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Coffee and Tea Reports
from the Front Lines

Tristao Resigns from CECAFE
SANTOS, BRAZIL - Sergio G. Tristao, president of Tristao Companhia de Comercio Exterior, a large and traditional Brazilian coffee exporter, announced the firm’s withdrawal from CECAFE, the Council of Brazilian Green Coffee Exporters. Sergio Tristao in a letter to Jorge Esteve Jorge, president of CECAFE, resigned, irrevocably, as vice president of the organization. He stated that decisions taken by CECAFE although approved by the majority, were contrary to principals and positions of his firm which left him no other alternative but to withdraw.

It is believed the main reason for his action was the decision promoted by certain members of CECAFE recently to continue to support the government’s Coffee Retention Plan.

The trade believes that Tristao’s action may “open the door” for other dissidents who are unhappy that certain decisions of CECAFE have been contrary to their Charter Declaration, “to defend a free market.”

It should also be noted that since the founding of CECAFE by Government pressure to unite the two entities (FEBEC and ABECAFE) representing Brazil green exporters interests, there still exists class and policy differences that have not been overcome. -By Harry C. Jones

Brazilian Coffee Retention Debate Nears A Close
SANTOS, BRAZIL - The main course served for participants of the Third Agronegócio Coffee Simposium held at Salvador, Bahia was a heated debate on the Brazilian Coffee Retention program. Moderated by Luiz Suplicy Hafers, president of the Brazilian Rural Society, key leaders of national coffee policy spoke for and against retention.

The position of the political rural interests - mainly Gilson Ximenes and Manoel Bertone, president and vice president respectively of the CNC (National Coffee Council) - continued to defend the retention plan professing that it helped to prevent prices from declining to even lower levels.

The government spokesman, Jaime Payne, newly appointed director of the coffee department of the Ministry of Agriculture also defended the plan. His theory of success surprised more experienced trade members of the audience when he made the observation that the price differentials for Brazils in New York, which were about 20 under before the plan were now only about eight under!

Criticism of retention was mainly voiced by a dean of the Brazil trade, Dr. Isaac Ferreira Leite, president of COOXUPÉ, the Guaxupé Minas Gerais Coffee Cooperative and one of the leading exporters. He stated that he was strongly against government intervention in any form. He noted that retention worked against exports of specialty coffees, which is an area of growing importance for Brazil as a supplier of quality coffees at higher prices.

Jorge Esteve Jorge, president of CECAFE (Council of Brazilian Green Coffee Exporters) recognized his group voted in favor of retention but this was in order to not intimidate their position with the producer sector. He qualified his position by observing that Brazil has a production cost and capacity superior to most competitors and should adopt more aggressive policies to conquer international markets.

Probably the most severe criticism of the retention plan came from the moderator, Luiz Suplicy Hafers. He maintained that Brazil’s coffee policy should be directed to agreements and marketing with consumer countries and never to negotiations with competitors. In his opinion, he stated; “the retention plan was a conceptional disaster and an operational catastrophe.”

The intense debate reached the general conclusion that retention produced no positive results for coffee producers and only negative results in the recuperation of prices. The problem now for the government and trade is how to retire from the retention program with the least possible traumatic effect for Brazil coffee culture. -By Harry C. Jones

Study On Eliminating Low-grade Coffees
LONDON, ENGLAND - The executive director of the International Coffee Organization (ICO), Celsius A. Lodder, announced that the ICO will undertake a study to determine the viability of eliminating low-grade coffees from the market, with the aim of improving both the overall quality of coffee and the global coffee supply/demand balance.

The ICO is carrying out the study at the suggestion of the Specialty Coffee Association of Europe and the ICO Executive Board endorsed the proposal.

The study is being undertaken by a task force of experts from the ICO, the Natural Resources Institute (United Kingdom) and the Free University of Amsterdam (Netherlands). Consultations have already commenced with a wide range of private sector associations and governments in producing and consuming countries. The study will analyze a range of factors which may facilitate or prevent the implementation of such a plan, including: existing minimum export regulations; identifying alternative uses for low-grade coffees; financing of such a plan, amount of coffee to be covered; views of industry sectors including roasters, exporters, importers and governments; and costs and benefits to the coffee sector of removing low quality coffees from the markets.

