Wed | Sep 20, 2017

Coffee farmers cash in as exports double

Published:Friday | July 1, 2016 | 7:03 AMSteven Jackson

 

A young pilot stepped into Wallenford Coffee Factory last month to buy roasted coffee beans that his mother - one of thousands of Jamaica coffee farmers - helped supply in an industry where business is again on the rise.

Coffee financed his costly schooling in an industry that only recently survived a tailspin.

"I am going to use your story when I speak about the success of coffee farmers," Mark McIntosh, the head of Wallenford Coffee, said to the pilot at the company's Marcus Garvey Drive office in Kingston.

Farmers are earning record levels at $12,000 a box of coffee compared to $3,000 about four years ago. It's more than double the $5,000 cost of producing a box of coffee.

"Tell me which other agricultural crop you can get that kind of margin," Mark Fletcher, head of Country Traders Limited at his office in Blaise Industrial Complex in Kingston which operates as a coffee hub with four companies, said on Wednesday.

Fletcher produces the Coffee Roasters of Jamaica brand which processes beans from hundreds of coffee farmers for local and international consumption. Fletcher himself returned to farming on the side after losing road access to a previous farm years earlier due to hurricane damage.

Fewer challenges now beset the industry and farms are planting again.

"Everybody wants to get into coffee now," Fletcher said.

Consequently, players are expecting a record earning for the crop year ending June 2016 with production up to May at some 240,000 boxes already outpacing the total production in 2015.

That year, export earnings were showing signs of a strong resurgence. The industry exported coffee valued at US$25.2 million or 87 per cent higher year on year, according to the 2015 edition of the Economic and Social Survey Jamaica (ESSJ) published by the Planning Institute of Jamaica. That equates to the highest earnings in at least five years.

The strong results notwithstanding, export earnings are still below the US$35.7 million earned in 2009 just before the global recession, which subsequently slashed coffee prices and overall earnings. Still, coffee producers said this week that they are poised to top those earnings in the medium term.

Recovery from disease

Underlying their bullishness is coffee's continued recovery from disease.

This crop year, which officially June 30, earnings are up with farms resuscitated and prices doubling year on year, said Fletcher.

The ESSJ cited the reduced impact of the coffee leaf rust disease on last year's out-turn. The industry in recent years was hit by a series of challenges including fires, drought and crop disease.

Stories now abound about resuscitated farms; of former security guards quitting their jobs to rejoin family farms in the hills of the Jamaica Blue Mountain; of small farmers finally buying that SUV; of men in water-boots smiling a bit more over hillside drinks; and generally healthier communities - all fuelled by increased coffee prices.

"It's a healthy time for our industry," said Jason Sharp, chairman of the Jamaica Coffee Exporters Association (JCEA) in an interview while walking the Blaise Complex from the offices of Coffee Traders Limited to Marley Coffee (Jamaica) Limited, both companies in which he holds an interest.

"Farmers are now motivated," Sharp said. "We expect the highest earnings ever seen."

Big buyers crying

The industry remains on a path to return to 400,000 boxes per year in the medium term but with higher prices. That would push export earnings towards US$40 million annually - and a new record.

Lovers of Jamaican coffee, especially the luxury Jamaica Blue Mountain, are paying some of the highest prices ever at roughly US$60 a pound or about six times more than commodity beans from Latin America or Africa. Japan buys about 75 per cent of the island's coffee and big buyers are now crying about the price amid increased production, said players. That hints at price reductions to come throughout all pillars of the industry.

Think of a pyramid with the current price supplying a small luxury segment of the market. Increased production will make the supply too large to absorb and therefore trigger a fall in price. Some think that would ultimately result in farmers earning $10,000 a box in the medium term.

"It's premature to talk about the price to farmers," said Sharp tersely, adding that too many variables remain unknown. "I cannot say where the price will be per box but it is unlikely to remain. But the price will still be attractive to the farmer. The farmer will still earn a good return," he asserted.

Small farmers would disagree with the need to cut the price. Sharp argued however that the reduced price would result in larger earnings for farmers due to increased productivity both in terms of out-turn and quality of bean.

"The farmers are producing more," he reasoned.

steven.jackson@gleanerjm.com