Global coffee market tight despite price slump

(Reuters) – The latest retreat in arabica coffee prices signals the tightly supplied coffee market is not running out of beans yet, but the outlook for sub-optimal harvests and faster consumption indicate that by next season it could come close.

A tour of coffee areas in the world’s top arabica grower, Brazil, showed a good but sub-optimal crop on the way. But in Colombia, output has dropped sharply and poor harvests have become almost a chronic problem.

On the demand side, things remain tight, with stocks in the United States and Europe totaling just about a month’s worth of global demand.

Despite the tight market, prices of coffee futures on ICE have been hovering near a 17-month low hit on March 12.

“There is a bit of supply available but you have a deficit year coming so we have to be awfully careful here and not be too bearish,” said Eric Nadelberg, Senior Vice President at Jefferies Bache, LCC in New York. “There is not a lot of coffee and as we move forward this will become more acute,” he told Reuters.

Despite record exports last season, European stocks of arabica and robusta are at their lowest since 2005/06, as consumers down more cups. Stocks there stood at just over 10 million bags by end-December, with 4.2 million bags in the world’s top coffee consumer, the United States, at the same time.

There have been two schools of thought over how coffee’s fundamentals will influence the price of arabica beans — more expensive than robusta. Arabicas are typically roasted and ground for brewed coffee while robusta is used in instant coffees or in blends with arabica.

Coffee market bears focus on expectations of a large Brazilian crop. Bulls point to the series of ever-smaller crops coming out of Colombia and other arabica producers in Central America and East Africa, a trend likely to continue.

On top of that, low certified arabica stocks at New York’s ICE exchange which remain close to their lowest in 11 years at around 1.6 million bags.

Until now, the bears have dominated, as the benchmark arabica contract trading on ICE Futures U.S. is down more than 40 percent from its 34-year high at $3.0890 per lb, reached in May 2011.

Nadelberg takes the view that the market will rally as production lags demand in the United States and Europe.

“We have a deficit year and we should trade higher coming into the main roasting season again. I look for it to get tight coming back to about the 3rd quarter, and by the 4th quarter the market should rally back,” he said.

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Brazil coffee output from 2000 link.reuters.com/ruw85s

Graphic on Colombia harvests: r.reuters.com/zad78r

Colombian production, exports: r.reuters.com/wet48r

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COLOMBIA’S “WORST CROP EVER”

Better weather could have made the difference between a good and a great coffee crop in Brazil and put Colombia back on track after a run of poor crops. A few million bags more from both would have left the market much more comfortably supplied.

Brazil’s is “not going to be the mother of all crops,” said John Wolthers, a veteran coffee trader with exporter Comexim in the main port town of Santos. Comexim’s crop estimate is among the highest of its private sector peers at 55.8 million bags.

Two damaging spells of drought during the critical flowering phase and again as beans were filling out, were enough to kill off hopes of a bumper or record crop.

The 2012/13 harvest comes in a so-called ‘on year’ in Brazil’s biennial cycle which causes output to rise one year and fall the next as trees recover. That is why producers are using the 2010/11 harvest as the comparative reference for this crop.

The Brazilian government’s crop agency, Conab, forecasts the crop at a median 50.6 million 60-kg bags while private forecasters see between 52 and 55 million bags, less than that picked in 2010.

Conab’s number comprises of 37.7 million bags of arabica beans and 12.9 million bags of robusta beans.

In Colombia, little improvement is seen after four harvests in which output was suppressed by heavy rain, leaf rust and pests, negating the effects of tree renewal programs.

“The harvest is not good, we continue to have many problems and in the best case we may get as much as last year,” said producer Hernan Castillo. The mitaca or mid crop in the 2010-11 cycle was one of the smallest in the last 50 years in Colombia.

A drive through the La Union coffee region confirmed reports from a Colombian Coffee Federation representative that many producers had uprooted and replanted trees afflicted by rust disease. The fungus weakens trees which lose foliage and it has spread at an alarming rate in some southern provinces of late.

“This is the worst crop ever. The main crop is gone, and the mitaca is bad, so as far as the 2011-12 coffee year is concerned it’s going to be hard for Colombia to get to even 7.5 million bags,” said a trader with a large exporter in Bogota.

Prior to its current problems Colombia used to produce between 11 and 13 million bags – a now-elusive level coffee importers have mourned ever since.

Easing coffee prices which could boost consumption further still and the certainty of a smaller Brazilian crop in the following 2013/14 crop year offers little reassurance that an awry supply and demand balance will invert any time soon.

“It’s a difficult situation,” Jeffries Bache’s Nadelberg said.

Coffee Growers Forge a Futures Recovery

NARANJO, Costa Rica—Coffee producers in the heart of this region that grows top-notch beans learned a tough lesson in 2001, the last time prices sank: Even gourmet coffee can leave a bitter taste.

