• Short Summary

    INTRODUCTION: The wholesale price of coffee in the world markets has risen more than fourfold in the past 12 months.

  • Description

    INTRODUCTION: The wholesale price of coffee in the world markets has risen more than fourfold in the past 12 months. There have been sudden falls in the last few weeks, not obviously accounted for by any change in the supply position. Exports last year were the second highest on record, in spite of lower production. It is not clear how far this was achieved by running down stocks. The International Coffee Organisation will carry out a survey to try to discover how far genuine shortage, the fear of shortage, or hoarding are contributing to the dramatic increase in price.

    SYNOPSIS: The New york coffee exchange. hectic trading there has driven up the retail price to three dollars a pound (0.45 kms), and it could go higher.

    Some stores have suggested that their customers should boycott coffee and buy tea, cocoa or fruit juice instead.

    The trouble started in Brazil, when a severe frost in July 1975 wiped out nearly three-quarters of the crop. Rust disease, in Brazil and other Latin American countries, made things worse.

    Brazil depends on its coffee sales to make good its foreign exchange deficit. It is therefore dipping into stocks and raising export taxes to make the most of the scarcity market.

    Drought and floods have cut back production in other Latin American countries. Colombia, the next biggest supplier, suffered from both in one year. It takes about four years for a bush to produce beans, so shortages will last several years yet.

    Africa might have been able to come to the rescue -- were it not for political problems in the main producing countries. The Angolan civil war brought production there almost to a standstill, until refugees were drafted in to the plantations. Now Angola is beginning to put its coffee on the market again.

    The Ivory Coast is Africa's largest producer, and can expect to do well out of the rising world prices, as its production has not been upset by any political upheavals. Brazil has been buying supplies of the "robusta" type coffee there, and in the Malagasy Republic, to build up stocks for its domestic processing industry. But the ivory Coast is in no hurry to sell. It is developing a profitable instant coffee processing industry of its own.

    Kenya is also well placed to take advantage of a favourable market. It is not as big a producer as Uganda, which ranks second only to the Ivory Coast in Africa. But Uganda, with its economic difficulties and the closing of the Kenya border, has been unable to market much of its crop. Kenya produces "arabica" coffee -- a high quality product which is sold mainly in Western Europe. The country's production has increased by about 50 per cent in the past seven years.

    Plantation House in Nairobi -- where the weekly coffee auctions take place. last week, with the prospects for good returns promising bidding was brisk.

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    Media URN:
    Reuters - Source to be Verified
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