If you like drinking good coffee, then the BBC World Service is the place to work. Within a minute's walk of our studios here at Bush House in central London, there must be now around a dozen places you can buy a cup of coffee.

That is a huge increase from only a year or so ago.

You might think such a boom in retail outlets would be good news for the growers of coffee. But that isn't the case. Prices for growers have slumped.

Robusta coffee, which is grown mainly in Africa and Indonesia, is at its lowest level for 30 years. Even premium arabica beans are at their lowest price for seven years.

The growers are not happy and their disgust at the current market conditions is well expressed by Brazil's agriculture minister, Marcus Pratini de Moraes.

Mr Pratini says the roasters, which are the multinational food groups like Nestle and Philip Morris, are continuing to reap large profits while the coffee farmers suffer.


"Currently, the coffee market is a reduction in prices for the farmer. But there is no reduction of the price for the consumers. Somebody is taking huge benefits. And we don't believe this is fair.

"I don't think we should condemn the poor South American or Central American farmers to misery. So we decided to withdraw from the market a substantial amount of coffee, through the retention plan, to avoid this speculation and to reduce the high degree of speculation."

We will not accept that coffee prices be manipulated by speculators and generate poverty for millions and millions of farmers. Marcus Pratini de Moraes

But is it really all the fault of so-called speculators, or is it merely the laws of supply and demand?

At a meeting last week in London, leading coffee producing nations discussed progress on their retention scheme. Some low grade coffee may even be destroyed.

Caroline Eagles of the online information site commodityexpert agrees that there is currently too much coffee being grown. Global production at the moment is estimated at about 150 million bags, and demand is put at somewhere around 105 million.

She says that there has been one startling newcomer in the industry, Vietnam. Just over ten years ago, production in Vietnam was negligible. This year, they are estimating they are going to be producing between 12 and 12.5 million bags. To put that into perspective, that makes them the second largest producer, after Brazil. They actually have now overtaken Colombia, in terms of coffee production.

Caroline Eagles believes the problems have arisen because of the cycles involved in coffee production. "A coffee tree takes about four or five years before it can actually begin production. And so, when you have a high price, everybody plants. But then it takes four or five years for all this new output to come in. It comes in all at once, and as a result the price comes down."
So it's not something like, for example, oil production, where you can turn the tap off.

It takes a long time for these changes in supply and demand to filter through to the market. Caroline Eagles

Caroline Eagles believes that Vietnam has actually very recently shown that it is now aware of its responsibilities as a world producer.

She added that one of the most important things that came out of this meeting in London this week was the clear declaration that Vietnam has already retained one million bags of coffee and is also hoping to retain a further amount.

So how is this discrepancy explained? The fact that world market prices for coffee have plummeted, and yet the price of coffee that people buy in consuming nations has stayed pretty much the same?

According to Caroline Eagles "the roasters say that in fact the cost of the coffee bean is a very, very small part of their overall cost, because they have packaging, marketing, etc. But then other people would say that, when the cost of the coffee bean rockets, the roasters are very, very quick to increase the price of coffee in the shops."

She adds that the roasters have never actually said exactly what percentage the cost of coffee is. She believes that people are becoming more aware of this discrepancy and perhaps the roasters may be realising that there is a public awareness of the big gap between the two prices

The roasters may be coming under more pressure to perhaps rethink their prices in the shops. Caroline Eagles

The retention plan has been in operation for some time. Brazil has taken a very active role, but just how successful has it been?

Caroline Eagles feels that the plan, when it was announced, was greeted with a lot of scepticism from the market, because they had never seen any other scheme work before. Brazil has been exemplary this time round in complying with the retention scheme. It was the first and has been retaining 20 per cent of its exports since July. Other countries have only recently started, because their own crops are only starting to come through.

The increasing credibility of this retention plan does not seem to have been reflected in the market price of coffee yet. Caroline Eagles believes this is because firstly, the announcements by Vietnam and Indonesia have really only come out in the past week or so and also, the other key factor is that they are going to be carrying out an audit.

"This will be important for the market, because obviously it's one thing for countries to say that they have this coffee stored away - it's another thing for an independent company to go out there and verify that the exact number of bags are in warehouses and that they exist. And I think, if the coffee is there, the market will start to react."

So does Caroline Eagles believe there another tactic - other than trying to improve the global world price of coffee - of attracting those consumers of coffee with a social conscience who are prepared to pay for it? Is there any more ground to be gained in these brands of coffee - the fair trade coffee? Is that a way round certain retail marketers of coffee having long-term contracts with producers which protect the producers from these sharp swings in prices?

"Well, the fair trade is marvellous and all these other companies that do it - Cathay Direct, for instance. It's something that everybody applauds. Really, you want all coffee producers to be benefiting from better prices and not a very small number."

The fair trade coffee is something that everyone applauds. Really, you want all coffee producers to be benefiting from better prices and not a very small number Caroline Eagles