Coffee bean prices hop, public pays more - is anyone profiting more?

The price of imported raw coffee beans has tripled since April, leaving Southland roasters to either absorb the costs or pass them along to retailers and hence consumers.

"Everybody takes a hit in this market. This is not an opportunity (for roasters to make money. It's an opportunity to survive,"

Two recent overnight freezes in Brazil, one June 27 and one July 10, may have damaged 40 percent to 50 percent of the country's coffee crop and have sent prices soaring, according to published reports.

Brazil is one of the largest coffee-producing nations and what happens there affects coffee prices worldwide, said Steve Ruiz, a coffee buyer for Vernon-based F. Gavina & Sons Inc., a gourmet coffee roaster.

These are the first major frosts affecting coffee crops since 1975.

The frosts came in the wake of already rising prices for green coffee beans in May. Bean prices had been low for the past five years, and growers had started hoarding up to 20 percent of their crops in an effort to boost them, Ruiz explained.

As a result, prices for green coffee beans rose from about 80 cents a pound in April to $1 in May. Then the frosts hit and by July 12 coffee bean prices had skyrocketed to $2.70 per pound, Ruiz said. Coffee closed at $2.41 a pound July 18.

Actually, coffee crops don't ripen until September or October, and not much is available right now. But local coffee companies are buying September coffee futures, or putting up money to buy coffee that will be delivered in September, the next most active month for coffee harvest and deliveries. Prices are rising in anticipation of the small crop expected to be harvested then, Ruiz said.

Local roasters are now paying importers these soaring prices, he said. Most major coffee importers in the U.S. are headquartered in New York, with none in Los Angeles.

Gavina is trying to pass along its increased costs to its customers, but is about two weeks behind current prices because the market is rising so rapidly, Ruiz said. Gavina sells to supermarkets and coffee stores.

Another roaster, downtown L.A.-based Apffel's Coffee Co., is "trying not to panic" and has raised prices to its customers only "5 percent to 10 percent at the most," said Sales Manager Jerry Van Horn.

As a result, Apffel's is taking a "soft hit" to its bottom line, he said.

Euro Coffee has raised its prices about 18 percent and is now absorbing much of the extra cost, Emerine said.

But he sells gourmet coffee and must buy coffee futures for many varieties of beans way ahead of time to be assured he will have them.

Thus, he already bought, at the previously low prices, much of his coffee suppl for the next several months. Therefore, he won't take as much of a hit as those roasters which hadn't bought their coffee in advance, Emerine said.

Retailers are also feeling the brunt. Wholesalers have raised coffee prices to Compton-based Ralphs Grocery Co. across the board four times since the first freeze, said the supermarket chain's senior vice president, Jan Charles Gray.

For example, wholesalers boosted the price of a case of 24, 13-ounce cans of Folgers coffee from $44.16 in late June to $82.56 currently, Gray said.

In turn, Ralphs is raising its prices to consumers between 25 percent to 70 percent, depending on the brand. The grocery company is trying to hold back price increases as much as possible because of competition from other supermarkets, he said.

The state Legislature increased funding for export guarantees by more than 70 percent this fiscal year.

As part of the state budget, financing for the California Export Finance Office grew from $7 million during fiscal 1993-94 ended June 30 to $12 million for fiscal 1994-95.

CEFO provides loan guarantees to lenders to entice them to provide working-capital loans to small and medium-sized companies in California that need pre-export financing, said Jim Newton, acting director in CEFO's La Palma office. Pre-export financing enables companies to produce, assemble or acquire products or services to be exported.

The extra funding allows CEFO to reach more exporters than ever before and rais the ceiling on the amount of its guarantees, Newton said.

CEFO made guarantees totaling $14.3 million to businesses in Los Angeles, Riverside and San Bernardino counties during fiscal 1993-94, he said.

The office makes guarantees at a 4-to-1 ratio, so the $12 million in fiscal 1994-95 funds translates into $48 million worth of guarantees CEFO can make at any one time, Newton said. CEFO guarantees up to 90 percent of each loan.

Before, CEFO was reluctant to provide guarantees totaling more than $1 million for loans to each company, but now that figure might grow to $1.5 million, Newton said.