Like many agricultural products, global coffee production is concentrated and varies greatly from one year to the next.
Brazil, for example, which is the world’s largest coffee producer with a market share of 30%, is anticipating a 25% fall in production for 2007, while Indonesia, which is the world’s 4th largest coffee producer and exporter, is anticipating a 30% fall in production, due principally to very unfavourable climatic conditions.
Given, however, that supplies fluctuate and are difficult to anticipate, stock levels are of vital importance for determining world prices.
While stock levels of importing countries have remained relatively stable, the same cannot be said for exporting countries, as their stock levels have fallen by over 30% in 2006-2007.
This is why world prices have been fluctuating so wildly, by over 30% during 2006, a trend that is likely to continue and even worsen during 2007, giving rise to significant risks in terms of the supplies and stability of small farms facing erratic market variations.
The domination of a very small number of countries over worldwide coffee production, whose harvests are subject to hazards arising from various economic conditions with alarming consequences, illustrates the urgent need to establish a system of regulating the world’s agricultural markets.
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