The coffee market is plumbing 18 month lows
Good news for the trade and ultimately for the consumer – Assuming of course that the c 40% reduction in the commodity cost of coffee is passed on via :
The trade > The roaster > The middle man > The retailer > To Joe Public
This coming crop, available to European trade as of July, will many pundits predict be a record…Perhaps +52 m 60 kilo (132 Lbs) bags…surpassing 2002’s high of 48.5 m bags
It has been an excellent year, with fabulous flowering and production – although of course now the farmers are warning of a minor 200k bag crop reduction due to lower qualities and yields!
All in all though + 50m bags sounds like a lot of green coffee and it is when you consider the total market place is c 130m bags – It is 40% of global coffee production
And typically a bumper crop, using the age old principles of supply and demand, tends to mean a lower price – Or at least it did the last time I studied economics!
However, our friends in Brazil – freshly returned from Carnival – may have a cunning plan to change all that!
The Agriculture Ministry has announced a number of initiatives all aimed at supporting prices via retention. Under the main proposal, the government subsidised credit agency for growers ‘FUNCAFE’ would use its $1.25 b muscle to prioritise loans for stockpiling, over those for harvesting or maintenance costs. Edilson Alcantara, Director for Coffee at the Ministry advised ‘the Government will stimulate the producer to pace the sales of the product’; whilst Mendes Ribeiro Filho, the Agriculture Minister, said ‘What we can do to adjust the balance is take the product off the market, find more markets to sell it in, or utilise the domestic market’
And of all suggestions, this last proposal is surely the fairest and one which, as Brazil now rivals the US as the world’s largest consumer of coffee, (2010 consumption = 18.9 m bags vs 21.8 m bags in the USA ) may not be a farfetched suggestion
All very interesting, but let’s get down to the brass tacks!
There are record low certified stock levels
We have problems in other major producing territories such as Vietnam and Colombia
Even if Brazil achieves a record crop it is most unlikely that we will see prices fall significantly lower
And even today’s prices represent a good income – still at or above the newly increased Fair Trade minimum
So fairs fair eh? The farmers are happy, the trade is happy, the roaster is happy, the retailer is happy!
And we at Aromo are happy too! Because we continue to sell great quality ESE espresso pods which we know you love and enjoy – All’s well that ends well eh! Time for a perfetto espresso the hard espresso pod / easy serving espresso way me thinks…
This article was written by Guru who writes for aromocoffee.co.uk, the UK’s leading online retailer of 44mm E.S.E espresso coffee pods