Many Costa Rican coffee producers were hit hard by price downturns over the last few years. Now they’re starting up side-businesses around new crops and coffee tours as a hedge against future uncertainty. Video and reporting by WSJ’s Jean Guerrero.

This time, they are better prepared. Prices of arabica beans, the kind coveted by connoisseurs for their mild taste, have hit 17-month lows. Rather than spending their profits on luxuries like new cars and the latest electronic toys, as many once did, growers from Costa Rica to Mexico to Colombia are diversifying to protect themselves from cyclical declines like this one.

The efforts of some Latin American farmers to lessen their reliance on coffee has pinched supplies of high-end arabica, which undergoes a rigorous and labor-intensive washing process, even as global demand has increased. Consumers in emerging markets are thronging coffee shops in increasing numbers. Without a sustained increase in output from Latin America, the biggest source of these sought-after coffee beans, a shortfall could develop, setting the stage for a rebound in prices over the longer term, analysts say.

[coffee2] ReutersGrowers in Latin America are diversifying to protect against cyclical declines. Above, a harvest in Costa Rica.

Robin Rosenberg, an analyst at PFG Best, expects coffee prices will again hit $3 a pound over the next two years, as a supply deficit emerges. “Prices are going much, much higher,” Mr. Rosenberg said. “But it may not be next week.”

Since hitting a near record of $3.09 a pound in May 2011, coffee prices have plunged on expectations of a bumper crop from Brazil, the world’s biggest coffee producer but not a traditional heavyweight in “washed” arabica. On Thursday, coffee prices rose 0.9%, to $1.8445 a pound.

Here in the Naranjo region, in Costa Rica’s central highlands, Raul Herrera has been using profits from last year’s high prices to plant banana trees among coffee plants. He also planted laurel trees to sell firewood and built a tomato-plant nursery.

“The idea is that when prices go down, I’ll maintain a certain amount of income to sustain myself,” Mr. Herrera said.

Mr. Herrera grows washed arabica beans on about 45 acres. He couldn’t afford to maintain his plantation in the early 2000s when prices dropped. So the shade trees protecting the coffee plants became overgrown, stifling the plantation and causing a shade-loving fungus to damage half of his plants.

Latin American growers of the premium beans still bear the scars of 2001, when arabica prices hit an all-time low of 41.5 cents a pound, one-eighth the price only four years earlier. At the time, some growers in this region abandoned unprofitable fields or gave up altogether, with many migrating to nearby cities and the U.S. to find jobs.

Near the region of Naranjo, sprawling urban developments have taken over some of the best coffee land since then. Other former coffee-plantation land, high in the mountains where the soil is rich in volcanic minerals, remains overgrown with weeds and contains barren trees.

In the past decade, Costa Rica went from producing 2.3 million bags of coffee each growing season to 1.5 million bags, and the number of acres cultivated with coffee dropped from 247,000 to 212,000 or less over that time, said Ronald Peters, the president of the Costa Rican Coffee Institute.

Now, as production slowly recuperates, many producers who abandoned farms and returned, and others who remained, are determined not to put all their beans in one basket.

Instead, they are diversifying their incomes by planting crops such and corn and launching side businesses such as coffee tours and shops. Many of them also have signed up for certification programs, which require the farmers to live up to certain environmental and labor standards. For farmers, the main benefit of being certified is a guaranteed minimum price for their beans.

“They’re definitely taking action to insulate themselves if prices go down,” said Jack Scoville, vice president of Price Futures Group, a brokerage firm.

The trend cuts across Latin American countries that depend on washed arabica beans, which require subtle growing techniques and processing, and are the type nearly always used in gourmet coffee.

In Mexico, Cirilo Elotlan Diaz, president of the Regional Coffee Council of Coatepec, said 70% of the area’s producers abandoned their plantations from 2001 to 2004. “Some of them went to the U.S., others went to work in the cities,” he said.

But many of them have come back. Fernando Celis, an analyst at Mexico’s National Committee for Coffee Organizations, said some have begun growing corn and other grains.

“We have more options now and more certainty,” said Gabriel Barreda, president of Mexico’s National Union of Coffee Growers.

The Colombian Coffee Federation said its country’s high-end growers have begun planting corn and other crops as a way of diversifying incomes, and that most have been reinvesting by replacing old coffee plants with newer, more productive ones.

In Costa Rica, Jose Antonio Vera, head of sales and exports for Coopronaranjo, a cooperative with 2,000 producers, said that in recent years it has launched two supermarkets and a roasting mill where producers can grind their own coffee and sell at a greater value than their beans.

Coffee producers also are taking advantage of the fact that their plantations are often in scenic areas visited by tourists. Coopronaranjo started a coffee tour five years ago that draws hundreds of foreigners a year who each pay $22 to visit Espiritu Santo, an old-fashioned hacienda several hours from the capital of San Jose, to take part in the harvest and participate in coffee-tasting classes.

