Nestle seeks to manage coffee supply

Food & Drink Weekly, Sept 23, 2002

Nestle, the group behind the Nescafe brand, has expressed its aim to halt the severe fall in the price of coffee beans that is causing widespread destitution amongst coffee farmers in developing nations. By saying it will back measures to manage the supply of beans, Nestle has broken away from its three main coffee rivals: Kraft's Maxwell House, Sara Lee's Douwe Egberts and Procter & Gamble's Folgers.

Coffee bean prices are the lowest they have been for a century; average prices are about 50-cents per lb. The low prices mean that many farmers have to give up their farms as they face bankruptcy. Nestle has expressed concern that the low prices will affect bean quality because the price of the beans is currently less than the cost of production.

Previous attempts to manage prices of coffee beans have not been successful, and the head of the U.S. National Coffee Association Robert Nelson believes that these attempts actually worsen the situation. The association believes coffee should be traded in a free market.