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Why Does the Price of Nepali Coffee Defy Logic?

"Don't shoot yourself in the foot" the old adage states.


The graph on the right shows recent coffee prices - both world-wide and also in Nepal.  The price we paid for Nepali coffee increased 20% in 2012, 25% in 2013, and 17% this year.  "Why?


1. "Seller's Market" - the current local coffee situation is one in which demand significantly outstrips supply.

2. "Time Lag" Between Demand & Production - with coffee prices currently "high," a considerable investment is being made in more planting.  Remember, however, that it requires roughly 5 years from the time a coffee bush is planted until in comes into "full production."

3. "Skewed Export Market" - small quantities of coffee are being exported for significantly-high prices.  As all farmers strive toward this unsustainable level, it artificially drives the price of local coffee high.


US$ 5.51/kg - Current FOB Port cost of a world-class Central American coffee.

US$ 7.23/kg - Current FOB Port cost of quite-ordinary Nepali coffee.

 

Our Company Guiding Principles include the mandate of supporting Nepali coffee. As you can see, however, (being a business and not a charity) this is not easy under the current run-away market situation.  Remember: the "price bubble" must ultimately "break."


 

ICO Composite Indicator Price

 

For more information please consult:

www.ico.org

 


 

 

 
Posted: 1524 days ago (Top of the World) More