Coffee quarrel brewing over price cut
Published:Friday | October 22, 2010 | 12:00 AM
Avia Collinder, Business Writer
A severe cut in the farm-gate price paid by local processors to coffee farmers, to less than half the 2008 level, now has growers hopping mad and insisting that the agriculture ministry step in to do something about the matter.
The Coffee Industry Board (CIB), the government agency which regulates the industry, is attempting to set a meeting between farmers in the eastern belt and agriculture ministry officials.
From early October, the farmers took their grouse to the CIB at meeting during which they protested a whopping 57 per cent drop in the price processors were paying for a box of the beans this year over the price which obtained in 2008. The coffee farmers are now receiving $1,500 per box, compared to $3,500 in 2008 and $2,200 last year.
Last weekend, CIB Director General Christopher Gentles said attempts to set a high-level meeting to discuss the issue had been stymied by the agriculture minister, Dr Christopher Tufton's, travel to the Eastern Caribbean.
A copy of the minutes of the meeting between the CIB and the coffee farmers obtained by the Financial Gleaner noted that "numerous attempts to get an official response via the ministry had also failed".
The farmers are now threatening to hold demonstrations at the agriculture ministry's Kingston offices if the meeting does not materialise.
Gentles said the farmers are demanding a new payment system, preferably with a set period for payment or full payment upon delivery, thereby eliminating the need for local dealers, who act as middlemen in the coffee sale. The farmers now want to sell their product directly to the Japanese buyers.
At the meeting, the farmers complained that they had not received final payment from Wallenford Coffee Company for the last crop, although the new crop year has already started. Wallenford and Mavis Bank Coffee Factory purchase the beans from coffee farmers in eastern Jamaica for final sale, mainly to the Japanese market.
Hopeton Hanchard, a farmer of Spring Mount in St Thomas, who grows Blue Mountain beans, said that there was now a three-week delay in getting payments. He has hinted at the possibility of not growing coffee next year as the returns are said to be less than the cost of inputs.
He noted that for a one-acre farm, the best fertiliser costs $4,500 per bag, and 15 bags are needed for the year. To that must be added the cost of chemicals and labour. The CIB's Gentles said farmers have said they pay between $700 and $1,200 to pick a box of coffee.
"I have eight acres now, but it is going to come down to none (because) you can't stay in what is going to kill you," said Hanchard.
"This is worse than slavery," Hanchard declared.
"Farmers are of the opinion that the CIB should be able to set the overall price for a box of coffee, and not the dealers, (and) they want to know what the actual final price (paid to the dealers by the overseas buyers) will be if they receive $1,500," said Gentles.
The coffee farmers are insisting on a level playing field with the same price applying to small and large suppliers.
At the recent meeting held at the Cedar Valley courthouse, the CIB director general told the farmers that the market in Japan has shifted and the demand was being severely affected by the recession.
Gentles told the Financial Gleaner that three factors had affected the price of cherry coffee this year. These, he said, were reduced demand from Japan, with the pace of sales being significantly below last year's, no advance payment from purchasers, and lower prices in the marketplace.
Gentles said that in order to open markets, some discounting has to be applied to the pricing structure for cherry coffee.
As gleaned from the minutes of the St Thomas meeting, the farmers are adamant that the CIB destroyed the Blue Mountain Coffee Cooperative Society at Moy Hall when the regulator did not renew its licence.
The CIB was accused by the farmers of having given the Moy Hall licence to a big dealer.
However, Gentles has said the Moy Hall licence was not renewed because of a large debt that Moy Hall had carried off its balance sheet. The lack of up-to-date financial statements, and an inadequate business plan, the CIB head director general argued, would have put the farmers at risk.