“There was a time where the producers had to choose between feeding themselves and feeding their coffee,” Mr. Vera said. “So they neglected the plantations. It’s good that in these moments that prices are good, they’ve changed their mentality and culture.”

Rwanda Coffee Output Seen Climbing 20% on Weather, Yields

Rwanda’s coffee production may climb as much as 20 percent to 24,000 metric tons this year because of good weather and a high yield, the state-run National Agricultural Exports Board said.

Output may rise from 20,000 tons last year, Robinah Uwera, the agency’s marketing director, said today by phone from Kigali, the capital.

“This year we expect bigger production because of a high yield crop cycle and good weather,” Uwera said. “The cycle alternates such that when you have a good yield this year it falls the following season.”

Harvesting in the central African nation, which produces mostly arabica beans, started last month, she said. The country exports more than 98 percent of its crop, according to the Eastern African Fine Coffee Association.

The agency had targeted output of 40,000 tons for 2011 two years earlier. The sector failed to meet the projection because of insufficient production of coffee cherries and weak management, the agency said on its website. The East African region had the worst drought in 60 years last year, which also affected agricultural ouput.

Coffee and tea are Rwanda’s major crop exports. The nation earned $75 million from coffee bean shipments in 2011, compared with $56 million a year earlier, because of improved global prices, Uwera said.

Coffee falls on expectations for good Brazilian harvest; other commodity prices are mixed

Coffee prices fell Friday on expectations that Brazilian growers will produce a bountiful harvest later this year.

Coffee for May delivery fell 2.95 cents to finish at $1.8235 per pound. The price has fallen 19.3 percent this year on the prospect that global inventories could expand.

Brazil’s crop appears to be in good condition, prompting many traders to speculate that growers will have a good harvest in about three months. That could ease concerns about reports of lower coffee production in Colombia, analysts said.

Sterling Smith, a market analyst at Country Hedging LLC, thinks that the price could fall into a range between $1.65 per pound to $1.70 per pound, but noted that could be offset by strong overall demand.

Despite the falling futures prices, consumers aren’t likely to get a break at the retail level because manufacturers are paying higher costs to produce and ship their products, he said.

Arabica coffee futures sink to 16-month low

NEW YORK/LONDON, March 7 (Reuters) – Arabica coffee futures plunged on Wednesday to a 16-month low on investor liquidation and suspected producer sales as the market posted its biggest three-day fall in a month.

The rest of the softs complex was mixed, with robusta coffee deriving support from the fact that growers in top robusta producer Vietnam were holding back supplies. A large crop in top producer Brazil also weighed on the market.

Some dealers believe the Vietnamese action is longer-term bearish because those beans will eventually have to come to market and they also point to a revision of the Indonesia’s coffee crop, which is due to start harvesting in April, to 9.2 million bags from an earlier forecast of 8.75 million.

The key May arabica coffee contract dropped to a session nadir of $1.862 a lb, lowest for the second position in the market since mid-October 2010, Thomson Reuters data showed.

May fell 4.45 cents or nearly 3 percent to close at $1.886 per lb.

London’s May robusta futures jumped $76, or nearly 4 percent, to finish at $2,031 a tonne, the highest close for the contract in 1-1/2 weeks.

“Part of it had to do with the market going through (the psychological level of) $2,” said The Price Group senior analyst Jack Scoville, adding pre-placed computer sell orders accelerated the fall in bean values.

James Cordier, chief trader of commodity brokerage Optionsellers.com in Florida, said he suspected “heavy” producer sales hit arabicas as Brazilians wary of a weakening economy opted to turn their assets into funds.

“They want to turn their beans into cash,” he said. “Brazil has been sitting on a lot of coffee.”

Traders said roaster interest should begin emerging at these levels. Cordier believes a floor near $1.80, basis May, is likely.

Is coffee culture changing in Guatemala?

ANTIGUA, Guatemala – North Americans and Europeans have enjoyed coffee from Ethiopia, Costa Rica and Vietnam, among others, in their local coffee shops for decades. Coffee is a culture – in the United States, sitcoms like “Friends” and “Seinfeld” were based in coffee shops. So it’s peculiar to walk into businesses in a coffee-producing country like Guatemala and get sugary instant coffee. But it’s been this way forever.

“Even coffee plantation owners drank instant coffee, … the business was producing, not consuming,” says Francisco Palarea, editor of Café Cultura, a coffee magazine focusing on the industry in Guatemala and El Salvador.

Historically, producer countries are not consumers of specialty coffee. The best beans are shipped to the U.S., Europe and Japan, where cheap raw coffee fruit is turned into expensive roasted beans. But in recent years, Palarea says that local cafés here, like Café Barista and El Cafetalito, are giving many Guatemalans a chance to drink their own world-famous coffee.

