An INTECON presentation on the international trade of coffee especially on Kopi Luwak C31 Mananghaya, Marvin Tan, John Constantine QueQue,, Michael Vincent Game Most widely used/traded product ranking 2nd 5th 13 th Game Coffee crop are? Beans Berries Vegetables Game Beethoven Prepared his coffee with how many beans? 40 50 60 Coffee History 8th C First discovery of coffee berries 11 th C First coffee trees are cultivated 1475 Worlds first coffee shop 16 th C Coffee enters Europe Coffee History 1607 Coffee introduced to the New World 1652 First coffeehouse opens in England 1672 First coffeehouse opens in Paris 1683 First coffeehouse opens in Vienna Coffee History 1690 First to transport and cultivate coffee 1721 First coffeehouse opens in Berlin 1723 Coffee Plants introduced in America 1727 Brazilian coffee seedlings are smuggled Coffee History 1750 Café Greco, opens in Rome 1822 Prototype of the first espresso machine 1885 Method of roasting coffee 19 th C Kaffeeklatsch, afternoon coffee Coffee History 1905 First commercial espresso machine 1908 Worlds first drip coffeemaker 1920 Coffee sales boom 1933 First automatic espresso machine Coffee History 1938 Nescafè instant coffee 1940 US imports 70% of the world coffee crop 1945 Perfects the espresso machine 1971 Starbucks open its first store Coffee History 1991 Network of espresso service 1995 Coffee is the worlds most popular beverage Types of Coffee According to its Origin American types of coffee Arabic types of coffee African types of coffee Asian types of coffee Oceanian types of coffee American Types of Coffee Colombian Coffee Brazilian Coffee Costa Rica Coffee Guatemalam Coffee Jamaican Coffee Nicaraguan Coffee Peruvian Coffee Mexican Coffee Arabic Types of Coffee Café Mocha African Types of Coffee Tanzanian Coffee Kenyan Coffee Ethiopian Coffee Asian Types of Coffee Indian Coffee Java Coffee Sumatran Coffee Celebian Coffee Oceanian Type of Coffee Hawaiian Coffee Types of Coffee According to its Preparation Espresso White Coffee Espresso with a drop of milk Cappuccino Coffee Chocolate Vienna Coffee Mocha Affogato American Coffee Drip Coffee Brewed Pot Coffee Top Ten Producers of Coffee Brazil (2.59 million metric tons ) Vietnam (0.85 million metric tons) Colombia (0.7 million metric tons) Indonesia (0.65 million metric tons) Mexico (0.27 million metric tons) India (0.27 million metric tons) Ethiopia (0.26 million metric tons) Guatemala (0.26 million metric tons) Honduras (0.19 million metric tons) Peru (0.17 million metric tons) Sources: http://www.roastedsmell.com/coffee-of-the-world/top-10-coffee-producers http://www.tiptoptens.com/2011/05/10/top-10-coffee-producing-countries/ The image cannot be displayed. 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Source: http://www.mapsofworld.com/world-top-ten/world-top-ten-coffee-consumer-countries.html Top Consumers for 2005 USA (1,182 '000 tonnes per annum) Brazil (810 '000 tonnes per annum) Germany (566 '000 tonnes per annum) Japan (405 '000 tonnes per annum) France (334 '000 tonnes per annum) Italy (320 '000 tonnes per annum) Spain (171 '000 tonnes per annum) UK (126 '000 tonnes per annum) Netherlands (111 '000 tonnes per annum) Ethiopia (110 '000 tonnes per annum) Source: The Economic Pocket World in Figures, 2005 (Profile, 10.99 [pounds sterling]) Top Ten Most Expensive Coffee Luwak Coffee, Indonesia ($160) Hacienda La Esmeralda, Boquete, Panama ( $ 104) Island From St. Helena Coffee Company – St. Helena ( $ 79) El Injerto – Huehuetenango, Guatemala ( $ 50) Fazenda Santa Ines, Minas Gerais, Brazil ( $ 50) Blue Mountain, Wallenford Estate, Jamaica ( $ 49) Los Planes – Citala, El Salvador ( $ 40) Hawaiian Kona Coffee ( $ 34) Starbucks Rwanda Blue Bourbon, Gatare/Karengera, Rwanda ( $ 24) Coffee Yauco Selecto AA, Puerto Rico ( $ 24) Coffee Crisis Prior to 1989, coffee price were controlled In 1989, the ICA collapsed In 1992, prices decrease Coffee Crisis Sustained low coffee price: Oversupply 1100% increase in production Multinational Companies Nestlé Proctor and Gamble Kraft Sara Lee Coffee Crisis Robusta Beans Big Four Make a great profit Investment in growing cheap coffee Process to be drinkable Policies to Prevent Price Crisis Redressing the supply/demand imbalance by increasing consumption improvement of quality on the world market Support by donor institutions Promote diversification Broad