x Abu Dhabi, UAE Thursday 20 July 2017

Global coffee prices hit 13-year high

In Jordan, the pinch has been felt since beginning of summer with the introduction of sales tax.

Al-Ghazal coffee shop in Amman displays its beans last week. A kilogramme of premium coffee can now fetch up to $21.
Al-Ghazal coffee shop in Amman displays its beans last week. A kilogramme of premium coffee can now fetch up to $21.

AMMAN// Abdullah Attari's wife likes to invite her friends in for a chat over a coffee early in the day, but she might never hear the end of it from her husband. 

Her hospitality these days means the 250 grams of Brazilian coffee that now costs US$5 (Dh18) will last only a week or so.

"The problem is when my wife gathers the neighbours in the morning, most of the coffee will be finished quickly," said the taxi driver and father of three. 

Global coffee prices hit their highest level in 13 years this month largely because of bad weather in major coffee-growing countries, but Jordanians have felt the pinch since the end of June. The government decided then to reimpose a 20-per-cent duty on coffee and introduce a sales tax of 16 per cent.

Since then, retail prices surged between 20 per cent and 42 per cent higher, depending on the quality and the brand of the coffee, according to a study by the market control directorate at the ministry of industry and trade. 

Such increases are taking some of the pleasure out of a cup for many people. 

Mr Attari said he also is paying more for the java he buys from the tiny shops and coffee carts scattered around Amman. "I used to pay a quarter of a dinar (Dh1.2) for a cup a few months ago and now the price is 35 piasters.

"If the prices go higher, I will only buy one instead of two or three. And I will buy less coffee for home." 

For now, global prices have been steady since June. In Jordan, that means a kilogramme of coffee sells for between $8 and $15.50 in supermarkets and commercial coffee shops, while premium brands fetch as much as $21 a kilo. 

Coffee traders, meanwhile, have adopted a wait-and-see approach to the global markets. Samer Jawabreh, the chairman of the Foodstuff Traders Association, said it is unlikely that costs in Jordan will increase significantly before December.

"I don't expect the coffee prices would increase in the coming three months since the country has a stock of 3,000 to 4,000 tonnes of coffee that would last us for this period," he said. "We are waiting now for the results of the Vietnamese coffee harvest in October; by then we will know if the prices will increase or stabilise. 

"It is all based on speculation. But the current trend shows that prices are climbing and, therefore, we asked the government last week to reverse its decision and exempt coffee from custom duties and sales tax.

"Coffee is an essential commodity." 

Essential, indeed. It is, after oil, the most traded commodity in the world. And in Jordan, visitors to a home are usually welcomed with unsweetened coffee flavoured with ground cardamom. Then Jordanians might offer guests Turkish coffee with sugar before they leave. 

At weddings and funerals, bitter coffee is always served. Each year Jordanians consume between 12,000 tonnes and 16,000 tonnes of coffee. Its beans are imported mainly from Brazil, India, Costa Rica, Vietnam and Colombia .

"The pattern of coffee consumption is influenced by our traditions and we cannot do without it," said Jumana Ghneimat, the business editor at Al Ghad, an independent newspaper based in Amman. 

Citizens will likely purchase cheaper brands, and some may reduce their consumption. Many families started using Nescafé with cardamom to make bitter coffee instead of Turkish coffee to cut costs." 

Mr Attari is trying to cut costs. He no longer insists that his guests drink coffee, and sometimes he serves them tea.

"Coffee is part of our traditions and we usually don't ask people if they like to have it before serving it. Although it is expensive, we are still forced to prepare it. But now I ask people beforehand if they wanted coffee and for those who don't, it even better for us. The prices are not normal, and it is not only coffee that is expensive." 

The National Society for Consumer Protection said some coffee importers have been manipulating coffee prices.

"A few merchants are monopolising prices and their margin of profit is between 50 per cent and 200 per cent. They took advantage of the government's decision to levy taxes and duty on coffee and they are maximising their profits. We may call for a boycott so that merchants will reduce prices," he said. 

The consumer watchdog spearheaded a coffee boycott campaign in 1997 that lasted six weeks after prices rose, he said. "We managed to bring the prices down by 20 per cent."

But for those addicted to the coffee, the boycott is out of the question. 

"Even if the price of a kilo reaches $30, I will continue to buy it. But I will try to drink less. Now I drink up to 12 cups a day, said Mayada Sobhi, a 42-year-old housewife.