Coffee Cornered

When the price of coffee climbed alarmingly last January, President Eisenhower ordered the Federal Trade Commission to find out why. Last week, after seven months of searching (while coffee continued to go up), FTC gave its answer: Said FTC: "The increase in green coffee prices . . . from 58¢ to 96 1/2-c- between December 1953 and April 1954, and the corresponding increase in average retail . . . prices from 91-c- to $1.18 . . . cannot be explained in terms of the competitive laws of supply and demand." In a report to Congress, FTC listed what it thought were the real reasons:

P:Poor crop reporting in Brazil and other countries caused pessimistic harvest estimates and thereby inflated prices.

P:A small group of Brazilian speculators evidently got the word last December that the Brazilian government was about to boost the support prices from 1,200 to 1,500 cruzeiros ($63.76 to $78.17) a bag, They moved into the New York Coffee & Sugar Exchange one day before, came close to cornering the futures market, and in little more than a month sent green coffee prices from 58-c- to 73-c- a lb.

P:Control of U.S. prices fell into the hands of five big U.S. coffee roasters. Faced with shortages and rising prices, the roasters bought heavily, sent the price up even more.

P:The New York Coffee & Sugar Exchange failed to enforce trading rules, thereby opened the way to price-rigging and bucketing, and even permitted members to act as agents and principals in the same transaction without the customer's knowledge.

P:The May announcement that Brazil's minimum export price would go up from 53¢ to 87¢ a lb. on July 1, halted a downward price trend that had begun in April.

The remedy for high profits from coffee speculation, said FTC, is to clamp down on the New York Coffee & Sugar Exchange. One bill to regulate coffee trading has been passed by the Senate, but it is now tucked away in a corner of the House Agriculture Committee. In the pre-adjournment legislative jam, chances are that the bill will stay in the corner.

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