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Volume 8, Number 10           October 2003

 

 

Industry News & Information. 1

Bioterrorism Act Regulations Edge Forward, Open to More Public Comment 1

Ralph Russo Address, Bioterrorism Regulations Highlight 2003 NCA Fall Conference  3

Quantifying Sustainability. 5

NCA Accepting Agreements Electronically for New Agent Service to Members. 8

Coffee Found to Boost Male Fertility. 8

Coffee and Colon Cancer: Missing Link Found. 9

Key Indicators. 10

Retail prices (all sizes/per pound) 10

The ICO composite average indicator prices. 10

 

 

Industry News & Information

Bioterrorism Act Regulations Edge Forward, Open to More Public Comment

 

The FDA has made some small, but substantive changes to the initially proposed regulations that deploy provisions of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002, better known as The Bioterrorism Act. In "Interim Final Regulations" it posted in the Federal Register on October 10, the FDA eased somewhat the law's overall burden on exporters of coffee to the United States. 

 

Two regulations -- Prior Notice of Imported Food Shipments and Registration of Food Facilities -- have gone from "proposed" to "interim final" status after a public comment period, leading up to their effective date of December 12, 2003. The most significant change to the proposed rules is to the prior-notice regulation.  Responding to industry concerns and to minimize unnecessary costs, the FDA has drastically reduced the time period required for advance notice prior to the shipment of food to a U.S. port of entry.

 

Under the proposed regulation, prior notice had to be made by noon of the day before the shipment's scheduled delivery.  Under the new, interim final regulation, that period has been reduced to two to eight hours before arrival, depending on mode of transportation -- two hours if by land via road, four hours if by air or by land via rail, or eight hours if by water. Also, for international mail shipments, notifications must be made before the shipment is mailed. 

 

More Room for Comment

Both regulations will be open to another 75-day comment period. Also, to ensure that those who want to comment have had the benefit of FDA outreach and educational efforts, as well as experience with the systems, timeframes and data elements of the interim final rules, the FDA will reopen the comment period in March 2004 for an additional 30 days.

 

Two remaining regulations under the Bioterrorism Act -- Record Keeping Requirements for Food Processors and Administrative Detention -- are to be issued in final form, and are scheduled to be released by the FDA in a few months.

 

Registrations Now Accepted by FDA

The FDA is now accepting registrations of facilities under the Registration of Food Facilities regulation.  You can find the FDA Registration Form at www.fda.gov/oc/bioterrorism/furls.

 

U.S. Agent Service Available through NCA

The National Coffee Association is now accepting online Agent Agreements to serve as members' U.S. Agent for purposes of registration of facilities under the Registration of Food Facilities regulation.  To complete the registration process, visit www.ncausa.org/public/pages/index.cfm?pageid=289.

 

The Bioterrorism Act in Perspective

Under previous law, most of the prior notice information required by the interim final regulations was provided by importers or brokers to the Bureau of Customs and Border Protection (CBP) when foods arrive in the United States. The Bioterrorism Act requires that this information also be provided to the FDA in advance of an imported food's arrival into the U.S. In turn, the FDA will use the information in advance of the arrival to review, evaluate and assess the information and determine whether to inspect the imported food.

 

 

 

 

 

 

Ralph Russo Address, Bioterrorism Regulations Highlight 2003 NCA Fall Conference

 

The annual NCA Fall Education Conference for 2003 paralleled the wide-ranging changes facing the coffee industry this year. From a first-time seminar embedded in the Conference program, to a keynote address by the CEO of Sara Lee Coffee and Tea Foodservice, to a mock trading session at the NYBOT's new facilities in Lower Manhattan, it forged new ground for members seeking new answers. 

 

"This year's conference had tremendous take-home value," said Steven M. Wolfe, CAE, NCA Marketing Director. "Each year, the conference gains momentum as word gets out about the quality of our program."

 

Bioterrorism Act

Clearly, the subject most on the minds of participants was the new Public Health Security and Bioterrorism Preparedness and Response Act of 2002, better known as The Bioterrorism Act. Appropriately, the Conference offered two segments on the subject, providing insight from legal, governmental and industry perspectives. 

 

One session offered an experienced customs lawyer who discussed the conceptual and definitional permutations of the newly proposed Interim Final Regulations for prior notice of food shipments to the U.S. and registration of foreign food facilities. The second session signaled the first time the NCA scheduled a seminar-within-a-conference to address members' needs for in-depth analysis of a pressing current issue. That session addressed the logistical and practical aspects of the Interim Final Regulations, with perspectives from the FDA, a lawyer experts and the coffee industry.

