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Port of Houston: Transporting More than Coffee

By Carolina Pichardo

In recent years, the Port of Houston Authority (PHA) has witnessed the success of their relationship with coffee, as well as some tragic setbacks, especially with the devastation of Hurricane Katrina. However, this has been possible due to some strategic planning, and Houston’s own unique appeal.

Although Houston, Texas is known for being “Space City,” it is also the home of the U.S.’s National Aeronautics and Space Administration (NASA), as well as the center of the world energy in being the proprietor of the oil industry, but it wasn’t until recently that the city decided to venture into the coffee industry.

On February 14, 2003, the Port of Houston Authority (PHA) received a notice from the New York Board of Trade (NYBOT) approving its request for green coffee port designation. The PHA’s application was submitted in 2002, after Proposition 3 was placed in a ballot on November’s 2001, and selected by Texas voters, exempting all green coffee and raw cocoa imports from taxes. The initiative for this was due to the PHA’s perception that green coffee, in being the second largest traded commodity in the world, needed to be accommodated into the port’s future planning. “In order to reach that point, it was necessary to remove an existing problem, namely the annual inventory tax on all stored goods, written into the Texas Constitution,” said Jim Edmonds, PHA’s chairman. “Persuading the Texas Legislature was step one, but to do away with the inventory tax specifically for green coffee and cocoa, there had to be a Texas-wide referendum, before the constitution could be changed.” Once the legislation was passed, it allowed Houston to become a delivery point for the Coffee “C” future contracts traded on NYBOT’s Coffee, Sugar and Cocoa Exchange, joining the ranks of New York/New Jersey, New Orleans and Miami.

In being home to the only four decaffeination plants in the U.S., which include Folgers Coffee Company, Coffee Process Tech, Maxwell and Cadeco Industries, as well as a large number of soluble plants, roasters, and coffee-related companies, Houston was equipped to strongly enter the java scene. The port, which owns and operates facilities within a 25-mile long complex, has been successful due to their size and geographical location. Last year when Hurricane Katrina paralyzed the activities and other operations for the Port of New Orleans. This diverted much of the traffic and shipping to the Port of Houston, revamping the organization’s complete structure. Although New Orleans has done a remarkable recovery, and has been performing some of their original duties, much of the business within the Gulf region is depending on Houston’s facilities. Edmonds commented on these efforts. “We continue to hope that these great Gulf Coast ports can operate at full capacity,” he said, “as soon as possible, to continue participating in the daily functions that are so essential to the vitality of our region’s economy and its leadership in trade and commerce.”

Since then, PHA has become a top-ranked coffee exchange contender, according to the Greater Houston Coffee Association (GHCA) and the Port of Houston Authority, the anticipation and presumptions are lying on the significant impacts this decision can have on the future of coffee trade.

Coffee Deliveries Deliver Mighty Economy Punch
Considering coffee imported into the U.S. seems to only be increasing throughout the years, the city of Houston has much to gain from this new addition. The GHCA insist that within the next few years, import volume within the city alone has the potential of developing to approximately 3.7 million bags annually. According to the Greater Houston Coffee Association, this creates a tremendous effect on the local and regional economy, and when there’s a business ‘boom’ of this sort, other opportunities arise. Edmonds felt this was something worth celebrating, stating, “By and large, coffee is sold/traded with one-third on the open market, one-third on NYBOT for Arabicas, and one-third on LIFFE for Robustas. The NYBOT designation has the potential to lift Houston’s coffee business access from one-third to two-thirds.”

Besides expanding the volume and deliveries of coffee, the Port of Houston also developed more employment opportunities. In expanding their services, jobs were developed to assist the processing and servicing industries of coffee. These include roasting, blending, and packaging, as well as logistics providers, warehouse operators, and coffee brokers or traders. This, the GHCA estimates, is an overall 15% increase in jobs related to this agreement alone.

First-Ever Symposium and Java Day Takes Center Stage
It was the first show of its sort, and with the support of Economic Alliance Houston Port Region, the GHCA and PHA, and the City of Pasadena, the Coffee and Cocoa Symposium took the spotlight on October 20, 2005. Intended to reflect the Houston region’s rising influence in the global trade of coffee and cocoa. Featuring the president and c.e.o. of the National Coffee Association (NCA), Robert Nelson, as the keynote speaker of the event, the show contained roundtable discussions, business-to-business forums and exhibit booths, and drew about 1,400 people. According to Edmonds, this symposium was more of a trade show with an accompanying educational dimension. In 2006, however, there is going to be a reversal of this arrangement with the educational forums being more of the main focus, and surrounded by social opportunities, such as golf, a cocktail reception and a gala dinner, in association with important regional business chambers of commerce.

Along with this celebration, the city also set aside a day to commemorate the important milestone. February 21, 2003, a week after the port received NYBOT’s approval for the exchange of coffee, was assigned as the Java and Jobs Day. “Although open-market coffee was already a steady commodity moving through the Port of Houston, the new designation now meant that traded Arabicas could now be attracted to Houston,” said Edmonds. These activities demonstrated the value and worth of this consent.

World Class City Coffee
With the symposiums, rise in employment and import volume, it seems like the future in coffee for the Port of Houston has been more than established. However, with approximately 60 members and participants, the GHCA is far from completing its mission. The organization is currently active in developing coffee trading opportunities for independent Brazilian coffee cooperatives, in association with the Port of Houston Authority’s Brazilian trade representative. In addition, they have been effective and significant in attracting a new coffee broking house to Houston that aims to become a significant player in the region.

Although so much appears to be in the works, the PHA is determined to carry out more than the coffee shipments and cargo, they want to attain the highest position available for this world-class city port.


Tea & Coffee - August/September, 2006
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