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Coffee’s World Geography
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After tea, coffee is the second most important stimulating drink in the world. Its cultivation occupies various millions of laborers in over 70 tropical countries, and its production represents close to 4% of total world business of nutritious products.
Until the XIV century, the growth of coffee tress was limited to a small area in the high provinces of Ethiopia and in the Arabian Peninsula where it originated. The people from Yemen were the first great coffee growers, and until the XVII century when coffee consumption had extended to all the Islamic nations and to many countries in Europe, Yemen was the only important producer and exporter. But its monopoly ended during that century when coffee growing reached the tropical world, first Asia and later America, where it was initially introduced in the Antilles by De Clieu. Its cultivation developed later in the African continent from where it originated, and the first great plantations were established during the first quarter of the XX century, especially in the Ivory Coast, Kenya, Zaire, Angola, Madagascar, Rhuanda, etc.
Europeans became familiar with this drink for the first time in the Orient during the mid XVI century. One of the first scientific references about the plant appeared in “Plantes d’Egypte”, a book by Prosper Alpin published in 1592. But until the beginning of the XVIII century, coffee was still a curious item. Certain public cafés operated in Western Europe during the mid XVI century, and coffee became popular in Paris due to its promotion by the Ambassador for the Ottoman Empire. By mid XVIII, coffee was popular all over Europe. Later, two important changes would occur in the geography and economy of coffee, namely the extension of its consumption to industrialized countries in the Northern Hemisphere and the displacement of its production to the inter-tropical zones which led to its large development in Latin America, especially in Brazil, Colombia, Venezuela, Costa Rica, Mexico, etc.
| Production |
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The growth of coffee trees has traditionally been done by means of employing only dirt and handcraft, with scarce fertilization and no use of mechanization, although for several years mechanical croppers have been used. Historically, the increment of the global offer has been fulfilled by transferring the mentioned production factors into processes of colonization of virgin spaces in the damp tropics. The most famous case is the Brazilian “coffee march” in the XIX century led by the “fazendeiros” to colonize lands extending from the seashore of Rio de Janeiro through the Paraiba Valley in the South, which was the initial basis for the economic prosperity of Sao Paulo. Large plantations have sometimes choked small exploitation, a form of economy that is predominant in many countries. This productive plantation system with an extensive nature, with abundant hand labor and transportation structures found in the most competitive world producers, is undergoing a process of modernization, and is being substituted by another form that sponsors the development of intensive production units in the use of capital, characterized by a larger growth density, the suppression of shade and interspersed plantations, more chemical fertilization and a better sanitary treatment, as well as the use of selected and improved varieties that reduce the period that the plants need to enter into production.
The larger part of green coffee world production comes from Latin America, especially Brazil, Colombia, Mexico, Guatemala, etc. During the decade of 1930, over 90% of world production came from those countries. But this contribution was significantly reduced during mid century until the decade of 1960. Later it was stabilized at close to two thirds of world production. In those areas, all the great types of coffee established by specialized market quotations are produced and even the production of “robusta”, not introduced too much, has undergone a spectacular development in Brazil and Ecuador since 1974.
The high concentration of production is evidenced when observing that only two countries in South America, Brazil and Colombia, were responsible in 1992 for 40% of total world production. That year, Latin America, studied as a whole, produced 3,700,000 metric tons, that is, 62% of world production. The African continent was in second place with 1,216,000 metric tons which was 20% of the total, and far behind was Asia with 953,000 metric tons which was 16%.
During 1993 the volume of coffee produced worldwide was fell to 5,808,000 tons mainly due to the contraction of production in the American continent to 63 % of total production, and it is still contracting, in spite of everything.
| Consumption |
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During the XX century, world coffee imports have increased at a rhythm slightly lower than 2% yearly, characterized by a stable growth. This stability is related to the fact that the larger part of the product’s demand is concentrated in developed countries of Europe, North America and Japan. World consumption was first led by North America, duplicating its imports between 1930 and 1945, but to later grow at a slower rhythm. It began decreasing in 1965.
That year the role of the dynamic consumption agent passed to Western Europe whose part in world imports increased from 22 to 46% between 1848 and 1970, growing at a yearly rhythm of 5%. During the decade of 1980, the rhythm became slower but still remained over 2%. And recently, Japan has had the leading role by recently becoming the fourth world importer after the USA, Germany and France.
During a long period (1883-1985), it was evident that there is a close relationship between the growth of income of the countries of the “OECD” (European Union?) and the growth of coffee imports. Both in Europe as well as in the USA, its consumption progress has followed that of the industrial economical one. Besides, coffee consumption is not very sensible to income differences between individuals of a same country. These elements that specialists call “intensive consumption norm” are concerned with structural factors that classically determine coffee consumption together with the choice of coffee as a stimulating drink (coffee is the first non alcoholic drink in developed countries although tea, due to its greater world diffusion, especially in the “PED” (under developed countries?) of larger population, is the first stimulating drink in the world).
| Marketing |
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Coffee is one of the largest commodities of international business as 83% of its production is an object of this commerce. Normally, it is sold by producing countries under the form of “green coffee” – first transformation that the product suffers in those countries – to be stored in 60 kg. Sacks. Later, it is transported by ships to the large port in the importing and consumer countries. Among these ports we find Rotterdam, Antwerp, Hamburg, Le Havre, Marseille, Bremen, Amsterdam, Trieste, Genoa, New York, New Orleans and San Francisco.