“[Guatemalan coffee chains] are the movers in creating a coffee-consuming culture in a coffee-producing country,” he says.

The arrival of Starbucks, which opened two locations in Guatemala last year, shows there is demand for specialty coffee. Starbucks has recognized the slow success that local coffee chains have had and are following it. On many afternoons at new Starbucks locations, customers wait in line for 15 minutes and can’t find a seat.

Some evidence supports the claim that consumption is up: Domestic coffee consumption in Guatemala has doubled in the last five years, according to a U.S. Department of Agriculture annual coffee report.

Palarea believes the trend can bolster the economy of Guatemala, a country where more than half of citizens live below the poverty line. “Coffee-consumption culture in a coffee-producing country can help improve the country in many ways,” he says.

Up to 1,000 people are involved in each cup of coffee, Palarea says, from farmers and exporters to roasters and baristas. When coffee is produced locally, this could mean 1,000 jobs in Guatemala. The benefits of more coffee consumption could trickle down and help the country.

Still, most Guatemalans aren’t yet feeling the benefits of increased consumption. With 52 percent of the population still living on less than $2 per day, purchasing a cappuccino for $3.50 at Starbucks is impossible.

Many Guatemalans involved in production don’t feel any of the benefits either. Small farmers are still at a huge disadvantage, says Franklin Voorhes, director of As Green As It Gets, a nonprofit group that supports small coffee farmers in Guatemala.

“There has been no change at all in the coffee industry,” he says.

Traditionally, Guatemalan farmers sell their raw coffee fruit to others who process it into expensive, roasted beans that end up in a customer’s cappuccino. “Even if [the farmer] only values his time at minimum wage, coffee fruit is sold at a loss,” says Voorhes.

And specialty-coffee premiums rarely reach the farmer. “The guy next to the customer is able to keep raising the price [of a cup of coffee], but it never trickles down to the farmer,” he says.

This is not unique to Guatemala. “Go to Honduras, Nicaragua, Kenya, the story doesn’t change,” Voorhes adds.

Voorhes wants small farmers to take control of each step of the coffee process.  Timoteo Minas, a 46-year-old father of six who has been a farmer since he was 10 and growing coffee for the last 20, tried it eight  years ago. He got a starter loan and learned every step of the process to harvest his 15 hectares of coffee trees, from planting the seedling to roasting the beans.

“The first year was very difficult,” he says. “I worried that I wouldn’t do it right and that when it got to the customer, it would be bad.”

But by his second year, Minas was confident. He says his final beans are much higher quality now than when he started.

Minas is now involved in exporting and sales. Despite receiving only four years of formal schooling, he acts as the accountant for his cooperative. Most of the time, coffee farmers deal with local buyers and never know where their product ends up. But on some occasions, a buyer comes to Guatemala to put the check directly into Minas’ hands, the same hands that planted, picked, washed, dried and roasted the beans.

Each step of the process makes the beans more valuable when done correctly. Minas says he earns much more now than he ever did before. “The time I invest in the process is paid back when it’s sold, and then some,” he says.

Minas has invested his higher earnings into more land and school for his children. So far, the older ones have all finished secondary school.

While Minas has been successful, the 300 small farmers like him who work with As Green As It Gets are very rare – they produce less than a third of 1 percent of Guatemalan coffee.

And Minas has an advantage because he produces in the Antigua region, recognized internationally for its coffee. Especially in areas with less notoriety and tourism, changing the way small farmers produce coffee is not easy – harvesting coffee is a delicate process and a long-term endeavor. Trees don’t bear fruit for the first five years and some varieties can produce for more than 100 years – once you start, it becomes very expensive to stop.  This makes many farmers hesitant to change the way their ancestors produced coffee.

Still, more Guatemalans like Minas are learning to appreciate their own coffee. Before, he didn’t drink his own coffee and didn’t know where it ended up. Now, he says, “I like a light roast, sometimes a dark. I usually drink it as an Americano

Jamaica’s coffee industry facing hard times

BRANDON HILL, Jamaica (AP) – A few years ago in this mist-shrouded mountain town, steep slopes were quilted with some of the world’s most valuable coffee trees. Farmers scrambled to increase acreage and pickers painstakingly filled wooden boxes with ripened berries at harvest time.

Today, much of the terrain is overgrown with underbrush and bamboo as a declining luxury market in Japan and a voracious beetle drive thousands of frustrated small farmers away from tiny plots of leased highlands.

Times are hard for the growers of Jamaica’s legendary coffee, especially those on isolated, low-tech farms such as the ones in Brandon Hill, a one-road enclave with no traffic lights.

“We used to make a living, but now we’re working hungry,” said Colin McLaren, standing in his sloping farm of flowering coffee trees in Jamaica’s wild eastern mountains, where his father grew the gourmet arabica beans before him. “It’s tough and getting tougher.”

