Skip to main content

Coffee in Retrospect: "Coffee exporters have grounds for apprehension"


Ed's Note: Coffee in Retrospect is a reprint column produced 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.
---

Coffee Exporters Have Grounds for Apprehension

BY PETER EDSON

Oct 7, 1958

WASHINGTON - (NEA) - Increases in the use of instant coffees plus the American housewives' and restaurant owners' trick of getting more cups of coffee to the pound are now blamed for another international crisis.

This is the chaos of world coffee markets.

Fundamentally, the trouble is that coffee-growing countries of the world are producing far more coffee than the consuming nations can take.

Production this year is estimated at 51 million bags by U.S. Department of Agriculture. Free world purchases will be about 44 million bags, at present consumption rates.

The remedy is for coffee-growing countries to cut down on production by 12 to 15 per cent. But that's easier said than done - as the United States has found out by producing more farm products than there is any earthly space age use for.

Besides, producers and sellers always like to blame their troubles on customers who don't buy enough.

WHAT CAUSED THE GLUT of over production was the high price of coffee from 1954 to the beginning of 1957. U.S. retail prices in that period ranged from 93 cents to $1.10 a pound by the can, 83 to 93 cents by the bag.

July, 1958, prices averaged 90 cents a can, 75 cents a bag. Coffee prices have been going down for two years while the prices of most other foods have been going up.

If the decline in coffee prices doesn't seem very big, it must be remembered that every time the U.S. retail price drops a cent, it means a loss of over eight million dollars to Colombia and 15 million dollars to Brazil. They're the two biggest of the 14 Latin-American coffee exporters.

Next to overproduction, a principal cause of the price drop is the growth of the instant coffee business. It can use the African "Robusta" coffees grown in Ethiopia, Belgian Congo and British Africa. They're cheaper than the varieties grown in Latin America.

In 1950, soluble and decaffeinized instant coffees accounted for less than 5 per cent of U.S. imports. This year it is over 17 per cent. Soluble coffees now cost housewives about a cent and a half a cup.

ANOTHER BIG FACTOR in the price decline is that back in 1949-50 and 1953-54, when coffee prices made sharp rises, housewives and restaurants started to economize.

They began making coffee one tablespoon of coffee to the cup. This gives approximately 64 cups to the pound. At 90 cents to the pound, that means coffee for less than a cent and a half a cup.

In the good old days when coffee was even cheaper, the custom was to use one and a half or two tablespoons of coffee to the cup. That gave 45 cups to the pound. At 90 cents a pound, it makes coffee cost two cents a cup.

This still doesn't explain how restaurants can charge 15 and 20 cents a cup and get away with it.

Anyway, coffee-growing countries think coffee makers ought to go back to the old two-table-spoons-to-the-cup formula, and maybe add one for the pot.

If that happened, it would mean consumption of another four to five million 60-kilogram (132 pounds) bags of coffee beans a year. That would take some of the surplus off the market and make coffee growers awfully happy.

THESE COFFEE-GROWING countries of Africa and Latin America have been trying for over a year to reach a world-wide agreement on how to curtail production.

The Africans favor a fixed export quota for each producing country. Latin Americans favor a system of having producing countries agree to keep a percentage of their crop off the world market.

Principal Latin-American producers are extending for another year their own agreement along this latter line, even if the Africans won't go along with it.

The new agreement lets Brazil hold 40 per cent of its beans off the market, Colombia 15 per cent, and the others 5 percent on the first 300,000 bags and 10 percent on the balance of the crop.
---

Here's what others said then...

Coffee Crisis


Sep 27, 1958

Every time you drink a cup of coffee, you are participating in a great economic and political crisis. Every time you drink one of those new-flanged instant coffees, you are complicating the crisis. How do you like that?

The answer is very simple. You like the coffee and not the crisis, about which, fortunately, you do not yet know. We'll tell you, to the best of our ability.

