History of the Association

1923 marked the formal incorporation of the Green Coffee Association of New York City. Actually, there had been meetings and discussions for several years prior to the incorporation, and the Association elected its first Officers in 1922. These were Wm. Bayne of Wm. Bayne & Co., President; Leon Israel of Leon Israel & Co., Vice President; C.A. Mackey of C.A. Mackey & Co., Treasurer. At the same time, a twelve-man Board of Directors was chosen. There were approximately a hundred members, and the names of their firms were almost all those of the partners, whether they were Importers, Brokers or Agents.

Foremost on the agenda of the Association was setting up a committee to write up a Standard Coffee Contract, and to establish the rules and procedure for arbitration of disputes, both quality & technical; also, the Association established a committee to work on Freight Rates, both steamship and railroad, and on a standard TARE allowance; and an Activities Committee to plan social functions. The priorities for the Association in 1923 continue to be valid and essential for the coffee trade in 1998

Moving swiftly, in February 1923 a "Spot Quotation" committee was formed, a necessity for both the domestic trade and for exporters to use as a pricing guideline. Led by members of the Board such as Aborn of Aborn & Cushman, Ehrhard of Woods, Ehrhard, Enright of D.M. Enright, Israel of A.C. Israel, as well as the Officers of the Association, the GCA became involved in all aspects of the coffee world. Representatives were appointed to discuss and participate in a Trade Publicity Campaign to promote coffee consumption with members from the New Orleans and San Francisco green coffee trade. Also, in 1923, a uniform brokerage amount was agreed upon: Milds @ .25/bag; Santos @ .20/bag; Rios @ .15/bag.

In January, 1924, a first draft for a Standard Mild Contract was submitted to the Board, drafted by Russell of Russell & Co., Volkening of Mecker & Co., Mitchell of Mitchell Bros., and others. In March, a final revised Contract was approved, and sent to the membership for ratification, which was swiftly done. In April, the Committee began work on a standard contract for Brazilian coffee, assisted by Hartranft of Hard & Rand, Simmonds of W.L. Simmonds, Peabody of T. Barbour Brown, and others.

Over the next several years, the Association's contracts became the standard for the entire East Coast of the USA. A Brazil contract was proposed in 1926, as well as the oath which arbitrators must take prior to serving on an arbitration panel. The Traffic & Warehouse Committee actively pursued the shipping companies and railroads for the most competitive rates, as well as for more uniform Bills of Lading and other paper work. The GCA took an active part in discussion and hearings with the Food and Drug Administration starting in the 1920's led by Runkel of Sprague & Rhodes, Schelesinger of J.W. Phyfe & Co., and Taffae of Leon Taffae. This cooperation led to a key ruling in 1928 that "Robusta is grown from a coffee seed and does not have to be labeled as an item - Other Than Coffee."

Thus, in the first five years of its existence, the tone was set for the GCA services and benefits for the entire coffee trade, through its Committees work on steamer & rail rates, warehousing, liaison with the Food & Drug Administration, Customs Authorities, and the development and general use of both the Standard Contracts, and the Arbitration Procedures.

In addition, the Association brought together disparate and often fierce competitors in social activities, such as the annual GCA Outing, where baseball and beer were the featured activities.

The decade of the 1930's was one of low prices, larger crops, and the emergence of new countries such as Kenya, Uganda and Angola as important producers. (Coffee was FIVE cents a cup until after the end of World War II). New York was by far the largest port for the entry of coffee, and supplied not only the East Coast, but a major part of the Mid-West Trade.

The outbreak of the war in Europe in 1939 brought about closer contacts with the steamship lines. The Association had set up an "Associate Members" category, in which Customs Brokers, Samplers, transportation companies and others related to the coffee trade could join.     

After the US entered the combat in 1941, members of the GCA were called to serve in Washington with the Office of Price Administration (OPA), and many members joined the Armed Forces. Allocation of cargo space for coffee had to be distributed among the importers, and required close communication between the individual firms, the Association and the Government. O'Connor of Jewel Tea and Fred Silence of Ruffner, McDowell & Burch headed the GCA during the difficult years of 1940 through 1945.

After the end of the war in 1945, the price of coffee, as well as other food items, continued to be regulated by the OPA for the next few years. The average retail price for a pound of coffee in a bag in 1946 was 34.4 cents under price regulation, advancing to 46.9 cents in 1948. The GCA worked closely with the other coffee associations to have price controls on coffee lifted. W.H. Lee of Lee, Simmonds, Walker of Bryne, Delay and Arthur Ransohoff of Ransohoff effectively argued the point that the price producers asked were not controlled, whereas the price charged to the USA consumer was. This put the USA Importer at a disadvantage in an open world market, with the full freedom of the shipping lanes.

