Coffee aficionados often compare coffee with wine. Both are agricultural products, grown worldwide. Their flavor is sensitive to both variety and terroir. Like wine, coffee can be enjoyed as a single-estate varietal or in a blend. As with wine, professionals participate in serious tastings ("cuppings" in the coffee world), complete with aspirating and spitting.
But the dissimilarities are more instructive than the similarities.
Imagine that 98 percent of all wine was sub-Thunderbird in quality, made from Concord grapes and not vinifera. Imagine that it was consumed for mostly for its alcohol. Also imagine that this wine was produced by untrained consumers, from grape juice or wine-flavored powders, using a hodgepodge of inferior equipment. And, imagine, lurking behind this, a bizarre alternate universe in which the wine-producing regions were, by and large, not wine-consuming.
Well, that, with appropriate substitutions, is coffee.
Coffee mostly exists as a caffeine-delivery device, usually in the form of soluble coffee (as instant coffee is called in the trade). Nestlé, Kraft, Sara Lee, Proctor & Gamble (the Big Four) and the German company Tchibo buy about half the world's beans every year. The Big Four sell about a billion dollars worth of coffee product a year, with profit margins that are estimated at between 17 and 26 percent.
And this world of coffee is in deep crisis. The market is falling apart, and it is the people at the beginning of the supply chain, the actual growers, who suffer.
For coffee is more like oil, that bubbling crude, than it is like wine. Coffee is the second-most-traded commodity in the world, second only to oil. Like oil, it is an export commodity. Since coffee is the export commodity for many poor countries, this means that a lot of people are in trouble. Coffee growers, pickers, exporters, processors are going out of business, without another business to go into. Families are starving. Already fragile economies, in sub-Saharan Africa, in Central America, are breaking under the strain.
The proximate cause of all the misery is stunningly simple--the lowest coffee prices in 30 years. Growers are being paid less than it costs them to produce coffee. And that's for the economically simple reason that there's a glut of coffee on the market.
The causes behind that glut are a not unusual blend of villainy, global economics, technology and unintended consequences. Some history.
No sane person trusts the "free" market when it comes to important commodities, particularly agricultural ones. Until 1989, like most commodity markets, the market in coffee was a managed market. It was regulated by the International Coffee Agreement, administered by the International Coffee Organization (ICO). Signatory governments, both producers and consumers, agreed to pre-determined supply levels aimed at keeping prices stable--in a price band between $1.20 and $1.40/lb. (This is the price of green, commodity-grade arabica as it enters the United States. Obviously, not all of this goes to the farmer. Better beans cost more, but this price, the c-price, serves as a benchmark for other grades of coffee.) Enter a villain. In 1989 the United States pulled out of the agreement, which essentially sunk the agreement and prices along with it. Today's c-price is about $.60, with a typical small farmer getting about half of that.
The standard explanation of the U.S. pullout involves the end of the communist "menace"; no need to bolster the coffee economies of Central America to counter left-wing insurgencies.
Enter an odd trio of villains: Vietnam, the World Bank and Brazil. Vietnam had never been a major coffee producer. For one thing, it isn't particularly suitable for coffee production; except in a few higher-altitude areas, only the inferior robusta type will grow there. But the World Bank encouraged, in the way that only banks can, a vast increase in coffee production in Vietnam. This fit in with the World Bank's general philosophy of encouraging third-world countries to convert to export economies, particularly commodities, rather than value-added products (think cheese, not milk). So, lots of forest in Vietnam was clearcut for robusta production. Meanwhile Brazil embarked on a project of increasing productivity by various means, including intensive agriculture. The result is a coffee market flooded with cheap, bad coffee.
Enter the Big Four, with their new techniques to literally steam the bad coffee to remove much of its (bad) flavor, and turn it into saleable soluble. They also had the marketing oomph to also sell it disguised with various artificial flavors (hazelnut peach truffle anyone?).
All this bad robusta not only lowered the price of coffee to 30-year lows, but also drove some high-quality arabica out of the market, as production far exceeded consumption. It may seem odd that low prices for bad coffee would also mean lower prices for good coffee, but that's the way the market works--basically because any given coffee can be replaced by one just a little worse, at least if you are one of the Big Four. Because the markets for robusta and arabica overlap, and because the Big Four have been increasing the percentage of robusta in their blends, that has tended, along with the death of the ICA, to depress all coffee prices. The collapse in prices also makes things difficult for even quality coffee growers by degrading the transport and processing infrastructure in their country--i.e., the roads are muddy paths and the processing unreliable.
