Chapter 57
CHAPTER XXIII
HOW GREEN COFFEES ARE BOUGHT AND SOLD
_Buying coffee in the producing countries--Transporting coffee to the consuming markets--Some record coffee cargoes s.h.i.+pped to the United States--Transport over seas--Java coffee "ex-sailing vessels"--Handling coffee at New York, New Orleans, and San Francisco--The coffee exchanges of Europe and the United States--Commission men and brokers--Trade and exchange contracts for delivery--Important rulings affecting coffee trading--Some well known green coffee marks_
In moving green coffee from the plantations to the consuming countries, the s.h.i.+pments pa.s.s through much the same trade channels as other foreign-grown food products. In general, the coffee goes from planter to trader in the s.h.i.+pping ports; thence to the exporter, who sells it to an importer in the consuming country; he in turn pa.s.sing it on, to a roaster, to be prepared for consumption. The system varies in some respects in the different countries, according to the development of economic and transportation methods; but, broadly considered, this is the general method.
_Buying Coffee in the Producing Countries_
The marketing of coffee begins when the berries are swept up from the drying patios, put in gunny sacks, and sent to the ports of export to be sampled and s.h.i.+pped. In Brazil, four-wheeled wagons drawn by six mules, or two-wheeled carts carry it to the nearest railroad or river.
Brazil, as the world's largest producer of coffee, has the most highly developed buying system. Coffee cultivation has been the chief agricultural pursuit in that country for many years; and large amounts of government and private capital have been invested in growing, transportation, storage, and s.h.i.+p-loading facilities, particularly in the state of So Paulo.
The usual method in Brazil is for the _fazendeiro_ (coffee-grower) or the _commisario_ (commission merchant) to load his s.h.i.+pments of coffee at an interior railroad station. If his consignee is in Santos, he generally deposits the bill of lading with a bank and draws a draft, usually payable after thirty days, against the consignee. When the consignee accepts the draft, he receives the bill of lading, and is then permitted to put the coffee in a warehouse.
_Storing at Santos_
At Santos most of the storing is done in the steel warehouses of the City Dock Company, a private corporation whose warehouses extend for three miles along the waterfront at one end of the town. Railroad switches lead to these warehouses, so that the coffee is brought to storage in the same cars in which it was originally loaded up-country.
The warehouses are leased by _commisarios_. There are also many old warehouses, built of wood, still operated in Santos, and to these the coffee is transferred from the railroad station either by mule carts or by automobile trucks.
At the receiving warehouses, samples of each bag are taken; the tester, or sampler, standing at the door with a sharp tool, resembling a cheese-tester, which he thrusts into the center of the bag as the men pa.s.s him with the bags of coffee on their heads, removing a double handful of the contents. The samples are divided into two parts; one for the seller, and one that the _commisario_ retains until he has sold the consignment of coffee covered by that particular lot of samples.
[Ill.u.s.tration: THE LAST SAMPLE BEFORE EXPORT, SANTOS]
_The Disappearing Ensaccador_
In the old days it was the custom every morning for the _ensaccadores_, or baggers, and the exporters or their brokers, to visit the _commisarios'_ warehouses and to bargain for lots of coffee made up by the _commisario_.
In the Santos market, until recent years, the _ensaccador_, or coffee-bagger, often stood between the _commisario_ and exporter. When American importing houses began to establish their own buying offices in the Brazilian ports (about 1910) to deal direct with the _fazendeiro_ and the _commisario_, the gradual elimination of the _ensaccador_ was begun. Today he has entirely disappeared from the Santos market, and is disappearing from Rio de Janeiro, Bahia, and Victoria.
Coffee
The _commisario_ works with samples of the coffee he has to offer and only puts out one set at a time. He names his "asking" price, known locally as the _pedido_, which is the maximum rate he expects to get, but seldom receives. A set of samples may be shown to twenty-five or thirty exporting houses in a day, one at a time. When the sample is in the hands of a firm for consideration, no other exporter has the right to buy the lot even at the _pedido_ price, and the _commisario_ can not accept other offers until he has refused the bid. On the other hand, if a house refuses to give up the samples, it is understood that it is willing to pay the _pedido_ price. The firm first offering a price acceptable to the _commisario's_ broker gets the lot, even though other houses have offered the same price.
When a lot is sold, the samples are turned over to the successful bidder, and he then asks the _commisario_ for larger samples for comparison with the first set.
[Ill.u.s.tration: STAMPING BAGS FOR EXPORT, SANTOS]
_Commisarios Make as High as Nine Percent_
Having sold the coffee of a given planter, the _commisario_ often gets as much as nine percent for his share of the transaction. Unless the bags have been furnished to the planter at a good rental, the coffee must be transferred to the _commisario's_ bags; and for this the planter pays a commission.
