Today farmers suffer from depressed coffee prices What

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The basic problem,too many beans, Due to an ongoing over production Coffee price US cents lb International. of coffee compared to demand,Organization s,coffee bean prices are at historically composite. low levels In 2002 2003 111 million average coffee. bags of coffee were produced price 1989 2003,while about 109 million bags were. consumed This has added to the 150,already large stock of coffee. accumulated over the past years,resulting in a disturbing increase.
in poverty among some coffee 100,farmers and their families. Green coffee prices are cyclical,and the present phase follows. a long period during which prices,far exceeded production costs. When prices were high a significant, number of farmers sometimes 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003. encouraged by third parties, decided to increase their production At the most fundamental level Who determines thei.
or simply to start growing coffee two factors can positively impact coffee price i. Simultaneously many Brazilian the imbalance in the market. farmers reduced the cost of a slowdown in production and Coffee prices are based on two. producing coffee through modern an increase in demand Given this commodity exchanges the LIFFE. agricultural techniques while situation what can be done to in London and the New York Board. Vietnamese farmers invested improve the income of coffee of Trade Commodity futures. heavily in an expanded planting farmers and improve the social and markets are a way of managing risk. programme This resulted in an economic situation of their families by establishing a basis to determine. oversupply with stocks amounting This document describes the the price of the product for. to nearly 50 of the annual measures which Nestl considers to producer exporter shipper and. worldwide consumption It will take be the most important in improving consumer At inception there were. time to reduce these stocks the lives of coffee farmers as well in the main only coffee related. as Nestl s contribution to their companies involved Today with. well being the active presence of funds playing,in this field futures markets risk. adding to the volatility of prices,as demonstrated by the fact that. the volume traded on coffee,markets exceeds the global. production by a factor of ten,3 What can be done,Move to speciality coffees. and niche markets, To obtain better prices one strategy Nestl and Fair Trade i.
for coffee farmers is to engage in, niche markets such as speciality Nestl recognises that Fair Trade is. coffees or coffees labelled as a useful way to raise consciousness. organic or Fair Trade about the coffee issue and for. Speciality coffees are superior individual consumers to express. quality products made from beans their solidarity with a group of. that are available in limited coffee farmers in the developing. quantities and for which the price world, is set according to origins and However if on a broad basis. quality This translates into higher coffee farmers were paid Fair. prices for the farmers who produce Trade prices exceeding the market. these beans price the result would be to,Companies such as the encourage those farmers to. fast growing Nespresso business increase coffee production further. which sell these products provide distorting the imbalance between. increased opportunities for farmers supply and demand and therefore. given the premium prices these depressing prices for green coffee. companies pay for the special Worldwide the Fair Trade. qualities of coffee they buy movement accounts for less than. However while high quality and 25 000 tonnes of green coffee. labelled coffees provide some Nestl s direct purchasing. coffee farmers with an opportunity accounts for 110 000 tonnes of. for greater revenues they account green coffee per year This system. for a relatively small percentage of enables the farmer to retain a. the consuming public and do not greater portion of the price paid by. represent a solution for the broad Nestl therefore improving his. coffee market as a whole income see page 6,Speciality coffee. brand Nespresso,pays higher,prices to the,according to.
4 What can be done,Diversification to,other crops, I grew up with coffee and it is For farmers who do not have the. important for me to have my possibility to produce the quality. own farm required for speciality coffee it is,vital that they reduce their over. Bongsong Kanakrut has a two dependence on coffee They need. hectare farm in Sawi Thailand to find new sources of income in. where he grows coffee and order to be less vulnerable to the. tropical fruits durian and inevitable fluctuations of coffee. rhambutan I started to plant prices These sources of income. durian three years ago when can be either alternative crops or. coffee prices started to decline other activities, But it needs six years to However it is not a simple. produce So now I work with matter for farmers to shift to. Nestl to have some more alternative crops Farm subsidies. money he says During the and other trade barriers in the. harvest season he is a driver United States and the European. at the buying station and the Union currently impede access to. rest of the year he grows coffee major markets They hamper. for a Nestl research project attempts to sell agricultural goods. My job on the Nestl project on a profitable basis to Europe and. allows me to learn new North America Nestl has, cultivation techniques that repeatedly spoken out for the. I can apply on my own farm elimination of these trade barriers. His wife takes care of the, plantation but he gives her A significant reduction in tariffs.
a hand at the weekends on farm products and the ultimate. Their two daughters go to phasing out of farm subsidies and. the local school He would like protection of the rich countries. them to study at university would offer third world farmers. It all depends on their capacity real benefits, and the way I manage my farm Peter Brabeck Letmathe i. If I am successful I will be able CEO of Nestl The Guardian i. to pay for their studies 08 09 2003i,He hopes that if they go to. university they study agronomy,and then come back to the farm. because I like coffee growing,and I know that it is a good. occupation,With the money I make with,5 What can be done.
