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COFFEE

The International Coffee Organization (OIC) differentiates four basic qualities: unwashed Arabic, soft Colombian; others soft or central and robust. The distribution of the market is relatively proportional between these groups. The largest share corresponds to unwashed Arabs, which contribute 28% of world exports. Central and robust coffees each represent 26% of the market and soft Colombians 19%. Although a large number of countries contribute to supply, the eight main producers account for 68% of world exports. The concentration is higher in the various groupings. Thus, Brazil and Colombia account for 92% and 79% of the world production of unwashed and soft Colombian Arabs, respectively, thus exercising a virtual monopoly of such qualities and a great control over the global market.

The concentration is somewhat lower in the case of the robust ones, where the three main producers (Côte d'Ivoire, Indonesia and Uganda) concentrate in any case 65% of world sales. Finally, the most competitive market is central coffee, where the three major producers (El Salvador, Mexico and Guatemala) represent 48% of the supply in the world market, but there is a broad set of products in Central America, the Caribbean and Asia.

 

The substitutability between the four basic qualities depends on the cultural tradition of consumers. The countries of northern Europe and the Federal Republic of Germany have a greater tradition of consumption of Arabic in general and soft in particular. The Mediterranean countries, on the other hand, have been major consumers of robust coffees. The tradition in the United States and Canada has been to consume mixtures of different qualities, where price has been a fundamental variable to establish the proportions of each of them. In addition to the above, the consumption of soluble coffee stimulated in the past the use of robust coffees - which from a technical point of view provide the "body" and the proportion of necessary bitter taste - mixed with other qualities depending on their prices, being these ones that provide the other necessary qualities: aroma, softness, etc.
It is of great interest to evaluate the degree of effective substitutability between the different types of coffee, particularly among the soft Colombians and centrals, who have very similar properties. As we will see later, the belief that there is a high substitution by roasters between these two types of coffee has motivated the Colombian coffee authorities (and other producers such as Brazil), to tie the sale price of our coffee to the Quote of the other soft in the international market.

 

MAIN VARIETIES PRODUCED IN THE WORLD

 

 

 

COLOMBIAN COFFEE

Coffee, is one of the main export products of Colombia, and plays a very important role in the national economy, also, internationally, the country is positioned as one of the largest producers of grain worldwide, the same Thus, the variety of soft coffee (Arabic) produced in Colombia, is very desirable, especially in the markets of the United States, European countries and Japan, therefore, its influence on the market is quite significant.

Likewise, coffee production by Colombia was placed in 2017 at 14 million bags, decreasing by 4.3% compared to 2016, however, the country continues to be the third largest producer of grain worldwide. , after Brazil and Vietnam.

The coffee harvest in Colombia for the first semester of the year 2018, reached 6.5 million bags, with an increase of 2.6% compared to the same period of 2017, according to the figures reported by the National Federation of Coffee Growers, increasing the possibilities that the production of this year exceeds between 2% and 5%, the 14 million bags of the previous year, generating a greater pressure to the market in relation to the offer.

 

 

 

GLOBAL COFFEE PRODUCTION

World coffee production has maintained its upward trend in the long term, standing at the end of 2017 in 158.6 million bags of 60 kg, despite having a negative variation of 0.3% compared to 2016 , has increased by 70% since 1990, according to figures from the International Coffee Organization (ICO), for which, production has been growing significantly in recent decades, and according to the Department of Agriculture of the United States (USDA ), the total production for this year 2018, will be placed in record figures, since it could possibly reach 171 million bags, this increase is already evident with the production registered in the first half of this year by the countries of Brazil and Indonesia, which obtained a harvest of 60 million bags and 11.5 million bags, respectively, with a positive variation with respect to the previous period of 17.6% and 5.5%, according to the data reported by the ICO, which it's It is very relevant for the market, because these two countries are part of the group of largest coffee producers worldwide, as are Vietnam and Colombia, and between these four countries they cover around 66% of the total global coffee production .