Coffee is the world’s three largest beverage plant and an important economic crop in my country’s hot areas. In order to find out the status quo of my country’s coffee industry and its role in poverty alleviation, and propose coffee industry development suggestions, in October 2019, the Institute of Science and Technology Information of the Chinese Academy of Tropical Agricultural Sciences established a special research group to conduct research through information, enterprise research, and production base research. , Conducted a comprehensive investigation and analysis of the coffee industry. Yunnan coffee occupies more than 99%of the country’s coffee production area, most of which are sold and exported in the form of green coffee beans. At the same time, my country imports a large number of cooked coffee beans from abroad for consumption every year. At present, the main problems hindering the development of my country’s coffee industry are backward varieties, inconsistent standards, low degree of organization, and backward processing technology. On the basis of optimizing the industrial layout, we should select good varieties, improve the coffee standard system, and carry out intensive processing. The development opportunities of the”Belt and Road” are integrated and developed with the tourism industry to expand the development space.
1. Current status of coffee industry development
1. The coffee area is stable at about 1.8 million mu, mainly in Yunnan. As of the end of 2018, the country’s coffee planting area was 1.84 million mu, ranking 31st in the world. Among them, Yunnan is 1.8261 million acres, Hainan is 11,400 acres, and Sichuan is 0.3 million acres. The coffee planting area in Yunnan accounts for 99%of the country’s total coffee planting area.
2. The production of green coffee beans is about 140,000 tons. In 2018, the country’s total production of green coffee beans was 137,900 tons, ranking 13th in the world’s production. Among them, Yunnan 137,300 tons, accounting for 99%of the country’s total output.
Figure 1 China’s coffee planting area and output over the years (2007-2018)
Data source:Bureau of Land Reclamation, Ministry of Agriculture and Rural Affairs
3. Affected by international coffee prices, coffee output has fluctuated and declined in recent years. In recent years, the output value of coffee has declined, mainly due to the oversupply of the international coffee market. International transaction prices have fallen sharply, and domestic transaction prices have also fallen sharply due to this, and the output value has declined.
Figure 2 Annual output value of coffee in my country (2007-2018) Unit:ten thousand yuan
Data source:Bureau of Land Reclamation, Ministry of Agriculture and Rural Affairs
4. Yunnan coffee is mainly small-grain coffee, and Hainan mainly grows medium-grain coffee. Coffee producing areas in Yunnan Province are distributed in 42 counties (cities, districts) in 11 prefectures and cities, among which Pu’er, Lincang, Dehong, Baoshan, and Xishuangbanna account for 90%of the total coffee area in Yunnan; more than 380,000 coffee growers in Yunnan , There are more than 1.14 million coffee farmers.
Figure 3 The 27 major coffee-growing counties in Yunnan Province
The global coffee evolved from three native species:Arabica, Robusta and Liberica. Arabica and Robusta are the main trade and consumption varieties, while the production of Liberica is extremely low and has not been commercialized. The global coffee market is dominated by Arabica beans, with an output of about 60%. Yunnan is dominated by mountainous areas, with large ups and downs, high altitude, long sunshine time, sufficient water, and large temperature difference between day and night, which provides conditions for the cultivation of high-quality small-grain coffee. In the early days of Yunnan, the small-grain Arabica ‘Tipica’ and ‘Bourbon’ were mainly planted. Since 1999, the ‘Catimor’ series of varieties have been introduced and promoted from Kenya. In Hainan, medium-grain Robusta is planted.
5. The coffee value chain is longer. According to statistics from the Yiou Think Tank, 86%of the coffee beans exported globally are used for retail packaging and freshly ground coffee, and 14%are used for instant and ready-to-drink coffee consumption.
Figure 4 Coffee Value Chain
6. The world’s coffee producing areas are highly concentrated. Global coffee production is concentrated in Brazil, Vietnam and Colombia. Brazil and Vietnam account for 50%of global coffee production.
1. Consumption is growing rapidly. The European Union, the United States, Brazil, and Japan account for approximately 65%of total consumption. Consumption in the Philippines, China and Vietnam has grown rapidly in recent years. In 2018, the global coffee market grew by 2%, while my country’s coffee market grew by 15%, making it one of the countries with the fastest growth in coffee consumption in the world.
