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Reduction in Zimbabwe coffee price expected.

Reduction in Zimbabwe coffee price expected

With the continued fall in world coffee prices since the suspension of quotas in July, the local prescribed producer price paid to growers in Zimbabwe is expected to be reduced as the present producer price was in excess of the likely realization of the crop.

Robin Fennel, the chairman of the Coffee Growers Association (CGA), said that if the price situation was not corrected immediately, a deficit, which would be to individual growers account would occur in the Grain Marketing Board's (GMB) coffee account. Growers would be advised of the extent of the price reduction early in November.

He added that for most of the period since the abolition of quotas, Zimbabwe had not had any coffee to offer but with new crop deliveries building up in October, some sales had taken place.

He stressed that Zimbabwe was a quality producer and much of its coffee sold at prices in excess of the relevent indices produced by the International Coffee Organization. However, from the initial recent sales it was clear that a very careful reassessment had to be made of Zimbabwe's future marketing prospects.

As part of this assessment, the chief executive of the CGA and the general manager of the GMB had recently visited most of the overseas buyers, and the consensus of opinion amongst the international buyers was that prices were unlikely to rise, at least in the short term and could even fall further.

Fennell believed that there was no possibility of quotas being reintroduced for at least another 12 months at the earliest. However, the CGA preferred an open market system where quality was appreciated.

He predicted that the market should stabilize in the next 6 to 12 months, as soon as Brazil finished the off-loading of stocks started when quotas were taken away.

Rensen Gasela, general manager of the GMB confirmed that the outlook was worrisome but was confident that Zimbabwe coffee exported adds to the problem. Coffee production has increased from 4,000 tons in 1980 to 15,000 tons in 1989. In the 1988/89 season 8,900 tons of coffee were exported and only 490 tons were used internally. Local consumption of coffee has been falling because the price has been too high for people living in the communal (peasant) areas.

People in the capital, Harare, did not drink coffee because for years they had been conditioned to drinking tea, which was much cheaper.

Coffee production is expected to earn Zimbabwe US$35 million this year.
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Author:Kille, T.
Publication:Tea & Coffee Trade Journal
Date:Dec 1, 1989
Previous Article:Coffee export revenues expected to be 35% lower.
Next Article:Shipping rates to increase; drug prevention costs appear.

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