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Blue Mountain coffee facing falling sales abroad, quality issues at home

Published:Sunday | September 28, 2014 | 12:00 AM

Avia Collinder, Business Reporter

New reports out of Japan say a significant shortfall in Jamaica Blue Mountain (JBM) coffee supplies are forcing distributors to either halt sales or raise prices.

The business magazine Nikkei Asia Review reports on its website that a top trader, UCC Ueshima Coffee, had since September 1 seen an estimated 40 per cent increase in the price of seven of its products made with Jamaica Blue Mountain coffee.

A manager at UCC'S Jamaican office in Kingston said Monday that he was unable to confirm the report.

"We do not sell coffee," he said, referencing the activities of the Jamaican operation.

Japan consumes about 70 per cent of JBM coffee, down from 85 per cent six years ago.

UCC Ueshima Coffee has its own coffee farm in Jamaica, but according to Nikkei Asia Review, its bean procurement has fallen by more than half since 2007.

The report also stated that Key Coffee, a Japanese chain, will stop selling some of its Blue Mountain blends this fall, "as it expects difficulty securing large quantities of beans that could pass its internal quality controls".

JBM coffee production in Jamaica is said to have dropped to about a fifth of its peak. Jamaica earned US$34 million from export coffee in 2009, but just US$16 million last year.

Total output for the next JBM crop in 2015 is projected at 593,000 kilograms by the coffee board. For the crop year ending July 2014, the commodity board said JBM production totaled 365,000 kg, a significant decline from 668,965 kg delivered by farms in 2013.

Gusland McCook, manager of the Advisory Services Unit at the Coffee Industry Board, said last Monday that farm yields in Jamaica were low because of low plant density, arising from a number of factors, including disease, poorly utilised inputs, such as fertilisers.

To meet market demand would require 872 plants per acre, but Jamaica is averaging about 600 plants per acre, McCook said.

The coffee sector comprises some 7,500 farmers, many of whom, he said, are inattentive to the requirements for higher yield.

"The theory is if a farm has 600 plants producing 1/4 box each, that farm can produce 150 boxes from that area. Even at $3,000 per box that farm could make a meaningful earning," said the coffee official.

"We are just not paying attention to some simple basics, which has been our setback."

The early fallout in coffee production has been attributed to cutbacks in forward purchase by Japan, the top consumer of Jamaican coffee, after the financial crash of 2008.

New markets

The sector has not recovered fully since, though producers and marketers of the coffee have sought out new geographic markets in places like China, the United States and parts of Europe.

Within the period, the coffee board has fought to maintain the premium quality of the bean, but Quality Assurance Manager Hervin Willis says it remains a struggle.

"In the last few years, the level of compliance has been higher, but it's just that we are highlighting the challenges. If you really do not dig in your heels and say you have to meet the standards, persons will want to do otherwise, especially in a year when you have low volumes," said Willis.

"They figure that you should soften your position in terms of softening the quality stance.

But, here we are saying: 'This, your coffee, is in the top echelon of the market - a speciality'. Persons still expect a good quality product. Our coffee fetches one of the best prices in the world so you really can't expect to lessen or lower the bar."

Willis said that green beans were now selling for "anywhere from US$29 per pound up", depending on the price negotiated between processors and producers, with US$29 being at the low end of the range.

There are about 23 licensed exporters of coffee who trade in green coffee or roasted coffee or both, the coffee board said. The agency said it is grappling with quality problems caused by both newly licensed entrants and unlicensed sellers.

"New entrants are persons who are licensed, but they are just coming into processing. You go down the experience curve. Unless they pay close attention to advice, what will happen is that they will make more mistakes and create more spoilage," Willis said.

Unlicensed market entrants present an even bigger challenge.

"Those who are unlicensed, what they have been doing is putting products in the market which are poor quality, poor packaging. They figure they must just do what they want to do," the quality assurance manager said.

Such operators generally sell to tourists, he said, and there have been complaints.

The group of unlicensed operators is "big enough to cause problems. Two letters coming in from persons who buy the coffee is two too many," Willis said.