No 30

Low Prices are Harmful for the Entire Industry, Warns Japanese Roaster Key Coffee

February, 2014

100% NOTEWORTHY

Low Prices are Harmful for the Entire Industry, Warns Japanese Roaster Key Coffee

Many international coffee buyers and roasters do not look favorably at low prices of the bean, as they end up affecting the entire industry, they warn.

Even if international coffee prices have shown a recovery so far this year, effects of low prices stir up different reflections by members of the industry. Key actors, including major buyers and roasters, warn that low prices are harmful for the whole industry.

Kazuo Kawamata, marketing director for the Japanese trading company Key Coffee and a member of the 100% Program, warns that low coffee prices negatively affect the entire business.

“From the position of roasters, it is not a good idea for coffee prices to go down, because if prices fall abruptly, they can damage all parties involved in the business,” Kawamata said.

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The marketing director of Key Coffee visited Colombia at the end of 2013 and talked to Bean & Beyond about the coffee market in Japan.

“The most damaging thing for the business from rosters’ point of view is that if price falls, also does quality of investment in the product, in the entire cultivation process, and the end result in the long-term is the worsening of overall conditions for the business,” Kawamata added.

The Key Coffee representative explained that the three main variables that come into play in the Japanese coffee market are a stable supply, quality and sufficient quantity of bean.

Kawamata also showed how complex it is to find a balance between production and price in the international market, because, while on the one hand it is good news for Colombia that production increases, an almost natural consequence is that with an increased supply, the price tends to drop.

“Of course, it’s very good that volume of coffee to be purchased and production increase, but the problem lies in a lowering price, because this will result in an unbalance chain within the business economy,” he concludes.

With 7 million bags a year, Japan is the largest consumer of coffee in Asia and the second largest buyer of Colombian coffee in the world, after the United States.

 


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