Obama Winning Election … Among Coffee Drinkers

The results are in … sort of.

The world’s biggest convenience store chain started running its third “7-Election” campaign back on Sept. 6, and thus far, things have looked good for the president.

Either that, or Democrats drink a lot of 7-Eleven coffee.

As President Barack Obama and former Massachusetts Governor Mitt Romney prepared to square off in their first debate, by Wednesday Obama (the blue cup) was leading with 60 percent of “votes.” Romney (the red cup) had 40 percent, according to the official 7-Eleven website.

In New Jersey, Obama had a 56 to 44 percent lead over Romney among political java drinkers. In Illinois, where Obama once was a senator, he was leading Romney 59 to 41 percent. In Massachusetts, that lead was 61 to 39 percent. Romney was leading in only three states, New Hampshire (51 to 49), West Virginia (53 to 47) and Idaho (57 to 43). Sixteen states are not participating in the promotion.

Although the promotion is “unabashedly unofficial and unscientific,” according to a press release, the 7-Election results have never been wrong since debuting for the 2000 election between George W. Bush and Al Gore.

As for those who prefer to keep political preferences out of their coffee, don’t worry—”nonpartisan” regular cups also are still available.

Coffee imports start to percolate at port again

The Houston Ship Channel’s identity may be wrapped up in oil, the most heavily traded commodity in the world, but it’s also a top transit point for the second-most traded commodity on Earth: coffee.

And the amount of beans pouring into the Port of Houston – most of them “green,” or unroasted – appears to be picking up after slipping in recent years as the price of coffee has escalated.

In May 2011, the benchmark price for green Arabica coffee reached $3.05 per pound, its highest in more than 30 years. It is now trading at well below $2 per pound.

“There was not much coffee coming to any port in the world, but now we finally see the exchange volumes coming up again,” said Maria Escheverry, general manager of Cadeco Industries, which operates the largest of three green coffee exchange warehouses in Houston.

Leo Vasquez, executive vice president of Houston-based Maximus Coffee Group, which operates one of North America’s only three decaffeination plants in east Houston, likened $3.04 per pound to oil hitting $150 a barrel.

Consequently, local imports and coffee stock­piles have waned in recent years after a boom spurred by Houston’s long-sought designation in 2003 as a green coffee exchange port – only the fourth in the U.S., after New York, Miami and New Orleans.

Certified for storage

The certification by the Intercontinental Exchange, which controls the trade of Arabica beans, allowed the port to store raw beans for trading purposes. It required voter passage of a tax exemption that permits the beans to be stored in Houston warehouses tax-free before processing.

The designation led to a spike in both the amount of green exchange coffee stockpiled at the port and the overall coffee imports as growers and buyers chose to ship more beans through Houston.

But high prices in the past two years, sparked by poor crops in producing countries, weakened global demand and blunted the local boom.

Industry officials point to recent signs of a turnaround and are hopeful that the 2015 opening of a wider Panama Canal, which is expected to divert some Asian trade from the West Coast to the Gulf and East coasts, will add buzz to the coffee business in Houston.

Stockpiles growing

After the exchange certification, the number of bags of coffee moving through the port – at 152 pounds per bag for exchange beans – grew to 800,000 bags a year, from 150,000 a year previously.

The port’s three certified warehouses began receiving exchange coffee in April 2005. By the following April, the amount of green coffee stored here had increased 30-fold. It grew exponentially until 2010, when prices soared and stockpiles began to slide as imports and storage decreased.

Overall coffee imports into Houston dropped off in fall 2008 and have not yet rebounded, Commerce Department data show.

Judith Ganes Chase, a soft commodities analyst and consultant, said the volume of coffee coming into most ports diminished the past two years because of a shortfall of mild Arabica coffee following excessive rains in producing countries.

“If there’s shortfall in coffee, then people are just buying it immediately (and) there’s no need to keep it in storage,” Chase explained.

Those coffee-producing countries where weather has impacted crops include Brazil – No. 1 in the world – Colombia, Guatemala, Costa Rica, Ethiopia, Kenya, Vietnam and Indonesia. The latter two are the largest suppliers of Robusta coffee, which Chase said has become more common in the U.S. as the price of Arabica has increased.

At the Port of Houston, stockpiles of exchange coffee have grown for the past five months, according to the Intercontinental Exchange. (Other than Cadeco, the other local green coffee exchange warehouses are operated by Gulf Winds International and Dupuy Storage Houston LLP).

Overall imports into Houston rose from February through May, but dropped off again in June.

In May, Houston for the first time surpassed New Orleans in the volume of exchange coffee stored.

Keeping eyes on Brazil

Chase said coffee stockpiles have crept back up as prices have fallen, but the market near-term will depend largely on the crop in Brazil, which is going through a “mini dry spell.” Prices are already rising, she said.

The price of coffee on Wednesday closed at $1.81 per pound, slightly higher than the average prices of recent months.

John Moseley, general manager of trade development at the port authority, said developments like the Panama Canal expansion could be a buffer from market fluctuations as more entities shipping Robusta from Asia send it to the eastern U.S. rather than to the West Coast.

“This Panama Canal expansion is going to allow larger ships, which basically drives down the price per unit cost of ocean freight between Asia and Houston,” Moseley explained.

That, he said, makes the product much more competitive in the local market. “Hopefully, we’ll see that develop further.”

‘ll see that develop further.”

ICO Plans to Promote Coffee Demand in Developing Countries

The International Coffee Organization is going ahead with plans to promote coffee consumption in developing countries as part of a global effort that almost doubled growth in demand in the past 10 years.

Demand for arabica beans is already probably going to get a boost because of the increased prices of robusta, Roberio Oliveira Silva, executive director of the London-based group, told reporters in London today. Arabica beans have dropped 24 percent this year as robusta beans climbed 20 percent.

“There will be an increase in arabica,” Silva said.

Global coffee demand climbed an average 2.5 percent a year over the past 10 years, compared with 1.6 percent from 1990 to 1999, Silva said in a presentation dated this week for ICO meetings. The ICO wants to “decommoditize” coffee in growing countries in Africa and South America, according to Andrea Illy, chairman and chief executive officer of Trieste, Italy-based Illycaffe SpA who is also chairman of the ICO promotion and market development committee.

The ICO wants to support demand growth even with consumption exceeding production to get out of the cycle of high prices spurring production that lead to lower prices, Illy said. Coffee demand was 138 million bags in 2011 compared with production of 132.7 million bags, according to the ICO. Ten years ago, coffee was in surplus, Illy said.

In China, coffee consumption is still not growing in the double digits, Silva said. Younger people drink maybe one cup a week, at shops to socialize, and usually with milk, Illy said. In India, young people in the south drink coffee with chicory, he said.

Cameroon is the latest exporter to join the ICO, bringing membership to 38 exporting nations and six importing nations, Silva said. Colombia’s coffee crop is expected to recover in the 2012-13 season after a four-year rebuilding, Silva said.

Uganda – Africa’s Biggest Exporter – to boost production

KAMPALA
 – Fred Ojambo (IPS) – Uganda, Africa’s biggest coffee exporter, is racing against time to boost its production of the crop by 60,000 tonnes, or one million 60-kilogramme bags, within the next three years. But some industry players believe that the feat is unattainable. This East African nation’s target is to raise annual output from 3.5 million to 4.5 million 60-kilogramme bags, and it plans to do this through an ongoing government replanting programme.

Francis Chesang, the production manager at the state-run Uganda Coffee Development Authority (UCDA), told IPS that he was confident that this landlocked nation would soon reach its target.

“Our replanting programme is yielding results and we should be able to lift annual production in 2015… because more of the new fast-growing and high-yielding trees are coming into production.”

Uganda, the continent’s second-biggest grower of the crop after Ethiopia, launched its coffee replanting programme in 1994, a year after the country detected the coffee wilt disease that devastated half its stock of Robusta trees.

The programme aims “to gradually replace old, diseased coffee trees with new, genetically pure and high-yielding coffee varieties at a rate of five percent per annum for Robusta and two percent per annum for Arabica.”

Currently, Uganda has a combined stock of 300 million Robusta and Arabica trees, according to the authority.

