Impact of food & energy prices on coffee producers

growing, harvesting, processing, cupping, purchasing

Impact of food & energy prices on coffee producers

Postby IanClark on Sun Jul 13, 2008 7:21 am

I've been doing some research on recent increases in food staple and energy prices, and I began to wonder what the general impact has been on coffee producing communities.

With prices of wheat reaching a 28 year high and prices of rice at a 19 year high, can anyone comment on the impact for

- those communities that produce a self-sustaining amount of food;
- those that are net-producers of food;
- those that are net-consumers of food?

Is there a trend for coffee producers in certain parts of the world to be net-producers/net-consumers of food? Or does this vary too much community-to-community to express a trend?

Ultimately the question becomes: Is there sufficient diversity in coffee producing community economies?

The price of fertilizers has doubled in Africa, increasing by 6 times in some countries such as Tanzania. Has there been an impact on coffee producers, or have they been protected by their relatively limited use of inputs?

Does anyone anticipate the current food/energy price situation having an impact on supply in years to come? Interestingly, futures prices seem somewhat stable.

Lots of interesting questions and I don't expect anyone to have expert answers, but I'm curious if anyone has taken notice of this issue either living in producing countries or travelling to them.
Ian Clark
Bridgehead
Ottawa, ON
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Re: Impact of food & energy prices on coffee producers

Postby Mark Prince on Fri Aug 01, 2008 2:47 pm

Kyle Freund from Coffee Kids asked me to post the following information to this thread:

VISIT UNCOVERS EFFECTS OF INTERNATIONAL FOOD CRISIS
Coffee-Farming Families See Food Prices Double Since Oct. 2007

While consumers in the United States fret over gas prices, a food crisis
threatens millions around the world. Coffee Kids staff visited with families
in the states of Chiapas and Oaxaca, Mexico and learned about the effects of
the international food crisis and how they are confronting the problem.

According to women working with Coffee Kids partner organization FomCafé in
Oaxaca, they have seen prices for basic products such as corn, oil and rice
more than double since October of 2007. The price of many vegetables has
increased 50% or more.

"Before 2008, families spent about 60% of their income on food, but today
families are spending almost all of their income on food. Salaries have not
risen, money being sent home is lower, and work is scarce in many rural
communities," said José Luis Zárate, international program director at
Coffee Kids. Families in the United States spend about 10% of income on
food.

Prices for common goods:

Item Oct. 2007 July 2008
Cooking Oil (liter) US$1 US$2
Corn (kilogram) US$0.28 US$0.47
Rice (kilogram) US$0.70 US$2

Coffee Kids partners, the Association for Research and Training of Southern
Mexico (ICSUR) in Chiapas and FomCafé in Oaxaca are working in rural
coffee-growing communities to build capacity and reduce reliance on the
annual coffee crop, which does not provide enough income for families. Many
of their efforts are also helping families deal with the food crisis.

Women and men working with ICSUR in Chiapas are learning to raise and sell
mushrooms and chickens to diversify their income and bolster family diets.
Women working with FomCafé are learning about organic gardening, cultivating
food for their families and selling the surplus locally.

"Many of the women commented that thanks to these projects they have access
to fresh, organic foods for their families, something they couldn¹t afford
otherwise," Zárate said. "The same is happening with the women working with
ICSUR in Chiapas. Without these productive projects, it would be difficult
to afford meat or eggs."

While food security is the major issue families in Mexico are confronting,
ICSUR and FomCafé also promote projects in health care, education and
economic diversification.
Mark Prince
Just in it for the espresso and coffee, Vancouver BC
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Re: Impact of food & energy prices on coffee producers

Postby Tim Dominick on Fri Aug 01, 2008 10:16 pm

The article below was from Sustainable Harvest. This is a mid-sized, mature farm with a fair amount of stability and they are feeling the pinch. Despite selling the '08 crop in a fairly high market, it is hard to get ahead with 25% input increases and higher labor costs. Add a weak dollar and the premiums from a high "C" are long gone.

Increased minimum wage is rarely a good sign. Sounds funny to say, however it usually means food and basic living costs have exceeded a particular level and upping the minimum wage is a government reaction to rising prices rather than a proactive step towards a better standard of living.

if you've talked with coffee producers lately, you have undoubtedly heard them reflect on the rising costs of production and high prices of basic goods and gasoline. For Francisca Cubillo of the Las Lajas farm in Costa Rica, the situation is worrying. She and her husband manage their family's 38 acre, organic coffee farm in the Alajuela province of Costa Rica. Living in Costa Rica with all the country's social systems, Francisca (pictured below) and her family already have a comparatively higher cost of living than farmers in other countries of Central America. In addition, this year prices for farm inputs and basic goods are spiraling upwards. Francisca reported that when she recently bought organic inputs for her farm, the prices had risen 25% in just two to three months since her previous purchase.

Francisca and her husband OscarFrancisca produce a semi-washed coffee they call "Honey Coffee" for its natural sweetness. Between the labor needed for the careful management of their organic farm and the labor requirements for the semi-washed processing, the Las Lajas farm depends heavily on manual labor to achieve high quality. During this time of year, Francisca and Oscar have a workforce of about 15 people who work on their farm in plant maintenance, organic pest control, and shade management. The Costa Rican government recently instituted a 10% increase in the national minimum wage to help hourly workers afford the rising cost of living. As a result, Francisca is re-thinking how to afford the necessary labor for the Las Lajas harvest this fall when she typically hires 80 to 100 seasonal employees to pick the coffee cherries. Francisca and Oscar do not want to reduce production, and yet they are unsure how to cover their increased costs. Francisca says that as of now, they are expecting to take on larger loans earlier in the harvest season in order to cover the costs of labor and maintain activity on their farm.
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