Genetics, Potato and Trade

A bit of a mixed post here: A couple of charts here I wanted to post as a quick Saturday afternoon thing, and perhaps they each merit a post of their own. The reason they don’t get one is my limited understanding of the subjects involved. I might have some pet theories, but more comprehension is required!

First up is a screengrab from the presentation of Dr Petiard at the GCQRI. My understanding of genetics is limited, though slowly improving. Nonetheless, I think this chart makes the lack of genetic diversity within popular coffee cultivars extremely obvious. It is mostly a good thing, such huge possibilities within the genetic makeup of coffee arabica that is unexplored.

However, the possibilities for widespread devastion from disease – be it natural or an act of agroterrorism – are somewhat disconcerting.

Click to embiggen

A few people have recommended Simon Mawer’s “Gregor Mendel: Planting the Seeds of Genetics” as a good introduction to the subject, but any other suggested reading is welcome!

For those who want to have a look through the GCQRI presentations the info is up here. I hope most people have also seen this announcement from the GCQRI concerning the potato defect. Getting a little closer to erradicating this particularly upsetting defect is a very good thing!

The other chart is the result of me digging through some old International Coffee Organisation (ICO) data on their site. I had been there because I wanted to better understand the International Coffee Agreements from the past. I think most of us are aware the coffee industry doesn’t have a golden reputation for economic ethics. Some of that is linked to the massive price crash when the ICA’s dissolved, and I think many coffee people of my generation lack an understanding of coffee’s history from a trade and economic perspective. We’re quite familiar with the ideas of modern ethical sourcing and trade, but these new approaches to sourcing are rooted in ideas that were the result of coffee’s past.

I’m getting off topic. I was looking at production data for the world from 2000 to 2009. This number is absolutely everything produced, good and bad, arabica and robusta 1. The average price of all coffee is a difficult thing, and I was curious about the potential turnover of producers worldwide. In the end I used the ICO indicator price 2, multiplied by pounds of coffee produced to get a figure. While initially turnover and production seem to match (as logic would dictate), this figure didn’t really seem to continue to track and they sharply diverge. What is hard to figure in, along with production and demand (in terms of price) is consumption. The bit of data that did seem to correlate more turned out to be stocks of coffee at origin.

Click to embiggen

I’m not really sure if I have a point to this – other than to accept that the above is a gross simplification.  However, I hope this marks a jumping off point for me where coffee trade starts to make more sense and my understanding of the wider world of coffee gets better.

Again, if people have some good suggested reading on the subject I would be very grateful! (Also – suggestions of any OSX software for producing better looking graphs and charts would be nice…)

  1. I had to use pounds of coffee produced to get the numbers to work, instead of the usual “000s of bags produced”  ↩︎
  2. In their own words, “The ICO composite indicator price, a historical series which can be extended back to 1947, provides an overall benchmark for the price of green coffee of all major origins and type, considered to be the best available measure of levels of green coffee transactions on a global basis.”  ↩︎

21 Comments

  1. Hi James,

    First time commenting on your blog. Like most first time commenters, I feel the need to first type a quick sentence or two about your contributions before an ‘on the topic’ comment. I have to ditto  many dozens of previous sentiments about the importance of your knowledge sharing and sparking of debate in this fantastic industry of ours. I for one can say that yours is the first blog I search for daily in my Vienna reader, not just for the fact I know you have a lot to hand down, but also for the amount I  often learn  from the regular comments of your readership due to the questions you ask us. So again, cheers.

    On the GCQRI, but slightly more broadly speaking, I wanted to ask you since you were at the innaugral conference what you know about the initiative’s seemingly rigid focus: 

    “The Global Coffee Quality Research Initiative (GCQRI) was conceived by a number of major companies and thought-leaders in the specialty coffee industry to address an increasingly challenged supply chain for high quality, washed Arabica coffee”

    WASHED being the term I’m a bit concerned by. Not to AT ALL down play the role it already is playing, and also has the serious potential to play ( as both yourself and Tom have generously reminded us all of) but I wanted to gauge your thoughts on whether this may or may not have any hindrance to research being done in future around other high quality coffees being produced and subsequently processed by other methods?

    I’m seriously new to this industry, but have a keen interest in researching quality drivers in the chain. I’d be interested in hearing your thoughts on this.

    Many thanks and keep on posting!