 

Thinking Outside the Cup

While the Bioterrorism Act appeared to evoke the strongest response from participants, this year's conference focused on the unprecedented changes facing the industry. A keynote address by Ralph Russo, the CEO of Sara Lee Coffee and Tea Foodservice, played on words and thoughts with the theme "Thinking Outside the Cup" and emphasized how coffee is now part of the larger beverage segment as consumers' tastes evolve over time. He also called upon the industry to recognize consumer trends and embrace change. 

 

In his comprehensive and thoughtful address, Russo emphasized how coffee no longer holds a hallowed position, even among morning drinkers, and so must now compete against other beverages for what he called "Share of Stomach."

Carbonated soft drinks account for 47% of market share, while coffee comes in at a distant second at 14%, and, according to Russo, it's no longer uncommon to see people starting their days with a Coke, Pepsi or health/energy drink. And, if coffee doesn't give consumers what they want, they'll move to other beverages.

 

Among consumer trends, Russo cited recent "hiving behavior" among Americans wary of a bad economy and terrorist threats as a potential boon to the market for gourmet foods consumed in the home, including specialty coffees. He also noted a trend toward piqued interested in gourmet coffees among ethnic groups, and questioned why the industry targets little advertising to the exploding Hispanic population. He recommended that the industry begin to reflect ethnic tastes in its product offerings.

 

Russo's suggestion for solving current coffee challenges was fivefold: educate, jazz it up, innovate, capture attention, and sustain. He suggested that the industry cater to consumers' love of being educated and begin to "romance" coffee like wine. He also recommended jazzing up options available to consumers such as low-acid coffee and decafs of different flavors. Innovations such as single cup-brewing -- up a whopping 20% over the last four years -- need to be considered. To capture consumer attention in the beverage market, Russo advised making the "coffee experience" more vibrant, with graphically pleasing and colorful delivery. Finally, Russo issued a shot across the bow, entreating the industry to embrace sustainability, and called for cooperation rather than infighting on what he called an important quality issue. 

 

A Spectrum of Expertise

Many new topics peppered the two-day New York conference, with presentations delivered by a diverse Who's Who of experts from across the industry spectrum. Among them was a discussion of origins by an expert on source issues, the certified coffee movement by an authority from industry pioneer and advocate Starbucks, a technical description of ideal roasting by an engineering consultant, health updates on coffee drinking by a leading scientist from Kraft, marketing perspectives on coffee as a beverage from marketing gurus from the coffee and beverage industries, and packaging options from canning industry executives.

 

Other innovative, trend-catching topics included achieving global sustainability, the new realities of certified coffees, the mystique of single origin, why consumers prefer whole bean, the role of good water in making good coffee, the Robusta story from geopolitical, scientific and marketing perspectives, and leveraging brands in office coffee service.

 

 

 

 

 

 

 

 

 

Quantifying Sustainability

 

"Sustainability" has become the industry's mantra for social responsibility as well as a cache of upscale consumer appeal. However, like the "organic" designation on groceries and produce, it can be an elusive, qualitative concept that is hard to pin down.

 

As the social and economic benefits for coffee farmers become more apparent to the health of the industry, efforts to define and quantify sustainability are beginning to emerge. Taking the form of model guidelines and measuring indices, these efforts aim to make sustainability a tangible concept and commodity for the mainstream coffee industry. 

 

The pioneers in quantifying sustainability are the Neumann Kaffee Gruppe (NKG) and Starbucks Coffee Company. NKG has developed a Sustainability Index that assigns values based on a comprehensive set of precisely defined ecological and social actions, the NKG Sustainability Standards. Starbucks Coffee Company's model rewards performance in sustainable categories and enables vendors to qualify as a Starbucks preferred supplier.

 

NKG Sustainability Index

In line with NKG’s mission and as part of its program "NKG Partnership for Sustainability," the group recently devised a comprehensive matrix -- The NKG Sustainability Index (the Index) -- to measure and promote its own Sustainability Standards for use by group members.

 

The objective of the Index is to standardize evaluation of coffee farms using social and environmental standards. Unique to its approach is targeting the mainstream market, as well as enabling step-by-step compliance to allow farms with less investing capital to gradually attain full compliance. To accomplish these goals, NKG sought to develop a measurement construct that can be applied to all coffee farms regardless of region, requires less than three days to apply, is focused on key criteria regarding sustainable coffee farming, and can serve as a tool for the transparent and credible evaluation of social and environmental conditions on coffee farms. 

 

A matrix encompassing the full spectrum of sustainability principles, the Index sorts them into ten distinct categories. Within each category, points are awarded for adhering to individual social and environmental criteria.

