GUATEMALA CITY—Amid the aroma of freshly roasted coffee at the offices of Guatemala's coffee growers association, officials were buzzing about a new discovery: How to burn coffee for fuel.
Driven by the lowest prices in eight years and with no end in sight to the decline, Guatemala's coffee growers are desperate for new ways to cope.
Hence, the plan for using their lowest-grade coffee for industrial fuel. If that fails, the beans might go for compost. No matter what, they say, they will do whatever they can to prop up prices in a market that some say soon might be the worst in decades.
In New York markets Monday, coffee futures prices fell to the lowest point in more than seven years, down nearly a penny, to 56.65 cents per pound for May delivery.
The market's decline results primarily from overproduction and excess inventories. Brazil, the world's top producer, has had huge harvests, and Vietnam has soared from a low-level producer to one of the biggest.
The market is awash with coffee, and that really is the overriding
factor, said Arthur Stevenson, a coffee industry analyst with
Prudential Securities Inc. in New York City.
This has been a
long-term, downward market.
Nor is the situation likely to let up, he said, especially since concerted action by coffee producers to buoy prices has gone nowhere so far.
Last year, eager to reduce supplies, the 14-member Association of Coffee Producing Countries and five non-member nations agreed to hold back 20 percent of their exports. But the head of the association recently complained that some coffee producers have not complied with the decision.
That, in turn, has generated panicky sales among growers worldwide, who fear prices will keep falling even if they hold onto their inventories.
In the case of Guatemala, the value of coffee exports is expected to fall 20 percent this year compared with a year ago, and growers fear that if world prices continue dropping, Guatemala's exports may fall by another 15 percent next year. Thus the unusual plans for the low-grade portion of the crop.
We hope that it is feasible to use coffee beans as fuel, said
Manfredo Topke, a coffee grower and president of Anacafe, the
association that represents Guatemala's 61,000 private growers.
are not asking farmers to destroy their coffee beans.
But some growers in lower-lying areas, where the coffee does not command as high prices as elsewhere in Guatemala, are switching to new cash crops, replacing coffee with banana and palm trees.
Everyone is in a panic because the market is so low. It is forcing
farmers to get rid of workers, said Esther Eskenasy, an official
with Anacafe. Last fall about 670 coffee farms were put up for sale,
and that number probably has risen, she said.
For all of the growers' despair about their losses, and the problems
created by newly unemployed coffee workers, diplomats doubt that
long-entrenched growers, who control Guatemala's coffee industry, will
consider any major changes. Even with the tough worldwide market, one
diplomat said, growers still
have it pretty good here.