At least 140 million trees, mainly Robusta, were planted over the last 18 years, with the goal to plant a total of 200 million trees by 2015, Chesang said. The replanting aims to “optimise foreign exchange earnings into the country and payments to farmers,” he said.

The crop accounts for 20 to 30 percent of the nation’s annual export earnings, with Uganda earning 448.9 million dollars from the export of 3.15 million bags of coffee from Oct. 1, 2010 through September 2011, according to the UCDA.

The country was the world’s ninth-biggest exporter of the crop during that period, ahead of Ethiopia, which was in 10th place, according to the International Coffee Organization.

According to David Muwonge, the deputy executive director of the National Union of Coffee Agribusiness and Farm Enterprises, Uganda is unlikely to meet its increased coffee production target as yields remain lower than potential because the country is yet to replace all the coffee trees destroyed by the 1993 wilt disease.

“I think it will be really hard to achieve this target because we are yet to plant 60 million trees,” he said. “The target is achievable, but only when all the new trees are in production.”

Muwonge added that the insufficient number of trees, aging trees, poor farming methods and the effects of climate change meant that it was unrealistic to increase coffee production by one million 60-kilogramme bags over the next three years.

Fred Kyobe, a 64-year-old farmer in the Wakison District in Uganda’s Central Region, told IPS that production volumes have taken long to recover from the wilt disease devastation as the youth did not have the patience to venture into coffee farming. He said that the lure of fast-paying jobs in urban centres resulted in the youth abandoning coffee farming because it takes more than three years before the crop starts yielding.

“My sons have abandoned farming in favour of motorcycle taxi businesses in town, and my vigour is reducing due to old age,” he said. “The blow I received when the coffee wilt disease attacked my crop made me less enthusiastic about it.”

Coffee here is grown by at least half a million smallholder farmers, 90 percent of whom own fields ranging from 0.5 to 2.5 hectares, according to the UCDA. The sector employs 3.5 million people.

“Coffee continues to play a pivotal role in the Ugandan economy, contributing immensely to the export earnings to the tune of 449 million dollars in 2010/11 and providing a livelihood to about 1.32 million of the 3.95 million agricultural households,” the UCDA said on its website.

The crop remains a key export commodity for Uganda in spite of it dropping from contributing 60 percent of export earnings to the current 20 to 30 percent, Muwonge said.

“Coffee is still central to the Ugandan economy for employment, farmer incomes and hard currency earnings in spite of the drop in its export revenue share due to the diversification of exports,” he said. “Increased investment in the sector may bear fruit in the government’s poverty reduction programmes.”

Uganda reduced a heavy reliance on coffee for its hard currency earnings by promoting non-traditional exports including fish, horticultural products, maize, cocoa, hides and skins.

Ugandan President Yoweri Museveni underlined the importance of the crop last week by stating that anyone caught contaminating the coffee quality should be arrested and prosecuted. In the past, some farmers have been accused of harvesting immature beans, while dealers were accused of mixing low-grade coffee with higher grade brands and selling it as superior quality.

“The urge to pick immature coffee is driven by poverty, since at times urgent needs may arise before your crop fully matures,” Sunday Mugaga, a coffee farmer in of Kayunga District in Uganda’s Central Region, told IPS.

Mugaga’s income from coffee is barely enough to support his family so he supplements it by selling the fish he catches from the Nile River, which flows through his district. The lure to expand his almost one-hectare coffee farm is strong, but he is constrained by a lack of available land.

“My two brothers and I inherited only four hectares of land from our father, which limits my expansion. But with time I will plant more coffee when I acquire more land,” he said.

“I treasure coffee because income from the crop has enabled me to send my five kids to school, although I must admit that the money isn’t enough to cover my needs,” he said.

But Uganda can still bank on the crop for most of its export revenue over the next three years, ahead of the planned commencement of its oil production in 2016, Robert Kasozi, an independent economics researcher, told IPS.

London-based Tullow Oil Plc, France’s Total SA and China National Offshore Oil Corporation are jointly developing Uganda’s oilfields, whose reserves the government upgraded to 3.5 billion barrels from 2.5 billion barrels.

“With oil production not expected to reach commercial levels until 2016, coffee production still has a significant role in the country’s economy,” he said. “Uganda could thus benefit from increasing its output over the coming three years in the form of higher export revenue.”

The country also stands to benefit from rising global demand, which is projected to outstrip production in the next few years. This is especially driven by rising demand for coffee in Russia, India, and China, Kasozi said.

Meanwhile, many farmers remain committed to coffee because of the high prices they receive for their crops amidst the rising global demand, Isaac Ntumwa, a coffee farmer in the Central Region district of Masaka, told IPS.

“Many farmers in my district have embraced the crop with hopes for a better harvest in the next few years,” Ntumwa said.

FLO Cert joins 4C Association

Fairtrade International became a member of the 4C Association on 17 September, joining the global sustainability platform for the coffee sector.

In becoming a 4C Member, Fairtrade International joins a forum that includes a growing number of producers, trade and industry representatives, and civil society organisations that  work together to address sustainability issues affecting coffee.

“We joined the 4C Association to continue making sure the voice of small coffee farmers is heard on a global stage,” said Lee Byers, Senior Adviser on Coffee and Tea at Fairtrade International, in a statement. “The 4C Association is an ideal forum for meeting with other important actors in coffee. We’re looking forward to joining the discussion on topics like climate change adaptation, quality and productivity investments, and more.”

Beyond providing a forum for members, the 4C Association helps coffee farmers and businesses take their first steps to applying sustainable production practices, the organisation stated. The 4C Code of Conduct, a baseline sustainability standard and verification system, is a starting point for producers to build up to other more demanding sustainability certifications, such as Fairtrade and others.

The statement noted that both Fairtrade International and the 4C Association actively collaborate with other sustainability initiatives. By working together, the standards organisations will aim to offer better support to producers and companies with multiple certifications, strengthen programs for producers, and ultimately increase the overall volumes of verified and certified sustainable coffees.

“We believe Fairtrade’s global scale, reach and experience of working directly with small coffee farmers for over 25 years can bring an extremely valuable contribution to the 4C Association’s work in broadening sustainability across the sector,” stated Melanie Rutten-Sülz, Executive Director of the 4C Association.

Two other leading standard-setting organisations, which are active in the coffee sector, UTZ Certified and the Rainforest Alliance, are also members of the 4C Association.

Coffee skyrockets

The price of coffee is skyrocketing on speculation that Colombia’s harvest will be smaller than expected for the fourth straight year.

Coffee for December delivery jumped 10.6 cents, or 6.5 percent, to finish at $1.7365 per pound. That’s the highest level since early August.

Although Brazil’s coffee crop appears headed toward a robust harvest, Colombia’s crop was hampered by heavy rainfall that caused delays earlier in the season. Colombia could produce a smaller-than-expected crop for the fourth consecutive year, Barclays Capital analysts said in a report on Frid

Brazil rain may revive wilting coffee prices

* Arabica one of worst performing commodities in 2012

* Traders estimate Brazil crop at around 55 mln bags

By Sarah McFarlane

GENEVA, June 29 (Reuters) – High quality coffee prices could be plucked from 2 year lows as weather problems in world top grower Brazil damage beans, but demand remains tricky as cash-strapped consumers seek out cheaper blends.

Arabica coffee is one of the worst performers of a struggling commodities sector in the year to date, shedding around 30 percent in value to its lowest since 2010 last week, reflecting consumer preferences for cheaper blends. A bumper crop from Brazil also loomed in the background.

But the May-September coffee harvest in the world’s top producer has made slower progress than usual due to torrential rains in June that have not only delayed the flow of beans to the market, but also spoiled much of the first produce to be gathered, damaging quality.

“The wet weather will impact the quality of the current crop, plus also the early flowering of the 2013/14 crop,” said Andrea Thompson, an analyst with CoffeeNetwork.

Brazil’s flowering period peaks in September/October and is key to the development of the future crop.

“There’s been reports of some fungus problems in patchy early flowering of the next crop which will affect quality,” Thompson added.

With arabica prices hitting a two-year low last week of $1.5010 per lb, not far from where traders estimate the cost of production for Brazilian arabicas at $1.10-$1.40 per lb, there’s also concern that these price levels are not sustainable if coffee output is to keep pace with consumption growth.

