Tue | Mar 31, 2020

Cess to be imposed on coffee imports to aid vulnerable local farms

Published:Friday | May 15, 2015 | 12:00 AM
Delano Franklyn, chairman of the Coffee Industry Board.

The Coffee Industry Board wants to impose a cess on coffee bean imports, which would then be used to finance extension services and technical assistance to local coffee growers, whose crops are constantly under siege from disease and natural disasters.

Coffee Board Chairman Delano Franklyn is staring at a coffee market that has "virtually doubled" in imports to compete with the local sector, while the production of premium Blue Mountain coffee is on the decline since its heyday over a decade ago.

Coffee output is expected to drop even further due to a fire that is now ravaging farmlands in the rural mountains - the fallout from which is estimated at about $100 million for the sector.

Franklyn says he has raised the idea of introducing the coffee import cess with the Minister of Agriculture and Fisheries, who is amenable to the suggestion. The amount is to be determined.

"This recommendation to the minister was made after extensive consultations with the stakeholders in the coffee industry. The minister has publicly expressed his agreement with the proposal and he will, at the appropriate time and place, announce the amount of the cess and how it will be applied," he said.

There is currently a cess on local coffee production, imposed under Section 10 of the Coffee Industry Regulation Act and applied at a rate of $91 per 60-pound box for growers, which amounts to about $27 million a year. The funds are used to subsidise the operations of the Coffee Board.

Coffee bean imports amounted to 637,850 kilogrammes in 2014, according to Franklyn, who said the volumes cover the shortfall in local supplies.

Jamaica's coffee production has fallen to less than 200,000 boxes annually from a high of more than 500,000 boxes in 2004. The volume compares unfavourably with other producers in Central America and the Caribbean.

Coffee Board data indicate that among more than 10,000 farmers, most of whom are registered with the Coffee Board, the average smallholder farms coffee on five acres and produces eight boxes per acre on average.

For example, whereas average production in Jamaica ranges from eight boxes per acre to 37 boxes for larger farms, in Mexico it ranges from 16 boxes per acre in the Oaxaca region to 52 boxes in Vera Cruz; in Colombia, the average is 57 boxes per acre, while Costa Rica averages 97 boxes.

One box of cherry coffee converts to 9.5 pounds of green beans.

Fires and the berry borer disease have affected production, leaving farmers with the problem of tree replacement. The shortage has been reflected on retail shelves as well, where authentic Blue Mountain brands are scarce. Franklyn noted that both Blue Mountain coffee and low elevation coffee are in short supply this crop year.

"This is largely due to the diseases which affected the crop in recent times. Based on the general replanting of coffee and the investments taking place in the industry, there is every confidence that production will be back to regular levels in the next two to three years," he said.

The bush fire that is still burning in east rural St Andrew has affected nearly 70 acres of coffee lands.

"Although over 80 per cent of the coffee in the affected area had been reaped before the fire, the fire has destroyed all the trees. This will require replanting," said the coffee board chairman.

"It will take three years before the plants reach bearing stage. This area will therefore be without coffee for the next three years. This will result in an average loss to the industry of over $32m annually, or nearly $100m cumulatively."

Coffee exports, which are used as a proxy to value the sector, totalled under US$13 million last year. Exports peaked at US$39 million in crop year 2002-03.