Poor Farmer

By Harrison Freund The Cavalier Daily  (University of Virginia)   September 29, 2010 Green Mountain Coffee Roasters is a vertically integrated company with two business lines. Vertical integration means that the company controls all stages of processing, except for growing the crop. GMCR buys the coffee and then processes, roasts, warehouses and sells it. The first business line sells the Keurig single-serve coffee maker along with its individual coffee, tea and hot chocolate pods called K-Cups. Keurig coffee-makers are sold to individual consumers through mass-market and department stores. GMCR also sell Keurigs directly to offices and hotels. The second part of the business is the Specialty Coffee Business Unit, which sells coffee beans, ground coffee and Keurigs to grocery and retail stores. Overall, the Keurigs and K-Cups account for 52 percent of net sales, while the SCBU accounts for 47.6 percent. GMCR copies and benefits from the razor-and-blade business model cr...

"The price of green coffee beans has a chance to break out to historic high prices in 2011... While I am bullish on coffee in the intermediate and long terms, I believe there is a very real possibility that we'll see a pullback in the coming days or weeks. Once that occurs, however, I would urge investors to take a really careful look at coffee as a top profit play, particularly given the demand, hoarding and weather-related catalysts - all of which are bullish for coffee prices." - Money Morning Contributing Editor Jack Barnes By Kerri Shannon Money Morning September 26, 2010 Starbucks Corp. (Nasdaq: SBUX) has announced that it will charge more for many of its drinks to compensate for surging coffee prices, which have climbed to their highest level in 13. The famous coffee chain announced Wednesday it would make "targeted price adjustments on certain beverages in certain markets," according to a press release on its Web site. Starbucks said it tried ...

Worldwide coffee consumption has risen at about twice the rise in supply. Another factor boosting prices is consumer insistence on 'specialty coffees,' a trend Colombian farmers are tapping into. By Chris Kraul Los Angeles Times September 25, 2010 These are golden days for coffee grower Segundo Cardona and thousands of other farmers in Colombia. Global prices for his beans are close to 14-year highs and according to some analysts, may remain at or near these levels for years to come. The reasons include less than optimal harvests in top coffee-producing countries Brazil and Vietnam and growing consumption in major coffee-producing countries Brazil and Mexico as well as in traditional tea-drinking nations, including China, India and Russia. Worldwide coffee consumption has grown an average of about 2% a year over the last decade, double the 1% annual average increase in supply. "It is a classic market imbalance," said Rabobank agricultural economist Guilh...

“The Ethiopian Commodities Exchange brings opportunities for farmers, and challenges for buyers.” (Photo courtesy of Joe Raedle/Getty Images via National Post) The Grind: Ethiopian coffee finds its way By Brad Frenette National Post September 23, 2010 Barrett Tyler Jones is a barista at 49th Parallel Coffee Roasters in Vancouver. The Grind is his tales from behind the bar: from rating beans to tasting trends to the skills involved in making the perfect cup. This past June, I packed up and set off once again to the World Cup Tasting Championships, and all the associated events and competitions. This year it was held in London – and Canadians will note assured that our nation finished firmly in the middle of the pack. There will be no “own the podium” program forthcoming – in fact, there was no podium at all. I scored 5/8 again this year: less than stellar, but not bad. The event is basically a large tradeshow, with various competitions, workshops and lectures going on a v...

By Elizabeth Campbell and Chris Kay Bloomberg September 23, 2010 Coffee futures climbed on concern that a lack of rain will reduce crop prospects in Brazil, the world’s largest producer. Sugar and cocoa gained. Brazil had dry weather since April and needs rain this month as coffee trees start flowering to produce beans for next year’s harvest. In the seven days starting Sept. 30, as much as 200 millimeters (7.9 inches) of rain may fall, said Expedito Rebello, the head of research at the government’s Meteorology Institute, known as Inmet. “We had a dry weather pattern which was very, very worrisome for some people,” said Rodrigo Costa, the vice president of institutional sales at Newedge USA LLC in New York.. “The market is waiting for a confirmation that we’re going to see rains in a regular way that usually takes place from October on.” Arabica coffee for December delivery advanced 0.7 cent, or 0.4 percent, to $1.8065 a pound at 10:16 a.m. on ICE Futures U.S. in New York....

