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 shipped 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 shipments pass through much the same trade channels as other foreign-grown food products. In general, the coffee goes from planter to trader in the shipping ports; thence to the exporter, who sells it to an importer in the consuming country; he in turn passing 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 shipped. 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 ship-loading facilities, particularly in the state of São Paulo. The usual method in Brazil is for the _fazendeiro_ (coffee-grower) or the _commisario_ (commission merchant) to load his shipments 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 pass 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. [Illustration: 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 reaches Santos in a mixed condition; that is, it has not been graded, or separated according to its various qualities. This is the work of the _commisario_, who puts each shipment into "lots" in new "official" bags, each of which bears a mark stating that the contents are São Paulo growth. If the coffee is offered for sale by the owner, the _commisario_ will then put it on the "street," the section of Santos given over to coffee trading. 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. [Illustration: 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. [Illustration: COFFEE FROM THE FAZENDAS IS DELIVERED AT THE COMMISSARIOS' WAREHOUSES IN RIO] [Illustration: INTERIOR OF A SANTOS CLEANING AND GRADING WAREHOUSE] [Illustration: PREPARING BRAZIL COFFEE FOR EXPORT] [Illustration: 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 classified 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 shipment 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 ship 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, cashing the draft through an exchange broker who deducts his brokerage fee. The exporter must obtain a consular invoice, a shipping permit from both federal and state authorities, and pay an export tax, before the coffee goes aboard the ship. 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. [Illustration: 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 São Paulo. Among the duties of the Board are the classification and valuation of coffee, adjustment of differences, etc. [Illustration: WHERE COFFEES ARE SIGHT-GRADED BEFORE BEING SUBMITTED TO CUP TESTS] [Illustration: HAND & RAND BUILDING: FIRST FLOOR, STORAGE; SECOND FLOOR, OFFICES] [Illustration: NEW YORK COFFEE IMPORTERS' MODEL ESTABLISHMENT AT SANTOS] [Illustration: PACK-MULE TRANSPORT IN VENEZUELA] _Transporting Coffee to Points of Export_ Transportation methods from plantation to shipside naturally vary with local topographical and economic conditions. In Venezuela, the bulk of the coffee is transported by pack-mule from the plantations and shipping 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 shipping point. [Illustration: 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. Trading methods between farmer and broker are not much more than the old system of barter. In the southwestern section, where the Abyssinian coffee grows wild, transport to the nearest trading center is by mule train, and not infrequently by camel back. In the Harar district, the women of the farmers living near Harar the market center, carry the coffee in long shallow baskets on their heads to the native brokers. In the more remote places the coffee farmer waits for the broker to call on him. From the town of Harar the coffee is transported by mule or camel train to Dire-Daoua, whence it is shipped by rail to Jibuti, to be sent by direct steamers to Europe, or across the Gulf of Aden to Aden in Arabia. [Illustration: COFFEE-LADEN OXEN FORDING STREAM, COLOMBIA] Ten different languages are spoken in Harar. In order successfully to engage in the coffee business there, it is necessary either to become proficient in all these tongues, or to engage some one who is. [Illustration: TRANSPORTING COFFEE BY MULEBACK IN THE CITY OF CUCUTA, COLOMBIA] [Illustration: Schooner from Encontrados to Maracaibo] [Illustration: One of the lake and river steamers] [Illustration: COFFEE CARGO CARRIERS THAT OPERATE ON LAKE MARACAIBO AND TRIBUTARY RIVERS] [Illustration: DONKEY TRANSPORT TRAIN FOR COFFEE IN MEXICO] [Illustration: COFFEE TRANSPORT IN MEXICO AND SOUTH AMERICA] When the coffee is brought, partially cleaned, into Harar by donkey or mule train, it is first taken to the open air custom-house (coffee exchange) in the center of the town, where a ten-percent duty (in coffee) is exacted by the local government, and one Abyssinian dollar (fifty cents) is added for every thirty-seven and a half pounds, this latter being Ras Makonnen's share. As soon as the native dealer has released to him what remains of his shipment, he takes it out of the custom-house enclosure and disposes of it through the native brokers, who have their little "office" booths stretching in a long line up the street just outside the custom-house entrance. [Illustration: DONKEY COFFEE TRANSPORT ON THE WAY FROM HARAR TO DIRE-DAOUA] There, a brokerage charge of one piaster per bag is paid by the buyer, and the coffee then becomes the property of the European merchant. In some cases it is put through a further cleaning process; but usually it is shipped to Jibuti or Aden uncleaned. Arriving at Jibuti, there is a one-percent ad valorem duty to pay. At Aden, there is another tax of one anna (two cents) to be paid to the British authorities. [Illustration: COFFEE CAMELS IN THE CUSTOM-HOUSE, HARAR] Since 1914, however, Abyssinian coffee has been exported largely through the Sudan, a much shorter and less expensive trip than that to Adis Abeba and Jibuti. Now the coffee is carried by pack-train to Gambela on the Sobat River; and thence by river steamer to Khartoum, where it is loaded on railroad trains and sent to Port Sudan on the Red Sea. _Buying Coffee in Arabia_ Most of the coffee in Arabia is grown in almost inaccessible mountain valleys by native Arabs, and is transported by camel caravan to Aden or