Wednesday, February 2005
Some welcome good news for Arabica producers. After five years of very tough times, the world’s producers of high-quality Arabica coffee are starting to make money again.
We’re considerably smaller and leaner than we were five years ago, when a worldwide surplus of green coffee drove prices down.
In a country like Costa Rica, where an estimated 85 percent of all coffee growers are considered “small to medium sized, the crisis was acute.
Farmers here weren’t able to get enough for their crops to cover production costs. Some got out of the business altogether, hoping for government aid to cover their debts. The majority retained their land, but let maintenance slide on their plantations. A generalized drought in much of Central America added to growers’ worries, further diminishing crops. The result, here and world over, is a reduced supply.
A December report by the London-based International Coffee Organization (www.ico.org) shows that many of the world’s big producers, Cote d’Ivoire, Ethiopia, Indonesia, Nicaragua, Ecuador and Columbia are expected to produce about 4 percent to 8 percent less coffee during the 2004/2005 harvest than they did during the 2003/2004 harvest.
Unfavorable weather conditions in powerhouse Brazil have reduced that country’s hopes for this year’s harvest.
We can see the effects of the reduced supply in last year’s price rebound. The ICO’s composite price history – a cross-variety average of coffee prices – shows that the per-pound value of coffee increased from $0.59 per pound in January 2004 to about $0.78 per pound in December 2004.
Prices have increased, but no so much that lovers of high-quality coffees have stopped drinking. The ICO reports that world coffee consumption was up last year over 2003.
These are good signs for a period of returning prosperity. Experienced coffee growers and brokers have come to expect this roughly five-year cycle. Farmers who see that prices are rebounding are already now planting new coffee and investing in their neglected plantations to cash in on the anticipated boom.
But in their zeal to cash in, they are already sowing the seeds of the next cycle of bust. A coffee bush planted today takes five years to produce its first coffee cherries. That first crop will coincide with first crops everywhere, adding to anticipated bumper crops in about five years.
Café Britt and our suppliers reduce our vulnerability to the “five-year cycle” by focusing on quality and growing practices that are ecologically sustainable. High-quality Arabica and organic coffees continually fetch higher prices at market. It’s good business. And it tastes a lot better in the cup.