Jittery Bean Counters
You could get dizzy trying to follow the bouncing ball of world coffee prices. Fortunately, since they seem to be falling right now, you can brew a quick cup for relief.
Procter & Gamble, which owns Folgers, announced last week that it is dropping the price of a 13-ounce can of coffee to $2.76. Other companies are expected to follow. To put that in perspective, the price of that same-size can was raised in May to $3.36. Of course, in February, it was $2.26.
How can something that is a staple in so many households around the world fluctuate so much in price? Supply and demand. For years coffee consumption matched production, meaning that we drank about as much as was grown, with what was left over going into storage in a kind of savings account. In the mid-’70s, the amount of coffee held in storage equaled half the world’s annual coffee consumption.
That drove prices down, making it less profitable for coffee growers and discouraging them from expanding plantings to keep up with our increasing intake.
World coffee consumption was roughly 75 million bags a year in the 1970s; today it is almost 100 million. Production has not kept pace. As a result, that savings account has dwindled to less than 20% of annual consumption.
So when you get an odd weather year in South America, as we have this year--that old El Nin~o again--coffee commodities traders go crazy trying to guess which way the harvest will go. When they guess low, the price goes up for a cup of joe.
The price of unprocessed green coffee, which was selling for about $1 a pound this time last year, climbed as high as $3.44 this summer. Now it has settled down to about $1.50.
Of course, how long it stays there remains to be seen. Early this week, the Assn. of Coffee Producing Countries--which accounts for roughly 70% of the world’s coffee production--announced that the 1997 harvest was going to fall about 7% short of the original prediction.
The current decline in coffee prices “does not represent what the actual situation is,” association president Rubens Barbosa told the Bloomberg news wire service.
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Carolyn Olney of the Southland Farmers Market Assn. reports that Irene Burkhardt of Burkhardt Farms near Dinuba has especially delicious Fuyu persimmons. She sells them at the Santa Monica market on Wednesday, Torrance on Tuesday and Saturday, and Hollywood on Sunday.
