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Coffee year ends with smallest crop in five years

Published:Sunday | August 31, 2014 | 12:00 AM

Avia Collinder, Business Reporter

Negotiations for Jamaican Blue Mountain (JBM) coffee prices for the new crop year, August 2014 to July 2015, will commence during the planned visit of producers to the Specialty Coffee Association of Japan in September, says president of the Jamaica Agriculture Society, Senator Norman Grant.

Japan remains the largest buyer of the premium coffee.

Grant said Thursday that disease, drought and low productivity in the sector have impacted JBM prices, with the amount paid for cherry coffee varying from buyer to buyer.

He declined to comment on current prices noting that this might affect the pending discussions in Japan.

Online listings for the one-pound bag of roasted JBM range in price from US$20 to US$24.95, while one High Mountain brand had a listed price of US$14 per bag.

Sunday Business also understands that some farmers were paid more per box of cherry coffee this year. Mavis Bank Coffee Factory, which bought 50,000 boxes of the last crop, said it paid $5,000 per box compared to $3,500 in 2013. One box of cherry coffee converts to 9.5 pounds of green beans.

Efforts by Sunday Business to secure an update on the recently ended crop year from the Jamaica Coffee Board were not successful, but Grant, who is both head of JAS and CEO of Mavis Bank Coffee Factory, said the sector produced 164,000 boxes, representing the "lowest in the last five years."

The goal of local producers, he said, through a number of planned initiatives, is to increase supply to 500,000 boxes of coffee annually, by tripling the yield per acre.

increased demand

Currently production levels are "35 boxes per acre but the possibility exists through good fertiliser usage and other agronomic practices to increase this to 100 boxes per acre," Grant said.

Currently, both reduced supply and increased demand might be impacting price of premium coffee.

The Jamaican Blue Mountain brand is considered a gourmet coffee and attracts a mark-up in line with its branding, as indicated by the Coffee Board in past interviews.

However, conditions in primary consumption markets are also influential.

Euromonitor said during July that the increased popularity of freshly brewed coffee at convenience stores in Japan will contribute to the increasingly positive consumer perception towards coffee but that rising retail prices of coffee due to the tax increase and a weaker yen are likely to discourage consumers from purchasing the brew.

In Japan, coffee is expected to shrink marginally, both in off-trade volume and constant value terms over the forecast period, the researchers noted.

For the market in the United States, cites a 2014 Coffee Consumer Trends Report showing consumption of speciality coffees on the rise, and adds that the beverage continued to increase its dominance over soft drinks, with 61 per cent of adults drinking coffee daily - a two per cent decrease year on year that falls within the study's margin of error - compared to 41 per cent of adults drinking soft drinks.

In the United Kingdom, another growing market for Jamaican coffee, researchers for Hospitality and Catering News said in a January release that the branded coffee-shop segment is forecast to exceed £4.1 billion across 7,000 outlets by 2018, with outlets predicted to grow at a compounded 5.2 per cent and revenue at 10 per cent over the next 5 years.

It is estimated, Hospitality and Catering said, that the UK has the long-term potential to comfortably host more than 9,500 branded coffee shops.