The purchase price of Nestl é coffee in Yunnan hit a six-year low and fell below the cost.

Less than 13 yuan/kg, the day before yesterday, Nestle gave Yunnan coffee beans opening purchase price. For the first time in nearly a decade, a purchase price that does not cover the cost of growing coffee farmers has been offered, and the price has hit a new low in nearly six years. Nestle's quotation has always had the role of a weather vane in Yunnan. The industry believes that such low prices will affect the enthusiasm of coffee farmers, and even worry about whether coffee trees will be cut down.

Nestle offers

Considered a weather vane by the industry

Nestle China company related staff introduced, yesterday for Yunnan coffee beans opening purchase price, ordinary beans for 12.21 yuan/kg, 4C certification is 12.48 yuan/kg. This year, Nestle should buy more than 10,000 tons of coffee beans in Yunnan.

"By 2015, we plan to purchase 15,000 tons of coffee beans in Yunnan. Last year, our purchase amount was 265 million yuan, accounting for about 20% of Yunnan's output. This year's purchases are more than last year's." Introduction of the above staff.

International coffee companies have traditionally quoted coffee futures prices in New York at a price cut of 5 to 15 cents per pound. Yunnan coffee companies will then quote 5 to 10 cents a pound lower than new york coffee futures prices, slightly higher than international coffee companies.

Yesterday, the price of coffee futures in new york was 107 cents/pound, equivalent to RMB 14.3 yuan/kg, which could not cover the planting cost of coffee farmers of about 14.67 yuan/kg. Nestle's offer, however, was the largest 15 cents cut in New York coffee futures prices.

Nestle has been deeply cultivated in Yunnan for many years. For a long time, its quotation has been regarded as a weather vane by the industry.

"Many coffee acquisition companies will follow Nestle's offer, and coffee farmers will pay great attention to Nestle's offer." Hu Lu, deputy secretary-general of Yunnan Province Coffee Industry Association, said that although a number of local enterprises have promised a purchase price of 15 yuan/kg, Nestle's offer is bound to have an impact on the enthusiasm of coffee farmers.

Yunnan coffee beans

Output estimated at 100,000 tons

Hu Lu said the impact on the enthusiasm of coffee farmers, on the one hand, if Nestle's offer, coffee farmers are likely to let mature coffee rot in the field rather than pick.

According to the coffee industry association, picking costs account for the bulk of the planting cost of 14.67 yuan/kg. The picking cost per kilogram of fresh fruit ranges from 0.8 to 1 yuan. About 5 kilograms of fresh fruit produces one kilogram of coffee rice, and each kilogram of coffee rice gets about 0.7 kilograms of coffee beans after shelling, that is to say, the picking cost of each kilogram of coffee beans is about 6 yuan, even up to 7 yuan.

If the purchase price of Nestle is 12.48 yuan/kg, coffee farmers will lose 2.19 yuan per kilogram after picking mature coffee fruits; if coffee fruits are allowed to rot in the field and not picked, coffee farmers will lose the cost invested before, amounting to about 7.67 yuan/kg (rough calculation).

Of course, from the figures, coffee farmers or choose to pick coffee after selling less loss, but in the actual operation process, affected by the psychological aspects of coffee farmers, this account can be calculated so, some insiders think it is difficult to say: "More importantly, this price is too low, we worry, such a low price will lead to coffee farmers cut coffee trees phenomenon."

In addition, although the local enterprises gave a quotation of 15 yuan/kg, Hu Lu believes that Yunnan coffee production is large, planting area is widely distributed, this year's coffee bean output is expected to reach 100,000 tons, relying only on local enterprises acquisition is very difficult. As for whether Nestle's offer will affect the quality of its coffee beans, Hu Lu believes it is difficult to predict.

China Coffee Trading Network: www.gafei.com