Marley Coffee Laments coffee price hike

The price of Jamaica Blue Mountain (JBM) coffee jumped 40 per cent in real terms in a year based which worries Marley Coffee.

Coffee remains scarce based on a confluence of factors now led by summer drought which killed beans.

“We are committed to ensuring our supply chain and providing our customers JBM. We are diligently working to secure more JBM as the market we created for it continues to expand. There still is a high demand for JBM in North America, but limited supply and rising costs may hurt sales,” stated Marley Coffee to its investors this month in filings to the US Securities and Exchange Commission. 

The sale of JBM beans largely gives the brand prestige, as the majority of Marley Coffee sales are from cheaper coffee growing regions outside of Jamaica.The company bought US$290,000 worth of JBM over nine-months ending October or two-thirds less than a year ago, financials state.

We are currently working to address the supply issues and while we believe we will be in a far better position in Fiscal 2015 with respect to JBM availability,” noted the company.

Over nine-months the company recorded a US$7.8 million net loss from US$6.7 million in coffee sales or three times higher losses than a year earlier. Part of the losses are the result of payments to executives at Marley Coffee which surpassed US$1 million over three-months.

Marley Coffee based in Denver, USA, recently gained distribution in over 5,000 stores in North America, with plans to enter 10,000 stores.

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Jamaica, Kenya , PNG all recovering coffee relatives

coffee plants

Coffee seedlings from the Blue Mountain range in Jamaica spawned commercial coffees from Kenya and Papua New Guinea in the 1900s.

Back in the 1700s coffee was introduced to Jamaica from Martinique according to the Coffee Board of Jamaica. At that time, Martinque a small French territory boasted 16 million coffee plants. Today it remains but a shadow of its former caffinated state.

Interestingly the same fate may meet its three descendant coffee territories as each suffers the one of the worst declines in nearly two decades.

However replanting efforts in Jamaica along with new farming practices in Kenya and PNG supported by loans from the World Bank and secondly its private sector lending arm the IFC respectively aim to resuscitate the sector.

For instance Jamaica’s coffee production is set to decline by half for the upcoming crop, experts indicate. Farmers blame rust disease and abandoned farms based on lower prices since the 2008 Western financial crisis. Ironically prices are now at record levels both on the premium coffee market and coffee commodities exchange . Farmers are clamouring back into the sector but it might take the length of an entire crop to rejuvenate coffee farms–thus creating disequilibrium and higher prices to consumers.

PNG coffee production declined by since coffee commodity prices dipped three years ago according to World Bank. Farmers not surprisingly abandoned farms. Prices are down some 23 per cent since the 90s data indicates.The World Bank will pump US$46 million in PNG agriculture in a campaign in part geared at rejuvenating the coffee industry hit with declining yields. The project aims to increase yields and hopefully pricing by replanting aging trees, some as old as 40 years, training in best practises, providing tools and paving farm-to-market roads.

Interestingly, PNG Blue Mountain Gold coffee sells for one-third of Jamaica Blue Mountain the project aims to cut that divide.

Kenya the 20th largest producer of coffee globally has suffered from a 60 per cent drop in production since the 90s (a similar level as Jamaica compared over same period), IFC data indicates.

” Decreased productivity has been in part the result of reductions in government programs that provide technical advice to farmers. Small farmers—responsible for about three-quarters of Kenya’s coffee production—have been most affected by the reduction in government support,” according to the IFC in its 2013 document Rebuilding the Kenyan Coffee Sector,

The IFC project aims to train hundreds of key farmers to in turn train thousands in best practices. Its a serious move that ultimately aims at double farmer annual income

“The project is expected to reach 9,000 farmers and raise their yield per bush to between four and five kilograms of cherry, resulting in an additional 120 kilograms of beans. This productivity gain should help more than double the gross annual income of a typical grower from less than $200 to $475,” stated the IFC in its document.

The African state sells its own Kenya Blue Mountain coffee.

The good news is that coffee from these three nations should recover and provide a decent living for thousands of farmers, whilst providing the perfect cup.