Coffee Industry
Industry Introduction
From the discovery of small, brightly colored red berries on trees in Ethiopia came the largest imported commodity in the world, second only to oil. The coffee bean provides a livelihood for over 20 million people worldwide with an estimated worldwide retail sales expected to grow by a compounded rate of 6.9% from 2005-2010, reaching $48.2 billion by 2010, according to The U.S. Market for Coffee and Ready-to-Drink Coffee. [1]
The two main species of coffee beans are Arabica and Robusta. Arabica is a high-quality coffee typically grown at higher elevations where the optimal climatic conditions necessary to grow this specialty grade of coffee are found. Arabica coffee is traded in two ways:
? On the highly volatile New York "C" market where the "C" price is affected by the global supply as it rises and falls. The average "C" price for a pound of coffee during fiscal 2005 was $1.04.
? Higher-quality Arabica beans are used in specialty coffee. Specialty coffee represents 10 percent of the total worldwide coffee market. Prices for specialty coffee are higher than the "C" offers in order to provide better rates payable to producing farmers for quality. [2]
According to the National Coffee Association in Volume 2005.4 of Coffee Trax, as of December 2005, forecasts for the world coffee production for 2005-2006 will be 113.1 million bags. Production is down 5.5% over the actual 2004-2005 yields of 119.8 million bags.
Domestic consumption in producing countries in 2005-2006 is forecast to increase to 31.2 million bags, indicating domestic use should be 9.9% higher in 2005/06 than in 2004/05. Using the most current data, world coffee consumption for 2003/04 was 96.5 million bags, up by 1.8% over 2002/03' ...