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Coffee and Tea Reports from the Front Lines

Brazil Consumption Reaches 16.9 Million Bags

Brazil — The Association of Brazilian Coffee Roasters (ABIC), recently released a report entitled, ”Industry Indicators.” This report announced that in the 12-month period, ending in April 2007, domestic coffee consumption had reached 16.9 million bags; an increase of 5.8% over the 15.9 million bags consumed in the same period last year. The report projected that considering the rate of monthly increases, Brazil’s consumption by the end of June 2007 will have topped 17 million bags.

The consumption per capita for the period was estimated at 5.52 kg of green coffee, which places Brazil among the world’s highest consuming countries like Germany (5.86 kg), Italy (5.63 kg) and France (5.05 kg) according to the latest ICO estimates. The 5.8% growth in Brazil consumption is well above the last ICO figure for average annual world consumption increase at 1.5%.

The ABIC report attributes the increases in Brazil consumption to the following factors: The improvement in quality offered to consumers as a result of a “Coffee Quality Program” launched by ABIC in 2004; the consolidation in the market of higher quality Gourmet and Specialty Coffees which have attracted attention and conquered new consumers especially among the youth market; and investments by the trade and Ministry of Agriculture in programs of “Coffee and Health,” which have revealed the health benefits of the beverage.

An increase in consumption “out-of-home,” in the work place, cafeterias, restaurants, confectionaries etc., is largely due to the convenience of espresso machines, which has also helped to upgrade coffee quality. The rapid expansion of cafeterias and coffee shops has been a significant factor and has attracted investments by foreign chains.

The ABIC report noted that Brazil consumption, presently at 17 million bags and with yearly increases at about 6%, is on target to reach their prediction of 21 million bags by the year 2010. The report also noted that this year’s consumption at 17 million bags would represent 52% of the present Brazil crop (2007-08) officially estimated at 32.09 million bags.

Analyzing the ABIC figures, with respect to market prices will mean that the total availability this year may not be sufficient to cover internal and export demand. They are predicting a firm market and higher prices by the end of this year and first months of 2008 before supplies of the next crop come into the picture. - Harry Jones

Sri Lanka Government to Train Skill Workers in the Tea Industry

Sri Lanka — The Sri Lanka government has paid attention to the problem of a lack of skilled workers in the tea industry, and plans are underway to commence a program to train the workers in necessary job categories.

At a discussion held with the patronage of minister of professional and technical training, Nimal Siripala de Silva, the minister said that under the program, skilled workers would be trained in the categories such as field officers, production officers, technical officers, electricians and tea plantation workers.

All the major players of the tea industry including the CEOs of plantation companies, the officials of the Tea Factory Owners’ Association, National Plantation Management Institute, Tea Research Institute, Tea Shakthi Fund, Sri Lanka Tea Board, Tea Small Holding Authority, etc. have participated in the discussion.

UCC Ueshima Develops Low-Caffeine Coffee

Japan — According to a report published on The Nikkei Business Daily, UCC Ueshima Coffee Co. announced that it has created a new type of coffee that has a robust aroma and flavor but with only one-fourth the caffeine content of Arabica coffee.

Dubbed GCA, the new variety was developed through crossbreeding and the use of multiple coffee types to produce one with a caffeine content of just 0.3%. UCC Ueshima has been working on the project with the government of Madagascar since 2001 on this blend.

According to the company, low-caffeine coffee accounts for 15% of the total coffee market in the U.S. but was just 0.15% of raw bean imports in Japan in 2006. The conventional approach of removing caffeine from coffee beans is thought to cause a loss of flavor and aroma, making it unpopular with Japanese consumers.

UCC Ueshima aims to begin selling the new coffee domestically in 2010. It hopes to cultivate demand by marketing the low-caffeine product as coffee for pregnant women and the elderly.

Exporters Fear Rise in Illegal Tea Imports

Pakistan — Tea exporters are expecting a decline in the import of tea through legal channels during the current financial year, in line with the declining trend during the last couple of years, due to an expected increase in smuggling of tea.

In this situation, the ratio between tea imports through legal and illegal channels is said to be equal. Out of the total consumption of tea in the country at 170 million kilograms, around 70 million kilograms is smuggled.

However, this illegal activity is likely to hit the peak level of 85 million kilograms, mainly due to unchecked tea smuggling under Afghan Transit Trade (ATT), one of the industrialists said.

Hamid Saeed Khawaja, chairman of the Pakistan Tea Association (PTA), told the Daily Times that major tea blenders like Unilever Pakistan, Tapal and Tetley have 100 million kilograms of the total tea import, which has been sold in their company packaging while 70 million kilograms of open tea is being sold in the market. Open tea importer’s future is at stake, as every year the situation is getting worse. PTA has brought this matter to authority several times.

“Recently we have been in talks with the chairman of the Central Board of Revenue, Abdullah Yousuf, but still our issue is unheard,” a PTA official said.

Peru's Coffee Exports Takes a Loss

Peru — A substantial increase in Peru's coffee production over the past years can be seen when the 81,000 lbs. produced in 1990, are compared to the 350,000 lbs. produced in 2006.

Due to its trade value, Peru's coffee is considered important in the country's economy. President of Peru's Chamber of Coffee and Cocoa, Luis Navarro Váscones, reported that last year alone, coffee exports amounted to $513 million USD. He also reported that coffee production is the main agricultural activity in the high jungle, where it supports 150,000 families, which cultivate it for a living.

Amid all of the positive reports, President of Peru's National Coffee Assembly (JNC), César Rivas Peña, has stated that production level is highly at risk, due to the fact that the plants, which account for the massive production of coffee in Peru, are old.

Rivas Peña stated that financial help was needed so the old plants could progressively be replaced. He added that Peru's coffee industry would suffer a 460 million sole loss due to the old plants.

Peña added that another problem was that producing coca plants was easier and much more profitable for farmers than producing coffee, due the frailty of the plant.

A meeting has been scheduled with Peru's Ministry of Agriculture to try and solve the problem. Rivas Peña stated that a prepared plan will be presented, at which time help in replacing the old plants will also be requested.

José Luis Camino, the main advisor for the Ministry of Agriculture has stated that the Ministry is willing to help, acknowledging that coffee is an important export in Peru.

Tea & Coffee - October, 2007

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