Sunday, March 20, 2005

Improvement in the coffee market

The coffee crisis may be ending for El Salvador and other coffee growing countries in Central America. The International Herald Tribune reports that coffee prices for the arabica bean grown in Central America have more than doubled from their 2001 lows. Prices are up 28% in the past year. Fair Trade certified coffee has increased its market share by 75% a year for the past few years. To explain the price rise, the article points both to contractions in the supply of coffee and to the expanding appetite in the US and elsewhere for gourmet coffees. (Another interesting fact in the article -- coffee is the second most extensively traded commodity after oil).

But is this rebound too late to reverse the structural changes in the rural areas where coffee is grown? The coffee crisis cost 260,000 small farmers in El Salvador, Costa Rica and Nicaragua their farms. People who were dependent on the coffee harvest were forced to migrate to the cities or to try to emigrate illegally to the United States. Those migrations are unlikely to be reversed simply with the improved prospects of the coffee market worldwide.

You can find my earlier posts on the coffee crisis here and here.

1 comment:

boz said...

The coffee market has been irreversibly changed by the glut of low quality beans from Vietnam and elsewhere. I would say that El Salvador has some advantage in that they can grow some of the high quality beans, especially at altitudes some other coffee countries do not benefit from. There will always be a coffee industry there, but it will not ever be the size that it was 10-15 years ago.

Beyond Fair Trade (which is a great movement), take a look at the Juan Valdez coffee shops started by the Colombian coffee growers. They've moved into the US market with a dozen stores or so and they hope to bring more soon. The coffee is no more expensive than Starbucks, but they bring more profits back to Colombian growers. I don't think that El Salvadoran growers can organize quite that well, but it's a model to ponder as they try to regain some of the jobs they've lost over the past decade.