Amid Rising Demand, Price Of Coffee Beans Soars

by Charlie Herman

November 25, 2010
http://www.npr.org/2010/11/25/131594733/price-of-coffee-beans-on-the-rise

A cup of coffee could soon cost you more.
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A cup of coffee could soon cost you more. Prices for green coffee, the unroasted beans, have soared more than 50 percent over the past year.
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November 25, 2010 from WNYC

More than half of American adults drink coffee on a daily basis — a routine that could start costing more. Prices for green coffee, the unroasted beans, have soared more than 50 percent over the past year.

There was a time when coffee was a much simpler affair, but not anymore. Now you can order coffee from specific countries.

Cafe Grumpy, a specialty coffee bar in Manhattan's Chelsea neighborhood, serves high-quality coffee at prices ranging from $2 to $8.

"I don't think they are afraid to spend their money if they know they are getting something worthwhile or good or sustainable," said co-owner Caroline Bell.

You might think that at these prices, the coffee business is a lucrative one. But with high labor costs, steep rents and now prices for raw beans at 13-year highs, profits can be slim.

Donald Schoenholt knows this. He owns Gillies Coffee Co., a specialty wholesale roaster in Brooklyn, N.Y., that was founded in 1840.

In the room where he stores the green coffee, beans are piled high in burlap sacks stamped with the names of faraway locations like Guatemala and Indonesia.

Schoenholt is roasting beans from Honduras, 600 pounds at a time.

"It is kind of like making a toasted marshmallow over a campfire. It takes a few minutes to get that marshmallow to turn white to tan, and then if you blink, it catches fire and falls into the fire," Schoenholt says.

With nearly 50 years in the business, Schoenholt has seen prices rise and fall before. But now, there's a fundamental shift in the market.

Brazil, the world's largest coffee grower, is soon expected to consume more coffee than the U.S. Then there are new coffee drinkers in India and China whose expanding economies have already pushed up prices for raw materials like corn and cotton. Now, it's coffee.

"As China becomes more and more middle class, they want to emulate European and American ways, and that means drinking coffee," Schoenholt says.

More coffee drinkers mean more pressure on prices at a time when coffee supplies, especially of higher-grade Arabica beans, are shrinking.

"In Colombia, Costa Rica, Guatemala and several other coffee-producing nations, there have been smaller crops coming out," he says.

Bad weather is one reason. But even when you look back over the past several years, overall coffee production hasn't increased much. Simply planting more coffee trees won't lower prices because it can take up to five years before they start producing beans.

The soaring prices of coffee have also attracted the attention of investors — and speculators — betting on higher prices. Schoenholt tracks prices at the Intercontinental Exchange, where coffee futures are bought and sold.

"There is so much money now in coffee that I have to now look at it and believe this is not coffee roasters that are pushing the price up because of their customers' needs, but rather money coming in from money funds that is jigging the price up," he says.

Already, major brands like Maxwell House and Folgers have increased prices. Starbucks says it will charge more for certain coffee drinks. Schoenholt expects he will have to raise his prices, too, as does Bell at Cafe Grumpy.

"Over the five years I think maybe we've increased prices twice, so maybe, I don't know, 10 cents, 20 cents," Bell says.

Schoenholt says he doesn't believe that higher prices will lead coffee drinkers to abandon their daily habit.

"I never worry about consumers giving up on coffee," he says. "I think it is so ingrained in the American lifestyle that they will always reach for a cuppa."

If prices keep rising, they may be more likely to reach for that cup at home or settle for a smaller size.

Haiti's Coffee: Will it Come Back?

Jan 27 2010, 12:51 PM ET 5


Photo by Stirling Noyes/FlickrCC

Like so many others watching earthquake-ravaged Haiti struggling back to life, I began to wonder: what on earth could I do? Much-needed funds and food had started rolling in, but could our daily activities as consumers help in a more long-term way?

And then my thoughts turned to coffee.

No, this wasn't a bout of distraction. I'd started to hear about charity efforts in coffee shops and where to find Haitian coffee—wait, did someone say Haitian coffee?

As a long-time coffee devotee, I'd learned to roast my own beans and brew everything from single-origin Kenyans to Guatemalan blends. But Haitian coffee I'd never tried. Did the island have a coffee tradition of its own?

As it turns out, Haiti and coffee go way back. In the 18th century, when Haiti was still a French colony, the country grew a grand cru of its own: beans of the original arabica typica variety, the first species of coffee to be cultivated, far superior to the other major commercial variety, robusta. Consumers in France and Italy coveted the island's distinctive coffee, and the industry thrived. But after Haiti declared its independence in 1804, the coffee industry—like so much else on the island—declined to almost nothing. And during the U.S. embargo of the Haitian dictatorship in the mid 1990s, many farmers burned their coffee trees to make charcoal to sell in local markets.

