Farmers growing more coffee due to higher bid and good weather

Nestle (Thailand) Co., Ltd. has made an offer to purchase coffee produce from farmers at a high price of 50 baht per kilogram, resulting in more coffee in the market.

Mr. Montri Muangphrom, the director of the Office of Agricultural Economics: Region 8, said most coffee farmers in the upper North have already harvested their crops, and the beans are being dried and processed before they will be distributed to the market. This year, farmers have been granted to produce higher amount of coffee.

In Chumphon province, a kilogram of coffee is priced at 48.60 baht, while in Krabi, one kilogram is valued at 47.00 baht. One kilogram of coffee in Surat Thani and Ranong are being sold at 48.13 baht and 48.75 baht respectively.

The favorable weather condition will enable farmers to produce more coffee, and because of the higher price, more produce will be available by about 10 percent this year.

Source: Thai National News Bureau Public Relations Department - 22 Febuary 2007

Hmmmm didn't realize that coffee growers can 'up' production on such short notice.

yep, weather might provide additional yields but am sure that coffee is a rather long

term production cycle.

Bt BWDIK

Yup - I'm also sceptical about the economics of this longterm - we all know what happened in Malawi, and it happened before the world market became saturated with tobacco.

Phillip Morris and others pushed tobacco as the country's primary crop, a policy which it adopted (stupidly). While intitialy prices were higher, the water/diamond paradox (for those of you who done economics in Uni as part of your credits) kicked in a few years down the line and the supply/demand ratio resulted in the inevitable - a steep drop in the price of tobacco but none in the drop of cig's (i.e. Phillip Morris et al continued to make huge profits but the poor farmers earned less and less season to season).

...... and remeber folks, this happened BEFORE the world was saturated with sources for Burley.

By comaprison, the world is already flooded with coffee (primarily Arabica). I see a short term benefit for farmers, but I am very sceptical regards the long term outlook. Easy for Nestle to sustain above average farmgate prices for a couple seasons, and then when the local supply is so high, start to drop it - at the cost of what are by and large subsitance farmers - for higher shareholder return.

MF

I am wondering how long it takes to get a coffee crop - from seedling to harvest.

Peter