Hodeida, where it is sold to agents of foreign importing houses. Mocha, once the principal exporting city for coffee, was abandoned as a coffee port early in the nineteenth century, chiefly because of the difficulty of keeping the roadstead of the harbor free from sandbars. [Illustration: SELLING COFFEE AT ADEN BY TAPPING HANDS UNDER COVER] In Aden there is a kind of open-air coffee "exchange" (as in Harar) where the camel trains unload their coffee from the interior. The European coffee merchant does not frequent it, but is represented by native brokers, through whom all coffee business is transacted. This native broker is an important person, and one of the most picturesque characters in Aden. He receives a commission of one and a half percent from both buyer and seller. Certain grades of coffee are purchasable only in Maria Theresa dollars; so a knowledge of exchange values is essential to the broker's calling. [Illustration: PACKING AND TRANSPORTING COFFEE AT ADEN] In making coffee sales, the negotiations between buyer and seller are carried on by means of finger taps under a handkerchief. The would-be purchaser reaches out his hand to the seller under cover of the cloth and makes his bid in the palm of the seller's hand by tapping his fingers. The code is well understood by both. Its advantage lies in the fact that a possible purchaser is enabled to make his bid in the presence of other buyers without the latter knowing what he is offering. _Buying Coffee in Netherlands India_ In the Dutch East Indies cultivation of _Coffea arabica_ has diminished, the decay of the industry beginning when Brazil and Central America became the dominant factors in the green market. Not so many years ago coffee growing and coffee trading were virtually government monopolies. Under government control each native family was required to keep from six hundred to a thousand coffee trees in bearing, and to sell two-fifths of the crop to the government. It was also compulsory to deliver the coffee cleaned and sorted to the official godowns, and to sell the crop at fixed prices--nine to twelve florins per picul previous to 1874, although forty to fifty florins were offered in the open market. Later, the price was advanced; until about 1900 the government paid fifteen florins per picul for coffee in parchment. All government coffee was sold at public auction in Batavia and Padang, these sales being held four times a year in Batavia and three times a year in Padang. Coffee from private estates, not under government control and operated by European corporations or individuals, has now succeeded the government monopoly coffee. Private-estate crops are sold by public tender, usually on or about January 28 of each year. If the owners do not get the price they desire in Batavia or Padang, the coffee is sent to Amsterdam for disposal. Some coffees always are sent to Holland; because the directors of the company get a commission on all sales there, and also because the coffees are prepared especially for the Dutch market. The Hollander wants his coffee blue-green in color. [Illustration: COFFEE CAMEL TRAIN ARRIVING AT THE HODEIDA CUSTOM-HOUSE FROM THE INTERIOR OF YEMEN] [Illustration: LOADING BY THE OLD-STYLE HAND-LABOR METHOD] [Illustration: HERE THE AUTOMATIC BELT POURS INTO THE HOLD A CONTINUOUS STREAM OF BAGS OF COFFEE] [Illustration: OLD AND NEW METHODS OF LOADING COFFEE AT SANTOS] _Loading Coffee at Santos_ In Brazil, when the coffee has been rebagged and marked by both the _commisario_ and the exporter, the coffee is again sampled. These samples are compared with those by which the purchase was made; and if right, the bags are turned over to the dock-master, who sets his laborers to work loading ship. Two methods are used at Santos. The old familiar style of hand labor is still in evidence--men of all nationalities, but largely Spaniards and Portuguese, take the bags on their heads and carry them in single file up the gangplanks and into the hold of the ship. The dock company, however, operates a huge automatic loading machine, or belt, which saves a great deal of time and labor. In other Brazilian ports all loading is done by manual labor. [Illustration: A COFFEE FREIGHTER ON THE CAUCA RIVER, COLOMBIA] Recently, at the suggestion of the Commercial Association of Santos, the minister of transport of São Paulo ordered that coffees destined for legitimate traders should be transported during four days of the week, and those of a speculative nature during the remaining two days. A premium of as much as five milreis a bag has been paid by speculators in order to obtain immediate transport. _Shipping Coffee from Colombia_ As Colombia ranks next to Brazil in coffee, a brief description of its transportation methods, which are unique, should be of interest to coffee shippers. A goodly portion of Colombia's coffee exports comes from the district around the little city of Cucuta, whose official name is San José de Cucuta. It is the capital of North Santander, is situated in a beautiful valley of the Colombian Andes mountains that is watered by several rivers, and is only about a half-hour's ride by motor from the Venezuelan frontier. Due to its geographical position, Cucuta serves as the most convenient inland port and commercial center for most of the department of North Santander. For the same reason, it is forced to depend on Maracaibo as its seaport, even though the Venezuelan government has a number of annoying laws controlling the commerce thus conducted. The Colombian ports of Baranquilla and Cartagena on the Atlantic are too distant from Cucuta to be available; and a large part of the traffic would have to be done on mule-back across one of the most formidable ranges of the Colombian Andes, involving high cost and delay in transportation. Yet its frontier position makes it possible for Cucuta to have important commercial relations with the neighboring republic of Venezuela, and to enjoy exceptional privileges from the Colombian central government. [Illustration: COFFEE STEAMERS ON THE MAGDALENA, COLOMBIA] A cargo of coffee leaving Cucuta has to go through the following steps on its way to a foreign market: