As a famous coffee retailer has said before, the best part of the morning is the smell of brewing coffee. In the U.S, few of us are able to face the day without at least one cup of liquid ambition, before even being capable of coherent speech. Almost everyone I know personally is on Automatic Pilot until they have finished that first cup of hot coffee. This Liquid Gold is one of Homo sapiens most favored beverages.
Well over 2.5 billion cups of coffee are consumed world-wide, every day. It is estimated that in the U.S. the average person consumes over 25 gallons of coffee per year (I believe that estimate to be significantly on the low side….). Over 150 million people in the U.S. consume coffee regularly, and 60% of U.S. coffee is consumed in the morning hours. It is considered an insult not to offer guests a cup of coffee in your home (…in the southern U.S, anyway). As a member of the Civil Air Patrol, and the Red Cross Disaster Relief Team, I can testify to the the fact that the first thing we do upon arrival at a disaster scene is to pass out coffee and blankets to victims. No other beverage has the ability to warm your heart and soul like a good hot cup of coffee. The mere act of offered someone a cup of coffee has deep social and spiritual meanings attached to it.
Coffee is unique in other ways, as well. It is one of the few agricultural products that are produced almost exclusively in developing countries, but consumed mostly in industrialized ones. Over 25 million small coffee producers depend on coffee for their livelihood. Without coffee, they would have nothing. In Brazil alone (which produces a superb coffee that makes up around 1/3rd of coffee blends world-wide), over 5 million people are employed in coffee production, which is hand-labor intensive, and requires daily attention. So far, coffee production has not been compatible with any automated processes. So that cup of coffee you are drinking not only has the heart and soul of the earth it was raised in, but also of the people who lovingly produced it.
This brain-boosting beverage also has an ugly secret…and it is that all coffees are not created equal. There are many factors that effect the price of what you paid for that Styrofoam-cupped repast you bought at a convenience store on the way to work. Different varieties bring different prices, and the prices on the world market are effected by many factors, both physical and political.
On the world market, coffee is one of the more important commodities, especially in futures-trading. Coffee futures are traded on the New York Board of Trade. A Futures Contract is just a fancy way of saying that a contract is signed to purchase future units based on an estimate of what the market will be doing at that time. This type of speculation can effect the price you pay for coffee.
International coffee prices are monitored by the London-based International Coffee Organization. While they have no control over prices, they do keep a close eye on them. The coffee prices themselves, like other commodities, are dictated by the available supplies, the amount of trading, and the demand for the product. Coffee was very consistent at around $1.00/lb (US) on the world market until the late 1980s. The collapse of the International Coffee Agreement, the end of the Cold War in 1991, the expansion of Brazilian Coffee plantations, and Vietnam’s entry in to the coffee market in 1994 (they produce tons and tons of hideous-tasting Robusta beans that are used as ‘fillers’ in ‘Bargain’ retail coffee blends….) all combined to bring the price of coffee to .41¢/lb. The rise in popularity of specialty coffees, and coffee shops, the internet, and a general improvement in world relationships has shored-up the coffee market significantly, and the price has slowly worked it’s way back up to previous levels.
New purchasing and marketing models do not even show up on the commodities exchange, so the figures may not even be accurate. For instance, Starbucks buys almost all of its coffee through multi-year contracts that pay double the market value. This results in a larger quantity of better quality coffee making it’s way to your cup, at a price you are willing to pay, that keeps the producers in business, and everyone wins. Another new market is the internet, which allows consumers to purchase coffee directly from importers, at prices that make everyone happy, from producer to consumer.
The variety of coffee does effect the price somewhat as well. Certain beans are in higher demand, produced in limited quantities, and bring a higher price. Like grapes, coffee only comes in two basic species, Arabica, and Robusta. Robusta coffee is horrible and harsh no matter where it is grown, but is is much cheaper to produce, more prolific by an exponential amount, and is used as a ‘filler’ in some cheap coffee blends to stretch the supply of the higher-quality Arabica varieties. Arabica coffee is effected by the environment, and soil that is is grown in, even more than wine grapes. This results in may varieties with completely different flavors and characteristics, depending on where, and how they are grown. Some examples are:
- Bourbon-named for the island it was originally grown on, Bourbon Island, in the Indian Ocean. The island has since been renamed as ReuniÃ³n. The main coffee exported from Columbia, also known as Colombian Supremo, is Bourbon, transplanted in Columbia. It is heavy bodied, robust, and is very aromatic with a wonderfully bright acidity. It makes up the major part of most US retail coffee blends such as Folgers, Maxwell House and others. Colombian Bourbon makes up around 12% of the world market in coffee.
