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March 2011 Newsletter 

An Economy of Scarcity


Coffee prices have reached an historic high, more than doubling
from where they were a couple of years ago. That is, commodity
coffees (otherwise known as New York Board of Trade "C" coffee
prices) have doubled in US dollar terms. They have gone from
US$1.25/lb to US$2.70/lb, mostly because coffee consumption has
finally caught up with coffee production.

If these prices continue they will have profound effects on the
global coffee trade. For example, the original Fair Trade price
was set at US$1.35/lb, at a time when the "C" price was below
US$1.00/lb. Transfair may have difficulty in maintaining supplies
and signing up new companies to be certified now that the "C"
price has doubled, so Fair Trade coffees will be both scarcer and
more expensive.

Australian dollar prices have been less affected because our
dollar has risen against the US$ over the same period, so right
now green coffee prices are only up by 50% or so. For us the
problem is going to be less about what we're paying for coffee
and more about getting hold of good quality green coffees at all.

Frankly, higher green coffee prices don't scare me that much; we
can always tighten our belts a bit and wait to see what happens
when next year's crops come in. As with most agricultural
products, it's possible to go from shortage to surplus pretty
quickly. What does send shivers down my spine is being told
"Sorry, none available at any price."

The growth of specialty coffee in the USA has made it more
difficult for the rest of us to get access to the good stuff, and
even average quality coffee is more costly and harder to get,
which has to be giving some of our major roasters heartburn.
Bottom end espresso will be getting even worse!

As I've said before, Australia is at the bottom end of the chain
when it comes to supply from most of the world's coffee producing
areas, and we're lucky to have skilled green coffee suppliers
with long histories in the business to keep us going. However,
even with their assistance and support we are not going to be
able to get exactly the same coffees that we've had in the past.

In the next few months there WILL be changes to the coffees we're
offering, some minor and some major. Café de Cuba will become
Café de Cuba Peaberry sometime this month, a slightly cleaner,
tastier version of the current coffee, but basically the same. In
other circumstances I would have put it on as a monthly special,
but right now I'm just happy to have it at all.

Organic Timor Maubesse will finish when I use up my current stock
of green coffee. It will be replaced by a different organically
grown coffee, yet to be decided. I'm sure there will be others as
the year rolls on, but I have no clear idea of what they will be,
exept they'll be the best I can get.

Fortunately, this month's special isn't at the end of a long
supply line, and escaped serious damage during Cyclone Yasi. It's

Australian Basalt Blue
$48.00/kg

This is a peaches and cream coffee, with a sweet, fruity front
palate followed by a distinctively creamy finish. It's more
"fruit driven" than last years crop, but retains the malty
aftertaste.

April is "conference" month, with the SCAA and a couple of others
happening around the world. I'll be away for a couple of weeks
mid-April, but the newsletter and special coffee should be
available on schedule.

Until next month

Alan.