durian I will be able to earn,a good income in the future. Direct procurement,helping farmers to retain,more of their coffee s value. Due to the fact that coffee is often Retaining value i Nestl s plantlets. distribution, grown in remote areas the crop direct purchasing in Thailandi programmes. from these isolated regions is allow farmers, usually sold to middlemen who Nestl is the world s largest to cultivate better. are often inefficient and may tend direct buyer of coffee In 2002 coffee trees. to take advantage of their situation the company bought about. Prices can be set with exaggerated 110 000 tonnes of coffee directly. commissions high transportation from farmers and cooperatives. fees are charged and farmers are This was a 10 increase over. left with the bare minimum for their the previous year. green coffee In Thailand where direct, Though middlemen play an procurement has been in place.
important role by transporting the since 1991 Nestl purchases some. coffee from remote cultivation areas 34 000 tonnes of green coffee. to the traders or to the coffee mills annually directly from farmers. a shortening of the supply chain The company has opened six buying. helps farmers to retain more of stations in the coffee growing areas. their produce s value in the south of the country reaching. Several mechanisms to increase some 16 000 farmers. the supply chain s efficiency In these buying stations the. have been developed Among farmers are allowed to sell their. them farmers have gathered in coffee at transparent conditions. co operatives to act as exporters In 2002 2003 the average price. and some large scale farmers paid by Nestl for coffee was. particularly in Brazil have developed THB 38 7 about USD 0 97 while. privileged relationships with local traders typically paid. roasters around THB 17 to THB 25, At industry level Nestl The agronomists responsible. developed a direct procurement for the buying stations during the. system over 20 years ago In coffee harvest season spend the. producing countries where the remainder of their time providing. company has a Nescaf factory free technical advice to the coffee. it has set up buying stations farmers They also provide them. where farmers can sell their coffee with free plantlets in order to help. directly to Nestl thus retaining for them renew their plantations with. themselves a larger portion of the productive varieties. value of their coffee,6 What can be done,Making compost and. reducing fertilisers helps,me to save money,I started growing coffee in. 1985 In the beginning I was,selling it to the local traders and. I relied on my neighbours to,teach me the best way to grow.
coffee Surachet Silpsorn says,Since 1992 at the same time. as the launch of the direct,procurement in the Sawi area. Nestl has provided technical,assistance to farmers This free. advice is primarily focused,on better use of fertilisers. productivity increase and overall,quality improvement.
I benefit a lot from the free,assistance provided by Nestl. One of the key lessons I learned,is the floating of my coffee It is. an easy technique which allows,me to identify the inferior quality. cherries just after harvest Since,I built my two floating tanks. I now manage to sell my coffee,at a higher price because it is.
of a better quality,Nestl s agronomist taught,me how making compost and. mixing it with the fertilisers is,a good way to save money Now. that I do it I have more money,at the end of the year. 7 What can be done,Assist the farmers,to improve the quality. of their coffee, It is evident that quality improvement Nestl and the ICOi.
has a direct impact on farmers Resolution 407i,income Quality coffee will be. bought at a higher price and will The International Coffee. compensate for the reduced Organisation ICO recently passed. quantities of coffee produced a resolution aimed at eliminating. Technical assistance to coffee low grade quality coffees from the. farmers is an efficient way to help supply chain ICO Resolution 407. them improve their farming The Nestl Quality Control. techniques Based on a win win Centres NQCC were created over. philosophy the free assistance 30 years ago to ensure that the. provided by Nestl Agricultural quality of exported coffees complies. Services allows farmers to benefit with the requirements of the Nestl. from state of the art training while market which ordered the product. ensuring the company that it will Nestl believes that the NQCC. receive the quality it needs for its network in producing countries. Nescaf factories encourages and enhances a better,understanding of quality and this. contributes to the objectives of ICO,Resolution 407. Nestl s technical,assistance,contributes to,the improvement. of the quality,8 What can be done, If the coffee we produced me If I have any questions.
here were not of high quality I can always ask him I must. I wouldn t expect Nestl admit that the first time I did this. to buy it job I was a little confused The,second time it was a bit easier. My name is Florentino As s By the third time I knew exactly. Anastacio I am in charge what I was doing, of quality control at the For me like all the people in. Limonestitla mill in Veracruz this community coffee is very. Mexico When the coffee is important I consider my job to. brought here by the farmers for be very important of course. sale I carry out an inspection if the coffee we produce here. to establish its quality was not of high quality, The Limonestitla mill was I wouldn t expect Nestl to. built in 1997 after the coffee buy it, farmers of the region decided to Yes I drink coffee In fact. establish a central place from the first thing I do every morning. which to trade their coffee before work is have a cup. Their hope was that by working,together as a group they could.
negotiate a better deal for the,sale of their coffee And they. have succeeded Whereas,before they were selling,piecemeal to local middlemen. they are now selling directly,First I check the moisture. content If it is too high the,coffee must be rejected and. put through the drying process,once again Then I check the.
concentration of defects such,as stones and bad beans in the. sample Once again if this is,too high the coffee must be. rejected and resorted I then,roast and grind some of the. coffee and prepare a sample,for tasting,9 What can be done. I learnt these activities with,Nestl s assistance I have.
attended two courses in Mexico,City and two here in Veracruz. state Mart n V zquez who,works for Nestl also supports. Helping developing,countries local economies,Too often the developing world is. solely the producer of agricultural,raw materials that are directly. What can be done Today farmers suffer from depressed coffee prices

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