“In our view coffee prices will have to go up if the market wants to keep the Brazilian coffee factory running,” said Carlos Brando, director at P&A Marketing International, the speciality coffee and coffee machine exporter.

The official government estimate for this year’s on-year crop in Brazil’s biennial cycle is a record 50.45 million 60-kg bags, up from 48.09 million bags in 2010/11.

Private traders, whose estimates typically exceed the government view, forecast Brazil’s current crop will reach a record of about 55 million bags.

“There’s concern regarding the quality of the crop now. I don’t think there’s a concern with regard to the size of the crop,” said a London-based broker.

Analyst F.O. Licht forecasts a small global coffee surplus of around 1 million bags in 2011/12.

“I think it’s going to be very hard for the market to trade below $1.50 a lb given how much consumption has expanded globally. Coffee is not something that you can ramp up production on very quickly because we have limited production areas,” said Sterling Smith, commodity analyst for Citi Institutional Client Group in Chicago.

Smith forecasts that the benchmark arabica futures contract will hover around $1.85-$2.05 by the end of 2012.

Ayrton Costalarge, trade manager at Cocapec cooperative in Franca, in the north of Sao Paulo state also saw a price floor of around $1.50 due to slow supply growth in other coffee producing nations and rising consumption.

“I’m confident that from September onwards we’re looking at a market at $1.80.”

WEAK COFFEE

Accounting for around 60 percent of global coffee output, arabica dominates premium coffee blends.

An 11-month rally which more than doubled the ICE benchmark arabica coffee futures price, lifting the market above $3 per lb to a 34-year high in May 2011, triggered some roaster switching out of arabica and into cheaper robusta beans where possible in their blends.

Volcafe, the coffee arm of commodity trade house ED&F Man, noted in its weekly report that the composition of European Union imports in the first quarter included 5 percent growth in robustas and 1 percent growth in mild arabicas, but a 6 percent fall in green Brazilian arabica’s share of imports, versus the same period a year earlier.

Strong demand for cheaper coffee blends is expected to push the premium for arabicas down in coming months, from levels already near a three-year low.

“Roasters have been selling more of the medium to lower (priced) end of blends,” said Renaud de Kerchove, managing director of coffee at trade house ECOM Agroindustrial Corp.

Lower grade robusta beans, which account for around 40 percent of world output and are mostly used in instant coffee, have benefited from a surge in demand for cheaper beans which helped push prices to an 8-1/2-month high at the end of May.

Established coffee drinking markets including North America and Western Europe have seen consumers become more frugal as the economic slowdown bites.

“Any (demand) slowdown in mature markets is mostly based on consumers becoming more conscious of how they use their coffee and avoiding waste,” said a coffee buyer at an international roaster. (Additional reporting by Emma Farge, Marcy Nicholson and Peter Murphy; editing by Veronica Brown and Keiron Henderson)

Colombia’s Coffee Crop

Colombia’s coffee production may be 9 million bags in the 2012-13 season, according to commodity research company J. Ganes Consulting LLC.

The Andean nation’s coffee output has dropped from a peak of 12.5 million bags in 2007-08 after damaging rains, according to the U.S. Department of Agriculture. Roasters that switched to other beans may not turn back to Colombia because they are more flexible on their blends, Judy Ganes-Chase, president of Katonah, New York-based J. Ganes said. Colombia also faces falling domestic coffee consumption, she added.

“Colombia has not seen the success other producers have seen in increasing domestic consumption,” she said at a conference in Geneva today.

The country has “minimal stocks” and is likely to benefit from a possible El Nino, a warming of the Pacific Ocean that brings dry weather to some parts of the Andean nation, she said.

Honduras coffee boom feels growing pains

MARCALA, Honduras (Reuters) – In the small town of Marcala in the western mountains of Honduras, farmers are harvesting more coffee than ever before, part of a nationwide push to capitalize on higher prices that has doubled production in less than 10 years.

But the boom comes with a cost.

The coffee is coming in faster than growers can handle it and they are running out of space to dry all the beans, which need time in the sun or in drying machines to stop fermenting.

Improper drying can ruin coffee for export. A drastic reduction in quality will slash the price the coffee can fetch.