- Jamaican Blue Mountain-one of the most expensive, and sought after coffee beans in the world. Considered the ‘Champagne’ of coffees, 80% of this delectable bean goes to Japan, where coffee aficionados pay $100.00 per cup, or more to experience this liquid Nirvana. Medium-bodied with a very complex flavor. It has musky, earthy, almost sensual overtones with no acidity. This is the coffee that is used as a base for Tia Maria Coffee Liquer. While not my #1 favorite, it is certainly on my Top 5 list. I always keep some on hand.
- Ethiopian-There are a few sub-varieties, but the all have similar characteristics. Ethiopia is the birth place of all coffee, and this coffee is almost like a return to the womb. One of my favorites, it has a wonderfully feral character with a soft floral aroma, mild-tasting, but with the promise of wanton, uninhibited flavor-debauchery, and an intense finish that leaves the taste buds feeling completely ravished. It is easy to see why this coffee is in high demand. It does not command the same price as Jamaican Blue Mountain, but it is well worth the effort to find a supply of it. You will not be disappointed.
- Kenya AA-Similar to Ethiopian, but a little less intense. Kenyan AA has a wonderful ‘winey’ character, crisp acidity, a stoic body and smooth finish. My favorite all-around coffee.
- Java-not a great coffee, but one of the most widely traded throughout history, especially by the Dutch. Strong, harsh, bitter, and not very aromatic, it’s name has become a slang term for less-than-stellar coffee. It is still used extensively as a filler, many times in place of Robusta. so they can state on the label that the coffee blend is ‘100%’ arabica.
- Brazilian Santos-currently the most used coffee on the planet, making up 30% of the world coffee market. Smooth, mildly aromatic and right down the middle on body, taste, finish and aroma. While great by itself, it it most often blended with Colombian Supremo to create various ‘Breakfast Blends’ very popular with morning coffee-drinkers because it has a wonderful medium taste, while being gentle on still semi-comatose central nervous systems.
There are many other varieties, and each commands a price range based on it’s popularity at the time.
Another factor that has an effect on the price of your coffee is the way it is grown. Most small coffee producers grow ‘Shade Grown’ coffee, which means the plants are grown under a rainforest canopy of fruit trees. Organic Shade Grown means that chemical insecticides, and fertilizers are not used, but natural ones can be. Natural fertilizer is one of those things like Magic Tricks and sausage. It’s more enjoyable if you don’t know how it is done….. Shade Grown coffee is very environmentally friendly, and is sustainable. More and more larger coffee ‘plantations’ are using Sun-grown techniques. Mostly under pressure from the United States, with financial incentives and assistance offered, larger growers are destroying the rain forests to grow faster-maturing, but lesser-quality coffees in direct sunlight, using tons of chemical fertilizers and pesticides. These coffees make up the bulk of retail
‘grocery-store’ brands in the US. Not only does this destroy the remaining rainforests, but also the surrounding ecosystems with agricultural pollution. In many cases, DDT (illegal in the US) is used.
One of the best things to happen for coffee in recent years is the advent of Fair Trade coffees. These are produced by small growers banded together in ‘Co-ops’, allowing them many of the advantages of larger plantations. Most Fair Trade coffee is Shade-grown, and Organic. Fair Trade coffees can offer you the best value for your money.
Here is how the coffee market works. It is a ‘chain’ with many links, all of which can effect how much your daily dose of Folgers is going to cost you. Coffee is purchased from growers by exporters, also known as Coffee Coyotes. Some of the larger plantations sell directly to big international importers under contract. The rest of the world’s green coffee beans are bought by importers. Importers have large sums of money available to buy the best coffees beans from all over the world. Then they accumulate large container-stores of these coffees, and either sell them off in batches, or sit on them to effect world coffee prices. Batches are sold to roasters, who lack the capitol to bid against the well-heeled importers, and have to depend on their good will to stay in business. Roasters get the maximum amount of profit in the chain. They get the highest mark-up. In the U.S., there are around 1200 large commercial roasters, who in turn sell their roasted prepackaged coffee to large retailers like Folgers, Maxwell House and Millstone. There are also many small specialty roasters that sell directly to consumers, and coffee shops that roast their own coffee. And, a growing number of consumers, like myself, have discovered the joy of roasting their own coffee, and buy green coffee direct from growers and importers online, or mail-order.
As stated before, coffee futures are also traded as a commodity on the New York Exchange under the ticker-symbol KT. Coffee futures is a volatile market that changes rapidly due to a lot of things that have nothing directly to do with coffee, such as politics, wars, toppled regimes, and so-on… It is not a market for the faint-hearted. Entire fortunes are gained and lost in a single day in this high-risk venture.
Now you know why all coffees are not created equal, and why you have to pay $9.00-$15.00 per pound for your favorite coffee. It’s just my opinion, but even if I have to pay $20.00/lb (which some of my favorites approach), I still consider coffee a bargain, because no matter how bad things get, few things have a more positive effect on your attitude than a good cup of hot coffee.