[Ill.u.s.tration: COFFEE FROM THE FAZENDAS IS DELIVERED AT THE COMMISSARIOS' WAREHOUSES IN RIO]
[Ill.u.s.tration: INTERIOR OF A SANTOS CLEANING AND GRADING WAREHOUSE]
[Ill.u.s.tration: PREPARING BRAZIL COFFEE FOR EXPORT]
[Ill.u.s.tration: GRADING COFFEE AT SANTOS]
Formerly the coffee, being rebagged by the _ensaccador_, was manipulated in what is called ligas; that is, mixing several neutral grades from various lots to create an artificial grade; or, more properly speaking, a "type," desirable for trading on the New York market.
_Grading and Testing in Brazil_
Having bought a lot of coffee, the exporter's next step is to grade and to test it. Grading is generally done in the morning and late afternoon, the hours from one to half-past four being devoted to making offers. The afternoon grading is done by sight. The morning examinations are more thorough, some progressive exporting houses even cup-testing the samples. Samples are compared with house standards, and with the requirements that have been cabled from the home office in the consuming country. Some of the coffee is roasted to obtain a standard by which all "chops" (varieties) are then graded and marked according to quality--fine, good, fair, or poor. Quality is further cla.s.sified by the numerals from two to eight, which standards have been established on the New York Coffee and Sugar Exchange, and are described farther on in this chapter. Some traders also use the terms large or small bean; fair, good, or poor roasters; soft or hard bean; light or dark; and similar descriptive terms.
When a lot is ready for s.h.i.+pment overseas, the _commisario_ stamps each bag with his identifying mark, to which the buyer or exporter adds his brand. If the _commisario_ is ordered before eleven in the morning to s.h.i.+p a lot of coffee, he must be paid before three in the afternoon of the same day; if he receives the order after eleven, payment need not be made before three in the afternoon of the following day. Generally the terms of sale are full settlement in thirty days, less discount at the rate of six percent per annum for the unexpired time, if paid before the period of grace is up.
_Dispatching and Capitazias_
The exporter collects his money by drawing a draft against his client on deposit of bill of lading, cas.h.i.+ng the draft through an exchange broker who deducts his brokerage fee. The exporter must obtain a consular invoice, a s.h.i.+pping permit from both federal and state authorities, and pay an export tax, before the coffee goes aboard the s.h.i.+p. This process is known as "dispatching," while the dock company's charges are known as _capitazias_.
In practically all coffee-growing sections the small planter is helped financially by the owners of processing plants or by the exporting firms. The larger planters may even obtain advances on their crops from the importing houses in New York, Havre, Hamburg, or other foreign centers.
[Ill.u.s.tration: THE TEST BY CUPS, SANTOS]
_The Exchange at Santos_
A new coffee exchange began business at Santos on May 1, 1917, sitting with the Coffee Brokers Board of Control. This Board consists of five coffee brokers, four elected annually at a general meeting of the brokers of Santos, and one chosen annually by the president of the state of So Paulo. Among the duties of the Board are the cla.s.sification and valuation of coffee, adjustment of differences, etc.
[Ill.u.s.tration: WHERE COFFEES ARE SIGHT-GRADED BEFORE BEING SUBMITTED TO CUP TESTS]
[Ill.u.s.tration: HAND & RAND BUILDING: FIRST FLOOR, STORAGE; SECOND FLOOR, OFFICES]
[Ill.u.s.tration: NEW YORK COFFEE IMPORTERS' MODEL ESTABLISHMENT AT SANTOS]
[Ill.u.s.tration: PACK-MULE TRANSPORT IN VENEZUELA]
_Transporting Coffee to Points of Export_
Transportation methods from plantation to s.h.i.+pside naturally vary with local topographical and economic conditions. In Venezuela, the bulk of the coffee is transported by pack-mule from the plantations and s.h.i.+pping towns to the head of the railroad system, and thence by rail to the Catatumbo River, where it is carried in small steamers down the river and across Lake Maracaibo to the city of Maracaibo. In Colombia, coffee is sent down the Magdalena River aboard small steamers direct to the seaboard. In Central America, transportation is one of the most serious problems facing the grower. The roads are poor, and in the rainy season are sometimes deep with mud; so much so that it may require a week to drive a wagon-load of coffee to the railroad or the river s.h.i.+pping point.
[Ill.u.s.tration: COFFEE-CARRYING CART, GUATEMALA]
_Buying Coffee in Abyssinia_
Coffee is generally grown in Abyssinia by small farmers, who mostly finance themselves and sell the crop to native brokers, who in turn sell it to representatives of foreign houses in the larger trading centers.