Local coffee company Cafe Organico Marcala (COMSA) was forced to rent out a nearby soccer field this year and cover it with plastic sheets to air out coffee cherries after their cement-drying patios overflowed.

“We’ve had an avalanche of coffee,” COMSA’s manager Rodolfo Penalba said, as workers raked beans over the plastic in neat rows. They survived this year by using the tarp but next year’s harvest would be even bigger, he added.

Right now Honduras only has around a dozen big coffee processing centers in larger cities or near export ports and around 20 smaller centers in more remote coffee regions.

“Honduras doesn’t have the capacity to dry all the coffee coming in 2011/12 in an efficient way, and even less so for what’s coming in 2012/13. This is going to lead to losses on a national level if the beans ferment,” said Eduardo Aguilar, the vice president of the Honduran coffee traders’ association.

The problem hit a peak at the height of the harvest in January and February when coffee cherries were ripening in several regions of the country. The industry is hoping the government or development banks will provide loans to help the sector ramp up infrastructure.

Honduras will export nearly 5.4 million 60-kg bags of arabica coffee next season, well over double the volume in the 2004/5 cycle, cementing the country’s position as the region’s biggest coffee producer.

It is the only country in Central America that is significantly increasing production, aside from Nicaragua, Central America’s smallest producer.

Unlike most of its neighbors, Honduras enjoys inexpensive land prices, keeping the coffee business attractive in an economy heavily reliant on agriculture and textiles.

Costa Rica, with a stronger tourist-based economy, has seen farm land shrink, gobbled up by condos for vacationers and American retirees.

Honduras is now tied with Mexico for a spot at the world’s No. 3 arabica coffee producer after Brazil and Colombia, according to the U.S. Department of Agriculture.

But if Honduras cannot improve infrastructure fast enough, quality could fall below standards demanded by exporters.

Improper drying affected between 230,000 and 383,000 60-kg bags of coffee this year — 5 to 8 percent of the crop, according to producers and traders. Some of this coffee could not be shipped abroad and went instead to local consumption, local industry officials said.

Several dealers said mold has been found in Honduran beans.

“There have been some quality issues,” said one U.S. importer, who declined to be named. “It’s an issue but I don’t think it’s affecting everything. They’re catching it at the certification process.

The problems may be hurting prices. The average price differential for strictly high grown Honduran coffee sold in the United States dropped in the first week of May. The differential, which helps to gauge a bean’s quality and availability, fell to 5 cents over the ICE Futures U.S. benchmark coffee contract, from 5.5 cents a week earlier.

BAD REPUTATION

This has complicated efforts by Honduras to boost its reputation as a producer of higher quality coffee. It hopes to compete with its neighbors Guatemala and Costa Rica, which can fetch higher differential premiums for their gourmet beans.

“Honduras has traditionally been a lower-priced exporter,” said Jack Scoville, a commodities analyst at The Price Group. “Their quality has been considered a little lower but they are working very hard to change that image.”

“Now they are producing a lot more coffee and I haven’t heard of many new (coffee processing facilities) being built just yet, so that could be an issue going forward,” he said.

So far, Honduras has not had problems finding buyers, said Scoville. Increasingly roasters are scouring for lower-priced options, or even turning to cheaper robusta beans.

“I think you are seeing the market chase lower quality,” Scoville said. “Honduras will be able to sell.”

MORE FARMERS, MORE LAND

The world’s growing thirst for coffee boosted prices here to a level that has inspired growing ranks of economists, doctors, lawyers, engineers and other professionals in Honduras to swap their ties for coffee baskets.

There were 101,489 coffee producers in Honduras last year, up from 92,706 in the 2009/10 season, the national coffee institute said. The country has added nearly 27,000 acres of new coffee-growing land.

In May 2011, ICE arabica futures hit a 34-year peak at $3.0890 per lb. They have since dropped about 40 percent, hitting a 19-month low on Monday at $1.7360 per lb. But the slide has not deterred farmers here.

Some 85 percent of farmers in Honduras scrape out a living on tiny plots they cannot afford to abandon even if prices fall.

