Coffee processors expect a new-look trade with regulatory upgrade
New regulations for the coffee sector anticipated by mid-November are expected to cull the ranks of importers, specifically those businesses that don't otherwise grow or process coffee domestically.
The regulations to be promulgated by the Ministry of Industry, Commerce, Agriculture & Fisheries (MICAF), are meant to deepen the market for locally grown coffee through new blending requirements.
"Blending regulations will force all roasted coffee sold in Jamaica to have some percentage of Jamaican coffee," said Jason Sharp, director of Coffee Traders Limited and chairman of Jamaica Coffee Exporters Association (JCEA).
Sharp said the regulatory changes are also expected to introduce a new standard for importers.
"Entities must, for example, be an exporter of Jamaican coffee if they wish to import coffee. Another requirement will be that the importing entity is an investor in the agricultural side of the coffee industry and not just a margin gatherer," he said.
A MICAF statement said that under the regulations no imported coffee shall be processed, roasted or packaged for sale in its pure form without a minimum percentage of locally produced coffee.
COFFEE IMPORT POLICY
The regulations "will be an update" of the Coffee Industry Regulation Act of 1948, but will be policed by the new Jamaica Agricultural Commodities Regulatory Authority (JACRA), said the Coffee Industry Board. A coffee import policy will also be developed.
The Coffee Board acknow-ledged that imports will likely fall, as a result, but noted that the larger goal "is to level the field so that local and long-established processors and manufacturers who produce the cherry coffee are not put in a disadvantageous position".
In the value-added market, the demand for coffee is around 1,000 tonnes, resulting in processors seeking more approvals for imported beans to fulfil this market demand, the coffee regulator said. The demand is almost twice what the local farming community can provide.
Citing data, the board said that coffee imports in 2015 amounted to 300 tonnes, while in 2016 they spiked to 500 tonnes, to offset the low production volumes domestically.
Jamaica produced approxi-mately 300,000 boxes of Jamaica Blue Mountain and Jamaica High Mountain coffee cherries in the 2016 crop year, and 240,000 boxes this year a 20 per cent drop in volumes, Sharp noted.
He said that, if implemented, the regulations will change the architecture of the local market.
"Simply, it will force companies who retail roasted coffee to first be a net purchaser of Jamaican coffee; and secondly, it will force the entities to blend Jamaican coffee into their product offerings," said the industry spokesman.
"It will also increase the price of finished product which may reduce consumption in retail," he said.
But as to whether the new regulations might lead to a decline in imports, the JCEA chairman was less certain.
"It's hard to say at this point," said the coffee processor. "However, there may be some fallout and in turn some new players may emerge."
He adds that the hospitality sector is the largest consumer of imported coffee, and as such import volumes are not expected to fall significantly in the short term, given that the room count is expanding in the hotel sector.
Traditionally, around 25 per cent of the coffee produced in Jamaica is consumed locally, Sharp said; while the Coffee Board notes that the market for coffee locally is valued at more than $1 billion.