During World War II, coffee prices began shooting skyward and such countries as Brazil, Colombia, and others cleaned up. Their principal customer was the American coffee drinker who paid what amounted to a tax on the pleasure of drinking coffee. Plantations were expanded; new areas were put into growing coffee. The Latin American countries produced so much coffee that if we drank it all, we should have become bloated.

However, that is not the worst of it. Arica came into the picture; some Arab countries, too, apparently every country that could grow coffee, grew it and tried to sell it to us.

The American consumer was just about ready to resist drinking liquid gold, when the manufacturers produced the "instant" type. It is possible to get more coffee per bag that way and considerable African coffee, which is less costly, is used for flavoring.

So the coffee economy of Latin America got hit by the law of diminishing returns and now those Latin American countries want the United States to help them out. - Seattle Post-Intelligencer.
---

15 LATIN NATIONS JOIN COFFEE PACT; To Sign Control Agreement...

New York Times - Sep 27, 1958

African coffee countries say they favor more rigid controls and have refused to agree to i the Latin formula. However, French and Portuguese representatives...

Popular posts from this blog

Ethiopian Coffee & Tea Authority Relaxes Coffee Export Restrictions

  Ethiopian Coffee & Tea Authority Relaxes Coffee Export Restrictions  Addis Fortune November 14, 2020 Coffee traders can now send all grades of coffee beans to the global market, in contrast to the previous law that allowed them only to export the top four grades of coffee, according to a new directive issued by the Ethiopian Coffee & Tea Authority. Farmers and exporters can also directly ship the beans without going through the trading floors of the Ethiopian Commodity Exchange (ECX). The new scheme allows fifth grade and under grade (UG) coffee beans, which up until now have only been supplied to the local market, to be exported. Coffee quality experts at respective regional offices of the Authority will determine the grade of the coffee. The Authority at its head office issues permits to the exporters every year, while regional offices are delegated to grant export permit to farmers who have at least two hectares of farmland. The Authority sets standard prices on a...

Climate-hit Ethiopia shifts coffee uphill

Caffeine high? Climate-hit Ethiopia shifts coffee uphill Elias Gebreselassie Thomson Reuters Foundation June 3, 2018 HAMBELA, Ethiopia (Thomson Reuters Foundation) - Few countries take coffee as seriously as Ethiopia - and that’s not only because it prides itself as being the source of the prized Arabica bean. But rising temperatures and worsening drought linked to climate change are now hitting production - and fixing that may require moving many Ethiopian coffee fields uphill, experts say. Aside from its cultural value, coffee is Ethiopia’s single largest source of export revenue, worth more than $860 million in the 2016-2017 production year. But coffee-growing areas in eastern Ethiopia have seen the average temperature climb 1.3 degrees Celsius (2.3 degrees Fahrenheit) over the past three decades, according to the Environment, Climate Change and Coffee Forest Forum (ECCCFF), an Ethiopian non-governmental organization. That has caused stronger drought ...

The saga of the Starbucks-Ethiopia affair

Note :   The most recent developments on Starbucks vs. Ethiopia are listed below: January 9, 2012:  Has trademarking doubled Ethiopian farmers' income?   January 5, 2012:   Starbucks to showcase use of a QR code to trace Organic Ethiopia Sidamo® Coffee   ========= "When two elephants fight, it is the grass that suffers. When the same two elephants make love, the grass still suffers." - derivative of an old African saying Life, before and after the agreement, remains unaffected for farmer Gemede Robe, the icon of the Starbucks vs. Ethiopia dispute. He lives in the Borena zone of the Oromia region, one of the many coffee growing zones of the country. (Photo: Courtesy of Oxfam America) By Wondwossen Mezlekia May 31, 2010 The coffee trademark dispute between Starbucks and Ethiopia officially ended exactly three years ago. In June 2007, the giant coffee chain and the government of Ethiopia declared their agreement "to work together to license...