based rural development Ensure international coffee policy initiatives Positive Effects of Coffee Health benefits (e.g. Prevent diabetes) Help develop creative thoughts Prevent possible drug addictions 1 cup of coffee can prevent colon cancer Negative Effects Monopolizing which causes inequality of wealth among the supply chain Every cup destroys 3 square centimetres of rainforest Health Effects (e.g. Alter blood sugar, damage teeth, etc.) Economic Analysis Heckscher-Ohlin Model Capital intensive Ricardian Model Comparative advantage of production in the “bean belt” Kopi Luwak • The world’s most expensive coffee, estimated to be costing 100 – 600 USD per pound. That’s the average! The more expensive variant would cost at a staggering price of 3000 USD per pound. • Has only an estimated global production of 500 – 700kg annually. • Why is the output so small? let’s learn about the production of kopi luwak shall we? Photo taken from http://www.realkopiluwak.com/perfect- cup/ About Kopi Luwak The Dutch connection During the colonial times, Indonesia, being a Dutch colony, is known for it’s coffee. However, as is in any good business practice, the plantation owners prohibited the farmer’s to drink harvested coffee. The farmers, desperate, seeks ways to overcome this problem. About the Civet Cat/Alamid/Luwak • The civet cat or more specifically the Asian palm civet is an animal commonly found in the South East Asian region such as in countries like Indonesia, Philippines, and etc… • A civet cat is a nocturnal and solitary creature, which prefers to move alone while doing it’s activities. The animal is active around 6pm to 4am . • Prior to popularity of the luwak coffee, they were commonly treated as pests to common farmers as they feed on their Photo taken from http://www2.cedarcrest.edu/academic/bio/hale/bioT_EID/ crops . here in the Philippines, they can actually be cooked to lectures/civet.html make adobo. About the Civet Cat/Alamid/Luwak • The civet cat is omnivore, although despite being an omnivore, the major bulk of it’s diet is feeding on fruits such as mango, rambutan and coffee berries. • It is said that they have a natural instinct in selecting the “best” fruits out of a “bundle” of fruits. • They primarily live in the forests, especially at places where mature fruit trees are found. Photo taken from http://www2.cedarcrest.edu/academic/bio/hale/bioT_EID/ lectures/civet.html The production process The production process of the kopi luwak So basically the idea is that these critters eat the coffee berries, they poop it and it’s ours for the taking. The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. The production process of the kopi luwak CLEANING • Removal of the fecal matter The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. SORTING • Separation of the bad beans and sometimes, at some rare occasion, pebbles. The production process of the kopi luwak WASHING • The beans collected for production is then immediately washed and air dried so that they when these beans are placed in their containers they won’t be fermenting because of the humidity. The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. ROASTING • The most critical step in the production process • As it affects taste, aroma and colour of the coffee. • It has to be roasted at temperatures between 220ºC–230º for approximately 21-26 minutes. issues & challenges • Because of the increasing demand of kopi luwak worldwide, producers are creatively finding new ways to overcome this problem. • In order to mass produce, wild civets are captured and forced into cages where they are fed handpicked coffee beans. • As shown in the video, there have been various cases of counterfeit circulation of civet coffee. • In itself it also has issues as prices increases because of the way their market structure is Photo taken from http://www.realkopiluwak.com/perfect- cup/ formed • Although, there are producers attempting to artificially produce the civet coffee, as they try to reproduce the conditions that formulate the coffee in itself Economic Analysis Heckscher-Ohlin Model Labor intensive- picking berries from the ground Gravity Model Production in Asian countries (Indonesia, Vietnam, etc.) Exports in Asian countries (Taiwan, Korea, Japan) Ricardian Model Comparative advantage in the production of civet coffee references Coffee and Health Issues.