Poor Farmer

Image by Getty Images via @daylife (courtesy of Forbes) By Addison Wiggin The Daily Reckoning via Forbes August 30, 2010 Today’s report begins with an abominable horror: The world’s most valuable commodity has soared to its highest price in a generation. Coffee futures are approaching a 13-year high of $1.88 today. The case for more expensive coffee is growing stronger every week: Colombia had a smaller-than-normal harvest last year, and dry conditions in Brazil this year have pinched supply even tighter. Demand for this delicious, addictive stimulant is (naturally) growing. Stockpiles at Intercontinental Exchange-certified warehouses are down 35% this year and swill makers like Maxwell House and Folgers have already raised prices by 9% and 10%, respectively. Starbucks announced recently that it will eat the costs, which will amount to roughly 4 cents a share. Retail prices would have to rise a whole lot more than 10% for us to even consider switching to something as s...

Moshi Hosts Africa's First Coffee Conference By Peter Temba Tanzania Daily News August 30, 2010 Dar Es Salaam — The first international conference to be held in the African continent under the banner of 'Let's Talk Coffee' was opened here on Monday with a call to a wide spectrum of stakeholders to promote the coffee industry to create security for future generations. Officiating at the opening of the three-day event in Moshi, Moshi District Commissioner, Mr Musa Samizi said the coffee industry in East Africa had great potential which needed to be exploited to boost economic development. However, he cautioned about 120 conference participants that coffee producers in the region were faced with a number of challenges that include transparency of the supply chain, young people moving away from the farm and acceptable production techniques. Mr Samizi said such challenges could be overcome through education and support, adding, "With conferences like ...

Note: The new coffee law in Ethiopia requires that all coffee trade be conducted through the Ethiopia Commodity Exchange (ECX) but cooperatives and large-scale commercial farms are exempt from this requirement. The latter are allowed to bypass the ECX system, which was originally designed for the trading of grains and pulses before the government turned it into a coffee auction. The Oromia Coffee Farmers' Cooperative Union (OCFCU) is one of the entities that is currently enjoying the benefits of Direct Trade - a business model that enables producers to transact with and sell their produce to the ultimate buyers across the globe. There are plenty evidences that Direct Trade, which is the norm in Specialty coffee trade, is a preferred business model in terms of ensuring the sustainability of coffee production, farming communities' livelihood, and the environment, but millions of smallholder farmers in Ethiopia are kept out of this model as they are legally barred from doing bu...

By Tom Sellen The Wall Street Journal August 30, 2010 KANSAS CITY, Mo.—Coffee futures remain close to a 13-year high, as tight supplies and the prospect of dry weather hurting next year's Brazilian crop have sent roasters scrambling to secure beans. Roasters are looking for top-quality arabica coffee beans, and supplies from Colombia—the largest producer of the beans—and Central America won't begin hitting the market in earnest until November and December. Brazil is on pace to harvest a record crop this year, though global demand is also strengthening. December coffee futures reached a 13-year high of $1.8865 a pound last Monday, as speculative investors jumped into a market that already was rising as coffee roasters fretted over inadequate supplies. Prices then dived the next day as investors questioned the steep gains and as Brazil's possibly record-setting crop eased supply fears. Since then, the market has gradually clawed its way back. On Friday, coffee for ...

A tiny insect that thrives in warmer temperatures — the coffee berry borer — has been spreading steadily, devastating coffee plants in Africa, Latin America, and around the world Photo Courtesy of Vegar Abelsnes Photography/Getty via Guardian Erica Westly for Yale Environment 360 , part of the Guardian Environment Network Guardian August 27, 2010 The highlands of southwestern Ethiopia should be ideal for growing coffee. After all, this is the region where coffee first originated hundreds of years ago. But although coffee remains Ethiopia's number one export, the nation's coffee farmers have been struggling. The Arabica coffee grown in Ethiopia and Latin America is an especially climate-sensitive crop. It requires just the right amount of rain and an average annual temperature between 64 degrees Fahrenheit and 70 degrees Fahrenheit to prosper. As temperatures rise — Ethiopia's average low temperature has increased by about .66 degrees F every decade since 1951, ac...

By Matt McClure Calgary Herald August 25, 2010 Wake up and smell this coffee. Your morning brew may soon cost more. An expected crop failure in Colombia and speculation in commodities markets have pushed coffee futures to a 13-year high. While specialty retailers like Tim Hortons and Starbucks are holding the line for now, small independent cafes may have little choice but to hike prices. Starting Sept. 1, Calgary's Fratello Coffee Roasters is increasing the price it charges 200 independent cafes around southern Alberta for beans by up to seven per cent -- a hike the firm's owner believes is here to stay and one he expects will be passed on to customers. "We're seeing rising consumption worldwide in countries like Brazil and India, along with bad harvests for the third year in a row in Colombia, one of the world's largest suppliers of Arabica beans," said Fratello owner Russ Prefontaine. "It's a perfect storm of increased demand and red...

Bloomberg via San Francisco Chronicle August 23, 2010 Coffee declined the most in more than two years as a bigger-than-expected plunge in U.S. home sales stoked concern the economy may relapse into a recession, eroding demand for commodities. The Standard & Poor's 500 Index fell for a fourth day as global equity markets sank. The Reuters/Jefferies CRB Index of 19 raw materials plunged the most since June 29, led by the drop in coffee. Before today, the commodity surged 50 percent in New York during the past year and yesterday touched the highest price in almost 13 years. "There is long liquidation after the market rose to a new high," said Boyd Cruel, a senior analyst at Vision Financial Markets in Chicago. "The weakness in the equity markets is also adding selling pressure." Arabica coffee for December delivery slumped 14.8 cents, or 8.1 percent, to settle at $1.6845 a pound on ICE Futures U.S. in New York, the biggest decline for a most-active c...

By Marcy Nicholson and Sarah McFarlane Reuters via FOREXYARD August 19, 2010 NEW YORK/LONDON, Aug 19 (Reuters) - Arabica coffee futures finished firm on Thursday on position rolling and roaster nibbling ahead of September's first notice day next week, but shied away from the recent 12-2/3-year top. Sugar and cocoa futures finished mixed in quiet dealings. Arabica coffee dealings were choppy as market players rolled positions out of the September contract, ahead of its first notice day Monday, into December, while roasters and investors bought the dips, dealers said. The move lifted the arbitrage of arabica beans over robusta to $1 for the second time this week. Arabica futures have soared more than 30 percent since mid-June to a 12-2/3-year high at $1.8290 per lb on Aug. 16, in a fund-led rally. Prior to the rally, the arbitrage ranged from about 71 cents to 78 cents. "The market is a bit tired up here. The market's signaling that it may not be able to sustai...

By Barry Malone Reuters August 11, 2010 Ethiopia's Prime Minister Meles Zenawi said on Wednesday he would look into claims Ethiopian coffee exporters have been defaulting on contracts since U.S. arabica futures hit a 12-1/2-year high. Sources at the Ministry of Agriculture in Addis Ababa told Reuters they were aware of several complaints from European buyers and were investigating how widespread the defaulting might be. Meles said he had not previously been aware of the claims but that he would investigate them. "If indeed our companies are improperly defaulting on their contracts, then the government has a responsibility to enforce the law and see that contracts are implemented or the necessary penalties are substituted," Meles told reporters. Ethiopia is Africa's biggest exporter of coffee. The ministry of trade this week told Reuters the country earned $528 million from exports of the bean in the 2009/2010 season, rebounding from a poor $375.8 millio...