According to the data of Qianzhan Industry Research Institute, China’s coffee consumption increased from 1106 thousand bags (60 kg per bag) to 3655 thousand bags in 2017 from 2010 to 2017, which is much higher than the global average growth rate. my country’s total consumption ranks 17th in the world, but its per capita consumption is only 0.03 kg/year, which is significantly lower than the world’s per capita annual consumption (1.25 kg).
2. The consumer market is concentrated in big cities. Beijing, Shanghai, Guangzhou and Shenzhen are currently the main consumer centers of coffee in my country, accounting for more than 30%of total consumption. At the same time, coffee consumption in some second- and third-tier cities is also showing an upward trend. Consumer groups are mainly concentrated in urban youth groups. According to a survey of 12 cities, 32%of urban residents drink coffee, of which young people are the majority.
3. The retail market is still dominated by instant coffee. Coffee products mainly include instant, ready-to-drink and freshly ground. According to the statistics of Fengrui Capital, in 2018, my country’s instant coffee accounted for 68%of the total market, ready-to-drink accounted for 10%, and freshly ground accounted for 16%.
(3) Processing and circulation
1. A clear industrial echelon structure is formed in the processing field. According to the annual roasting volume and product flow, there are roughly three types of coffee processing plants:
large roaster. The annual roasting capacity is tens of thousands of tons, and the main products are extracts and instant powders, which are used as raw materials for instant coffee and instant coffee. Representative manufacturers are:Hougu, Guodian, Liyu, etc.
medium-sized roaster. The annual roasting capacity is more than 500 tons. The products are mainly coffee beans and coffee powder, mainly for cafes, restaurants, hotels, offices, etc. Representative manufacturers:Mingshi, Jin Milan, Mellon, etc.
Small independent roaster. The annual roasting capacity is dozens to hundreds of tons, mainly specialty coffee, which is mostly supplied to its own stores, or small batches for boutique cafes, and the profits are considerable. With a stable source of beans, it can lower the purchase price. Representative manufacturers:Uncle Dou, Fisher, Minority, etc.
2. The profit distribution of various links in the coffee industry is uneven. It takes 15 grams of coffee beans (coffee powder) to brew a cup of coffee, and 1 kg of coffee beans can brew 67 cups of coffee. According to the latest coffee futures price, the cost of a cup of coffee beans is only 0.2 yuan. The price of a cup of coffee is about 20 yuan, and the cost of coffee beans only accounts for 1%of the price.
3. Intensive and deep processing is dominated by multinational companies. At present, the coffee industry in my country is still exporting high-quality raw materials, which are processed abroad and then imported into China. Coffee intensive processing is dominated by multinational companies, and the total production capacity of local coffee intensive processing enterprises is only about 30,000 tons.
(four) import and export
1. The coffee trade is dominated by green beans. my country’s coffee imports are increasing year by year. In 2018, the import volume reached 105,400 tons and the export volume was 108,600 tons. Green coffee beans (unroasted coffee beans) account for approximately 48.40%of coffee imports and approximately 82.95%of coffee exports. At the same time, since the domestic consumer market has just started and the processing links are not yet complete, roasted coffee beans (roasted coffee) and processed coffee products (products with concentrated coffee juice or coffee as the basic cost) also occupy an important share of imports. .
Figure 5 my country’s coffee import and export product type distribution in 2018
Data source:General Administration of Customs of China
2. Green coffee beans are mainly imported from Vietnam, Indonesia and Brazil. In the past seven years, the structure of my country’s green coffee importing countries has undergone significant changes:in 2012, my country’s imports of green beans from Vietnam and Indonesia accounted for 92%of all green bean imports, which dropped to 51%in 2018; while Brazil’s green coffee beans The proportion of imports rose from 3%in 2012 to 16%in 2018. The above-mentioned changes in the proportion indicate that my country’s imports of Arabica beans have increased significantly in the past few years. At the same time, the concentration of green coffee importing countries has been declining year by year:From 2012 to 2018, the proportion of imports by the top five green bean importing countries has dropped from 97%to 83%year by year. The source of green coffee beans in my country is becoming more and more abundant. .
