BOGOTA (Reuters) - Global coffee growers are being forced into poverty by low international prices for the crop, farmers’ representatives said at an international conference, warning the future of the industry is at risk.
Coffee futures are near a 13-year bottom, trading as low as 93.45 cents per pound on Wednesday – far below the cost of production in most countries. [SOF/L]
In a statement on Tuesday from Nairobi, Kenya, where the International Coffee Organization is conducting a biannual meeting, the World Coffee Producers Forum said New York market prices are “allowing the impoverishment of producers.”
“The current economic sustainability crisis of coffee producers needs to be addressed immediately before it becomes a humanitarian crisis,” read the statement, signed by producer associations from Colombia, Brazil, Mexico, India, Vietnam, Central America as well as across Africa.
Futures have been weighed down by excess supplies, particularly from Brazil, the world’s biggest and most efficient producer of arabica. The country last year produced a near-record arabica crop and is widely expected to produce another huge crop in the 2019-20 harvest year, despite it being an off-year in the biennial production cycle.
The price environment has accelerated momentum to find pricing alternatives. In January, a new platform for specialty coffee was launched in the hopes of eventually delinking fine beans from the futures price.
Colombia’s growers’ federation has suggested that high-quality producers untether their prices from the New York market, though traders were uncertain about the feasibility of the effort.
“An approach based on the principle of co-responsibility and total transparency must be implemented to ensure that all the links of the value chain are profitable and healthy,” the statement added.
“Coffee farmers from all over the world have been reaching out for years to the rest of the value chain hoping for a collective, constructive and realistic approach to secure the economic sustainability of producers. The response - unfortunately - has been very weak.”
Desperation among growers is such that some are switching to illegal crops to make ends meet, a phenomenon already on display in Peru, whose federation said some growers have abandoned their crop to grow coca, the main ingredient in cocaine.
A survey from Rabobank earlier this month pegged Brazilian 2019-20 arabica output at about 38 million bags, which would be the largest for cyclical off-year.
Reporting by Julia Symmes Cobb in Bogota and Ayenat Mersie in New York; editing by Helen Murphy and G Crosse