Jamaica produces what connoisseurs rank as one of the world’s finest coffees, mostly grown on patches of a few acres between 2,000 to 5,000 feet (610 to 1,525 meters) above sea level. The moist, cool climate of the Blue Mountains lengthens the growing period from five to about 10 months, allowing sugars to develop in the beans that grow inside the berries. Many coffee lovers say the rich brew has a smooth, nutty flavor and a deep, intriguing aftertaste.

The roasted beans often sell for about $40 a pound in the United States, up to four times the price of other gourmet coffees. In Japan, the main market for Blue Mountain coffee, the beans fetch as much as $34 for a 100-gram (3.5-ounce) package.

But consumers are buying less because of the global economic slump. And that has brought declines in purchases by coffee dealers, as well as big drops in the prices paid to Jamaica’s growers. Like farmers everywhere, they get only a small fraction of the retail price after middlemen, processors, shippers, retailers and others take their slices of the pie.

Meanwhile, the cost of producing coffee has soared for Jamaicans as inflation has driven prices for fertilizer, insecticide and wages higher over the last decade and powerful storms damaged their trees. Between 2005 and 2009, the cost of tending an acre of coffee almost doubled, jumping from $3,400 to $7,070.

An increasing number of exasperated Jamaican farmers say they can’t even eke out a bare living growing the specialty crop.

The nation’s Coffee Industry Board says Jamaican farmers received an average of $50.57 for every 60-pound (27-kilogram) box of Blue Mountain coffee cherries they produced during the 2006-2007 season. Last year, they got $28.91.

Over the same period, the price of coffee elsewhere roughly doubled, according to the World Coffee Organization, as consumer demand has risen for mostly inexpensive commodity beans.

McLaren said the problem has gotten so bad that he would accept being paid in fertilizer instead of cash just so he can keep his coffee farm healthy and maintain his investment.

“That’s what it’s come to now,” he said, looking over his mountainside farm from a ledge. “Fertilizer here costs more than a box of our coffee.”

Demand for the island’s coffee has plunged in Japan, where coffee lovers have long paid top dollar for Jamaican beans. Japan used to buy nearly 90 percent of Jamaica’s crop and helped the island develop its brand. Now Japanese importers buy around 60 percent at depreciated prices and have stopped advance payments for green coffee, shifting the costs to Jamaican exporters.

Toyohide Nishino, executive director of the All Japan Coffee Association, said his country’s love affair with Blue Mountain coffee has dulled because even discriminating Japanese consumers are looking for cheaper products at a time of economic stagnation.

“Consumers really have to watch their budgets, and Blue Mountain coffee is an expensive brand,” Nishino said. “So instead of Blue Mountain, coffee from Colombia and Brazil is more popular these days.”

This year, Jamaica is projected to produce just 140,000 60-pound (27-kilogram) boxes of branded Blue Mountain coffee, far below the record crop of 529,704 boxes in 2003. Even in 2004, when Jamaica’s coffee business was ravaged by Category 4 Hurricane Ivan, it managed to produce 236,405 boxes of Blue Mountain coffee.

As some farmers gave up in the lush Blue Mountains that tower over eastern Jamaica, their untended fields exacerbated a problem for those who remained by creating a breeding ground for the coffee berry borer, an invasive pest originally from Central Africa that is a headache for coffee growers around the world.

Officials say some Jamaican farmers could lose as much as half of their coffee crop this year due to the borer, an opportunistic bug smaller than a sesame seed that flourishes in abandoned fields and then spreads to working farms, further diminishing supply.

Industry leaders are distributing about 50,000 sticky traps containing a dab of pheromone that lures the tiny beetles inside, and they’re trying to educate farmers about how to get rid of the pests by hand. The government, meanwhile, is distributing small aid payments to help with fertilizer purchases.

Gusland McCook, advisory officer with Jamaica’s Coffee Industry Board, said the island has to get the borer population down or else its “going to be catastrophic.” And the fall in prices for Blue Mountain beans makes that tougher.

“A true, faithful coffee farmer can deal with the borer, (and) with more storms. But if the big man makes it so he can’t make a living, well, that’s another story,” said Danavan Edwards, a 29-year-old farmer with a plot near McLaren’s land.

Derrick Simon, president of the All Island Jamaica Coffee Growers’ Association, argues that the industry is in trouble largely because it foolishly relied on Japan almost exclusively for years and failed to diversify its markets.

McCook agrees. “I don’t believe we should be looking back with much regret, but we should have been looking forward in a better way. You could say we have been slow to react and look forward and make adjustments.”

Jamaica has been trying to expand the market for Blue Mountain coffee in Europe and the U.S., where adventurous coffee lovers can order it online from several sellers. The Coffee Industry Board also is looking for a toehold in China, where analysts predict coffee consumption will grow.

