Tanzania’s Benchmark Coffee Price Climbs as Stocks Decline

Tanzania’s benchmark coffee price advanced 11 percent at an auction on March 10 amid lower supplies, the Tanzania Coffee Board said.

The average price of the top arabica AA grade rose to $327.93 per 50-kilogram (110-pound) bag, from $294.14 two weeks earlier, the board said in an e-mailed statement today. Supplies of the grade fell 51 percent to 1,218 bags, it said. Prices of other grades rose as stocks declined and global prices improved, the board said.

“We’re very close to the end of the season and there’s been mixed quality,” said William Harris, managing director of coffee trader Taylor Winch (Tanzania) Ltd., by phone from the northern city of Moshi. “The rise in prices was both because of higher prices in New York, and some good quality beans here.”

Tanzania reaps its crop from April through August. Arabica accounts for 75 percent of the country’s output, with robusta making up for the rest. Output in the 12 months through June may rise 54 percent to 55,000 tons because of improved weather, Adolph Kumburu, the board’s director general, said on Aug. 3.

Total supplies at the 28th auction of the 2010-11 season fell 12 percent, while sales dropped 18 percent to 10,038 bags, according to the board’s statement.

The following are details of the March 10 auction in U.S. dollars for a 50-kilogram bag for the good grades:

Grade             Offer   Sold    High     Low         Average
Arabica AA        1,218   953     350      224.80      327.93
Arabica A         2,031   1,446   342      235         317.29
Arabica B         3,203   2,511   328      259.20      303.62
Arabica PB        678     611     314      224         284.88
Arabica C         683     575     309.80   248         293.79
Arabica FAQ       720     720     193.20   185.20      189.20
Robusta Superior  1,227   1,227   127      105         119.18
Robusta FAQ       2,009   2,009   126      99.80       117.08

To contact the reporter on this story: Fred Ojambo in Kampala via Nairobi on email hidden; JavaScript is required

As weather shifts, coffee farmers struggle to protect crops

As weather shifts, coffee farmers struggle to protect crops

A mile above this rural mountain town, coffee trees have produced some of the world’s best arabica beans for more than a century.

Now farmers are planting even higher – at nearly 7,000 feet – thanks to warmer temperatures.

“We noticed about six years ago, the weather changed,” said Ricardo Calderon Madrigal, whose family harvests ripe, red coffee cherries at the higher elevation. He sells beans to some of the most notable coffeehouses in the U.S., including Stumptown Coffee of Portland, Ore., and Ritual Coffee in San Francisco.

Standing among healthy coffee trees near the upper reaches of his farm, Calderon said he knows he is lucky.

Calderon is one of the few Costa Rican coffee farmers benefiting from the shifting weather pattern, while most of his fellow growers have found themselves on the losing end.

Yields in Costa Rica have dropped dramatically in the past decade, with farmers and scientists blaming climate change for a significant portion of the troubles.

Many long-established plantation owners have seen trees wither or flower too early. Some have given up. Others are trying to outwit changes in temperature, wind and rain with new farming techniques and hardier tree varieties.

Like many tropical crops, coffee cannot tolerate extreme high and low temperatures, and it needs dry and wet seasons. Costa Rica and other countries, such as Colombia, with sophisticated coffee farms and mills appear to be noticing the impact of climate change first.

These problems are helping push up the price of a latte or espresso at coffee shops everywhere.

Most important, the fate of coffee in Costa Rica could be a bellwether for food production – and prices – globally, as farmers around the world cope with mudslides, droughts and creeping changes in temperature.

Almost all coffee grows in the tropics, and in general, tropical species are more sensitive to climate change, said Joshua Tewksbury, the Walker professor of natural history at the University of Washington. There are more species there, they can withstand only a narrow band of temperatures, and they are not likely to adapt well to change.

Heavy rains in Colombia recently helped drive coffee beans to prices not seen in more than a decade, and coffee companies are watching closely. Last fall, Starbucks raised prices on some drinks to offset rising costs on commodities, notably coffee.

Global warming – more accurately called climate change – poses “a direct business threat to our company,” Starbucks executive Jim Hanna told an Environmental Protection Agency panel in 2009 in Seattle.

Near the crest of a hill on a farm named La Edda for his mother, Francisco Flores bends a knee to touch the curled, yellowed leaves of a young coffee tree, one of hundreds on a windswept ridge where coffee grew strong two decades ago.

“They live, but they don’t produce,” Flores said. “I have an ache in my heart. It’s very difficult to see coffee businesses that went from generation to generation to generation, closing.”