    Nick

    Thanks again for keeping us all up to date with the happenings of the recent GCQRI research, both yourself and Tom Owens are doing a marvelous job at promoting the initiative and keeping discussion and information flowing
    Sent from my iPhone

  2. PS Apologies for this being a generic query/comment on the GCQRI when your thorough post is only partially about it, and where it is, it’s clearly focused on important research on the potato defect. don’t want to give you or your readers the impression I don’t believe this research is important. It is, and genuienely exciting! Just thoughts I should’ve written on your early GCQRI posts, yet only the now the words came.

    Best,

    Nick

  3. To respond to this properly I think it is important to look at the goal of processing methods. I think a good explanation of the washed process might be:

    “A method of processing coffee fruit after harvest that adds cost, but significantly reduces the incidence of defect.”

    While there are cup qualities associated with processing methods, only a tiny, tiny percentage of producers/millers are choosing their method based on a desired flavour. Processing is about getting the seeds dry in a way that is cost effective in the short term (i.e. the processing is immediately affordable) and cost effective in the long term (the coffee retains a high value once assessed for quality and bought/sold).

    The GCQRI has a very broad focus, and I think a lot of people would like to see processing explored further in a more rigorous manner. That said – I think (and this is me, not the GCQRI) the washed process still has a priority over other methods for research as it is the method used for the vast majority of specialty coffee and a better understanding would have a wider impact and benefit, a higher return on investment.

    I think the use of the term by the GCQRI in its mission statement is also to help clarify that this isn’t about making cheap/low quality coffees more palatable, and therefore reduce big companies purchasing costs. It is about increasing the quantity, and increasing the quality of speciality coffees.

  4. Hi James,

    Thanks for your thoughts. I see your points clearly hear, and will continue to read with interest as the initiative gains momentum. I know from even my limited readings, and the information already put forth by yourself, that it does seem the focus and scope is broad for sure. An exciting initiative, and I’m definitely not arguing with it’s merit and seemed urgent need.

    I guess my concern and subsequent naming of the focus as ‘rigid’ may have been a bit blunt. What I suppose I meant was that to the reader not as interested in delving into the enormity of the detailed research (like an informed consumer), yet interested enough to want a general overview, a reading of the mission statement for a general understanding of it’s aims will find that the research is to be directed to washed coffee and washed coffee only.

    I take your point on the higher return on investment given washed coffee’s dominance in specialty. The reason I feel this may be limiting is that obviously there are producers, indeed whole regions such as in most of Indonesia, whose processing methods fall outside the scope of the intiative’s research aims. In this region for example, will the focus of the GCQRI be on developing more fully washed coffees? Or will the region’s potential for improvement be over-looked due to their traditional wet-hull methods? Will the research still be of communal benefit in empowering them to improve and gain higher market access, and in turn achieve the increase in quantity for the seekers of quality here – importers, roasters and consumers?

    It may be a bit of cynicism here, but if the proposed aims are met, will this possibly favour an increase in supply from some regions and producers and neglect others because of this process preference? Or will it just mean a less thorough exploration of these regions’ potential ensue due to the enormity of the task in converting all coffees to being washed?

    Surely increasing the supply of specialty coffees through research will also necessitate identifying possible improvements in the chain in an effort to move non-specialty to specialty. I see you make the point about making cheaper/lower quality coffees improved, and making a distinction between these and specialty. Will this not have the potential to elevate some of these coffees into the delicious range denoting specialty, increasing their quality at the same time as increasing the quantity of specialty available? Surely this is potentially a good thing.

    I really appreciate you taking the time to reply, it’s an exciting time to be in coffee. And although I realise you don’t speak for the initiative and might feel i’m grilling you, I think you know you do serve as a well regarded ambassador.

    Cheers again, and look forwarding to more of your coffee goodness, like the siphon I had yesterday in Sydney of your Mauritania Natural AND Washed. Tasty stuff! :)

    Nick

  5. Before I go down the conversational route about Indonesian processing, I should probably go back to the goals and sensible expectations for the GCQRI.

    Assuming it gets the money necessary to move forward, its research budget is still pretty small. Good research takes both time and money, and for the program to gain momentum it needs to yield returns early on. A select few projects need to be agreed upon, but a budget of $2-3 million a year isn’t that much for research, especially when the spectrum of coffee is as wide as it is.

    Indonesia is a tricky one – and I suspect it will become something of a battle ground in the coming years. It has such potential in the soils, varieties and altitudes there that a lot of people are quite excited the coffees that it could produce.

    Wet hulling definitely stands in the way of that. However some believe that it is a key part of the desirability of those coffees, while others believe it is pretty much defective processing. Speciality coffee is a broad church and covers many organisations and philosophies. Some would argue similarly about natural process coffees – that the process stomps all over the terroir. Getting rid of wet hulling will likely be as difficult as getting rid of naturals, and who is to say that is the right thing. Another topic I suppose….