By William Davison Bloomberg September 17, 2010 International Finance Corp., the World Bank’s private-investment arm, started a loan-guarantee facility worth as much as $30 million for Nib International Bank SC to support Ethiopia’s coffee industry. The guarantee is expected to result in lending to an additional 70 coffee cooperatives in the first year and the production of an extra 3,542 metric tons of beans and 2,000 jobs over three years, IFC said today in a statement handed to reporters in Addis Ababa, Ethiopia’s capital. The guarantee will enable NIB to provide loans worth as much as $12.5 million for the 2010 coffee season, increasing to $25-30 million by 2013, according to the statement. “This facility reduces NIB’s financial risk of lending to coffee-farmer cooperatives and will go a long way to strengthen NIB’s commitment to expand support to small farmers in the coffee sector in Ethiopia,” the bank’s president, Amerga Kassa, said in the statement. Ethiopia, Afric...

Story highlights: The impact of the months-long climb is leading to higher retail coffee prices on several major brands This week's rally appears to be largely due to speculative trading because fears have eased about weather and supply issues Sen. Charles Schumer, D-N.Y., says he wants U.S. Trade Representative Ron Kirk to warn some major coffee growers in Brazil and Vietnam not to stockpile their crops. He said that could boost coffee futures contracts even more. ---- By Sandy Shore Associated Press September 8, 2010 Coffee prices hit a 13-year high Wednesday, extending a rally that has sent prices up about 43 percent in the past three months. Coffee for December delivery settled up 2.25 cents at $1.9455 a pound Wednesday after hitting $1.9865 per pound earlier in the day. Trading volume was light, which can exaggerate price movements. The impact of the months-long climb is leading to higher retail coffee prices on several major brands, including Folgers, Dunkin...

Jaspers Caffeine Dealers owner Wells Trenfield samples a brew as Tong Zhou prepares to roast a fresh batch of beans. [Courtesy of The Sydney Morning Herald] ''We are keeping people impoverished because we are not prepared to pay 21st-century prices for the stuff we enjoy. It's still cheaper than a beer.'' - Wells Trenfield, Owner of Jaspers Caffeine Dealers By Maris Beck The Sydney Morning Herald September 5, 2010 The caffeine dealer's warehouse in Collingwood is piled high with sacks of coffee beans. They haven't even been roasted yet but already they are giving suppliers the jitters. With unprecedented demand from Asia squeezing global coffee supplies and weather problems affecting crops, wholesale prices have been soaring for months. If the all-important Brazilian harvest falls short, the average cost of a cappuccino in Melbourne could hit $4 within a year - an increase of 76 cents. A soon-to-be-released survey of 600 east coast cafes, the ...

By Zerihun Tesfaye Addis Neger Online September 1, 2010 Ethiopians now need to find a name for the new market system. Sure, the pure monopoly is getting closer to the Ethiopian agriculture marketing system, but it is indeed true that the market is becoming increasingly skewed to favour the Ethiopian government. Last Saturday, Prime Minister Meles Zenawi clearly stated that all agricultural products would be traded on the floor of the Ethiopian Commodity Exchange (ECX) in the coming years. He bluntly declared, during discussions with traders and their associations, that because the ECX system is modern and reliable, all agricultural commodities must now be traded based on ECX’s “state- of –the-art”. It has been over two years since the ECX missed its target and moved towards a monopoly-like market structure. The first commodity exchange was established in the country in April 2008, with a capital investment of Birr 194 million. At the time of its establishment, many hoped that...