Costa Rica has 25 percent fewer acres planted in coffee than it did a decade ago, according to the national coffee agency iCafe. Roughly 10,000 farmers have quit coffee, some converting their land to pasture for cattle or dairy businesses.

The remaining coffee farms produce less, with yields down 26 percent in a decade.

Weather is only one problem. Costa Rica also has too many old coffee trees, and farmers’ costs have risen because of a labor shortage and devalued currency.

Still, climate change represents about a quarter of the problem and is expected to worsen, said Ronald Peters, executive director of iCafe.

 

Standing in a field of rented trees, Flores said he thinks about switching to timber or leather-leaf ferns. Three years ago, he tore out 100 acres of coffee trees ravaged by the weather and turned the land into a horse farm that a friend runs.

Only arabica beans are grown in Costa Rica, taking advantage of the volcanic soil at high elevations to produce some of the world’s most sought-after coffee.

Farmers learned long ago to negotiate the country’s microclimates. Now they must adapt to new changes.

On the slopes of Volcano Poas, the biggest threats are colder nights, fiercer winds and rain that falls too hard and at the wrong times. Temperatures at Flores’ coffee farms on Poas used to stay above 60 degrees at night, but now are dropping to 52 degrees. He also has planted more rows of Indian cane and other trees as windscreens.

Many young coffee plants that should be lush and preparing to burst with fruit remain withered and unproductive, he says.

Just a couple of miles away are healthy coffee trees that have escaped the wind and cold. Some are still producing robustly at the ripe old age of 30 years.

Rainfall also has become more erratic.

Farmers constantly watch the sky during the harvest, fearful it might rain and cause their trees to flower early.

Flores is dismayed to find blooms on some of his coffee trees in January, the peak of the harvest. He expected it: There had been rainy spells all week.

Still, the trees are not supposed to flower until April. Many of these January blooms will dry up from lack of water before the true rainy season arrives.

“Last night we had rain, so for next year we will lose coffee,” he said.

It first rained during the harvest on Poas in 1997, a year Flores remembers because it was something his family had not seen in five generations of coffee farming.

“We were scared about it,” he said.

Rain also means higher humidity and more fungus. To combat that, Flores prunes some trees shorter and smaller so their leaves will capture less moisture.

Then there are the mudslides. Although climate change is expected to bring a net drop in rainfall over the long term, some places – including Costa Rica – have experienced deluges. In recent years, mudslides have wiped out swaths of coffee farms, blocked roadways and demolished at least two processing mills.

 

Experts are trying to help coffee farmers with the problem.

Mostly, they recommend farmers do more of what they have been advising for years to protect the environment and grow better coffee, such as adding shade trees and planting in curved and terraced rows to prevent massive water runoff.

“Farmers are scared,” said Orlando Mora, an agronomist at Starbucks’ farmer support center in Costa Rica. “They are having to alter their daily routines a lot.”

 

Researchers are developing hardier varieties of coffee that can withstand changes in the weather.

Flores is testing about 1,500 hybrid trees developed by coffee-research institutes in Costa Rica, Guatemala, El Salvador and Honduras along with the Tropical Agricultural Research and Higher Education Center in Costa Rica and CIRAD in France.

A major snag is that they cost twice as much as regular coffee trees because there are so few available. But they produce about 25 percent more coffee and should become affordable once volume picks up, according to Peters from iCafe. His agency helps arrange financing for farmers who want to buy the new trees.

Starbucks and others are working to distribute thermometers to farmers so they can monitor exactly how the temperature is changing – and share that information.

“They know they feel warmer or cooler, but they don’t know how much,” Mora said. “What they need is communication and knowledge, and our activity at Starbucks is not only to buy coffee but to provide support so they can be good coffee producers.”

In Costa Rica, the world’s 15th largest coffee exporter, high coffee prices have helped farmers make up for lean crops.

Eventually, coffee prices are expected to fall again. At that point, Peters from iCafe said he hopes the country will have returned to strong production levels, “because in many regions there are not very many alternatives” to growing coffee. Worth about $400 million a year, coffee is the country’s third-largest agricultural export, after pineapples and bananas.

 

Roberto Mata, who runs the Coopedota cooperative in Santa Maria that sells to Starbucks, worries about all of it.

“If coffee falls to 100 cents a pound, we won’t survive. We will disappear,” Mata said. Coffee currently sells on the commodities market for about $2.75 per pound.

 

A few years ago, when Coopedota’s 800 farms had surprisingly low yields, he began studying the weather and climate change. “At the beginning, I was afraid; then I was angry,” he said.

