Coffee Importation Into the United States Term Paper

Introduction

A large percentage of coffee that is grown in the world is in developing countries while majority of the consumers of this coffee reside in developed countries. Most coffee importers import the coffee in form of unroasted caffeinated coffee, unroasted decaffeinated coffee, roasted caffeinated coffee and roasted decaffeinated coffee.

The United States has one of the highest populations of coffee drinkers in the world. Over 65% of Americans, which accounts for more than a hundred and fifty million Americans, consume coffee as a beverage (Coyle, 1982).

Competitive situation in Importing Country

Almost all the coffee that is consumed in the United States has its origins in Brazil. Other coffee importers into the United States include; Vietnam, Latin America, East Africa and Asian countries. As an importer, the United States forms one of the largest importers of coffee in the world.

Canada follows closely then Europe and some Middle East countries. Coffees from different regions of the world have different aromas, flavors, acidity and body. The coffee that meets the best and highest standards that have been set by international bureau of standards get the highest prices. In the year 2009 alone, Brazil exported coffee worth $756 to the US and $72.7 to Canada (Office of the Federal Register, 2011).

Other major exporters of coffee to the United States include Latin America and Colombia. Statistics show that Canada and Europe were among the countries that imported the highest amount of coffee in the year 2009. While the United States imported over 1200 tons of coffee, Canada imported approximately 300 tons. This is a very large amount given that the population of Canada is lower in comparison to that of the United States.

It is very important for the importing countries and the companies in charge of the importation to ensure that they perform appropriate product mix functions and strategize according to the available market so that they get the best possible quality, quantity and pay the best prices that are reasonable to the importers and still considerate and fair to the producers so that they also continue producing the coffee. The price, product, place and promotion of coffee are conducted in various ways by the different coffee importers (Johnson & Bade, 2011).

Competitors in Importing & Domestic Producers of coffee

Canadian and United States coffee importers have the advantage that coffee from Brazil is not taxed. Therefore, Brazil coffee importers can benefit because they do not have to pay import duty for their coffee. This also offers the importers an opportunity to offer competitive prices to the coffee producers and encourage them to produce large quantities of high quality coffee (Ukers, 1935).

Different coffee importing countries have come up with tactics of securing high quality coffee and quantities that they need. International coffee importers have coffee fair trade bodies and organizations that aim to dialogue with coffee farmers or coffee farmers’ representatives.

The main objective of this dialogue is to ensure that both the exporters and importers feel that their concerns are addressed and respected. A large percentage of the coffee exporters also want to feel that the importers are transparent and that they get the best possible prices for their coffee (Stower, 2011).

Although most coffee farmers target maximum profits, not all of them get the fair prices that they demand from the importers. Therefore, there is competition to get the highest paying importers for the coffee farmers. To remain competitive, most United States coffee importers target the direct involvement with coffee farmers and they try to exclude middleman who might lead to reduction of profit margins that the coffee producers get for their coffee (Hinkleman, Nolan & Manley, 2003).

Marketing Activities & Competitive Situation

The shorter the chain from producer to the importer who processes and markets the product, the better for both parties in terms of business relationships formation and likelihood of getting profits. The disadvantage with the fair trade is that farmers have to pay membership and renewing fees which places prohibitory measures on some farmers that might have small quantities of coffee to provide but might even exceed expected coffee quality expectations.

Therefore, some importers target small size coffee farmers located in concentrated regions and ask them to form associations through which they can increase their coffee quantity and increase their chances of having issues that they might have addressed by importers such as higher and prompt payments for their produce (Johnson & Bade, 2011).

Government Regulations and Tariffs in Importing Country

Luckily for Brazil which is the largest coffee importer to the United States, coffee importers do not have to pay import duty to get the product into the country.

Trade Regulations and balance of Payment

The balance of payment between Brazil and the United States either creates a deficit or a surplus. By the end of the year 2010, the balance of payment to Brazil was $47364730697.53. Although this seems like a high figure, Brazil is one of the most prosperous countries in Latin America. Payments made for coffee imports were a major contribution to the reduction of the balance of payment (Johnson & Bade, 2011).