Figure 6 Sources of green coffee beans in my country
Data source:General Administration of Customs of China
3. Nearly half of coffee exports are sold to Vietnam and Germany. In 2018, my country’s coffee export volume was 108,600 tons, with an export value of 356 million U.S. dollars. Yunnan is the province with the most coffee exports in my country, followed by Jiangsu and Guangdong. my country’s coffee beans are mainly exported to Vietnam and Germany, each accounting for about 1/4.
(5) Market price
1. Coffee prices continue to fall. The International Coffee Organization (ICO) reports that Arabica accounts for 62%of the global coffee market. According to the”Wall Street Journal” report, as of April 11, the Arabica coffee futures price had fallen to US$0.93 per pound, which was already lower than the cost of planting and processing.
Figure 7 Arabica futures prices
Data source:Wall Street Journal/FactSet
Brazil is the country where coffee is grown the most in the world, so the production and price of Brazilian coffee deeply affect the price of coffee. Since 2011, the Brazilian currency real has depreciated sharply, which has fallen by 60%compared to the US dollar, which has pushed down coffee futures prices.
2. Rising production increases the risk of coffee prices falling. The International Coffee Organization (ICO) reported that global coffee production in 2018/19 increased by 3.7%over the previous year to 168.78 million bags (a bag of 60 kg), of which Arabica production increased by 1.8%and Robusta production increased by 6.7%. At the same time, global coffee consumption increased by only 2.1%that year, and the global coffee market experienced an oversupply for the second year in a row, putting downward pressure on international coffee prices. Affected by international coffee prices, the domestic coffee market will also face the risk of falling prices.
(6) Cost benefit. The cost of coffee in my country is higher than in Brazil. The cost price of Brazilian Arabica coffee ranges from 347 reals/bag (10.69 yuan/kg) to 510 reals/bag (15.78 yuan/kg), and the average cost is 400 reals/bag (12.32 yuan/kg) ) . The cost of Yunnan coffee is generally 13-15 yuan/kg, which is higher than the cost of Brazil, the main producing country.
2. Prospects for the development of the industry
(1) The coffee area will remain stable, and the varieties will be further optimized. In the short term, my country’s coffee area will remain at about 1.85 million mu, and the output will remain at about 150,000 tons. Varieties will be further optimized, the area of ‘Katim’ varieties will be reduced, and the area of ‘Tiepi cards’ will increase.
(2) Domestic prices are greatly affected by international prices. 2019/2020 is a harvest year for global coffee, and the coffee market is still adequately supplied. It is expected that international coffee prices will remain low in 2020, and the domestic market will be affected by it and face low price risks.
(3) The scale of the coffee market will continue to grow. The coffee market in my country started late but is developing rapidly. With the improvement of people’s living standards in the future, the size of my country’s coffee market will gradually expand, and it is expected to exceed 330 billion yuan by 2024.
3. The development of characteristic industries in poverty-stricken areas
(1) Overall situation
In 2018, 11 of the 73 impoverished counties in Yunnan developed the coffee industry. They are:Longling County in Baoshan City; Mojiang County, Menglian County and Lancang County in Pu’er City; Yongde County, Fengqing County, Cangyuan County, Zhenkang County, Yun County and Shuangjiang County in Lincang City ; Lushui County on the Nujiang River.
(2) Main experience and practice. At present, about 80%of coffee production areas in Yunnan belong to poverty-stricken areas, with an income of less than 2,000 yuan per mu. Yunnan will provide precise assistance to poor households with registered cards in the form of”new agricultural business entities + poor households with registered cards”. The government funded the cultivation of coffee seedlings and delivered them to poor households. The company provided technical training and purchased them at the same time. In addition, the entire industrial chain of production and processing plants, shared leisure farms, and sales companies can provide thousands of jobs a year. The Shared Farm Coffee Valley, as a newly-built characteristic industrial rural tourist attraction, effectively helps the poor households with filed and registered wage income and solves the employment of the needy.
(3) Typical Case Analysis
1. Hemei Coffee Industry Co., Ltd., Liuku Town, Lushui County, Nujiang Prefecture. Nujiang Hemeigezhi Coffee Industry Co., Ltd. is a professional coffee company established to promote poverty alleviation in Nujiang.
The company began to grow specialty coffee on a large scale in 2012, which promoted the cultivation of 50,000 acres of standardized specialty coffee, and the first phase promoted the employment of 700 registered registered households. Build a boutique coffee estate, organically combine primary, secondary, and tertiary industries, and”bring on short-term growth”, and make every effort to promote poverty alleviation and rural revitalization in Nujiang.
2. Fuxing Coffee Farmers Professional Cooperative, Shangjiang Town, Lushui County, Nujiang Prefecture, Yunnan Province. Lushui Fuxing Coffee Planting Farmers Professional Cooperative consists of 427 Lisu coffee farmers from 102 households in Manying Village, Shangjiang Town, Lushui City, planting 1,683 acres of coffee with a small variety of Arabica.
The cooperative adopts the model of”cooperative + farmer households”, which is led by a leader with outstanding ability to establish a cooperative, and has close contact with the farmer households to form a chain in the links of planting, production, and sales. Now all farmers in the cooperative have been lifted out of poverty. The scope of business has also grown from the original single planting to the creation of its own brand”Ake Duomi”. Cooperatives will open up external markets and reduce production and transaction costs. Cooperatives and farmers have achieved a win-win situation and shared profits through the benefit linkage mechanism, and realized income increase in all aspects.
3. Thinking about typical cases. The degree of organization of growers is not high, and the ability to resist risks is weak. As prices fell, the enthusiasm of coffee farmers was frustrated. To show the benefits of coffee, we should take the lead through demonstrations by leading enterprises and cooperatives, unify varieties, technologies, production materials, unify purchases and processing, and combine agricultural tourism and other tertiary industries to build coffee experience halls, cultural squares, observation decks and other themes Facilities promote the integrated development of primary, secondary and tertiary industries.
4. Problems in the development of the coffee industry
1. The production technology is backward and the varieties are relatively single. my country’s coffee production technology is backward, the commercialization rate is low, the production scale is small, and the variety is single. At present, the vast majority of coffee is”Katim”. The decline period of”Katim” coffee in many coffee plantations has been shortened to 7-8 years. The replacement cost of this new type of coffee is relatively high, coupled with insufficient funds, backward equipment, and shortage of scientific research talents, which restrict the healthy development of the coffee industry.
2. The existing coffee industry standard system is not sound, and the industry standard system is not in line with international standards. my country’s coffee standard system is still relatively fragmented, and there are still blank standards in many fields, which urgently need to be unified. More than 60%of my country’s coffee is exported. The current domestic coffee standards are quite different from the international standards, which has an adverse impact on the development of the industry.
3. The added value of the product is low, and the market share is not high. At present, the power distribution of coffee companies in various links is uneven, mainly concentrated in the upstream of the industrial chain, in the meagre links of the division of labor in the industrial chain, and the industrial added value is low. The high value-added links such as deep processing, distribution and retail of coffee are mostly used by foreign countries. Occupied by coffeemakers.
V. Suggestions on Policy Measures
(1) Production link
1. Establish and improve the coffee standard system. Actively digest and absorb advanced foreign standards, and at the same time innovate domestic coffee standards, gradually improve my country’s coffee standard system, covering all aspects of coffee before, during and after production, and speed up the integration with international standards.
2. Breed high-quality coffee varieties and carry out research and development of intensive processing technology. Learn from the practices of Colombia and Jamaica and set up a national coffee research and innovation center to jointly research key technologies for the development of coffee breeding and deep processing industries. Actively join forces with major coffee producing countries in ASEAN to build an Asian coffee ecosystem and bring Chinese coffee to the world stage.
(2) Market segment
1. Expand the development space of the coffee industry. With the aid of the”One Belt One Road” initiative, we will unite with major coffee producing countries in Southeast Asia, integrate resource advantages and markets, and jointly create an Asian coffee ecosystem.
2. Build a coffee industry platform. Give full play to the role of coffee trading centers built in Chongqing, Kunming, Pu’er and other places to promote the coordinated development of coffee manufacturing and raw material bases.
3. Clarify product positioning and improve economic efficiency. The output of fine coffee beans is low but the price is high, and the output of bulk coffee beans is high but the price is low, both of which have huge market space. In particular, the concept of specialty coffee is not only a variety of coffee beans, or a special roasting method, it is closely related to”variety + standardized planting + special preliminary processing + personalized roasting + tasting method”. Therefore, it is necessary to clarify product positioning, improve product quality, stabilize product flavor, and grasp the future direction of coffee industry development.
Article source丨 Ministry of Agriculture and Rural Affairs website