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.
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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...