Coffee sector in turmoil - Beans going to waste, MPs upstage press conference
Ripe coffee is dropping off trees in the Jamaica Blue Mountains with only one of 18 processors now purchasing supplies from farmers.
And that one buyer, Mavis Bank Coffee Factory, has reduced its purchases to once a week from the usual five days.
It led three Government parliamentarians on Tuesday to upstage a Ministry of Industry, Commerce & Agriculture press conference to clamour for stabilised pricing for their coffee-farming constituents.
"I am leaving here very uncertain as to the future of the industry. We are very happy about the Government assistance but we are very concerned," said MP for Western Portland Daryl Vaz.
"It doesn't make sense that I call the farmers in my constituency because of the uncertainty. I have nothing to tell them," said Juliet Holness, MP for East Rural St Andrew.
"And I am now being told that coffee is being bought only once a week now," said Juliet Cuthbert-Flynn, MP for West Rural St Andrew.
Large coffee processors came back from Japan in late September without finalised deals from their main market. That doesn't normally happen. But conditions are changing due to heavy supplies of Blue Mountain coffee, (JBM), already in Japan, and a steady supply of the crop in Jamaica.
JBM prices jumped from US$25 per kilogram four years ago to US$60 now, resulting in a pullback by Japanese consumers.
Essentially, the Japanese big buyers aren't selling the JBM beans fast enough and won't place new orders until next March, Gleaner Business understands. The domino effect is that few local processors want to buy beans from farmers.
"We are in a crisis but it is not a reason to panic. If we handle this in a mature way then we will get through this," said chairman of the Jamaica Coffee Exporters Association, Jason Sharp.
At the press conference, Industry Minister Karl Samuda announced an $80-million worth of fertiliser assistance to farmers and an extension of the coffee import cess to include roasted coffee brought into Jamaica.
The new cess will hit such companies as NestlÈ Jamaica, new entrant Starbucks, Folgers and other importers. Imported green beans already incur a charge.
The ministry has not yet decided when the roasted coffee cess will take effect.
The various stakeholders attending the press conference parliamentarians, farmers and processors welcomed the Government assistance and cess.
However, there was an eruption following remarks by Mavis Bank managing director Norman Grant on prices paid to farmers. Grant said Mavis Bank would seek to pay farmers at a fair price, at around $6,000 per box. That is less than the $8,000 farmers were reportedly paid last year at this stage of the crop.
"Even at $6,000 a box, that price is not a viable price but we are trying to make it work," Grant said.
That resulted in Holness questioning the expected rate of price declines. Grant indicated that negotiations with major Japanese buyers continued and as such he could not give a definitive figure.
Vaz asked for a timeline on concluding negotiations with the Japanese, saying the uncertainty would keep the industry in "limbo".
"If it continues for much longer then we will resort to a two-payment system," Grant responded.
In that system, farmers would get a portion of the funds up front and the remainder of the payment later in the coffee year, once the price is known.
The farmers indicated that it's raining daily, which apparently quickens the ripening of the coffee, but no one is buying.
"The coffee is dropping off the trees. Only one of the 18 processors is buying," said farmer Odia Bruce during the press conference.
"Where's the market?," asked another farmer, Will Frazer. "They want us to produce more but if we cannot sell 40 boxes now, then how are we going to sell 140 boxes?" he demanded.
The island has a positive coffee trade balance. But attorney Jennifer Housen who represented the Jamaica Coffee Growers Association at the meeting indicated that on a tonnage basis, there's an imbalance. Coffee imports amount to 600,000 pounds while exports amount to 200,000 pounds.
This produces farming opportunity, according to Samuda, who wants the sector to increase productivity in order to offset the reduced unit price. He said the average coffee farm yields 20 boxes per acre, but the Government wants that to move towards 80 boxes.