makes it “liquid gold.”

• Each sip of coffee that we take brings us in contact with the poor, who grow it.

• Coffee is the world’s second largest globally traded commodity (after petroleum).

• About 2.5 billion cups of coffee are drunk every day in the world.

• “There’s an awful lot of coffee in Brazil…” In fact, one third of the world’s total. When there is a frost in Brazil, causing a shortage of coffee on the world market, prices can increase substantially. When Brazil bounces back, world prices can fall catastrophically.

• In the past ten years, producer prices have fallen catastrophically. Global production is up, but price is down. A lot of extra coffee has been produced, and demand has leveled off, or even fallen. “The more we acquire a taste for coffee, the less we drink.” But “we plant like there’s no tomorrow.”

• The price the farmer receives is an insignificant part of the price of a cup of coffee, perhaps one quarter of one percent.

• The world market price at the beginning of March, 2004 was US$1.057 per pound of Arabica, and US$0.5039 (50 cents) per pound of Robusta. We get about 80 cups of coffee from a pound of roasted coffee. This might be worth up to US$280 at US$3.50 per cup retail. If the retail price of coffee is US$3.50 per cup, the farmer gets less than one cent per cup.

• Coffee is a cyclical crop because it takes trees at least three years to bear fruit. The price of coffee can fall below the cost of production, and stay there for several years in a row, as supply adjusts to demand.

• The multinational Swiss company Nestlé controls 40 percent of the world market.

• We pay a large premium for fair trade, organically grown, slickly packaged, politically correct coffee, as well as for sipping branded coffee in an upscale city coffee shop.

• Supermarkets have become “ethical and political minefields” as consumers grow increasingly concerned about what foods contain, where they come from, how they have been produced, and who has produced them.

• A coffee “cherry” (the red fruit that grows on a coffee bush) contains two coffee “beans”, pale green in color, which increase in size when they are roasted to a dark brown. Up to 50 of these roasted beans are needed for one cup of Espresso, and one bad bean can spoil the whole cup. A person who drinks 2 cups of a coffee a day may consume 30 gallons in a year, using the coffee from 12 trees, containing in total 15,000 cherries.

Other Facts About Coffee:

• Coffee is second only to petroleum in dollars worth traded worldwide.

• Coffee is a global industry employing more that 20 million people.

• 80 percent of the world trade is in arabica coffee.

• Up to 1989, the countries who were members of the International Coffee Agreement decided each year how much coffee to release on to the world market, releasing more in years of shortages in production (e.g. when Brazil had a severe frost) and less in years of glut (e.g. when large producers like Brazil had bumper harvests). The Agreement broke down in 1989 and was suspended, when member countries could no longer agree on quotas. Since then, the market has been a free-for-all.

• In the 20 years from 1990 to 2010, Vietnam emerged as the world’s largest producer of robusta coffee, raising its production fourteen fold from 84,000 tons to almost 1.2 million tons. Its accelerating exports cut into the prices for traditional producers in Central America, such as Costa Rica and Guatemala. It is now the second biggest exporter in the world, after Brazil.

• For the year 2011, the average world price for arabica coffee was 271 cents per lb (598 cents per kg), and for robusta 109 cents per lb. (241 cents per kg) [see graph]

World Market Prices for Coffee and Fair Trade Prices in 2005/6

World Market Prices for Coffee 1990-2011

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