“Prices for coffee are at their lowest level since 1990,” said Lodder. “…We will carry out this analysis objectively to get an accurate picture of the feasability of this proposal as a means of halting the downward trend in coffee prices.”

The ICO is an intergovernmnental organization of 63 member countries which serves as the international coffee community. It provides the following services: up-to-date information and statistics, innovative projects to benefit the world coffee economy, country coffee profiles and economic studies, and the promotion of coffee consumption in emerging markets.

Anacafe to Use Coffee for Energy
GUATEMALA CITY, GUATEMALA - Guatemala’s National Coffee Association, Anacafé, said they would run the first tests of burning low-quality coffee at a local cement plant in the country, reported Coffee Contact News. A spokesperson for Anacafé, president Manfred Topke, said that this is part of Guatemala’s bid to remove low-quality coffee from the oversupplied world market in a bid to improve current depressed global coffee prices.

The Anacafé project seeks to transform the low-grade coffee from Guatemala into energy, or alternative fuel, in the country’s cement industry, rather than “destroying it just for the sake of destroying it,” Topke said.

The exact volume of coffee to be burned in what Anacafé describes as a trial of the “transformation of coffee into energy” process has not been disclosed at press time, but is believed to be small.

The pilot project undertaken by Anacafé in cooperation with Cementos Progreso’s local plant in Guatemala is part of an overall plan initiated by Mexico last year, and adopted last November by all five Central American coffee nations.

The plan, which calls for removing low-grade coffee from the world market through either physical destruction or alternative uses, is supported by the world’s No. 2 producer, Colombia, and the London-based Association of Coffee Producing Countries.

At a meeting in Guatemala earlier this week, Mexico, Colombia and the five Central American nations - Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua - agreed to set a deadline for implementation of the plan.

Each country will adopt its own adequate measures for whether to destroy the minimum 5% target of the country’s total coffee exports, which consist of the lowest quality beans, or whether to find an alternative use for the coffee, which is not to be used for human consumption.

The seven coffee nations exported a total of some 30 million, 60-kilogram, bags in the last 1999/2000 harvest, and although exports are forecast to fall significantly in the current 2000/01 harvest, the target for coffee to be removed from the market in the plan is set at 1.5 million bags.

Starbucks Pours into Quebec
Montreal, Quebec - Starbucks has finally reached Quebec, states The Montreal Gazette. The chain has opened the first of what its local partner expects will be 50 to 75 stores across Quebec within five years.

“We were the last market this size that was untapped (in North America),” said Michael Aronovici, president of Vision Café Inc., a local company working with Starbucks to introduce and adapt the chain to this province. Starbucks coffee has been available in the province for a few years at a bookstore chain, an airport and a hospital, but this is its first street-front location in Quebec. A second is due to open this summer on Monkland Ave., and others are in various stages of development.

Normally, Starbucks’ North American stores are corporate-owned. But for Quebec it has allied itself in a long-term licensing deal with Interaction Restaurants Inc., which operates Pizza Huts in the Montreal area.

Vision Café is a subsidiary of Interaction, created to operate and develop the Starbucks brand in Quebec.

Stores here will operate under the banner Café Starbucks Coffee, “the only place in the world where it permitted a different name on its stores,” Aronovici said.

They also will sell foods baked on-site and products particular to this market, notably an “intense” coffee blend called Melange Mont-Royal.

Aronovici said the Quebec market is more partial to espresso-based brews than others in North America, which is one of the reasons he believes Starbucks will thrive here despite competition from entrenched competitors like Second Cup, Van Houtte and Tim Horton’s.

“We sell more espresso-based beverages than our competitors,” he said. “We’ll appeal to consumers looking for a certain taste profile. We think we have a place. There’s room for everyone.”



Tea & Coffee - May/June 2001
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