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Last Updated: Tuesday, 22 August 2006, 15:17 GMT 16:17 UK
Coffee prices hit seven-year high
Coffee beans
Vietnam only entered the global coffee market in the early 1990s
The cost of coffee could be about to rise, after the price of robusta beans hit a seven-year high because of low output in main producer Vietnam.

Production of robusta, the variety of bean used primarily to make instant coffee, has been hit in Vietnam by heavy rain which has damaged crops.

As a result, the price of robusta beans has soared to $1,668 (883) a tonne in London trading.

The price of robusta has now increased by about 50% in the last 12 months.

Before the latest news of a reduced harvest from Vietnam, robusta prices had already risen because of strong demand and already tight supplies.

Other costs

The London-based International Coffee Organisation said the price of finished coffee should rise, "but not by very much".

Its head of operations, Pablo Dubois, pointed out that the raw material only accounted for about 20% of the price of coffee in supermarkets and about 5% in coffee shops.

Back in 2003, Vietnam was blamed for a crash in global coffee prices caused by oversupply.

Although it only entered the worldwide coffee market in the early 1990s, the Asian nation quickly expanded its production - so much so that by 2003, it was the world's largest exporter of robusta beans and second-largest coffee producer overall behind Brazil.

Robusta is considered to be the lesser quality of the two varieties of coffee, the more prized and expensive being arabica.

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22 May 03 |  Business
Country profile: Vietnam
24 Jun 06 |  Country profiles
Timeline: Vietnam
24 Jun 06 |  Country profiles

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