Coffee : Hard Times

Brazil, the world’s largest coffee grower, has announced that it will soon abandon the retention plan launched by the Association of Coffee Producing Countries (ACPC) in May last year. Under the plan, which was to run for two years to help boost sagging coffee prices in the world market, producing countries were to withhold 20 per cent of their exportable production till prices reached a desired level, when these stocks could be released. But the plan has been a failure due to laxity in its implementation and galloping global coffee production. The resulting supply glut has seen prices crash, with the robusta variety languishing near 30-year lows and arabica at eight-year lows. Brazil, which had initiated the retention plan, blamed non-compliance by other producing countries, especially those in south-east Asia for its failure. Brazil now joins a growing list of countries that have decided to pull out. Earlier other big producers, Colombia, Mexico and El Salvador, said their commitment to the plan would end with the close of the 2000-01 (October-September) crop year.