On the other hand, high-quality coffee is essentially a niche market where small roasters can and do pay over-market prices for good beans. (By the way, we're not talking Starbucks here.) This may save quality coffee and prevent the destruction of quality coffee estates. (Most coffee is still grown on small holdings--some 70 percent of the world's coffee is grown on farms of fewer than 25 acres.)
But it won't do much for the vast robusta farms that are in deep trouble and can't shift over to quality coffee for reasons of climate, skills and market. While the market for coffee as a whole is stagnant, with soft drinks showing much "healthier" growth, the market for quality coffee, though small, is showing the strongest growth.
So what is to be done? The producing countries are reviving the ICO and a plan has been put forward, endorsed and promoted by Oxfam. Its highlights include destroying at least 5 million bags of coffee (see "triage" in the glossary), financing alternative livelihoods for robusta growers, and a return to some sort of price-support system. The ICO also proposes a limit of 86 defects (moldy or unripe beans, gravel, sticks) per 300 grams of beans; the current U.S. rules permit 495 defects per 300 grams, which can approach 30 percent by weight.
You may have seen the Fair Trade logo on some coffee. That represents a system of organizing small farmers into co-ops, guaranteeing them a minimum price ($1.26/lb., with $1.41 for organic) and eliminating some middlemen. Of course, not all Fair Trade is good. Some roasters supplement their Fair Trade selections with what have come to be called "relationship" coffees.
As Peter Giuliano, the roaster and bean-buyer for CounterCulture coffee in Durham, points out, there's a built-in feature of Fair Trade coffee that can stand in the way of good coffee. Since Fair Trade coffee is co-op coffee, it means that beans from various small growers are mixed together, the superb with the merely good, at the co-op's processing plant. Some roasters prefer single-sourced beans. For example, Giuliano, in cooperation with some other roasters, traveled to Mexico to make a single-source deal and arranged with the local co-op to keep different growers' beans separate during processing. This kind of work involves visiting the growing regions and paying enough to allow the co-op to set up tasting rooms, drying rooms and buy a computer to help with inventory control. This comes to $1.67/lb. for these farmers, a nice step up from $.30.
So which coffee should you buy? Buying supermarket brands or from the likes of Starbucks you're taking your chances politically and palatably. If you buy from any of our small local roasters, like CounterCulture or Broad Street, then you're almost certainly getting either a Fair Trade coffee, or just as good, a relationship coffee. If in doubt, just ask the roaster the history of their beans. A reputable roaster will know and tell you. And, the good thing is, these are also the best coffees.
The vocabulary of caffeine
Coffee aficionado: Someone whose coffee grinder costs more than $150.
Robusta: One of the two major types of coffee plant. Grows in a wider range of habitats than Arabica; tastes like a mix of cellar dirt and rubber. You don't want to drink it. Used to make instant coffees and blended into supermarket coffees by the Big Four. A few very high-end robustas are used in small percentages in fancy espresso blends to add a certain body and mouthfeel to the cup. The latter use is arcane and relatively insignificant.
Arabica: The good type of coffee plant; the one you're drinking when you buy whole beans from a reputable roaster.
Triage: Green coffee with a goodly percentage of sticks, stones, rotten beans and unripe beans. Called triage because it was the reject pile from coffee sorting and used to be thrown away. Now can be used and labeled as "coffee," using technology pioneered by the Big Four.
Soluble coffee: Instant coffee.
Flavored coffees: Bad coffee overlaid with the chemical industry's handiwork.
Specialty coffee: An umbrella term to cover the small but growing market for quality coffee. Given some oomph by the trade group, Specialty Coffee Association of America. It is sometimes used to include "gourmet" coffees, like the packaged flavored coffees in your supermarket aisle.
Shade-grown: Coffee grown in its natural habitat, as an understory tree; less stress for the tree, fewer herbicides needed, better flavor, pleasanter picking conditions for the farmworkers. Also, preserves the winter habitat of our songbirds and avoids the ecological disasters consequent on clear cutting the sides of mountains.
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