 

Among the 10 categories, 5 are based on environmental factors, and 5 on social criteria.  The categories are: 1) Shade and Biodiversity; 2) Water Use, Conservation and Protection; 3) Management of Waste and Crop By-products; 4) Soil; 5) Integrated Management and Energy Use; 6) Child Labor and Education

for Children on the Farm;   7) Salaries; 8) Health; 9) Training and Work Safety; and 10) Living Conditions for Workers on the Farm. Within each category, point values are assigned to specific activities or levels of achievement.

 

Additional points are available, too, for farms that have achieved excellent results in some areas not considered sufficiently within the evaluation system.  So, farms can compensate possible deficits in some areas with outstanding results in others.

 

The 100-point scale, in turn, provides an incentive for farmers.   NKG also plans to use the index going forward as a sourcing tool for sustainable coffee farms in several planned pilot programs.

 

Starbuck's Green Coffee Sourcing Guidelines

In late 2001, Starbucks launched the industry's first sustainability standards with its Green Coffee Sourcing Guidelines in partnership with Conservation International's Center for Environmental Leadership in Business. The guidelines were introduced in an effort to enlist Starbucks current suppliers and others as partners in developing sustainable coffee sources.

 

The company based its guidelines on the Conservation Principles for Coffee Production developed jointly by the Consumer Choice Council, Conservation International, the Rainforest Alliance and the Smithsonian Migratory Bird Center. Starbucks served in an advisory role in the initiative, reflecting the company's commitment to coffee producing countries.

 

To implement its Sourcing Guidelines, Starbucks developed a flexible point system that rewards performance in sustainable categories. To be considered for the program, suppliers must first meet Starbucks rigorous green coffee quality standards. Another difference from NKG's standards is the requirement for financial transparency and third-party verification.

 

Suppliers accrue points based on their ability to meet the sustainability guidelines. Those who earn 100 points become Starbucks Preferred Providers, but as they move toward that goal, vendors who earn more points can receive higher purchasing preference when Starbucks purchases green coffee in the market. To help defray vendors' costs associated with taking steps necessary to meet the sustainable requirements during a two-year pilot phase, Starbucks has provided premiums of up to ten cents per pound based on how well a supplier meets the standards.

 

The guidelines divide the sustainability principles into three categories:  Environmental Impacts, Social Conditions and Economic Issues. Initiatives within

each category are assigned point values that comprise the total. For example, the 50 environmental points can be earned in 10 sub-categories: 

§         Soil management -- controlling erosion, enhancing fertility and favoring organic fertilizers, cover crops, mulch and compost

§         Water reduction -- using methods that minimize water use for coffee processing

§         Clean water -- preventing pollution of surface and ground water

§         Water buffer zone -- creating vegetative buffer zones adjacent to all water sources, with no alteration to the hydrology of streams or other bodies of water

§         Forest and biodiversity conservation -- maintaining and enhancing biological diversity on farms and surrounding areas without disturbing natural forests

§         Use of shade -- maintaining or enhancing canopy cover with diverse tree species that conserve local and endemic biodiversity

§         Energy use -- using energy efficiently, employing renewable sources wherever possible and not relying on firewood obtained from forest clearing

§         Pest management -- employing integrated systems that limit pesticide application to extreme cases of severe crop loss and substantial economic failure

§         Accepted agrochemical -- minimizing use of agrochemicals such as chemical pesticides and synthetic fertilizers, or holding certified organic farm status

§         Waste management -- applying reduction, reuse and recycling, such as composting coffee pulp and parchment, to minimize environmental impact

 

The social conditions score is comprised of the following sub-categories:

§         Wages and benefits -- meeting or exceeding legal requirements, ensuring workers' rights to organize and negotiate, and conforming to all local laws and international conventions as well as working toward continual improvement over time

§         Health and safety -- meeting or exceeding applicable health and safety laws and employing effective measures to ensure health and safety of farm workers who may be exposed to agrochemicals.

§         Living conditions -- providing workers and seasonal workers with access to potable water, sanitary facilities, adequate housing, education and training, transportation and health services

 

Starbucks economic issues' points are awarded for "economic transparency."  This term means the complete documentation of prices paid to suppliers throughout the entire supply chain to ensure that farmers, millers, exporters and importers all benefit from the program. Additionally, while not part of the scoring system, Starbucks includes economic principles of seeking long-term trading relationships with preferred suppliers, and providing incentives and support for sustainable coffee production, processing and shipping methods through ongoing purchasing and pricing policies.

 

NCA Accepting Agreements Electronically for New Agent Service to Members

 

In step with evolving industry requirements, the NCA is offering a new member service to facilitate compliance with new federal legislation -- to act as U.S. Agent for members under requirements of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act).