He became angrier after sending a representative to the United Nations Climate Change Conference in Cancun last fall. At that meeting and others, efforts to limit greenhouse gases and take other steps to slow or reverse the effects of climate change came to little.

The conference was held at about the same time Coopedota’s farms were spraying more than twice as much fungicide as usual to counteract a fungus attack after heavy rains. The cost also doubled, to about $300 an acre.

Now Mata is on a mission to certify Coopedota as carbon-neutral, largely because he wants to set an example.

“We want to prove to the coffee-consuming world that we’re doing what we can and ask them to do something against global warming, because otherwise we will not be able to produce coffee,” he said.

He also wants to hire two agricultural scientists – he has one now – to teach farmers how to combat climate change, and he is lobbying to get funding for those positions, plus new trees and extra fungicide.

Mata is not sure what to do about the increasing wind. “It used to be, if you saw clouds coming at the top of the mountains, two hours later you would have rain. Now, it’s five minutes later.”

Planting at higher elevations might not be a good solution for many farmers, he says, because of the different soil and because the heavier clouds there could invite fungus. As a test, the co-op planted trees at 6,400 feet and is waiting to see whether fungus attacks.

With all these measures, Mata said, he hopes to keep farmers in business. He also wants his son to continue their family’s 85-year tradition of coffee growing.

 

“Some people do not know what we are suffering,” Mata said. “They can go shopping and buy a bunch of items and throw them all away, and they can sit in their cars for six hours and think it’s not affecting anybody. It’s affecting somebody.”

US Jan Organic Coffee Imports

 

Mar 10, 2011 (Dow Jones Commodities News via Comtex) —

(Data is for Organic non-roasted and non-decaffeinated arabica coffee,
in kilograms)
 
Origin                        Jan 11
Mexico   Ogn                 207,000
Guatmal  Ogn                 856,635
Salvadr  Ogn                 624,450
Hondura  Ogn                 770,418
Nicarag  Ogn                 489,900
C Rica   Ogn                 723,465
Panama   Ogn                  36,000
Dom Rep  Ogn                   3,734
Colomb   Ogn               5,986,415
Ecuador  Ogn                  53,406
Peru     Ogn                 798,567
Bolivia  Ogn                 101,050
Brazil   Ogn               4,640,829
India    Ogn                   2,700
Vietnam  Ogn                 651,349
Indnsia  Ogn                 916,561
China    Ogn                  76,800
New Gui  Ogn                  76,800
Burundi  Ogn                  38,400
Ethiop   Ogn                  20,700
Uganda   Ogn                  18,000
Kenya    Ogn                 211,500
Tnzania  Ogn                  57,600
TOTAL                     17,362,279 

El Salvador Coffee Exports Up 38% Through Feb

El Salvador Coffee Exports Up 38% At 621,730 Bags Through Feb

Mar 10, 2011 (Dow Jones Commodities News via Comtex) — DOW JONES NEWSWIRES

Coffee exports from El Salvador for the 2010-2011 season through February totaled 621,730 bags of 60 kilograms each, up 38% from the same period last year, the country’s coffee council said Thursday.

The value of coffee exports during the first five months of the season saw a year-on-year increase of 75%, to $144.52 million amid high international coffee prices.

Germany was the principle destination for coffee exports from El Salvador, receiving 37%, while the U.S. received 32% and Japan received 9%.

Last month, the country exported 230,156 bags of coffee, up 19% from February 2010. The value of the exports increased 52%, to $55 million.

The average price per pound during the month was $1.83, compared with $1.45 during February 2010.

El Salvador contracted to sell 1.42 million bags for export through March 8, up 116% from the same period last season. The volume represents a value of $359.9 million, up 189% from last year, with an average price per pound of $1.94, compared with $1.45 last year.

The country expects to produce 1.7 million bags of coffee this season, up 40% from last year, when there was a record low harvest.

-By Jean Guerrero, Dow Jones Newswires; (5255) 5980-5180, email hidden; JavaScript is required

Kenya 2010-2011 Coffee Output Seen Up 25%

NAIROBI, Mar 11, 2011 (Dow Jones Commodities News via Comtex) — Kenya’s coffee output is expected to rise to over 50,000 metric tons in crop year 2010-11 [October-September] from a record low 40,000 tons the previous year, Kenya Coffee Research Foundation Director Joseph Kimemia said Friday.

“If we get rain before the end of March, we expect a good harvest in the early crop [May-July],” Kimemia said.