This shows that coffee is a great contributor to the Gross Domestic Product in Brazil. The import of coffee in the United States can be considered to be conducted in a friendly manner. The United States has a high number of coffee consumers and therefore, needs to create and maintain good relations with the importing nations such as Brazil. It is a requirement that all the coffee that is imported into the United States meets certain specified quality standards.

The importer should not leave all the details of the packaging to the importer. Instead, he or she should ensure that the products have been well packaged and that they arrive into the US in good condition. Importers should try and chose the most convenient and cost effective methods that are available for them to bring the products into the US (Hinkleman & Manley, 2003).

The US Customs and Border Protection (2012) declaration form 6059B requires that importers declare that they are importing agricultural products from another country even though coffee from countries such as Brazil has been allowed into the country. Non declaration of such coffee might result in heavy fines and confiscation of the coffee or any other imported products.

Foreign exchange and Trade regulation policy

Coffee is classified as a food product hence; it has to meet the quality standards that are required by the health body. The products have to be labeled on the content, nutritional value and expiry date of the products. Prior notices also have to be filed with the Food and Drug Administration.

No limits are imposed on the amount of coffee that can be imported into the United States. Import duty on coffee has been removed for all coffee that gets into the United States creating a point of benefit for coffee importers for Brazilian and other countries that import coffee into the United States (Hinkelman, Manley & Nolan, 2003).

Foreign exchange for Brazil and other countries that import coffee into the United States, Canada and Europe earn a high foreign exchange because of the value of the dollar in relation to most of these developing countries.

Trade with other countries especially import of products like coffee into the United States helps in the forging of good relationships between countries which helps to promote peace. Most leaders usually realize that it is important to create and maintain a good atmosphere whereby, they can conduct business with other countries that are of benefit to them. Importers of coffee into the United States should also be ready to provide the necessary conditions to get a trade license so that they can import coffee (Coyle, 1982).

Licenses and Importing Documents

Not just anyone can import coffee as licenses are necessary before the paper work for importing products such as coffee into the United States can be approved. It is only when one has the trade licenses and provides the necessary documents such as import details that one can actually be able to fully take advantage of the free import duty for the coffee importation.

Coffee importers from duty exempt countries like Brazil can claim the duty free terms by showing on the importation form that the country from where the coffee has been imported is exempt by entering letter E to the tariff column as a prefix. Evidence of the origin is usually required by personnel at the port in form of invoices or shipping papers (Banks, 1999).

All the right documentation should be presented to the government agents at the border entry points before coffee can be allowed into the country such as the type of coffee that is presented for importation for example the type of coffee beans; Robusta or Arabica, the entry of origin, the quantity of the coffee and valid documents from the food drug and administration organization to show that an applications was made and approved US authorities before entry of coffee into the United states (Stowell, 1989).

Conclusion

The paper has looked at the major competition for coffee importation from developing countries. The major competition for importation of coffee into the United States of America happens to be Canada. Even though Europe has many individuals, most of these individuals prefer tea to coffee thus lowering the position of Europe in being a highly ranked position country in the importation of coffee from growing developing nations.

In order to remain competitive in the importation of coffee, majority of the importing countries have been found to use several tactics so as to attract high quality and large quantities of coffee such as formation of coffee trade Fairs whereby, member coffee producers can have their issues such as high and prompt payment being made to their coffee supply to the developed nations.

Reference

Banks, M. (1999). The World Encyclopedia of Coffee. London: Arness Publishing Limited.

Coyle, L. (1982). World Encyclopedia of Food. New Yolk, NY: Facts of Life Publishers.

Hinkelman, G. E., Manley, M. & Nolan, J.L. (2003). Importers manual. New York, NY: World Trade Press.

Johnson, K. & Bade M. (2011). The Coffee Book Anatomy of an Industry from Crop to the Last Drop. New York, NY: Bazaar Books.

Stowell, A. M. (1989). Importing into the United States: A Guide for Commerical Importers. New York, NY: Books for Business.

Ukers, W. (1935). All About Coffee, Second Edition, The Tea & Coffee Trade Journal Company.