Coffee 'cherries' await their fate on the global market

With over 200 brands already vying for position as morning pick-me-ups or after-dinner expressos, very few would wish to travel 8000 miles in search of new coffee.

But Cafe Direct is doing just this in its efforts to launch a gourmet brand.

Managing Director Penny Newman has travelled to Peru to sample the goods, looking for a piece of the caffeine addict's $50bn annual habit.

The bean with a buzz has come a long way since a 14th century Ethiopian goat herder made a brilliant connection between his frisky herd and some wild berries they had been eating.

Trading habit

A world away in the frenzied trading pits of the Coffee Sugar and Cocoa exchange in New York, the future value of billions of dollars worth of coffee is changing hands.

Those involved directly in the coffee chain - producers, exporters and roasters - agree to buy or sell coffee for a fixed price at a future date, hedging against uncertain availability.

Billions of dollars worth of coffee changes hands in the trading pits

But there is another way to profit from coffee: It's called scalping the market, keeping an eye on shifting prices and guessing right.

Merrill Lynch's commodities analyst Judy Gaines has successfully predicted the market often enough to have become its oracle.

"Rumours that I was about to say something caused the market to move 5%. It gets difficult ... if I'm bullish on price then I am loved in Central America and all the producing countries, but the roasters who are buying the coffee will hate me."

Commercial conscience

The ruthless competitiveness of the global food industry is masked by the blandness of the supermarket.

There is hardly a corner of a foreign field left that is not growing cash crops for the UK's out of season culinary desires.

Consumers have become more discerning. Cafe Direct is banking on the fact that, as foodies without frontiers, we are now keen to indulge in a little exotic global taste tourism.

Coffee could almost be an emblem for globalisation, smuggled out of Ethiopia and spread to the four corners of the world through exploration, conquest and colonisation.

Caf� Direct's MD Penny Newman meets the coffee farmers in Machu Picchu

In fact, the global coffee trade - for centuries a story of power, exploitation and deprivation - has now become a tale of oversupply, falling prices and third world poverty.

Cafe Direct says they want to change this "commerce with a conscience".

But Cafe Direct must try and get customers to think about what they put in their trolleys.

And the issues are piling higher. Both shopper and shop must now tick off a growing list of public and private concerns: E-numbers, additives, cruelty to animals, wasteful packaging, so the list goes on....

And there is also the classic business squeeze between customer bargains and shareholder value.

Supermarkets have become moral, ethical and political minefields.

Customer choice could ensnare shoppers in a global trade war - the choice that is made could mean favouring one side over another.

Coffee is therefore becoming a heady brew of great social and commercial value.

This is compounded by the now thousands of coffee shops competing fiercely to sell lifestyle in a cup.

"We have to teach a coffee style that is commercially acceptable," says Michael Fairholme of Urban Expresso.

There is many a slip twixt cup and lip, but get it right and you're looking at liquid gold with mark up potential of 200%.

Ironies of global trade

A coffee shop chain such as Starbucks gets 14 million customers a day or more.

It sounds like good news for coffee producers, but the global coffee trade is fraught with ironies.

Equatorial countries looking for cash crops have been planting and picking like there's no tomorrow. But over-production will eventually yield less cash.

The more customers acquire a taste for quality coffee, the less they drink.

With production up and consumption down, consumers must pay more and producers must accept less.

When prices are high, farmers plant more and cause a sudden glut in the market which drives down prices.

So, the coffee growers of Peru's Santa Teresa will, along with the 20 million other rural coffee-growing peoples around the world, be aware that their fate is being determined by another global phenomenon - not natural like El Nino but equally devastating - market forces.

Each sip of the legally addictive drug gives consumers a fleeting contact with the poor of some of the most destitute regions of the world: The global economy in a cup from crop to the very last drop.

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