Prices have edged back up, although they’re still far below what growers used to get. Mavis Bank Coffee Factory Ltd., a major Jamaican processor and exporter, just promised growers a final price of $35.75 for each box they produce.

Not all Jamaican growers face the same hardships. Farmers with a do-it-yourself approach at higher, cooler elevations find they don’t need to spray often for the damaging beetle, which is far more common at lower altitudes.

David Twyman of the Old Tavern Coffee Estate brand cultivates and roasts coffee at his family’s 150-acre property and relies largely on mail order customers in the U.S., Canada and Taiwan who come back year after year.

“We’ve found that once we get people to try our coffee, they will be back,” Twyman said at his lush farm perched high in the mountains perch where he gives tours and steaming cups of black coffee to tourists and other visitors. “Our customers want a more personal connection.”

Kenyan Coffee Prices Advance 1.5% at Auction, Exchange Says

Kenyan coffee prices rose 1.5 percent at an auction yesterday as the supply of beans declined, the Nairobi Coffee Exchange said.

The average price for all the coffee sold rose to $284.67 for a 50-kilogram (110-pound) bag, from $280.34 a week earlier, the bourse said today by e-mail.

The benchmark AA grade climbed 1 percent to an average $381.16 from $377.27 at the previous sale after supplies fell about 14 percent to 3,949 bags, the exchange said.

The rise in prices was marginal because the quality of the beans was lower and some of the major buyers weren’t active because they had covered their orders, Mansukh Shah, a coffee trader at the Nairobi-based Alanwood Ltd., said by phone.

“Prices were mixed with good grades fetching good prices while low grades attracted low prices,” he said. “Some of the big players weren’t in the market.”

Sales at the auction rose 2.8 percent to 8,117 bags worth $2.81 million from 7,896 bags valued at $2.69 million a week earlier, the exchange said.

Supplies of the beans at the 12th sale of 2011-12 season fell 9.9 percent to 24,702 bags, the agency said.

Kenya harvests the bulk of its crop from October through December, while a secondary crop is reaped from April to June. The nation, whose output slumped 13 percent to 36,629 metric tons in the 12 months ended Sept. 30, from 42,096 tons a year earlier, is yet to make a forecast for 2011-12, Isaac Muchomba, secretary of the Kenya Coffee Traders Association said on Jan. 17.

The following are details of yesterday’s auction in U.S. dollars for a 50-kilogram bag:

Grade          Low            High           Average
AA             257            491            381.16
AB             177            433            307.33
C              157            285            236.68
E              416            431            420.36
HE             198            216            201.74
MH             167            189            180.18
ML             107            128            122.42
PB             221            437            336.92
T              205            240            216.19
TT             218            319            245.53
UG             217            217            217.00
UG1            183            214            201.94
UG2            136            157            149.46
UG3            104            106            104.99

Mystery Disease In Central America Kills Thousands

CHICHIGALPA, Nicaragua — Jesus Ignacio Flores started working when he was 16, laboring long hours on construction sites and in the fields of his country’s biggest sugar plantation.

Three years ago his kidneys started to fail and flooded his body with toxins. He became too weak to work, wracked by cramps, headaches and vomiting.

On Jan. 19 he died on the porch of his house. He was 51. His withered body was dressed by his weeping wife, embraced a final time, then carried in the bed of a pickup truck to a grave on the edge of Chichigalpa, a town in Nicaragua’s sugar-growing heartland, where studies have found more than one in four men showing symptoms of chronic kidney disease.

A mysterious epidemic is devastating the Pacific coast of Central America, killing more than 24,000 people in El Salvador and Nicaragua since 2000 and striking thousands of others with chronic kidney disease at rates unseen virtually anywhere else. Scientists say they have received reports of the phenomenon as far north as southern Mexico and as far south as Panama.

Last year it reached the point where El Salvador’s health minister, Dr. Maria Isabel Rodriguez, appealed for international help, saying the epidemic was undermining health systems.

Wilfredo Ordonez, who has harvested corn, sesame and rice for more than 30 years in the Bajo Lempa region of El Salvador, was hit by the chronic disease when he was 38. Ten years later, he depends on dialysis treatments he administers to himself four times a day.

“This is a disease that comes with no warning, and when they find it, it’s too late,” Ordonez said as he lay on a hammock on his porch.

Many of the victims were manual laborers or worked in sugar cane fields that cover much of the coastal lowlands. Patients, local doctors and activists say they believe the culprit lurks among the agricultural chemicals workers have used for years with virtually none of the protections required in more developed countries. But a growing body of evidence supports a more complicated and counterintuitive hypothesis.

