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Permalink Reply by Matias Zeledon on February 2, 2011 at 4:17pm

Well, if i interpret your question and interest in this subject correctly (you want the farmers to be better off), then you should be a happy person.

 

Farmers are getting record prices for their harvest, mainly because there is a shortage of coffee around the world, but also because there are investment funds speculating with coffee, just like they did with oil two years ago and almost sunk the world economy.  Also, we have horrible weather in 2010 and that reduced the latin american harvest an addtl 20% to 30%.

 

The benefit to Costa Rican farmers specifically is that the cup profile of the colombian and costa rican coffee is very similar and the colombian harvest is very low, so all buyers are coming to Costa Rica to buy the "suave" coffee they need to make their blends taste better.

 

To give you a clearer perspective, in the region where we grow coffee, which is Tarrazu (dota mountains specifically for me), the cost of production of a fanega (volume measurement equivalent to 1.5 bushels) is $80.  Last harvest the farmers were getting  $155 for the fanega, with payments spread out over a ten month period.  This harvest they are getting $250 per fanega, ON THE SPOT, cash, no questions asked.  So, they are definitely enjoying the benefits of the crisis although their production is lower.  At the end, they will be getting more money even if selling less coffee because the prices have skyrocketed.

 

We think this shortage will continue till next harvest so coffee prices are going to continue to rise.  It is not strange to get a quote for a 100 lbs of green coffee for $300 or more, and that is a price that people dreamed about once in a while.

 

But high prices are not the perfect situation for everybody.  The coops are having a really hard time reaching their goals and the future markets sometimes forces them into contracts that are counterproductive in a market like today.  Some of them, because of the long term relationship they have had with buyers, are being able to adjust the prices a bit but the coops are on the losing end of this equation because they dont have enough cash or commercial savy to fight the trading companies; they are better funded and better equipped to sell at a higher price.  so the situation is tough right now.

 

let me know if you have any questions about this subject and will make sure i answer them.

 

matias

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Permalink Reply by luke hudek on February 3, 2011 at 1:08pm

I regularly speak to a gentleman at La Minita and he informed me that his farmers see more when prices go up.  He finds it funny how when prices are low for his crops people are all gung-ho about supporting farmers, but when prices go up and farmers see more they want nothing to do with it.

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Permalink Reply by Matias Zeledon on February 3, 2011 at 5:46pm

Interesting, La Minita's final price to their farmers was about $165 and just last week i saw a sign outside one of their "recibidores" that announced $226, that is $61 more per fanega.

 

it is a war for coffee out there.

 

MAtias

 

luke hudek said:

I regularly speak to a gentleman at La Minita and he informed me that his farmers see more when prices go up.  He finds it funny how when prices are low for his crops people are all gung-ho about supporting farmers, but when prices go up and farmers see more they want nothing to do with it.

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Permalink Reply by luke hudek on February 3, 2011 at 6:21pm

I do not know what that would translate to for a farmer there though.

Matias Zeledon said:

Interesting, La Minita's final price to their farmers was about $165 and just last week i saw a sign outside one of their "recibidores" that announced $226, that is $61 more per fanega.

 

it is a war for coffee out there.

 

MAtias

 

luke hudek said:

I regularly speak to a gentleman at La Minita and he informed me that his farmers see more when prices go up.  He finds it funny how when prices are low for his crops people are all gung-ho about supporting farmers, but when prices go up and farmers see more they want nothing to do with it.

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