Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-03-20
Coffee Prices
No Panic or Threat of Housewives Strike
Now Thot Cost of the Brew Is Going Down
By Richard FrykIund

The price of coffee is moving
again, but this time there are no
demands for Investigations. no blasts
at spectators, no threats of
buyers strike-in short, the public
isn't bit worried.
The reason. of course, is simple.
This time the price is moving sharply
downward and the outlook is for
further reductions.
A year ago, when the average
price Of pound of coffee was
soaring toward a peak Of 1923,
Congress and the Federal Trade
Commission set out to find out who
was to blame. And anxious house.
wives clamored for them to- do
something" about coffee prices.
Something was done all right, but
it wasn't done by the Government.
The skyrocket was magically
changed into a toboggan by nothing
but the old-fashioned law of supply
and demand.
And that same economic law
seems to make it inevitable that the
price will drop even more and then
will soar again and then drop again
and so on-until some sort Of
artificial brakes are applied.
Boom Bust History
For the coffee business has been
q boom -and-bust affair ever since
European colonizers took the pro-
duction monopoly away from the
Arabs around 1890. The Dutch
cleaned up and also went broke in
Java and Sumatra; England did the
same in India and Ceylon. And
after blight finally wiped out the
Asian coffee plantations in the
middle 1905. Brazil and other Latin
American countries stepped In to
supply the demand.
They have been booming and
busting ever since.
The natural cycle of high to low
takes about seven years. 1t works
something like this:
II prices are up, the growers clear
more land and plant more trees in
order to take advantage of the boom.
The trees begin to produce after
about four or five years In another
two or three years the new produc-
ton is going full blast. BY then,
however, consumption has run be-
hind and oyersupply plummets
prices. Excess coffee must be stored.
The farmers who have gone over
board on coffee bitterly cut down or
abandon their trees and switch to
a better-paying crop. perhaps beans
or corn.
Cycle Storts Anew
AS production drops and stored
coffee is gradually used up, prices
begin to rise. In a few years the
surplus is gene and production can
not meet demand. So prices soar.
That's where the farmer steps in
with more hasty planting, and the
cycle is on its way again.
The cycle is made irregular, OF
course, by natural disasters-storms
and frosts-and by man-made fluc-
tuations in demand-through wars
and changes in taste.
Most persons coffee buying mem
cries go back at least as far as the
late sos when there was such an
oversuppiy of coffee that Brazil was
dumping the beans in the ocean and
burning them in locomotives.
Production was cut. and through
the 40s supply gradually dipped to
meet demand. BY 1949 the last Of
Brazil's stored coffee was used up.
Shortages were predicted for the
coming years. Prices began to rise.
and buying was stepped up in an
ticipation Of even higher prices. The
farmers, Of course, started planting
again.
Then late in 1858 there came
word from Brazil that severe frost
had killed thousands of trees. The
frost, piled on top of the already
anticipated shortages, spanked buy
ers into frantic bidding for available
stocks.
That set of the 1854 coffee sky
rocket.
AS the year wore on, however, it
became apparent that the frost,
though extensive. had not cut sup
plies as low as had been expected.
At the same time demand fell of
in the United Stataes. The result
was that no shortage actually devel-
oped.
The price started down again.
Now the price Of ceffee Is expected