Demand for a new higher-yield, disease-resistant variety is very high, as high global coffee prices mean farmers are taking coffee seriously after years of neglect.

Despite the weather department this week predicting a prolonged dry spell, this isn’t a worry because flowering for December harvest was very good, Kimemia said.

An official revised coffee output estimate for this year is expected before the end of the month, Kimemia said.

“Coffee farming is picking up, farmers are getting record payments. It is good business,” said Samuel Muriithi, a farmer in central Kenya’s Kirinyaga region.

In February, Kenya’s benchmark grade AA reached a record high $1,022 for a 50 kilogram bag at the weekly Nairobi auction.

Joshua Sitati, a farmer in the Mt. Elgon region near the Ugandan border, said the area has already been receiving some rain, which will boost bean ripening and quality.

Kenya exports near 98% of its coffee output mainly to the European Union, the U.S. and the Middle East.

Coffee production in Kenya has been in decline from a peak of 129,926 tons in 1987-88 to a low of 40,000 tons last year, largely due to poor earnings by farmers as result of mismanagement and corruption in farmers’ cooperatives.

Currently, the giant smallholder coffee farmers union, Kenya Planters Cooperative Union, is in receivership.

-By George Mwangi, contributing to Dow Jones Newswires; 254 735 781 853; email hidden; JavaScript is required

Costa Rica Coffee Output 1.52 Million Bags, Up 5%

Costa Rica’s coffee production for the 2010-2011 season through March 7 was 1.52 million 60-kilogram bags, up 5% from the same period last season, the country’s coffee institute said in a report Monday. Coffee sales were 1.31 million bags, compared with 1.15 million bags in 2009-2010. Most of the coffee was sold for export with an average price per kilogram of $2.13, up from $1.54 last season. Domestic consumption for the period was 117,980 bags, up from 112,210 bags last season. The country is among those in Central America expected to provide relief amid tight global supplies and high international coffee prices. Costa Rican coffee officials expect the country to produce 1.57 million bags of coffee this season, up 8% from last season when the country produced 1.45 million bags. Last season, fungal diseases and bad weather caused production shortfalls. This season, high coffee prices have enabled producers to invest in improved agricultural practices such as good fertilizer that have increased yields, and weather has been relatively favorable.

Grounds for Health Coffee Auction June 7- 8

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Grounds for Health - Coffee Auction - June 7-8
Have an Impact. Reach New Customers.

For the last two years, the Grounds for Health Online Coffee Auction has given importers, producers, and retailers an innovative way to reach new customers AND have a meaningful impact on the lives of women at origin.

We are now accepting donations for the 2011 Grounds for Health Coffee Auction – June 7-8.

In 2010, more than 40 donors such as Royal Coffee, Cafe Imports, Atlantic Specialty and Daterra gave over 34,000lbs of green coffee. Roasters and retailers from across the globe bid on these specialty lots, raising over $100,000 for Grounds for Health.

Help make 2011’s auction an even greater success.

Donate now and we’ll feature your coffee in our marketing campaigns and promote it to hundreds of potential bidders. Donate one small bag or 40 large ones. Whatever works for your business. Come June 7, bidders will be ready to buy your coffee.

Fill out the coffee submission form to make your commitment today. We’ll follow up immediately with further information.

Donation Form: http://auction.groundsforhealth.org/submission-form/

Questions? Check out our Auction FAQ or just reply to this email.

Thank you for your interest and support. We’re excited for another great auction.

Best,

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Grounds for Health

2011 – 2012 Coffee Crop


coffee

 

