Wednesday, December 1, 2010

Caffeine rules

It is the happiest of convergences on a farm: the crop is excellent and the world price is high. Happy and rare. In farming one is often precipicitally poised between two implacable forces over which even the most adept farmer has no control: weather and the world price.
Often the price will be high and the harvests will be poor and the weather indifferent.
Just as often the price will be high because the harvests are poor and the supplies are low and hence demand outstrips them.
At other times there will be a fine flowering and an excellent crop, as high as 25,ooo fanegas per manzana, but the world price will hover in the low one-dollar-and-change range, where coffee farms can barely cover their costs. Then there will be no premiums for the coffee pickers. The difference between the cost of a fanega of coffee beans in the field and the price of a quintal of dried coffee beans for export will be very slim indeed.

Between 1972 and the present, the world price of coffee(the price paid to the grower for a quintal or hundredweight of green coffee beans,as determined by the CSCE, with assorted premiums or reductions for quality) has averaged $118.51. In 1977 and again in 1997 the price reached vertiginous heights over $300. Café finqueros around the world swooned. Then they quickly returned to reality. The record low of the past 40 years, when coffee farmers lost their camisettas and their farms, was $41.50 in December of 2001. You might associate that with the events of 9-11, but in fact the coffee market had been in a free fall since that Everestian day in 1997.

The spot position for coffee, today, is $202.40, with a premium of $30 for the high altitude estate coffee.
The coffee pickers of Costa Rica, already the best paid in the world of coffee, are being paid a premium to bring in this scarlet crop. Caffeine rules!

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