Coffee Price Rise Looms For Some Importers
Attempts by the world’s major coffee growers to force up prices by withholding crops – echoing the OPEC’s strategy of restricting oil production – is doomed to failure, says a Kiwi coffee importer.
"Several retention schemes have been tried in the recent past with only moderate success for the mainly speculator market," says Roger Sheppard, master roaster of Pirongia-based Origin Coffee. "Trying to control these schemes is practically impossible, especially for developing countries whose governments don’t have the finance to compensate growers."
Mr Sheppard, whose company imports high-grade coffee beans from Malawi for roasting and internet sales, doesn’t believe the retention scheme by the Association of Coffee Producing Countries, will greatly influence prices in New Zealand in the near future.
"The drop in the NZ dollar is more likely to increase general coffee prices especially for the larger companies that are importing roasted bean products and have cut-price policies in place.
"For specialty coffee producers, roasting in New Zealand, the effect will be more moderate."
The 14-country Association, working with non-member countries, control 85 per cent of the world’s coffee production and say they are prepared to withhold 20 per cent of coffee crops from the market
Coffee prices have been running at seven-year lows with an increasing world supply of coffee beans.
"Brazil, the biggest producer, has the most to lose and is a key mover of retention schemes," says Mr Sheppard. "To counteract this, the USA, as the biggest consumer, is holding about two million 60kg bags in certified stock."
Major growers meet again in London on June 14. In the meantime, traders are watching Brazil where the onset of winter could see frost damaging crops making a price agreement unnecessary.
Information on the history of coffee can be found on Origin Coffee’s website, www.origincoffee.com.