Thankfully this isn't about a fist fight and blood spilling over coffee beans- we know how those S. American countries can get at times. No, instead this is the battle over the humble bean and the weapon is cash.
The demand for coffee has never been higher and with two poor harvests of the very coveted arabica bean, the current crop producers have a little more say when it comes to price...and that's just fine. Turns out the big companies Nestle and ED and F Man are offering to pay cash to individual farms, meaning they total circumvent the co-ops, and they are offering much more then what the co-ops were asking for. Usually the farmers sell their coffee to a co-op at prices fixed months in advance. The co-op then goes and strikes a deal with the major companies...if they sell it for more then they bought it they keep the profit, if not, they cover the loss. This gives the small farmer a larger voice in the market. However the companies are now offering cash at a much higher price then the co-op and farmers are starting to break their promises to the co-op.
Is this good? Well, not really. It's good for the farmer, for now, since they get more money for their crops. It's bad for the co-op as they now have dwindling supplies that could weaken them in the future. It's also costing them more to buy coffee and since smaller supplies its harder to pony up the cash to do so. And what if the price of coffee plunges? That's when this gets ugly. With the co-ops weakened from lack of supplies the farmers voice in the market just got a lot smaller. You can forget seeing Nestle officials come and visit individual farms if the prices plunge. And with the co-ops weakened, there is less financial support for the farmers during the tougher times.
As it stands now, the farmers stand to gain a lot by these current quick deals, but may be hurting themselves in the long run.
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