Finance

As coffee prices drop, some growers turn to farming coca

Shallow focus photography of coffee beans in sack/Tina Guina on Unsplash

Coffee aficionados around the globe cringed because the price of coffee is still at historic lows. According to Reuters, the World Coffee Producers’ Forum announced on Monday that the industry is currently facing an economic crisis due to the decline of coffee prices, meaning many farmers are “operating at a loss.”

Some of the farmers in Latin America have begun planting coca, the plant from which cocaine is derived, to offset the losses of their coffee harvests.

“You will find in some places coffee growers will now grow coffee and coca,” said the Colombian Coffee Growers Federation CEO Roberto Velez, adding that coca production was “at an all-time high.”

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Coffee aficionados around the globe cringed because the price of coffee is still at historic lows. According to Reuters, the World Coffee Producers’ Forum announced on Monday that the industry is currently facing an economic crisis due to the decline of coffee prices, meaning many farmers are “operating at a loss.”

Some of the farmers in Latin America have begun planting coca, the plant from which cocaine is derived, to offset the losses of their coffee harvests.

“You will find in some places coffee growers will now grow coffee and coca,” said the Colombian Coffee Growers Federation CEO Roberto Velez, adding that coca production was “at an all-time high.”

Arabica futures sat at 98.90 cents per pound on Monday, barely up from two weeks ago when it hit a 12 year low of 98.65 cents, according to Daily Coffee News. This means that many coffee farmers won’t be able to break even unless the prices rise significantly.

“It is today a desperate moment for the 25 million coffee growers around the world. It is a crisis beyond imagination,” added Velez, according to Reuters. “We need the industry and consumers to realize that this is a situation that cannot be maintained if we want the coffee industry to survive.”

There are several reasons why the current price has dropped, but one of the most important factors is the larger-than-expect Brazilian harvest this year, which added 12 million additional bags of coffee beans to the total 2018 harvest. According to Daily Coffee News “record-setting levels of speculation and industry consolidation,” also played a part in the price drop.

“A lot of farms are being abandoned, social conditions have deteriorated,” said Rene Leon Gomez, the executive secretary of Promecafe, a firm that “represents [coffee] growers in Central America and the Caribbean,” during an interview with Reuters.“I would say millions of producers in the region are desperate right now.”

Many of Promecafe’s clients are hoping to hold talks with coffee industry leaders from around the globe in an attempt to bring prices up to levels that are sustainable for the producers. According to Daily Coffee News, the break-even point is somewhere between $1.08 and $1.24 per pound.

Even with its record harvest, Brazil still faces massive hardships due to the arrival of thousands of Venezuelans, who have fled across the border looking to escape their country’s economic crisis. The immigrants have entered Colombia as well, overwhelming the country’s social services. The influx of migrants is currently straining the economic resources of both countries.

However, not everyone is gun-shy about investing in coffee. According to Business Insider, Coca-Cola recently purchased Costa Coffee, a popular “British coffee-shop chain” for $5.1 billion. Coca-Cola is hoping to expand its offerings beyond soda, which is commonly seen as unhealthy, and hoping to use its infrastructure to grow the Costa brand globally.

About Joseph LaFave View All Posts

Joseph LaFave writes about finance, maritime issues, healthcare, the National Guard, and conflicts around the world. Before becoming a journalist, he worked as an EMT in Florida and as an ESH engineer for Lockheed Martin supporting several DoD and NASA satellites. He holds a Bachelor of Science degree from Florida State University and a Master of Science in Management from Southern New Hampshire University.

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