Global Markets for Cocoa, Cashew and Specialty Coffee

Transcription

1 Global Markets for Cocoa, Cashew and Specialty Coffee Africa s Position presented by Peter Jaeger Africa s Share in World Trade Product Value of African Exports Value of Global Import Demand Coffee $2.2bn $12.2bn Cocoa Beans Products Cashew Nuts Raw Kernels $2.2bn $32mn $12mn $19mn $3.2bn Not relevant (but African grind 1% of world total) $17mn $73mn 1

2 Million bags The Specialty Coffee Market Overview of the global coffee market What is Specialty Coffee? Is it relevant to Africa? World Imported Coffee Demand Legend Robustas Unwashed Arabicas Other Milds Colombian Milds Source: NKG Statistical Unit 2

3 US cents / lb Regional Production of Arabica and Robusta Coffee N & C America Brazil 18.5 S America Africa Asia & Oceania Arabica Production 1997/98 N & C America.15 Brazil 4.5 Robusta Production 1997/98 S America.83 Africa 9.35 Asia & Oceania Source: NKG Statistical Unit Coffee Indicator Prices 3 25 Composite Arabica Grp Robusta Grp Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Source: ICO Jan-99 Jul-99 3

4 What is Specialty Coffee? A marketing concept; Originally applied to premium grade coffees in the U.S.; Currently, it is any coffee not in the mainstream of a particular market, i.e., gourmet, flavored, decaffeinated,canned and chilled, organic, fairtrade, espresso, bird-friendly; Not necessarily green bean quality. The U.S. Market for Specialty Coffee The U.S. is the largest import market for coffee; Coffee consumption is in long term decline; Low consumer choice led to specialty coffee niche; Size of specialty market depends on definition; Up to 3.5mn bags; Flavored coffees compose 4 to 5% specialty coffee volume; 4

5 The European Market for Specialty Coffee Less distinction between specialty and mainstream coffees; Espresso revolution in the U.K., developing in France and Germany; Market size? Is the Specialty Market Increasing Demand? The Specialty Coffee Association of America stated that..consumers are not drinking more coffee, but they are just choosing to drink better coffee. 5

6 Benefits to the Global Coffee Industry Increased interest in coffee introduces new consumers and maintains loyalty Small scale of trade, in a consolidated industry, allows producers direct access to market Premium prices add value to true gourmet coffees Less Encouraging Aspects Out-of-home consumption reduces demand at home Large specialty players may lower their quality requirements Authentication Vulnerability to recession 6

7 Relevance to Africa Principally concerns East African arabicas, but almost two-third s of African production is robusta Benefits larger growers, however, most African production is smallholder No such thing as a commodity Robusta producers must distinguish their product s quality Opportunities for Specialty Coffee from Africa Single Origin Coffee African arabica coffees have a unique flavor profile Ecological and Social Coffees Certified Organic coffees are a fast growing sector Organic production appropriate for small-scale farmers Fair-Trade Coffees potential market segment 7

8 Specialty Coffees from Africa U.S. Imports 1998 Uganda 85,385 6 kg bags US$1,42,851 Tanzania 15,394 6 kg bags US$2,887,138 Kenya 85,416 6 kg bags US$23,25,11 Ethiopia 7,183,473 6 kg bags US$ 38,361,134 Challenges for Specialty Coffees from Africa Consolidate Market Image Invest in market image Consistency in Coffee Quality Educate and reward farmers for quality Consistency in Coffee Availability Establish and maintain long-term trade relations 8

9 Future of Specialty Coffees from Africa Global Overproduction of Coffee Expanding Production Vietnam, Laos and Cambodia starting to produce coffee Brazil s expansion of coffee production Dropping Consumption in Europe and N. America Sustainability of Specialty Coffees from Africa Sustainability: Economic Sustain a diversified agricultural economy Social Sustain a diverse tradition and culture Environmental Sustain the diverse ecology of coffee producing regions 9

10 The Cashew Market Two markets: Raw seed Kernels Global Production of Cashew Nuts 1,, 75, World Asia South America E Af rica tonnes 5, 25, Source: FAO 1

11 Raw Nut Imports to India 12, 8, 4, W Africa E Africa Asia Other 1993/ / / /97 Source: External Trade Statistics Cashew Kernel Exports 16, 12, 8, Vietnam Brazil Ind ia Total 4, Source : Man Producten 11

12 Global Imports of Cashew Nuts 16, 12, 8, China Euro pe North America To tal 4, p 1998f Source: ManProducten& EUROSTAT Raw Cashew Nut Prices Speculative trade No transparency Guide prices: Tanzanian Guinea Bissau Nigeria $8 - $1,2 / ton $65 - $85 / ton $6 - $8 / ton 12

13 us $ / lb Cashew Nut Kernel Prices FOB India W18 W21 W24 W32 W45 SW FS SS FB SB LWP SP Source: Man Producten Outlook for African Cashew Production Growth in global demand outstripping production Indian factories likely to remain undersupplied Raw nut trade is important to Africa 13

14 tonnes tonnes Global Cocoa Production and Consumption 3, 2,5 Net Crop Grind 2, 1,5 1, 5 197/ /76 198/ /86 199/ /96 Source: E D & F Man Cocoa Surplus/Deficit / /76 198/ /86 199/ /96 Source: E D & F Man 14

15 J 93 A J O J 94 A J O J 95 A J O J 96 A J O J 97 A J O J98 A J O J99 A J tonnes tonnes European Stocks of Cocoa Beans 8, 1,1 6, 9 4, 7 2, 5 Source: F & M Cocoa Ltd U.S. Stocks of Cocoa Beans 3, 2, 1,5 2, 1, US $ per tonne 1, 5 15

16 Monthly Cocoa Prices 2, 2nd Position LIFFE 12month moving average 1,5 1, Source: F & M Cocoa Ltd Consolidation in the Cocoa Market West Africa provides over 65% of the world s cocoa Ivory Coast provides over 4% of the world s cocoa The top 4 processors account for over 5% of the total grind Africa has achieved a dominant position which it can maintain because of a number of strengths in the market 16

17 African Strengths Quality in demand Scale of output Proximity to market Tradition of production Available land Available labor Weaknesses Quality of bean preparation Counter party risk Political risk Finance Aging tree stock 17

18 Opportunities Premium quality Adding value by processing Liberalization Investment Threats Low prices Volatility Consolidation of the trade Disease Liberalization 18