Tax Exemption for Green Coffee
Letter to Chairman Rene Olivieria, Chairman, TX House Ways & Means Committee
Certified "C" Exchange Coffee
Coffee, which is second only to oil as the world's most-traded commodity, is grown in more than one-hundred countries, and typicallyt enters the United States as unroasted, green coffee beans at one of three Green Coffee Exchange Ports -- Houston, New York, New Orleans, or Miami. Only these ports are designated as sites for delivery to fufill futures contracts made on the InterContinental Exchange. Green coffee beans can be stored at those ports for extended lengths of time, often for years, before being shipped to domestic roasters and then on to the consuming public.
The InterContinental exchange is the center of global trading in "soft" commodities in 2007, and the ICE futures exchange offers options on cotton, cocoa, orange juice, sugar, and coffee. The ICE Future's US Coffee "C" contract sets the standard as the benchmark for world coffee prices. The coffee importation business requires tremendous industry support, as all green coffee stored must be constantly maintained in an atmospherically controlled warehouse and routinely sampled for consistancy of care and quality.
The Port of Houston Authority's application to be designated as a green coffee exchange port came about after the voters of Texas approved Proposition 3 in 2002 which exempted coffee from ad valorum taxation while it was being stored to satisfy a futures contract. In 2005, Colombian containers filled with coffee arrived at the port, and since then, Houston has overtaken New York and Miami to become the number two destination of exchange coffee in the country. The impacts of this growth have fueled jobs in the coffee processing industry as well as transportation/logistics opportunities.
As home to the only four decaffination plants in the United States, Texas is the ideal location for the coffee industry. Two of the nation's three soluble plants are located here, and there are dozens of coffee related companies in the Houston area, to say nothing of the hundreds of coffee shops and millions of consumers.
Houston's certification and designation as an exchange port for coffee has spurred long-term investment in local warehouse facilities, created jobs, and brought additional business to trucking and distribution companies across the state.
Outside Harris County, dozens of Texas coffee blenders and roasters who currently import green coffee from other exchange ports have benefitied from lower transportation costs via the Port of Houston. The designation has sparked tremendous growth in shipping, ground transportation, warehousing, employment, and other new business throughout the state.
Other Texas ports and transportation options have also benefited because green coffee brought in from other seaports or trucked across the border qualifies for the improved tax treatment as long as it is stored in Harris County while it is fulfilling an InterContinental Exchange contract.