This archive report was first published on 13 November 2019.
Published on November 13, 2019, by AFP
Two billion cups of coffee are consumed every day, but the price of coffee has fallen by 40 percent since 2017, hitting producers hard.
The main reason for the price drop is the bumper harvest in Brazil, the world's largest coffee producer. However, consumption has grown by an average of 2.1 percent annually over the past decade, according to the International Coffee Organization (ICO).
Valeria Rodriguez, a manager at fairtrade organization Max Havelaar France, warned that the crisis in prices is creating 'real structural problems' for producers. 'The consequences are terrible - they can no longer support themselves, invest in production or prepare for the challenges of climate change,' she said.
Smaller producers in Central and South America, Africa, and Latin America are particularly affected, as they grow arabica, which is more difficult to produce than the robusta variety favored in Asia. In Africa, high production costs in Kenya and insecurity in significant producers like Cameroon are also contributing to the problem.
As a result, 'origins with a higher cost of production such as Colombia, Honduras, and Guatemala are forecast to produce less coffee for the 19/20 season', said Geordie Wilkes, head of research at Sucden Financial.
However, demand for high-quality coffee is strong, which protects prices for certain varieties and regions. Max Havelaar France guarantees its producers a minimum price of $3.10 per kilogram of coffee, plus a bonus if the coffee is organic.
But fairtrade represents only a small section of the market, and the vast majority of producers are vulnerable to prices fixed by traders in London or New York. The low prices they set 'do not affect consumer prices', said Paul Belchi, also from Max Havelaar France.
When you take into account merchants, transportation, real estate prices, and staff, the trade price of coffee is only about 10 percent of what you pay at the counter. Rarer varieties like Jamaica Blue Mountain, Tarrazu Costa Rica, or Bourbon Pointu from Reunion have prices more akin to caviar, negotiated directly between the producer and the merchants.
