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http://buyorganiccoffee.org/1596/how-does-the-strong-dollar-affect-coffee-growers/ How Does the Strong Dollar Affect Coffee Growers? By www.BuyOrganicCoffee.org Being a hardworking and efficient coffee grower may not be enough these days if you want to be successful. You will also want to live in a country whose currency is not pegged to the US dollar! What is that all about? How does a strong dollar affect coffee growers? It turns out that coffee growers in Vietnam where the currency is pegged to the US dollar are hurting and coffee growers in Brazil whose currency is not tied to the US dollar are doing well. The Wall Street Journal provides a businessman’s view of coffee, currency exchange rates and profit as they discuss how the dollar’s strength distorts the coffee market. Vietnamese farmer Y Kua Mlo is storing coffee in his bedroom, unwilling to sell as the strong dollar makes this greenback-denominated commodity less profitable in the dollar-pegged local currency, the dong. Mr. Mlo’s wife wants him to move into other crops. In Brazil, João Elvidio Galimberti is planting more coffee because the steep fall of the real against the dollar means the Brazilian crop fetches more. The strong dollar is picking winners and losers in commodity markets. In coffee, the dollar-created imbalance between the world’s biggest producers, Vietnam and Brazil, is pressuring the price of robusta, the lower-quality beans that go into instant coffee, by encouraging extra supply from those on the right side of the dollar’s rise and an overhang from those that aren’t. This could have a long-term impact on coffee production, encouraging Brazilian farmers to grow more beans even as it pushes their Vietnamese peers to move into other crops, such as pepper. Over the last year, robusta’s price in dollars has fallen more than 29%. With the dong pegged to the dollar, the local price in Vietnam has almost matched that, falling by 27%, and that has encouraged stockpiling. Add Colombia to the Brazil side of the equation as the Colombian peso is not pegged to the US dollar and has fallen to sixty percent of its 2014 value against the greenback. That gives incentive for the two greatest Arabica coffee producers to up production which will in the end drive Arabica prices down, as denominated in US dollars. The biggest robusta coffee producer ahead of Brazil is Vietnam where growers are quitting coffee due to their exchange rate dilemma. Where Does Organic Coffee Fit in This Equation? Organic coffee typically commands a premium price providing that the grower can connect to organic coffee purchasers through middlemen and roasters. The premium that organic coffee commands is a great incentive in Brazil where the weak Brazilian currency makes coffee more profitable as it is sold internationally in dollars. Although Vietnam is not a large Arabica or organic coffee producer it will become less so as their currency tied to the expensive US dollar makes coffee growing a non-profitable venture. Coffee growers that have survived coffee leaf rust now need to contend with price fluctuations which are not based on supply and demand but on an overpriced US dollar. https://youtu.be/dPaGQwT_zEc