Price controls were lifted on coffee, and moved up to 51.4 cents in 1948 and 55.4 cents in 1950. Following a frost in Brazil in 1953, retail prices rose to 1.108 cents average in 1954, but slipped back to 59.2 cents in 1959.

The membership of the Association continued to grow during the 1950's as roasters became more active members. The first GCA Weekend took place in 1950 at Montauk Manor on Long Island, and became a featured social event for many years.

During the 1950's, there were several damaging reports issued on the negative effects of caffeine on people's health, with coffee being singled out as one of the main problems. The GCA, led by Anisansel of Hard & Rand, Byers of Hills Brothers, Clark of Anderson, Clayton, as well as the membership individually, worked to clarify and rebut much of the negative research. However, it brought into popularity "decaffeinated" coffee, which sold for several years before being attacked for the chemicals used to produce it. The 1950's also saw the rapid expansion of soluble coffee after the huge increase in prices resulting from the 1953 Brazilian Frost. This in turn led to major increases in Robusta production in Africa and Indonesia and an equal rise in imports to the USA.

Despite rising consumption in the USA from 2.38 cups per day in 1950 to 2.94 cups in 1959, as well as a steady increase in coffee consumption in Europe, production worldwide was expanding even more rapidly. As prices to the producers continued to slide, the leading Latin American countries began to put together an organization to control Coffee exports in the hope of raising prices. As this effort failed to produce the desired result, an ambitious plan was put forward to form an International Coffee Organization, including consumer nations. The GCA, led by Baerwald, of H.F. Baerwald, McEvoy of J. Aron, and Leon Israel Jr. of Leon Israel participated in discussion with the State and Commerce Departments as to the practicality of such an agreement.      

The leaders and the membership feared that such an Organization could result in various Governments taking over the export of coffee, and the elimination of traditional sales by exporters to private importing companies.

As a result of the consultations, a clause was included in the International Coffee Agreement that "Established Channels of Trade must be respected".

The International Coffee Agreement of the International Coffee Organization came into being in 1962, and was ratified by 41 Producing Members and 25 Importing Members by 1963. They represented 99.7% of the World Coffee Exports, and 96.2% of the Imports. The US Senate ratified the Treaty for a five year period, with the active support of the State Department. Quotas were established for each exporting country, and in 1965 an Index Price System was introduced to adjust the quotas if the price fell below .38/pound ex-dock NY or went above .44/pound. More and more price and quota adjustments were added to the original concept including separate price ranges for each growth, weighted averages, European Spot prices etc.

Regrettably, the fears of the members of the GCA soon turned out to be correct. As each added control was placed on the export of Coffee, the various government agencies in the producing country became more and more powerful.

Within a few years, monopoly coffee boards were established in Uganda, Ivory Coast, Cameroon and others; the Instituto Brasileiro do Cafe controlled the export permits and ICO certificates needed by the export firms in Brazil, as did the various "Institutos" and government "Companias" in their respective countries, and the "Established Channels of Trade" clause of the ICA was soon forgotten.

The Association attempted to convince the State Department of the problems for the Importer in dealing with these entities, and Ansardy of Volkart, Bayer of J.W. Phyfe and Wear of Anderson, Clayton provided detailed information as to the distortions taking place. Sales to "NON-QUOTA" importing countries, became larger and larger, and despite all efforts by the ICO, the Agreement collapsed in 1989.

Throughout the years of the ICA, the Association continued to adjust and work with the changing conditions. Contracts were continually reviewed and revised, and new ones drawn up. Scholtz of Scholtz & Co., Heuman of Continental Coffee, Apuzzo of Armenia, Wohlfahrt of Savin and Bederka of A.C. Israel all worked to keep the lines of trade between exporting firms and importing firms open. In the years after the collapse of the ICA controls, these efforts proved to be successful, as the Coffee Boards and quasi government bodies almost all exited from the export trade.

From the mid 1980's to the present, the GCA itself has had to adjust to changing conditions. Theranks of the USA roasters declined as mergers and consolidation took place; some importing firms had to close as pricing against the futures contracts of NY & London demanded much larger amounts of capital; scandals and bankruptcies in the U.S. as well as similar events in producing countries, caused banks to restrict credit, or to leave the financing of coffee completely. Through all the turmoil, the GCA contract and arbitration procedure remained a vital necessity. Quality arbitrations were worked on promptly and fairly. So much so, that many nonmembers overseas firms agreed that any arbitration would be based in New York on the terms of the appropriate GCA contract. Technical arbitrations were also decided by the GCA arbitrators for many nonmember coffee producers and importers.

The current generation of GCA leadership has continued the legacy while confronting the business realities of a rapidly changing world.

Today the GCA carries out its mission and retains its unique identity as the foremost trade association dealing with green coffee in the United States, working in conjunction with the Coffee, Sugar & Cocoa Exchange, the world's leading marketplace for trading these commodities.

written by
Abba Bayer of J.W. Fhyfe and Company

 

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