“The price has gone down but it is still competitive for us,” said IHCAFE’s technical manager Mario Ordonez.

Coffee cultivation has spread to most of the country and the industry is scrambling to improve infrastructure.

Officials said the national coffee institute IHCAFE wants to launch projects that would give government financing and loans from regional development banks to farmers to buy drying tools.

Each drying machine can cost up to $70,000, said coffee machinery vendor Juan Osorto. “People who have been able to get financing are buying drying equipment since there is so much more coffee,” said Osorto, who so far this year already sold 25 driers. Each can process 153 60-kg bags at a time.

Similar schemes have worked in Brazil and Taiwan. IHCAFE director Victor Molina says the help could boost the country’s processing capacity by 1.5 million 60-kg bags by adding 135 new facilities, complete with electric drying machines, and some 12,000 smaller, solar drying units.

Representatives from IHCAFE traveled to Brazil to drum up support from Brazilian lenders to purchase mechanical driers.

“We need government help,” Molina said. “We are going to do everything possible so that we don’t lose out.”

(Additional reporting by Mica Rosenberg and Marcy Nicholson; Writing by Mica Rosenberg; Editing by David Gregorio)

Copyright © 2012, Reuters

Keeping our daily coffee: the farmers in Peru adapting to climate change

14th May, 2012

 Shade-grown, hand picked coffee is one of Peru’s biggest exports, but the country’s smallholder farmers face sustained crop losses from extreme weather. Matilda Lee reports from Peru

Coffee connoisseurs will tell you that in Peru, the world’s seventh largest coffee grower, the high altitudes, Pacific Ocean winds and alternating periods of rain and sunshine provide the perfect growing conditions for the delicate Arabica coffee bean. Coffee growing is a central part of life for the 6,600 smallholder coffee farmers who make up the Cepicafe cooperative in the northern Sierra Piura region. Here, farmers tend to small plots of up to five hectares, their land and shade-grown coffee farming traditions passed on generation after generation.

But Mother Nature can be unforgiving. Heavy downpours and flash floods that lead to landslides, and at the other extreme, high temperatures and drought are wreaking havoc on coffee farms across the region. Farmers like Angela Santos Tocto, 60, who has looked after a two and a half hectare plot in Canchaque village all her life, are facing new and complex conditions. ‘As a grower, I know everything, inside and out. The weather is affecting us,’ she says. She harvests an average of eight ‘quintals’, the 57.5-kilo sacks of unhusked coffee beans, on the same land that used to give her father 20. ‘The worst year brought a yield of only three quintals. This was real scarcity,’ she says.

Another Canchaque farmer, Alexandre Reyes, 57, literally grew up with coffee. ‘When I was eight or ten, I learned coffee growing from my parents. There were lots of trees in the mountains. It was colder, fresh. Now when the rain comes, it is still hot. The weather is changing, we need to adapt, but there is a lot we don’t understand.’

During the Ecologist’s visit to Canchaque and San Miguel del Faique villages, many farmers described how unpredictable weather, including rains 500 per cent greater than normal, has left them defenseless. Winding up a treacherous, dirt road 1,100 metres above sea level en route to Canchaque, the effects were visible in the rope and pulley system (pictured below) built three years ago to carry schoolchildren and provisions across a river when the flash floods and ensuing landslides make road crossing impossible.

A growing concern

Peru is among the group of countries that will be most affected by climate change, according to the UK’s Tyndall Centre for Climate Change. It can always be argued that specific extreme weather events aren’t directly connected to climate change, but proof of cause and effect is a moot point for these small farmers who can’t afford the luxury of climate change scepticism. Peru’s Vice-President Marisol Espinoza told the Ecologist, ‘We are already living the effects of climate change. We’ve experienced massive landslides and flooding along the coastal regions as well as in the mountains. It’s happening in the here and now. This is not about criticizing, but about proactively coming up with responses and solutions to tackle climate change that address the issue for the poor and give them a way forward’.

Ninety per cent of the region’s coffee is for export, which means the implications on the global market, were unlikely to go unnoticed. The question is how international coffee buyers are prepared to respond to climate change related impacts on the world’s second most traded commodity after oil.

