Currently it costs less to buy (cheap) coffee than it does to produce it -- even the cheap stuff.
Partly this is because Vietnam recently got into the coffee business -- because of loans, gov encouragement, and poverty. Unfortunately, Vietnamese coffee sucks rocks. Bad. Vietnam simply isn't a good place to grow coffee. So suddenly there's a ton of dirt-cheap, piss-poor coffee on the market.
It's also because companies like Nestle decided they could use lower-quality coffee and steam the hell out of it, removing all the nasty flavors. This results in tastless coffee instead of bad coffee. Then they add sweeteners, flavorings, etc., in order to sell it.
It's also because, after the cold war, the US decided they didn't need to support the coffee cartel (they were no longer concerned that coffee producing nations would go over to comunism becaues of economic pressures). So it fell apart and there was no structure in place to avert the impending disaster when it happened.
So what's happening? The farmers who sell the good coffee (quality variants of arabica -- the better of the two species of coffee) can't sell it. The good stuffs costs even more to produce than the nasty stuff like Vietnam produces, so they default on loans, sell their land, etc, and go to the big city for a government handout. The coffee they produced, which may not have existed in the wild, disapears, possibly never to be seen again.
Nestle & co, pressured by the likes of Starbucks, sells worse coffee at lower prices. Pretty soon they won't have the option of going back to better coffees, even what they used to sell. My prediction is that they're going to realize how stupid a move that was, one of these days. Instead of modeling the coffee industry after the wine industry (a plethora of varieties that you pay good money for) they produce it like cheap beer. You get a more competative industry with lower margins. But by the time they realize that it may be too late.
And it will be especially too late for those of us who like good coffee.
(See my other post for some links, if you want more info.)
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