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There's alot of coffee in Laredo.

There's alot of coffee in Laredo

Since the suspension of the ICA Agreement, coffee exports from Mexico have increased well over 100 percent. Actually, comparing July through November 1988 with the same period in 1989, the increase has been 193 percent from 807,000 bags to 2,363,000 bags. Over 90 percent of the exports went to the U.S. and over 70 percent came through Laredo, Texas, while about 25 percent was exported by sea through Veracruz. The other five percent passed through some 10 other ports on border towns.

The Tea & Coffee Trade Journal recently spoke with Rene H. Garcia, president of LACID, Inc., and Felipe Gonzalex Calderon of the Mexican Coffee Institute. LACID is the only green coffee importer based in Laredo and is close with the daily coffee transactions taking place in Laredo. Felipe Gonzalex is the new representative of the Mexican Coffee Institute based in Neuvo Laredo. By the new administration at the Institute, he has the responsibility of facilitating coffee exports through Laredo.

The dramatic increase of coffee exports to the U.S. to a large extent is not coffee that actually has been sold but coffee that has been exported by the exporter and is being stored in the U.S. Why? Garcia states the one reason is that the exporters wanted to get the coffee into the U.S. before quotas were re-introduced. Just after the suspension, exporters did not know if the situation was temporary or not, and so they raced to get their coffee over the border.

Garcia feels that the primary reason is to have the coffee actually in the marketplace which facilitates its sale. Most importers buy coffee SAS (subject approval of sample) in a Laredo warehouse. The coffee is still basically in the hands of the exporter or importer (very little is in the hands of the roaster) and so it is easier to finance if approved and stored.

From June through October, coffee poured into Laredo much faster than it went out. However for the last two or three months, the level has been about equal. As a matter of fact, outgoing shipments may have been a little greater than entries for the last month or so as the new crop will start to come in and so entries will be greater than shipment. Stocks should then continue to build again and temporarily, the storage capacity could become serious.

There are five warehouse companies seriously dedicated to coffee. Olympia which is not only a warehouse but is also a customs house broker increased its capacity. Sergio Velasquez stated that coffee stocks built up quickly in August through October. Since then, the transport level has been about equal but stocks could build again in late January.

However, Olympia does not anticipate expanding anymore immediately as they do not want to become over-extended and thereby compromise their service to their customers.

Thor, another warehouse, which in June had 114,000 sq. ft. was only 40 percent full. At the time of this interview, the company had 164,000 sq. ft. of which 90 percent of the capacity was filled. Thor also had to increase their capacity by stacking coffee bags four pallets high instead of the usual three. Thor states that they will first take care of their established customers as demand for additional space increases with the new crop. The firm feels that as of January 1st, more coffee was going out than coming in, but again they expect a build up with the new crop. Thor also does not contemplate an immediate increase in size as they already have expanded by 45 percent and anymore might compromise their service such as never leaving a truck overnight without unloading. Thor works two shifts of 30 people each shift - 24 hours a day.

Gilbert Warehouse is the oldest warehouse in Laredo. There are two other warehouses - Jefferson and Hesca. Carrillo, the largest coffee customs house broker, has been specializing in coffee for many years. Carrillo deals with all the coffee warehouses.

A problem that has plagued all the Laredo companies is that several of the New York importers are extremely slow paying. Also all companies look forward with some apprehension to increased storage demand as the new crop comes in but all seem confident that they can handle their customers' needs. Rene Garcia of Lacid stresses that the advantage of Laredo over any other inland port is the time to the marketplace. With Laredo's coffee handling traditions, the Mexican government's focus on decentralization and the Institute's new attitudes toward coffee, coffee can be handled much quicker than any other Mexican port.

Understandably, the two Mexican Lines, Texomar and the Mexican Line dispute this. Both offer service from Veracruz to U.S. Gulf ports and stress that it is actually less expensive to ship from Southeast Mexico where most of the coffee is grown to all but South Texas by steamship. Presently, about 25 percent of the coffee exports are through Veracruz. Mexican Line handles some coffee bound for the U.S. West Coast through the Mexican West Coast ports, but this presently, is minor.

Some have been surprised at the sudden surge of Mexican exports to the U.S. but Felipe Gonzalez Calderon of the Institute states that Mesico's coffee is well suited for the U.S. demand. Mexico's primary production is Arabica with very little Robusta. The quality range includes excellent high grown `Alturas' to several low grades of Prime Washed Arabica green coffee. All tastes can be satisfied and the coffee is next door to the U.S.

Crop size is about 5.6 million bags. Domestic demand is 1.2 million bags. The quota was 2.2 million which leaves an excess of 2.2 million bags. Although some exports went to non-member countries, stocks did build up which lead to the surge in exports to the U.S. It is expected that the U.S. will most likely absorb most of the 4.4 million bags.

Low prices should not affect quality as the Institute supplies fertilizer and technical assistance to the grower, but it may affect quantity in the future as a direct consequence of economics.

F. Gonzales Calderon stresses that the Institute supports the concept of a system of organized commercialization which considers crop size, type and ability to export.

Gonzalez was more than willing to speak about the past and the present new administration at the Coffee Institute. The customs house brokers, green coffee importers, and warehouses, all praise the improved service of the Institute under the Gonzalez's direction which now works additional hours and holidays to grant speedy export registration and quality certificates.

Now the Institute has pledged to fulfill its slated objectives: regulate exports, help small producers with quality and financing, arrive at a consensus of all members of the Mexican coffee industry which includes producers, processors and exporters so the Institute may represent them before the world industry and the ICO, and to organize production, internal consumption and verify quality.

The Institute hopes to help the small exporter by making it easy to get permits and giving them export information. In the past, a potential exporter had to go to headquarters at Xalapa when now one just has to go to an export office like the one in Nuevo Laredo. The Institute tries to connect exporters with importers. Since last July, Laredo showed a registra of 275 Mexican exporters and 59 U.S. importers handling Mexican coffee. The smallest exporter registered 82 bags; the largest - 108,000 bags.

The Institute anticipates to streamline its operations in the near future in an effort to maximize efficiency and contribute to the government's overall decentralization program. "HACER MAS CON MENOS!"

PHOTO : Shown here is one of Thor's 4 warehouses.
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Title Annotation:Laredo, Texas
Publication:Tea & Coffee Trade Journal
Date:Jan 1, 1990
Words:1299
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