"All the equipment just rusted away," said Terry Montague, who feels lucky to have tried the island's original bean, prized for its velvety sweetness. Montague is a roaster at Down East Coffee in New Brunswick, Canada, and he was introduced to Haitian brew by a minister named Paul Smith. In the late 1990's, Smith's church started a charity project called New Millennium Coffee. Congregants sent suitcases of clothing to a small orphanage in Haiti run by a woman named Marlaine Alix. There, Alix and her neighbors would harvest and process green coffee beans, fill the suitcases the clothes had arrived in, and send them back to Canada for Montague to roast. Many of the people who sampled that first batch, including Mark Prince of the popular online coffee community Coffee Geek, still rave about the taste more than 10 years later. In his tasting notes, Prince described the coffee as "chocolately, caramel, smooth, velvety with low acidity."


Photo by jakeliefer/FlickrCC
Decades of political unrest and government corruption, however, made farmers too afraid to come down from the mountains to sell their crops. Over time, many Haitians lost the skills needed to grow, harvest, and process coffee, and Brazil eventually cornered the regional market, aided by modern facilities. Between 1998 and 2002, annual coffee exports fell to only four million dollars, less than one sixth their former size. Marlaine Alix also struggled to maintain the high standards of her first batch, and her project fell apart completely when her house burned down, leading her to resettle in the United States.

A promising moment, however, was the arrival of a bean called Haitian Bleu. Developed by a cooperative of coffee farmers (the Fédération des Associations Cafétières Natives) under the guidance of USAID, Haitian Bleu was an instant success story. Modern processing made the coffee more palatable to North American consumers, and because it was fair trade certified, it enabled farmers to demand a living wage as they moved into the specialty coffee market.

The Haitian Bleu revival was short-lived: producers had trouble controlling quality, and bribery and corruption made the export process costly. Montague's shop has only four bags of Haitian Bleu left, and he says it's very difficult to find—now especially, because of the post-earthquake chaos. Still, the coffee is one of Montague's favorites, and others feel the same way. Coffeereview.com says that "at its best, the coffee is rich, opulent and sweetly low-toned."

But the beans didn't win everyone over. George Howell (owner of his namesake coffee company and terroircoffee.com) carried it years ago when he owned the popular Boston-based roaster the Coffee Connection, which was later bought by Starbucks. Like Montague and Prince, Howell remembers tasting an impressive sample back in the eighties, but the problem, he said, has always been consistency.

"It's been a 'cause coffee,' not a quality coffee," he said, noting that only shops that actively support social justice are likely to carry it. Nonetheless, he added that what's happening in Haiti has piqued his interest. "You feel bad. They've been so neglected for so long."

Atlantic Food Channel contributor Jerry Baldwin, co-founder of Starbucks and the company's first roaster and buyer, agrees. He now owns Peet's Coffee and Tea, and he says the relatively low-altitude Haitian coffee doesn't have the taste his company seeks. Still, he suggests that coffee drinkers who want to help Haiti donate to long-term agriculture projects.

Belief in Haiti's potential as a high-quality coffee producer runs strong among coffee professionals. Prince said the coffee he remembers trying tasted radically different from other Caribbean coffees he's tried, such as Cuban and Dominican. He added that if wild Haitian coffees are allowed to mature and grow, numerous taste profiles could emerge—provided that people are trained in picking, sorting, and processing.

Coffee purchasing also holds the potential to help rural areas. Rick Peyser, director of social advocacy and coffee community outreach for Green Mountain Coffee Roasters, said that as massive numbers of people move from ravaged and dangerous Port au Prince to the countryside, they are going to need a source of income.

"Coffee was there before the earthquake and coffee will be there after," he said. "It's a great way for consumers to get involved in commerce: if enough people wrote checks for a quality product that benefitted farmers and their families, then the infrastructure of Haitian coffee could be improved."

Artisan roaster Paul Katzeff, of Northern California's Thanksgiving Coffee Company, said now is "the perfect time to start over and to do it right." He's seen it happen: in Rwanda, an initiative known as the SPREAD Project, run by one of Katzeff's friends, rebuilt the country's coffee industry from the ground up in just five years. In an email to past presidents of the Specialty Coffee Association of America, Katzeff challenged members to "step up to the plate on this."

Katzeff added that something else is necessary for reviving coffee in Haiti: hope. He noted that growing coffee requires determination and a bright vision for the future.

"Coffee rarely brings economic and social justice," he said. "But it can."

Heritage Coffee Company is donating seven dollars from each bag of Haitian coffee it sells to the earthquake relief effort. You can also support Latin American coffee growers by donating to Coffee Kids, which supports education, health awareness, micro-credit programs, and food security in coffee-farming communities.