Rains lift world coffee prices; PHL follows rise

Prolonged rains have stumped the flowering phase of coffee plants in Brazil and Colombia, the world’s major coffee exporters, pushing global prices of the commodity to levels unseen in 14 years, industry people in the Philippines said Tuesday. The situation is having a kind of domino effect that coffee prices in the Philippines have started rising, that brewing coffee may be more and more expensive in the next two to three years. Prices of Nescafe products, a popular brand in the Philippines, were increased on Monday as coffee beans in the world market soared to a 14-year high last week. “They have increased prices by 3 to 5 percent," said Trade and Industry Undersecretary Zenaida Maglaya, referring to Nescafe. A 25-gram sachet of Nescafe coffee now sells for P18.95 from P18 only last week. Nestle Philippines, maker of Nescafe is now buying its coffee beans for about P103.50 a kilo from P65 per kg on average last year. Nick Matti, the Philippine Coffee Board’s co-chair, on Tuesday said the country should brace for higher prices of coffee. “Coffee prices will move up further in the next two to three years if weather patterns continue to remain unpredictable," he said. Brazil, the world’s biggest coffee bean producer has experienced crop failure because of excessive rains. The South American nation used to produce 45 million to 50 million bags of coffee beans per year. Last year, however, its coffee bean output was down to 39 million to 40 million bags as prolonged rains continued to devastate coffee plantations there. A bag of coffee beans weighs 60 kgs. Columbia is likewise feeling the impact of excessive rains. “The prolonged rains may coincide with the flowering season which can destroy the coffee," Matti said. On average Columbia — the second largest coffee producer in the world, used to churn out 13 million bags a year. Its output last year was down to 10 million. Vitenam, Philippines also suffer output drop Other coffee-producing nations trying to make up for the slack in South America are unsuccessful. Vietnam, which exports coffee to the Philippines, is also expecting a slowdown in production. From the 1.3 million tons it produced last year, Vietnam sees coffee been production only at 1.1 million tons this year. “Vietnam experienced heavy rains last year which affected their crops," according to the Coffee Board’s Matti. In the case of the Philippines, the abnormal weather phenomenon El Niño that brought a prolonged drought starting in 2009, destroyed crops during its onslaught. “Back in the late 1980’s, Philippines produced 72,000 tons," Matti said, noting that last year’s output totaled 40,000 tons. The Coffee Board expects a further drop in Philippine coffee output to 25,000 to 27,000 tons with the lingering impact of the drought. Coffee plants that survive harsh weather conditions yield smaller beans. Coffee consumption in the Philippines is rising, putting pressure on the demand-supply situation and having an impact on prices. Philippines consumption is increasing at 3 percent a year. “We do not have enough coffee in the country today. We need to import which is another reason why prices are up." Local brewer Bo’s Coffee has started to feel the pinch of higher prices. “We started to feel the effects of higher prices early this year. We are not looking at increasing our prices yet," said CEO Steve Benitez. Le Bistro Vert, another local coffee outlet said that prices in their shops will not increase in spite of the rising cost of coffee beans worldwide. “We have computed our costs in such a way that we can still profit even if prices go up further," said Le Bistro Vert director Lot Manalo-Tan. Meanwhile, Starbucks branches in the Philippines have increased their prices by P10 per cup of coffee. It is just a matter of time before other coffee shops raise their prices. “At a certain point roasters will have to pass on the costs to hotels, restaurants, coffee shops, and supermarkets," Matti said. “They can carry [the burden] up to a certain margin but if the prices continue to go up, they have no other choice but to pass it on to consumers," he added. — VS, GMA News