Piece this morning in the Wall Street Journal (it’s behind a tollbooth, so no link) about the sorry state of Central American economies tied to coffee prices. Seems that there’s now a global glut; wholesale prices are at 50 cents per pound, while production costs in the high mountains are 80 cents per pound. The result is a lot of people out of work — and the very real possibility that they’ll turn to growing something a whole lot less benign than coffee.
What makes the article worth looking for is a rundown of how high coffee prices were an instrument of American foreign policy during the Cold War: strong prices means stable governments, which meant slim pickings for the Godless Pledge-fearing Commies. Now the Vietnam (speaking of Godless Pledge-fearing Commies) has joined Brazil as a major exporter of low-quality beans, supply outstrips demand.
Not that you’d notice it at the checkout, of course. WSJ points out that while wholesale prices have dropped 80 percent in the last five years, retail prices have dropped 20 percent.
“Up to 75% of a typical can of coffee is now made up of the cheap stuff, which they then cut with Central American or Colombian [arabica] beans so your coffee doesn’t taste like a shoe,” says Eric Poncon, director in Nicaragua of ECOM Group.