The Premium Being Paid on Coffee

The rapid downward change in prices has left the processing sector badly off; expecting prices of over $300 per quintal, they went into debt to pay high prices for the raw grain.

Monday, June 18, 2012

An article in Elfinancierocr.com analyzes the cycles of crisis and prosperity in the Costa Rican coffee industry, the high risk that exists in all phases of the business and the complexity of the process of adding value to exporting finished products rather than raw materials.

"With the rising prices of coffee, in each coffee-growing areas of our country there was the fiercest competition at the mill level, with them competing for each and every grain of the harvest. Being their profit 9% of the value of the harvest, the more and better coffee the more revenue for them.

However, in order to receive the greatest amount of black coffee there is only one possibility and this is to give the producer the highest advances for payment of their crops. Of course in light of Act 2762 (on the regime of relations between coffee producers, processors and exporters), which governs the relationship between coffee sectors of our country, an advance on a harvest is considered a final payment even if the mills demonstrates that the harvest is lower, meaning that, in extreme cases, the coffee processing company is not able to demand a refund of the excessive payment to the producer.

This is exactly what has happened in this crop, as some manufacturing companies never covered the advances paid to producers with the fixation of their sales."



More on this topic

Coffee: Global Report up to April 2015

May 2015

Good grain inventory levels globally have kept prices relatively stable and low in April.

From a monthly report by the International Coffee Organization (ICO):

Coffee exports from Brazil reached a record level of 36.8 million bags in crop year 2014/15 (April-March), driven by domestic stocks and favored by a depreciation in the exchange rate.

Coffee: Global Report up to December 2014

January 2015

In December 2014 coffee prices continued to fall, and the monthly average indicative price calculated by the International Coffee Organization was the lowest since February.

From 'Coffee Market Report - December 2014' by the International Coffee Organization (ICO):

The coffee market ended 2014 with the lowest level in ten months

International Auction of Honduran coffee

May 2014

The 23 samples selected in the national competition will form part of an electronic auction on June 17, in which over 200 international buyers will take part.

The international companies participating in the auction on June 17 hail from the United States, Taiwan, Japan, Australia and several European countries, who come to the country to see the sights, procedures and conditions under which the grain is grown.

Market Changes Threaten Arabica Coffee

May 2013

The variety of coffee which is considered the best quality, is starting to have disadvantages compared to the robusta variety, both due to changes in consumer trends, as well as price.

This is the warning given by experts who gathered in Sao Paulo, Brazil. According to the manager of the research firm Olam Europe, Neil Rossner, the Central American countries affected by the rust blight, "failed to meet the challenge presented by Brazil and Vietnam", the world's largest producers of grain. "The Arabica segment is in crisis and the gourmet coffee strategy is threatened," he added.