Generally, coffee supply is affected by planting and harvesting schedules chosen by a farmer. A bush planted by a farmer today, yields crop after three to five years. Thus a farmer needs to accurately estimate the world demand and supply three to five years in advance in order to have an optimal planting schedule. But since coffee growers usually have small sized operations, access to estimates of the demand-supply position does not make a difference. Their production schedulesare not large enough to create an impact on prices. Then, there are other factors beyond a farmer's control.

Weather and labour unrest, both of which are critical to profitability, also play an important role. Any turmoil in these quarters can send coffee prices into a tizzy.

However, the main ordeal for the coffee trade is the consumption factor. After a virtual stagnation for three decades, the nineties saw an upswing in coffee consumption. Increased visibility and promotion by coffee-houses spurred demand. Europe turned out to be the best destination for coffee as consumption in this area increased. But there were contrary trends in the US. Over the past 30 years, per capita coffee consumption in the US has declined considerably. Added to this is a limited population growth. This has led to a decrease in the total consumption.

Some argue that the per capita consumption has declined due to high prices while others attribute it to changing tastes.

In the early nineties, US coffee imports dropped fromtwo thirds of total world coffee imports to a third of world imports. During the same time Europe's imports rose sharply.

But optimistic experts point out that US consumption has been changing. They point out towards statistics available for 1998. The table Trade and consumption of coffee summarises data on trade and consumption in importing countries from 1993 to 1998. It can be seen that although over a long term, there has not been any rise in consumption by the US, the late nineties show a different picture. It could be the fall in consumption in Japan and Europe that could have produced a downward trend in the total consumption of importing countries. This decreased consumption was offset by the rise in consumption in the US and other countries like Switzerland. The international financial crises could also be a plausible reason for reduced domestic consumption in coffee by a number of importing countries.

A look at the table World Production and Prices establishes the clear relationship betweenproduction, consumption and prices. A sharp increase in production in 1998 led to a surplus situation and prices fell from 133.91 cents/lb in 1997 to 108.95 cents/lb in 1998.

Analysts also felt that in 1998, the surplus created would be offset in 1999 as Brazilian coffee production was slated to fall. But, this did not happen. There were various reasons. Other coffee producing countries recorded higher production and inventories.

That global supply has been rising can be seen from the fact that the global availability to world demand ratio increased from 1.41 in 1997 to 1.42 in 1998 following the increase in world production for crop year 1998-99 (See table World stocks and consumption). This overhang of supply is expected to remain for some time. Prices are expected to remain low as existing stocks are sufficient enough to take care of consumption and demand. The heady dream of 1997 prices remains distant. It could materialise only if there is a stepped up demand from importing countries. And this doesnot seem to be happening. As far as India is concerned, marketing coffee is becoming difficult as it faces competition from tea and other beverage manufacturers. The probable hope for the coffee trader is the cybercafe. But then, how many of them are serving the brew?