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Coffee in Retrospect: "Expert Doubts Coffee Prices Will Decline"

Ed's Note: Coffee in Retrospect is a column prepared by Coffee Monitor and Poor Farmer blog to provide context for the current global coffee trade by republishing news articles from the past. In this column, we intend to reprint archived prints by converting images into electronic file formats with careful conformity to originals and, whenever applicable and possible, we provide links to the sources of the information. Meanwhile, responsibility for the contents lies solely with the authors and the views expressed in the articles do not necessarily reflect our opinions.
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Expert Doubts Coffee Prices Will Decline

Feb 8, 1954

WASHINGTON, DC - A New York expert told Senate investigators yesterday there is no hope for a dip in coffee prices as long as the demand stays normal.

Leon Israel, vice president of the New York Coffee and Sugar Exchange, gave that appraisal to a Senate Banking subcommittee when it opened a public inquiry into price boosts that have pushed coffee beyond a dollar a pound in some grocery stores and 15 cents a cup in many cages.

The subcommittee didn't nail down yesterday the reasons why coffee has shot up in recent weeks.

Israel ruled out speculation as a factor but said the fact that Brazil has different rates for exchanging American dollars for Brazilian cruzeiros has something to do with it.

DENY SHORTAGE

Both Israel and Gustavo Lobo, president of the Coffee and Sugar Exchange, insisted there is enough coffee now to meet demand and this "no shortage." But Israel added that "every bit of coffee in Brazil" may have been put on the market by the time the 1953 crop year ends next July.

The subcommittee chairman, Sen. Beall (R-Md), got out of a statement after the hearing saying that "two general misconceptions have apparently been cleared up" by the first day's testimony.

"Statements in the last few weeks have given the impression that there is a shortage of coffee, and that this shortage was created by a severe drought in Brazil last summer."

Sen. Bush (R-Conn) said he thought a uniform exchange rate would cut in half the price at which Brazil sells coffee in the American market. He said the existence of varying rates "is probably responsible for 25 to 30 cents in this market."

"Is that a fair statement?" he asked Israel.

"No," the witness replied.

The differential, Israel said, is responsible for "some" of the recent upturn in coffee prices, but:

"I don't know that you can say it is responsible for 25 to 30 cents or 10 cents a pound."

BOYCOTT THREATENS

Prices have gone up to an extent that talk of a coffee-drinking boycott has made some headway around the country. And coffee producing nations are worried.

The Columbian ambassador to the United States, Edauardo Zuleta Angel, when to the State Department yesterday to tell Under Secretary Walter Bedell Smith a boycott would hurt sales of American products in Latin America.
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