BY : Alan Hawkins | Chief Roaster at the East London Coffee CO.
World coffee prices are controlled by the International Coffee Exchange in New York. Brazil and Vietnam produce some 60% of the worlds’ coffee and have experienced high crop yields in what is currently a soft international market. This has pushed raw coffee prices down. While this might sound like a good thing for consumers, it does not augur well for the small farmers. Those in East Africa particularly might be considering uprooting their coffee trees and replacing them with other crops as you read this.
There will be two long term disadvantages if this occurs. The obvious one being reduced supply and massive demand-push price increases during peak demand periods. More worrying than this, will be reduced availability of the better quality beans, many of which are grown by subsistence farmers and their families on the slopes of Ethiopian, Kenyan and other mountainous equatorial regions.
Considering this is a business publication, many of you will be wondering why the local prices aren’t coming down. The raw bean cost is approximately 35% of the shelf price of the finished product. Unfortunately, the New York Exchange is far removed from South Africa where, as we know, we have to deal with a volatile currency, logistical costs, high fuel prices and VAT increases along with many other inflationary influencers. Despite this, the coffee portion of our early morning home cuppa still only costs around R2.00 for a quality 200ml brew, pretty good when compared to other beverage options.
“People don’t stop eating and they don’t stop drinking coffee.” – Magic Johnson Earl Wilson
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