By Tony Dicorpo
Did you know that drinking your daily cuppa fresh roasted gourmet coffee or buying your pound of coffee beans helps more than just your neighborhood cafe? That's right there is a supply chain at hand here: from farmer to buyer to your cup, and a few stops in between. And most people haven't a clue that coffee is traded as a commodity on the commodities market. "That is amazing", you say?...and just what is a commodity? A commodity is a good for which there is a demand, but which is supplied without qualitative differentiation across a market. That would be defined as that all coffees are superior but very different in some way. Commodities usually come out of the earth and generally maintain a universal price.
In contrast, one of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. A few examples of agricultural commodities would be crude oil, coal, sugar, coffee beans, soybeans, wheat, gold and silver. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining. Coffee would then be considered a soft commodity. Get it? It comes out of the earth.
Here's another truth: Contrary to popular belief, coffee is not the second largest traded commodity in the world. True the first is oil however I and countless other java professionals were taught this incorrect factoid in years gone by. In actuality, coffee is way down the line. It is arguable that it might be the second most traded commodity in terms of dollars because of its cost to manufacture and produce the final product but that phenom is best left for a good debate. True I am a BIG coffee geek but this is not the place I'd like to debate it, nor do I want to debate it; I believe it. If you don't, tough! At any rate, it can also be argued that it is the second most valuable commodity exported by developing countries. That is where I'll stop on that one! It's pretty deep. Google it sometime for an interesting read.
The best quality coffee beans are called Arabica. They come from a 'cherry' that is grown on a tree at a high altitude from 4,000-6,000 feet. These trees are harvested for their green coffee beans inside the cherry. Arabica trees are not as plentifully full as Robusta trees. This is the reason Arabica coffee is at a premium price. Yes, quality gourmet coffee beans cost more! Robusta is the lower quality bean. If you buy whole bean coffee, there is a high probability that you are buying premium Arabica grade.
In 1822, espresso was born. The first espresso machine was invented in France but the Italians perfected it. Go Italians! (I'm-a Italian, and interestingly we were also the first to manufacture the espresso machine.) Espresso is so embedded in the Italian society and its culture that currently there are over 200,000 espresso bars in Italy alone. That is a lot of espresso! Salud!
A huge global industry employing more than 20 million people, the coffee industry today produces over 400 billion cups consumed every year. That's a lot of coffee beans! Roasters around the world deliver millions of pounds of roasted coffee every year to satisfy this demand. Fresh roasted gourmet coffee is the world's most popular beverage (thank the Boston Tea Party for that one!) Just take Brazil alone: the country employs over 5 million people that are responsible for the cultivation and harvesting of over 3 billion coffee plants. Frank Sinatra sang, "They grow an awful lot of coffee in Brazil." How true it is!
In 2009 the total number of US based coffee shops neared just over 25,000 and half of the operators are small chains and guess who else? Yes the green giant! The major companies include Starbucks, Caribou, Coffee Bean and Tea Leaf, Gloria Jean's and It's a Grind. The rest are independents like the mom and pop down the street.
Specialty coffee today accounts for almost $14 billion in annual sales, one-third of the nation's $40 billion industry. And farmers in other countries depend on this commodity for their livelihood. So when you are drinking your next cup of fresh roasted gourmet coffee, or buying your next pound of whole bean coffee remember the supply chain and that you are helping the economies of more than just one country.
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