The roots of the epidemic, scientists say, appear to lie in the grueling nature of the work performed by its victims, including construction workers, miners and others who labor hour after hour without enough water in blazing temperatures, pushing their bodies through repeated bouts of extreme dehydration and heat stress for years on end. Many start as young as 10. The punishing routine appears to be a key part of some previously unknown trigger of chronic kidney disease, which is normally caused by diabetes and high-blood pressure, maladies absent in most of the patients in Central America.

“The thing that evidence most strongly points to is this idea of manual labor and not enough hydration,” said Daniel Brooks, a professor of epidemiology at Boston University’s School of Public Health, who has worked on a series of studies of the kidney disease epidemic.

Because hard work and intense heat alone are hardly a phenomenon unique to Central America, some researchers will not rule out manmade factors. But no strong evidence has turned up.

“I think that everything points away from pesticides,” said Dr. Catharina Wesseling, an occupational and environmental epidemiologist who also is regional director of the Program on Work, Health and Environment in Central America. “It is too multinational; it is too spread out.

“I would place my bet on repeated dehydration, acute attacks everyday. That is my bet, my guess, but nothing is proved.”

Dr. Richard J. Johnson, a kidney specialist at the University of Colorado, Denver, is working with other researchers investigating the cause of the disease. They too suspect chronic dehydration.

“This is a new concept, but there’s some evidence supporting it,” Johnson said. “There are other ways to damage the kidney. Heavy metals, chemicals, toxins have all been considered, but to date there have been no leading candidates to explain what’s going on in Nicaragua …

“As these possibilities get exhausted, recurrent dehydration is moving up on the list.”

In Nicaragua, the number of annual deaths from chronic kidney disease more than doubled in a decade, from 466 in 2000 to 1,047 in 2010, according to the Pan American Health Organization, a regional arm of the World Health Organization. In El Salvador, the agency reported a similar jump, from 1,282 in 2000 to 2,181 in 2010.

Farther down the coast, in the cane-growing lowlands of northern Costa Rica, there also have been sharp increases in kidney disease, Wesseling said, and the Pan American body’s statistics show deaths are on the rise in Panama, although at less dramatic rates.

While some of the rising numbers may be due to better record-keeping, scientists have no doubt they are facing something deadly and previously unknown to medicine.

In nations with more developed health systems, the disease that impairs the kidney’s ability to cleanse the blood is diagnosed relatively early and treated with dialysis in medical clinics. In Central America, many of the victims treat themselves at home with a cheaper but less efficient form of dialysis, or go without any dialysis at all.

At a hospital in the Nicaraguan town of Chinandega, Segundo Zapata Palacios sat motionless in his room, bent over with his head on the bed.

“He no longer wants to talk,” said his wife, Enma Vanegas.

His levels of creatinine, a chemical marker of kidney failure, were 25 times the normal amount.

His family told him he was being hospitalized to receive dialysis. In reality, the hope was to ease his pain before his inevitable death, said Carmen Rios, a leader of Nicaragua’s Association of Chronic Kidney Disease Patients, a support and advocacy group.

“There’s already nothing to do,” she said. “He was hospitalized on Jan. 23 just waiting to die.”

Zapata Palacios passed away on Jan. 26. He was 49.

Working with scientists from Costa Rica, El Salvador and Nicaragua, Wesseling tested groups on the coast and compared them with groups who had similar work habits and exposure to pesticide but lived and worked more than 500 meters (1,500 feet) above sea level.

Some 30 percent of coastal dwellers had elevated levels of creatinine, strongly suggesting environment rather than agrochemicals was to blame, Brooks, the epidemiologist, said. The study is expected to be published in a peer-reviewed journal in coming weeks.

Brooks and Johnson, the kidney specialist, said they have seen echoes of the Central American phenomenon in reports from hot farming areas in Sri Lanka, Egypt and the Indian east coast.

“We don’t really know how widespread this is,” Brooks said. “This may be an under-recognized epidemic.”

Jason Glaser, co-founder of a group working to help victims of the epidemic in Nicaragua, said he and colleagues also have begun receiving reports of mysterious kidney disease among sugar cane workers in Australia.

Despite the growing consensus among international experts, Elsy Brizuela, a doctor who works with an El Salvadoran project to treat workers and research the epidemic, discounts the dehydration theory and insists “the common factor is exposure to herbicides and poisons.”

Nicaragua’s highest rates of chronic kidney disease show up around the Ingenio San Antonio, a plant owned by the Pellas Group conglomerate, whose sugar mill processes nearly half the nation’s sugar. Flores and Zapata Palacios both worked at the plantation.

According to one of Brooks’ studies, about eight years ago the factory started providing electrolyte solution and protein cookies to workers who previously brought their own water to work. But the study also found that some workers were cutting sugar cane for as long as 9 1/2 hours a day with virtually no break and little shade in average temperatures of 30 C (87 F).

