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Colombia: Coffee Production and Exports Forecast to Drop in 2008/09Tuesday, December 02, 2008 > 09:54:23
(FlexNews via I.E. Canada)
Colombian coffee production is expected to fall to 12.2 million 60 kg bags in MY 2008/09 due to adverse climatic conditions, which include heavy and consistent rainfall problems which occurred in the coffee region.
Exports are also forecasted to decrease by 274,000 60 kg bags to 11.5 million 60 kg bags in MY 2008/09. The effect of the financial crisis on the coffee sector is likely to be reflected more in coffee quality than in volume of production. The credit crunch would reduce pest control, fertilizer application and labor expenditures.
The Colombian government and the Colombian Coffee Growers Federation (Fedecafe) signed a new coffee agreement whic h includes an income - stabilizing provision for coffee growers which is a fixed price contract that will attempt to protect coffee growers’ income. The price was set at 474,000 pesos ($199.22), per 125 kg bag.
Colombian coffee production is expected to fall by 142,000 60 kg bags to 12.2 million 60 kg bags in MY 2009. This was partly due to the strong rainfall which occurred in the coffee region during the early months of 2008, which registered 48 percent higher than the historical average for the region. Excess and continuous rainfall reduces the caloric stress needed during the coffee tree’s blossom and, as a result, caused a reduction this year in the number of coffee beans produced by each tree.
The income of Colombian coffee growers in the past year did not reflect the higher international coffee prices that occurred in 2007 and the beginning of 2008. This was due to the fact that, while international coffee prices did increase, the peso was simultaneously appreciating against the dollar. The peso has since changed course and, like many other currencies, is weakening against the dollar.
However, a decline in international coffee prices recently occurred, which offset once again Colombian coffee grower gains. As a result of the income woes of the farmers, the government fixed a minimum coffee price to guarantee income to coffee growers.
Colombian coffee production volumes should not suffer directly from the current financial crisis. However, the lower credit availability could affect coffee quality as farmers invest less in agricultural inputs (fertilizers, pest control and labor related to crop management) due to the fact that farmers have less cash on hand.
Per-capita consumption of coffee is considerably lower relative to other coffee producing countries. The Coffee Growers Federation (Fedecafe) estimates total domestic consumption at around 1.2 million 60 kg bags, which has been stable for quite a few years. In recent years, with its “Juan Valdez” branding strategy, Fedecafe began offering export-quality coffee to the local market. This new local supplier has managed to expand consumption of highquality coffee, but has not been able to increase per-capita coffee consumption in .
GAIN Report: http://www.fas.usda.gov/gainfiles/200811/146306442.pdf