 

Beginning on December 12, 2003, facilities that manufacture, process, pack or hold food for consumption in the United States, unless otherwise exempt, must register their facilities with the U.S. Food and Drug Administration (FDA) under the new legislation. Foreign facilities, when registering with the FDA, must designate a U.S. Agent, and the NCA is offering that service to members to facilitate the process for them.

 

Members can access all necessary instructions and execute an Agent Agreement with the NCA online at www.ncausa.org/public/pages/index.cfm?pageid=289.  From this page, members can also link to the appropriate FDA web pages to register their facilities with the government agency.

 

For further information, visit the NCA website at www.ncausa.org or call NCA at 212-766-4007.

 

 

Coffee Found to Boost Male Fertility

 

It's common knowledge how coffee makes us work faster, think clearer and endure longer. But, our favorite caffeinated pick-me-up has now been found to enhance performance of another kind -- making men more fertile.

 

Just a few cups of coffee a day will not only keep you moving, but revs up the speed of sperm cells, according to Brazilian scientists at the American Society for Reproductive Medicine. According to findings, the caffeine in coffee appears to make sperm cells move faster, potentially increasing the odds of pregnancy. Increasing the speed at which sperm swim -- or, their "motility" -- could offer a solution to millions of men who suffer infertility problems.

 

For the study, Fabio Pasqualotto and colleagues at the University of Sao Paulo tested the sperm quality of 750 men, including those who had never drunk coffee before as well as aficionados. While sperm motion and concentration remained steady, as did hormone levels, the motility of sperm was significantly higher in patients who drank coffee compared to those who did not. Since "hyperactivation" of sperm is, in fact, needed to fertilize an egg, the research team suggested that compounds with active components found in caffeine may be useful for treating some infertile men.

 

The Brazilian researchers assessed coffee-drinking and semen quality in men undergoing vasectomies from January 1999 to September 2002. The study results were presented at a meeting of the American Society for Reproductive Medicine in San Antonio, where the effects of various drugs on male fertility were under review. Compared with other substances examined at the meeting, caffeine appeared to be the only substance that is good for sperm. The study results were published in the latest issue of New Scientists.

 

 

Coffee and Colon Cancer: Missing Link Found

 

For years, scientists have suspected that coffee may offer some cancer protective properties. A new discovery appears to have landed the evidence, finding the missing link in an obscure but potent coffee compound.   

 

German researchers recently identified a powerful antioxidant in coffee known as methylpyridinium. This highly active compound was shown to boost the activity in animals of "Phase II" enzymes, which are widely believed to protect against colon cancer.  The study results appear in the November 5 2003 issue of the Journal of Agricultural and Food Chemistry.

 

Significantly, methylpyridinium is found almost exclusively in coffee and coffee products. It is formed during the roasting process from its chemical precursor, trigonellin, which occurs naturally in coffee beans.

 

However, study co-leader Thomas Hoffman, professor and head of the Institute for Food Chemistry at the University of Munster, says that until human trials are done, it is not known how much coffee is needed to have a protective effect against colon cancer. 

 

The study also notes that the stronger the coffee, the more the methylpyridinium.  Therefore, darker roasts can contain two to three times more of the anticancer compound than medium roast coffees. 

 

 

 

 

 

 

 

 

Key Indicators

Retail prices (all sizes/per pound)

 

Ground roast

Instant

 

August '03

August '02

August '03

August '02

U.S. Avg

2.921

2.929

12.140

12.155

Northeast

3.313

3.339

N/A

N/A

Midwest

2.663

2.540

N/A

N/A

South

2.716

2.641

N/A

N/A

West

3.012

3.374

N/A

N/A

Source: U.S. Bureau of Labor Statistics

The ICO composite average indicator prices

 

Colombian Mild

Arabicas

"Other Mild"

Arabicas

Brazilian & Other

Arabicas

Robustas

Composite Price

March

61.82

61.66

43.77

38.26

49.61

April

66.12

65.35

48.71

38.68

51.87

May

67.56

66.47

51.06

38.90

53.19

June

65.01

61.34

47.11

35.33

48.90

July

67.84

62.32

49.64

36.71

50.89

August

68.65

63.60

52.88

37.92

52.22

 

 

 

The Coffee Reporter is published monthly by the

National Coffee Association of U.S.A., Inc.

 

15 Maiden Lane, Suite 1405

New York, NY 10038

© Copyright 2003 NCA

 

Telephone: (212) 766-4007

Facsimile:   (212) 766-5815

 

www.ncausa.org

info@ncausa.org

 

Chairwoman:             Mary J. Williams

 President & CEO:    Robert F. Nelson

                                    Editor:                Joe DeRupo