Country Report Central African Republic August 1997 Main report

Economy: There are encouraging signs in the coffee market--

Market observers are cautiously optimistic about the continued strength of the world coffee market. This year has seen a significant recovery from the price falls of 1996. The decision taken on May 21 by the Association of Coffee Producing Countries to maintain export quotas should help minimise the risk of over-supply and a new price decline. Prices for robusta coffee--the type grown in the CAR--rose during the first quarter of this year. The background environment therefore presents some relief to the CAR's growers, who already have many other problems to cope with, given the disruption to normal trading and government extension activities caused by the upheavals in Bangui. Analysis by industry specialists F O Licht suggests that African coffee output could be as high as 19m bags this year (1996/97), some 8% up on the previous season and a marked improvement on the 14.4m-bag low of 1993/94. However, there may be some concern that quality could suffer in the CAR because the instability in Bangui may lead to more coffee being traded informally or smuggled out of the country.

--while cotton prices hold steady

Meanwhile, the International Cotton Advisory Committee has forecast that prices for the crop--the other main source of income for CAR farmers, especially in areas too arid to support coffee--will remain steady. This judgment is shared by the journal Cotton Outlook, which comments on the "remarkable stability" of price levels. Indeed, African Franc Zone producers, generally regarded as a source of quality output, have been among the main beneficiaries of a drop in production in Uzbekistan and other states of Central Asia, filling much of the global supply shortfall. As with coffee, the ability of CAR farmers to benefit from the situation may be limited by political developments in Bangui, but the resilience of demand and prices has been one encouraging factor in an otherwise difficult period.

© 1997 The Economist lntelligence Unit Ltd. All rights reserved
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