    As for elevation of quality – this is a very important goal. If we can improve the quality of coffee so that producers earn more then that would be great. Steaming robusta to make it passable is the antithesis of that, and that kind of approach was what I highlighting as wrong.

  6. Perhaps it’s my disability to read well…but I don’t understand much of this article. It’s fantastic, but I’m not sure if my brain is capable of understanding (probably the diction I don’t understand)! Could some one explain?
    I this on the stocks or general economics of coffee?

    This is very interesting just looking at the charts. It seems as if the business is just very erratic. I feel that these charts will change a lot as the coffee industry develops. Obviously within the past few years, the business seems to have taken a much different turn. Especially with ethics, quality, and all around culture. I’m eager to see what the future bring on this subject. I would like to learn more about this, perhaps my desire to travel to south american farms and talking to the natives will help me understand.

    John

    May I add that this has been the most helpful blog I’ve followed…actually it’s the only one I follow regularly.

  7. Perhaps it’s my disability to read well…but I don’t understand much of this article. It’s fantastic, but I’m not sure if my brain is capable of understanding (probably the diction I don’t understand)! Could some one explain?
    I this on the stocks or general economics of coffee?

    This is very interesting just looking at the charts. It seems as if the business is just very erratic. I feel that these charts will change a lot as the coffee industry develops. Obviously within the past few years, the business seems to have taken a much different turn. Especially with ethics, quality, and all around culture. I’m eager to see what the future bring on this subject. I would like to learn more about this, perhaps my desire to travel to south american farms and talking to the natives will help me understand.

    John

    May I add that this has been the most helpful blog I’ve followed…actually it’s the only one I follow regularly.

  8. Cheers again for your thoughts. Once again a lot to think about.

    I take your point about the research budget being relatively small. I get that needing to agree on a select few projects for now is fundamentally important for this to get of the ground. Clearly this will necessitate a restriction of focus in the short term.

    I guess my concerns might be jumping the gun a bit at this early stage, and may be a bit naive, hence the questions. From what I’ve seen I’m positive it will be a long term initiative. Which is why I think keeping an eye on the driving principles and developing them where necessary will be important given it’s potential to be far more long term.

    Cheers again and look forward to more, as usual.

    Nick

  9. Hi James,
    I thoroughly enjoy reading your blog. I’d like to comment on your graph. Or rather, ask a few questions: When you say turnover, do you mean total earning by all coffee producing countries? Or total global sales of coffee? Your graph stops at 2009 I suppose because that’s as far as the ICO data goes. But I know the current estimate for total earnings for coffee producers in 2010 will probably exceed 16 billion dollars, which is a record actually. So I’m a bit confused!
    Many thanks.
    Mauricio

  10. The turnover figure was calculated by multiplying the ICO indicator price (created to be a cross quality metric) by the annual production. I couldn’t do 2010 as there is no average price for the year yet, and I am guessing all the figures aren’t in yet.

    It is a crude metric, but I wanted to see the output of price and production combined.

  11. The biggest problem is that europa is loosing it’s mark on the industry to american capitalism. Which may be good for coffee, but not for customers in europe.

  12. Just to clarify – are you saying that Europe is less able to purchase high quality coffees than US companies? Sorry if I have misunderstood.

  13. I actually view the lack of genetic diversity within popular coffee cultivars to be a bad thing, at least from the perspective of offering different variety in addition to biological risks of crop eradication due to pests, disease, etc. These principles are at the core to some of Slow Food’s Foundation for Biodiversity and the goals of their Coffee Presidia.

  14. From an economic perspective, doing business in America with coffee has a lot of benefits. Shorter shipping, cheaper transportation, more people, more customers, swift economy.

    Roasting is a personal thing, but the beans can in most cases only be acquired by money. It seems like the high end coffees don’t sell very well in Scandinavia, and rich selections like Stumptown seem to stay within America.

    In the US you are taught to spend money, in Europe you are told to save it. Anyway, I see your great coffees fly out of the store, but all the bloggers have been reporting about the high demand, inflation … and how does this affect Europe and the Frasier Cranes of coffee?

  15. Consider the coffee farmers when reading this article. They are the one responsible for the good market value of coffee around the world, be whatever kind of coffee it is. Well, they are the one less compensated from the list of coffee workers.

  16. Concerning speciality coffee sales in Scandinavia, the worlds largest importers of Cup of Excellence (in volumes) are in Oslo: Solberg & Hansen and Kaffebrenneriet.

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