Coffee Farms Holding Out
For Price Rebound
By Brian Harris
Harvesting is peaking on
some coffee farms in
Costa Rica, but after
prices took a steep dive
in October some growers
are waiting to sell and
postponing new
investments on hopes
prices will recover.
At the CoopeSabalito
coffee cooperative, the
economic lifeblood of
the mountain town of
Sabalito near the border
with Panama, farmers are
worried they will not be
able to cover costs with
prices at current
levels.
Coffee prices fell last
month to their lowest
levels in more than a
year as investors,
spooked by the global
financial crisis, pulled
money out of commodities
futures.
"If the market stays
like this we will
survive but it puts us
in a difficult
situation," Walter
Quesada, a manager at
the cooperative, told
Reuters. "We will put
coffee in silos and ask
God to do something."
When prices were higher
two or three months ago,
CoopeSabalito promised
7,700 60-kg bags of
green coffee for
December delivery with a
price to be set by Nov.
20 and offered farmers
advanced payments based
on those calculations.
But now that prices have
gone down, the
cooperative will be
lucky to get $1.20 per
lb, which is not enough
to cover the costs of
picking the cherries,
processing and
delivering them to port.
After meeting its
December commitments,
the cooperative will
still have an estimated
18,000 bags of unsold
coffee in its silos.
Starbucks Corp the
coop's main customer, is
willing to buy the
coffee, but the members
are reluctant to sell at
a loss.
The pinch being felt in Sabalito should echo throughout other coffee
growing areas in Central
America when their
harvests begin in
mid-December.
Companies in the region
are taking a second look
at planned investments,
including refitting
mills for energy and
water efficiency.
The government is trying
to step in and help.
Costa Rica's
cooperatives, who
produce about half of
the country's coffee,
obtained a $40 million
line of credit last
month from state-owned
banks, but CoopeSabalito
was not included in the
plan.
CoopeSabalito is still
paying for a $650,000
investment in new
equipment after it
bought new
Colombian-made pulpers
and dryers made by
Brazilian company
Pinhalense, making it
hard to access credit.
Pinhalense executive
Carlos Brando said it is
too early to see a drop
in orders but he is
worried about sales next
year.
Not all growers are as
nervous. High-end
specialty producers say
they will be cushioned
from the price fall
because of the premiums
paid for their quality
beans.
When coffee prices
collapsed at the
beginning of this decade
due to a glut in global
supply, many farmers
abandoned their fields
or migrated to the
United States.
The plantations that
survived are now used to
the boom and bust cycles
of the crop.
"It is always the same
with coffee, it goes
down and then it comes
back up," said Irma
Alvarado, an
administrator at a high
school in a town near
Sabalito that runs an
experimental coffee
farm.
"We think there should
be diversification but
that does not mean we
are quitting on coffee,"
she said.
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