Financial crisis hits your morning joe

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As I sip my coffee this morning, the Financial Times has given me new reason to appreciate my Robusta roast. Stung by the falling price of coffee, exporters — particularly Southeast Asian exporters like Vietnam and Indonesia — have started hoarding their stocks. Other big exporters, such as Colombia and Brazil, also look worried.

The coffee industry took a quick and nasty turn when markets fell last month and credit froze up. Traders found it harder to get credit to buy supplies, so demand — and prices — plummeted. Prices for Robusta have fallen anywhere from 20 to 40 percent in just two months. Some say the problem is less hoarding than the fact that traders are purchasing cautiously small sums at a time.

That’s bad news for my wakeup call. Before the crash, the United States imported over 2 million 60kg bags of coffee in just 5 months. It’s even worse news for the farmers whose crops are now worth less. Coffee plants don’t produce beans for two to three years after planting — meaning the newest converts to the crop are the hardest hit; their first payoffs are naught.

That could be hard to swallow.