Increased demand for coffee, but production shrinks

Published: Friday | September 20, 2013 Comments 0

Tameka Gordon, Business Reporter

The local coffee industry will miss out on gains from projected increases in demand from international markets, despite the Planning Institute of Jamaica's latest report that output of the commodity has increased by 143.8 per cent for the quarter to June.

However, production has been significantly reduced because of, among other factors, diseases affecting the plants.

"The production is just not there because of the many hits the sector has taken," senior information officer at the Coffee Industry Board (CIB), David Gordon, said in an interview with the Financial Gleaner.

He cautioned that crop production for 2013-2014 "might not reach 200,000 boxes for the JBM (Jamaica Blue Mountain) segment, due to the devastation caused by the coffee leaf rust disease", among other things.

The industry received J$29 million in grant aid from the Ministry of Agriculture in 2012 for fertiliser and fungicide to help in the rehabilitation of coffee cultivation. However, despite the progress made in combating the leaf rust disease and the increased demand from new and developing markets, "the projections indicate the sector will still come up short," Gordon said.

The latest assessment of the leaf rust has revealed a 13 per cent decrease in the infection rate when compared with the 30 per cent recorded in December 2012, but farmers have suggested there has been an increase, manager of the advisory service unit of the CIB, Gofland McCook, said. "We are not out of the woods just yet," he added.

McCook said that to date some J$10 million has been spent to combat the leaf rust disease. The rust, combined with the worst berry borer infestation in years, has resulted in a bleak outlook for upcoming coffee crops.

"It is a very scary thought, but the reality for the sector is that we are just not producing enough to be able to take advantage of the upward trends in prices or demand," Gordon reckoned.

Japan's market share is trending upwards from an all-time low of 66.5 per cent with other traders sustaining levels over 200 tonnes since 2009-2010, Gordon said.

Exports to European markets stood at 79 tonnes in the 2011-2012 crop year, with the United States accounting for about 117 tonnes.

Since July 2013, about 577 tonnes of coffee has been exported, with Japan receiving the bulk - 366 tonnes, and the remaining 211 tonnes going to other markets.

With export prices at US$24.89 per kilogram as at July 2013, both McCook and Gordon are cautiously optimistic of improved production rates to meet the increased.

Former chairman of the Jamaica Coffee Exporters' Association Richard Sharp agreed with the prognosis for a missed take-up, given the increased demand since production has been significantly reduced.

In reference to the impact of the rust disease, Sharp said "the damage has already been done", adding that "the whole thing is just spinning out of control right now".

tameka.gordon@gleanerjm.com

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