Commodities: An Awful Lot of Coffee in the Bin

If coffee beans could be spent as currency, a lot of have-not nations would suddenly find themselves rich. The surplus stocks of coffee stored in warehouses from Colombia to the Cameroons have now reached 15.8 billion Ibs., or enough to keep the world’s coffee drinkers well-nerved for a year and a half at present consumption rates. To do something about this surplus, delegates from 61 nations gathered in London last week for the tenth meeting of the International Coffee Council.

Free Cups & Foul Moods. The council’s tea-drinking British hosts tried their best to get the three-week meeting off to a jolly start. Delegates were provided with copies of a book on Where to Get a Good Cup of Coffee in Central

London. But in spite of the book and the free cups of carefully brewed coffee available at the meeting, no one was certain that harmony would prevail. “Fifty percent of our delegates are pessimistic,” said Brazilian Representative Georges Maciel, “and the rest feel no optimism.” The reason was that no nation had a very clear idea of how to eliminate the present surplus or stop the flood of newly harvested coffee beans that continues to roll in.

On the basis of a “coffee year” that begins in October and ends in September, the grower nations represented at the London conference will harvest 62,200,000 bags of coffee beans this year, each bag containing 132 Ibs. of beans. Of this staggering total, the consuming nations will get only 46,850,000 bags, leaving another 15,000,000 or so to be consumed at home or added to the warehouses. What makes the gap more disturbing is that some coffee-drinking nations are not even drinking as much as they used to. In the U.S., which takes 50% of the global output, per capita daily consumption has fallen from 3.12 cups to 2.86 cups in four years, apparently because younger Americans tend to prefer soft drinks. Thus last week, Joao Oliveira Santos, executive director of the International Coffee Organization, reminded delegates that coffee production, increasing at the rate of 5% annually, is now double the annual amount consumed by coffee drinkers.

Uproot More Trees. Still, the situation is vastly better than it was five years ago before the 61 nations negotiated their first international coffee agreement. Until that time, the grower nations, lured by a postwar demand, planted and pushed onto world markets so much coffee that supply and demand reversed and prices dropped badly. The agreement corrected that by establishing stringent export quotas for each coffee-producing member.

What made delegates pessimistic last week was a basic disagreement between big and small producers. Of the 39 nations who grow coffee, no less than 36 arrived in London to demand increases in their market quotas. Ranged against the smaller nations are Brazil and Colombia, the world’s two largest producers of coffee. They argue that the only cure for the coffee glut now is to maintain quotas, uproot a sizable number of the world’s coffee trees, and replace them with other crops. Brazil has earmarked $70 million to destroy 1.3 billion trees and cut output by 18%. The U.S. has promised up to $30 million to an International Diversification Fund that would finance such changeovers. Whether the small nations are wise enough to stop depending on coffee as their money crop and go along with diversification must now be fought out over the London coffee cups.