In 2006, the plantation, owned by one of the country’s richest families, received $36.5 million in loans from the International Finance Corp., the private-sector arm of the World Bank Group, to buy more land, expand its processing plant and produce more sugar for consumers and ethanol production.

In a statement, the IFC said it had examined the social and environmental impacts of its loans as part of a due diligence process and did not identify kidney disease as something related to the sugar plantation’s operations.

Nonetheless, the statement said, “we are concerned about this disease that affects not only Nicaragua but other countries in the region, and will follow closely any new findings.”

Ariel Granera, a spokesman for the Pellas’ business conglomerate, said that starting as early as 1993 the company had begun taking a wide variety of precautions to avoid heat stress in its workers, from starting their shifts very early in the morning to providing them with many gallons of drinking water per day.

Associated Press reporters saw workers bringing water bottles from their homes, which they refilled during the day from large cylinders of water in the buses that bring them to the fields.

Glaser, the co-founder of the activist group in Nicaragua, La Isla Foundation, said that nonetheless many worker protections in the region are badly enforced by the companies and government regulators, particularly measures to stop workers with failing kidneys from working in the cane fields owned by the Pellas Group and other companies.

Many workers disqualified by tests showing high levels of creatinine go back to work in the fields for subcontractors with less stringent standards, he said. Some use false IDs, or give their IDs to their healthy sons, who then pass the tests and go work in the cane fields, damaging their kidneys.

“This is the only job in town,” Glaser said. “It’s all they’re trained to do. It’s all they know.”

The Ingenio San Antonio mill processes cane from more than 24,000 hectares (60,000 acres) of fields, about half directly owned by the mill and most of the rest by independent farmers.

The trade group for Nicaragua’s sugar companies said the Boston University study had confirmed that “the agricultural sugar industry in Nicaragua has no responsibility whatsoever for chronic renal insufficiency in Nicaragua” because the research found that “in the current body of scientific knowledge there is no way to establish a direct link between sugar cane cultivation and renal insufficiency.”

Brooks, the epidemiologist at Boston University, told the AP that the study simply said there was no definitive scientific proof of the cause, but that all possible connections remained open to future research.

In comparison with Nicaragua, where thousands of kidney disease sufferers work for large sugar estates, in El Salvador many of them are independent small farmers. They blame agricultural chemicals and few appear to have significantly changed their work habits in response to the latest research, which has not received significant publicity in El Salvador.

In Nicaragua, the dangers are better known, but still, workers need jobs. Zapata Palacios left eight children. Three of them work in the cane fields.

Two already show signs of disease.

Yunnan’s caffeine rush For all the coffee in China

THE Coffee Industry Development Office of Pu’er is located in the city’s Tea Industry Bureau building, its roof designed to look like a leaf of this city’s ubiquitous crop. It is also one of the rare offices in China where a government official will greet a visitor with a decent cup of coffee—even though the deputy director, Liu Biao, was until a year ago promoting tea.
In 2007 this city in southern Yunnan province (see map) changed its name from Communist-era Simao back to its historical name of Pu’er, in order to capitalise on the tea leaves that it made famous. Now Pu’er is once again overhauling its identity. Farmers here endured the collapse in 2008 of a bubble in the price of Pu’er tea, possibly manipulated by officials and speculators. They are now rapidly sowing more coffee seeds, with the encouragement of the local government. Some growers are clearing forested hillsides, something they once did to plant tea. Pu’er today has 28,000 hectares (70,000 acres) of coffee, twice as much as in 2009, and that is projected to grow by half again by 2015. (By comparison, the city has 220,000 hectares of tea of all kinds, roughly the same as three years ago.)
Nestle
The economic impetus is clear. A family with a hectare of coffee can earn more than $10,000 a year, triple the amount for tea, and five times more than for maize or rice, says Mr Liu. Nestlé, along with the Chinese government and the United Nations Development Programme, helped jump-start coffee production in the area in the late 1980s. Yunnan’s first coffee growers, 19th-century European missionaries, found a suitable climate for their bitter juice, but little native interest in drinking it. Now Yunnan accounts for almost all the coffee grown in China. Other buyers have followed Nestlé in recent years, and demand has outstripped supply. Beans are sold at the global price, which last year briefly topped 40 yuan ($6.30) a kilo, and is now about 30 yuan. Three years ago, the price was only 16 yuan a kilo.
Many not-so-decent beans are included. The high price of coffee last year prompted farmers to cash in by selling the bad with the good. One local exporter, Liu Minghui, rejected a big share of the beans offered to him last year—he has a brand name to protect, after all: Starbucks, a global coffee chain, has agreed to buy a majority stake in his coffee business, Ai Ni. In 2010 Howard Schultz, the Starbucks chief executive, stopped by for a visit. Mr Liu at the coffee office says it was the first time a foreigner had come to Pu’er by private jet. Look out for a town called Starbucks some time soon.