Coffee producers seek urgent talks with industry on low prices

By Nigel Hunt

LONDON (Reuters) – Coffee producers are seeking urgent meetings with major customers such as Nestle, Jacobs Douwe Egberts and Starbucks (NASDAQ:) to find ways to shore up prices that have slid to 12-year lows.

The World Coffee Producers’ Forum, whose members account for about 85 percent of global production, held a press conference on Monday after meeting to discuss the price crisis.

“It is today a desperate moment for the 25 million coffee growers around the world. It is a crisis beyond imagination,” said Roberto Velez, chief executive officer at the Colombian Coffee Growers Federation.

“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,” he added.

Arabica coffee futures fell to a 98.65 cents per lb on Sept. 4, the lowest for the second position contract since July 2006. They continue to hover around that level, dipping to a low of 98.90 cents on Monday.

The market has been depressed by a record crop in Brazil this year while speculators have also made a huge bearish bet on the New York-based arabica coffee futures market, adding to the downward pressure on prices.

Rene Leon Gomez, the executive secretary of Promecafe, which represents growers in Central America and the Caribbean, said they were seeking to set up a dialogue with industry leaders across the world and also have a campaign to raise consumer consciousness about the crisis.

“I would say millions of producers in the region are desperate right now,” he said. “A lot of farms are being abandoned, social conditions have deteriorated.”

Among the schemes being discussed by producers is a positive certification program for companies willing to offer high enough prices to enable farmers to make a living.

Many farmers are currently producing at a loss.

“Every day we have this price crisis, there is more illegal immigration from our countries to North America. That is a very dangerous situation,” said Ricardo Arenas Mendes, president of Anacafe, a producers’ group based in Guatemala.

“Our people are starving. The price (buyers) are paying for coffee today is less that the price they were paying 30 years ago,” he added.

The fall in coffee prices could also encourage production of coca, the crop used in the production of cocaine, producers said.

Velez of the Colombian Coffee Growers Federation said production of coca in Colombia was at an all-time high.

“You will find in some places coffee growers will now grow coffee and coca,” he said.

Many coffee producers are in London this week to attend a bi-annual meeting of the International Coffee Organization, an inter-governmental body.

Producers said they hoped the ICO meeting would focus on low prices.

“There is nothing else we want to discuss,” Velez said.

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