Only five countries are responsible for half of the value of coffee exported worldwide. If one considers the value exported by Colombia and Brazil, the two largest exporters, and both in South American, we find that both countries jointly accounted for 36% of the total value of world exports during 1982. On the other hand, we can clearly see the increase in coffee exportations from the “PD” (developed countries?) that are, generally, processed coffee.
It is interesting to note that the exported coffee value, green and toasted, was substantially reduced between the years 1982 and 1992. In effect, the decrease reached 33% and is related to the deterioration of the value of the exportation of green coffee which fell in 1992 to less than half in comparison with the price quoted in 1982. In 1993, the total exported value recovered, reaching US $6,626,240,000, a figure that no doubt is very much lower than what was obtained during 1982.
In the exportation business there is a high degree of concentration between 59 and 61% of value imported worldwide corresponding to only 5 countries, all PD, during the years 1982 and 1992, respectively.
United States is the largest coffee importer in the world, representing by itself close to 25% of the total imported value. However, an considerable decrease in coffee consumption in the US was observed in the 1950, a reduction that includes both the number of consumers (the percentage of the population that drinks coffee decreased from 77.4% in 1950 to 55.2% in 1989) as well as the number of cups consumed daily (an index that decreased from 3.12 in 1950 to 1.75 in 1989).
The coffee business takes place around the large raw material exchanges that are installment markets where the interests of speculators and economic agents of the commercializing chain for the product are confronted, and the prices of transactions executed on the international market are determined. Practically no physical transactions are effected, only contracts where the amount, the quality, the term and the conditions for delivery are specified. Among the coffee installment markets, two are outstanding: The Sugar Coffee and the Cocoa Exchange of New York (NYSCCE), for Arabic coffees and the Coffee Terminal Market in London for “robusta” coffee.
Besides, in the international coffee market two important agents act: on one part, the governments of producing-exporting countries; on the other, private negotiators.
The governments of producing-exporting countries are actively involved in the commercialization and in the negotiation of exportations by means of public offices that are charged with the stabilization of prices and/or coordinating exportation strategies of private operators. Thus, offices or institutes or coffee funds have been created, generally in Latin America, as well as stabilization funds (Caisses de Stabilisation) in Africa and marketing boards in the ex British colonies.
The following companies are found among the main private coffee negotiators: Bernard Rothfos from Germany; Gebrüder Volkart from Switzerland; Cargill from the US; Rayner and Ed & F Man, both from Great Britain; Bozo from Switzerland and Jack Aron from the US. These seven large companies control, in total, close to half of world interchanges.
| Prices |
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As other agricultural products, coffee feels the influence of cycles, in this case long cycles, with a duration of close to twenty years during which the alternation of overproduction phases with depressed prices and plethoric stocks are produced, as well as scarcity phases with high prices and reduced stocks. This cyclic evolution is due mainly to the uncontrollable nature of offer.
On one hand, coffee is a product of mass consumption, and on the other, it represents a substantial part of export income in many PED. That is the reason why it has been very important to try to stabilize prices by limiting large fluctuations in offer and its negative effects on the economies of producing and exporting countries. In this respect periodic international negotiations have taken place which led to the creation of the International Coffee Agreement in 1962 that joints producing and consuming countries, after certain preceding agreements that lead to the establishment of regional organizations (like the Pan American Coffee Office) and of regional agreements (Inter American Coffee Agreement) as well as partial agreements (Mexican Agreement in 1957).
The International Coffee Agreement is a universal agreement that brings together almost all the producing and exporting countries. Signed in 1962, it has been renewed three times, in 1968, 1967 and 1983, under the supervision of the International Coffee Organization located in London.
The central mechanism of the Agreement is the contingency of exportations where each exporting member country benefits from a base quota established which is modified in accordance with the evolution of the indicative price. In the event of a high price increment, a suspension of the contingency is produced. Due to this reason, the Agreement has been reactivated and suspended several times: on 10.1.1980, it was reactivated and renewed in 1983. Later, it was suspended between 02.01.1986 and 10.06.1987, and suspended once again on 07.04.1989.
According to a series of numerical interests carried by the GATT, this organization considers 1980 a basic year (1980 = 100). The lowest price level was produced in 1970, by 31, and the highest in 1977 that reached 153. However, during a large part of the period studied by GATT between 1970 and 1990, prices have remained depressed.
During mid 1994, a significant rise in the quotation of coffee in international markets was noted, a consequence of the sustained decrease in exportation of coffee from Colombia, Indonesia and Ivory Coast, important producers-exporters, and of two sudden cold waves that were produced in south Brazil at the end of June. On the other hand, over 40 coffee producing countries were organized in the Association of Coffee Producing Countries (ACPC) in 1993, and they decided to apply a system of quota retention to contribute towards improving prices. On July 12, 1994, the referential price of coffee in the London market reached US$2.32 per pound, an average of the indicator composed of different coffee categories.
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Printed image of the Series
Encyclopédique des
Leçons by Choses Ilustreés,
France, XIX century
Old printed image of the
torrefaction and packing
of coffee.
Brazilian coffee
publicity poster,
Jean d´Ylen, París,1928
La Grande
Cordonnerie du Louvre
publicity poster, Paris
Illustration that show
part of the perilous trip
of coffee, from its embarkation
to its consumption
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