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Q: Dollar ranking of coffee as a commodity as compared with other agricultural prod ( Answered 5 out of 5 stars,   0 Comments )
Question  
Subject: Dollar ranking of coffee as a commodity as compared with other agricultural prod
Category: Miscellaneous
Asked by: baw-ga
List Price: $5.00
Posted: 25 Sep 2002 10:54 PDT
Expires: 25 Oct 2002 10:54 PDT
Question ID: 68960
I have repeatedly read that, in terms of total dollar value, coffee is
the biggest agricultural product in the world and that it is the
number two product overall , second to oil.

A commodities broker laughed when I told him this and said that coffee
couldn't even come close to corn, or wheat, or sugar, or many other
crops in total dollar value.

What is the story here? Can coffee really be the number one
agricultural commodity?  Or is that just an old wives tale?
Answer  
Subject: Re: Dollar ranking of coffee as a commodity as compared with other agricultural
Answered By: eiffel-ga on 26 Sep 2002 06:25 PDT
Rated:5 out of 5 stars
 
Hi baw,

Coffee is nowhere near the "top of the crops" in terms of quantity
produced or dollar value.

I would normally get this information from the Food and Agriculture
Organization database, but their site is inaccessible today. Instead,
I used figures from the International Monetary Fund. These are
available on the IMF website to registered users only, but they are
quoted in a report from the Central Bank of Tunisia. The figures are
for 2001:

The World Commodities Market
http://www.bct.gov.tn/francais/download/report/fiche5.pdf

The IMF reports a total coffee bean production for the 2001 crop year
of 111 million 60kg bags, or 6.6 million metric tons:

The price of coffee varies over time and according to the variety, but
for 2001 the weighted average New York price was around US $1361 per
ton. This equates to an annual production of around US $9.0 billion.

Here are some comparisons with other crops. 
Rice - 586 million tons - US $308 per ton - US $180.5 billion
Wheat - 567 million metric tons - US $127 per ton - US $72.0 billion
Corn - 600 million tons - US $84 per ton - US $50.4 billion
Sugar - 128 million tons - US $ 201 per ton - US $25.7 billion

A commodity that is comparable to coffee production (in dollar value)
is soy oil:

Coffee - 6.6 million tons - US $1361 per ton - US $9.0 billion
Soy Oil - 25 million tons - US $354 per ton - US $8.9 billion

So, it seems that your commodities broker is right.


Additional links:

International Coffee Institute
http://www.ico.org/

Food and Agriculture Organization
http://www.fao.org/

International Monetary Fund
http://www.imf.org/


Google search strategy:

fao "mean annual production" coffee
://www.google.com/search?q=fao%20%22mean%20annual%20production%22%20coffee

"most important crop" coffee
://www.google.com/search?q=%22most+important+crop%22+coffee

coffee wheat corn sugar "annual production"
://www.google.com/search?q=coffee+wheat+corn+sugar+%22annual+production%22

wheat international OR global OR world "annual production"
://www.google.com/search?q=wheat+international+OR+global+OR+world+%22annual+production%22

"world production" wheat rice corn
://www.google.com/search?q=%22world+production%22+wheat+rice+corn

fas "production estimates"
://www.google.com/search?q=fas+%22production+estimates%22


Regards,
eiffel-ga

Request for Answer Clarification by baw-ga on 26 Sep 2002 09:17 PDT
Great answer.  But you seem to be referring to aggregate wholesale
value.  What about the value of the final retail product?  In other
words, if you added up what people pay for coffee when they buy it by
the pound (or even by the cup?), would that magnify the total to
perhaps greater than what people are paying retail for the other
agricultural products?

BAW

Clarification of Answer by eiffel-ga on 26 Sep 2002 12:37 PDT
Hi baw,

Thanks for your feedback.

You make an interesting point about the retail price of coffee.
According to the "Sally's Place" website, one pound of the most
expensive specialty coffee beans retails for $12.

That's $26455 per ton, or $174 billion for the year's production. This
still does not beat the aggregate wholesale price for one year's rice
production. And of course most coffee retails for much less than $12
per pound.

So let's work it out by the cup! According to the "Sally's Place"
website, one pound of whole beans will make 40 six-ounce cups. That's
88185 cups per ton of beans, or 582 billion cups from the annual world
production of coffee. At $3 per 6-oz cup (an arbitrary price that is
sure to be above the world average for coffee sold by the cup) that's
$1746 billion.

Now at last we are above the aggregate wholesale price of rice. So
let's apply a similar exercise to rice. Suppose you eat out for
breakfast, and buy a bowl of Kelloggs Rice Bubbles for $2. You get 30
grams of processed rice for your money. Sure you get some milk and
sugar too, but you also get milk and sugar with a cup of coffee. $2
per 30 grams of rice equates to $66666 per ton, or $39067 billion for
the world's annual rice production.

No matter how I look at it, I can't make the value of the world's
coffee production exceed the value of the world's rice production.

Sally's Place - Supermarket Coffee vs. Specialty Store Coffee
http://www.sallys-place.com/beverages/coffee/supermarket.htm

Regards,
eiffel-ga
baw-ga rated this answer:5 out of 5 stars

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