Cafédirect, the UK’s leading Fairtrade coffee brand, has worked with the Cepicafe cooperative since 2001. Founded in 1991 by Oxfam, Traidcraft, Equal Exchange and Twin Trading, Cafédirect’s unique owner structure means the 39 producer organizations it works with in 13 different countries are represented on the board and have shares in the company. While most of the world’s coffee farmers sell to middlemen, or brokers at coffee auctions, who, in turn, profit from selling on to multinational companies, Cafédirect works directly with growers.

Wolfgang Weinmann, head of sustainability at Cafédirect, says, ‘In 2005 and 2006, during producer group meetings, I would hear a lot from our [coffee, cocoa and tea] growers about weather related issues – from drought, to desertification, to flash floods. We will never be able to predict exactly the impacts, but climate change is happening for them now. This is about decreasing the vulnerabilities and strengthening their capabilities to adapt.’

Climate data about the Piura region predicts that some parts of the area will not be suitable for coffee growing in 20 years time. ‘A scientist would say, “So what you just move up the mountain, it’s cooler. Grow the coffee there”. No, from an environmental point of view, you should not do that. The highlands are more fragile. In most cases, they are still uninhabited. The bigger picture is about the wider water management,’ says Weinmann.

In 2006, Cafédirect set up a three-year programme aimed at responding to grower concerns with pilot projects with four of their growing partners, including Cepicafe in Peru. The project, ‘Adaptation to Climate Change for Smallholder Growers’, (AdapCC), includes site-specific climate adaptation methods and a carbon credit reforestation project designed to buffer the coffee farms against heavy rainfall and landslides up mountain.

Climate adaptation brings changing traditions

According to the Smallholder Coffee Association (Junta Nacional de Café), there are around 150,000 coffee smallholders in Peru. Everything from coffee picking, sorting and milling is done by hand. A radical departure from tradition such as the Brazilian method of sun grown coffee on large plantations using chemical fertilisers and heavy machinery, is neither possible nor desirable. Coffee is a quality market, and being organic smallholders with a hand picked premium coffee bean helps ensure differentiation in a competitive market. Luis Torres, Cepicafe’s Project Manager on AdapCC, says, ‘We can’t compete with Brazil in quantity but we know our quality is good.’ Vice President Espinoza refers to Peruvian coffee’s unique ‘aroma of justice’ because of its link with community development.

In Canchaque, farmers learn adaptation methods through a ‘talking map’, a colourful, hand drawn visual aid illustrating how the weather changes have affected the coffee farms. Paul Santos Santos, 24, a young farmer turned community organiser trained to pass on technical assistance, sings a song he’s written about the community’s coming together to face the dual threats of drought and heavy rains.

‘We could see the changes, but we didn’t know what to do about it,’ he says.

Support from the AdapCC project has enabled coffee farmers to invest in rain-fed irrigation systems to provide water during dry spells and methods to stop soil erosion on steep hillsides. In the village of San Miguel del Faique, the most significant result has been to repair a water reservoir (pictured below).

‘In the past we had complete fields infested with the coffee borer, it was too hot,’ says Alexandre Reyes. They now use biological pest traps: plastic water bottles cut in half with coffee essence inside, used to attract pests, which then drown.

Coffee is an understory crop, shade trees buffer against high and low temperatures. In Canchaque, coffee plants are interspersed amongst banana, Roble and ‘cedro rosado’ (hardwood,) canopy trees. Hundreds of new shade trees have been planted as part of the project. ‘But we know that too much shade means more pests, so we prune our shade trees,’ says Paul Santos.

When the Ecologist visited, coffee cherries were just starting to turn colour – from green to the deep dark red that means they are ripe. The coffee cherries are hand picked and sorted then poured through a ‘popping machine’ where they are pulped, leaving two white beans from each cherry.

The future of coffee growing in the Sierra Piura region depends in part on adaptation projects such as AdapCC. Cafédirect’s project represents a new start in corporate practice to protect smallholder coffee growers around the world. Cafédirect say climate change adaptation should be a boardroom agenda for all major coffee retailers. Vice President Espinoza says, ‘I think [companies] can’t be just spectators to what is happening, they will have to contribute to find solutions to climate change

Matilda Lee