Brazil, biggest exporter of Latin America, expects its coffee crop to decline by 13%. One of the reasons for that is the biennial cycle of the low productivity of coffee plants. Nevertheless, this year Brazil expects to harvest the biggest crop for a low-productivity season. It is preliminary estimated at 42-44 million bushels. In 2010 Brazil’s coffee crop was 48,1M bushels.
The cumulative export of the other coffee-exporting countries of Latin America gained 22.5% over Q4 2010 as compared to the same period of 2009.
In October-December 2010 the coffee exports from the Dominican Republic, Mexico, Columbia, Guatemala, Nicaragua, Honduras, Costa Rica, Salvador and Peru made up 5,405 million bushels. Mexico was the only country that had reduced the export (-17%) while the max increase was shown by Honduras (148.59%) and the Dominican Republic (51.12%). It should be reminded that the previous crop (Oct 2009 – Sept 2010) allowed the 9 countries to export 23,426 million bushels of coffee. The forecast for 2011 is generally positive for the region, which is expected to partially make up for the decline shown by Brazil.
Brazil’s coffee reserves in 2010 declined down to 12M bushels, rather low value for the country. It means that the reserves are insufficient and there is no “safety bag”, which may expand the global deficit of coffee and make the coffee prices grow around the world. The thing is that Brazil is the major coffee producer and exporter (35%). So, even if all the other exporters show positive figures (better than expected) the overall yield will be insufficient.
Moreover, Brazil’s domestic consumption of coffee is expected to rise by 5%, which will inevitably initiate an increase in the domestic demand for coffee (by the way, Brazil is the leader among the exporting countries in terms of coffee consumption).  In 2012 Brazil may even outpace the US. The domestic consumption in Brazil has been gaining 4% every year on average since 2003, which has been conditioned by growing purchasing power and consumption of coffee beverages abroad. The mentioned tendency is also connected with the fact that the export growth is lower than the production growth. The consumption of coffee per capita grows faster than the average global value (about 1,5 – 2 % a year). In 2010 the consumption gained 3,4 %, up to  4,8kg per capita (as compared with 4,65kg in 2009). Taking into account the relatively warm climate of Brazil, it is still far from reaching the consumption volumes of Finland, Norway and Denmark (13kg of coffee per capita every year).

график


 

 

In Brazil coffee is harvested in April-October, which means that the harvest season in Brazil (the southern hemisphere) coincides with those seen in the northern hemisphere in October-September. That is why the ICO includes Brazil’s current coffee crop in the overall crop of the 2011/2012 agricultural year.
The yield forecast for Columbia in 2011 is also unfavorable, predicting less than 9M bushels (the level of 2010). This is going to be the 4th consecutive poor crop of coffee in this country (for comparison sake, the crop yield of 2007 is 12.5M bushels). The main reason is that the coffee plantations were damaged by heavy rains. Many plants are affected by diseases while the treatment is rather costly.
As expected, during the last trading week the market of coffee saw the price consolidating within the 230-245 range (created on Jan 22nd). The daily volatility is rather high. However, there are no grounds for the price to make a strong movement during the week as no relevant significant news releases are expected. It should be noted that on Friday, Jan 28th, the price updated the 13-year high once again (the new high is 246,35). There is a seasonal price decline currently seen at the coffee market and caused by the decreased consumption of coffee around the world. That is why no significant price growth is expected in the near future.
Low global reserves, steady demand and uncertainty about supplies are the key factors influencing the coffee market at this point. These factors favor a slow but steady increase in the prices on coffee and make the high-quality coffee less affordable. The global production of coffee in 2011 is expected to be between 133 and 135 m bushels (134.6 in 2010). If there is an increase in the global consumption, the coffee prices may rise in 2011.

Colombian rains push coffee to a 13-year peak

By Naomi Mapstone

Published: December 30 2010 14:57 | Last updated: December 30 2010 19:01

The wettest rainy season on record has knocked expectations for the crucial Colombian coffee crop, pushing prices to 13½-year highs.

The price of higher-quality Arabica coffee has risen 80 per cent since mid-June on the back of critically low inventories following a series of disappointing harvests in Colombia, the biggest producer of high-quality beans.

That has forced roasters to bump up the retail price of coffee. JM Smucker, Kraft and Starbucks have all announced increases this year, while Lavazza, Italy’s largest roaster, said recently it would raise prices by 9-16 per cent from the start of 2011.

Torrential rains in Colombia, which have killed hundreds and displaced millions since April, have also disrupted infrastructure vital to the coffee industry. A landslide recently closed the four-lane “coffee highway” in the central region of Caldas, underscoring the challenges facing Colombia’s coffee producers.

The rains are also raising fears of humidity-related diseases such as coffee rust, which has ravaged recent crops. “We are very worried,” said one coffee industry worker from the central region of Quindio. “No one is at fault here. We have worked to improve productivity in each finca [farm] and replant more disease resistant trees, but against this terrible winter, we have no answers.”

Supplies of Colombia’s prized, handpicked Arabica beans dropped last year to a 35-year low of 8.1m bags, each of 60kg, down from 12.5m just two years earlier. The National Coffee Federation of Colombia says production increased to 9m bags in 2010, but that the outlook for 2011 was “not very favourable”.

Kona Haque, agricultural commodities analyst at Macquarie, said: “What started off as yet another ‘bad’ year for Colombia’s arabica crop this season seems increasingly symptomatic of a structural decline.

“While undoubtedly wet weather has impaired the harvest, we suspect that poor crop investment, rising costs, access to labour and urbanisation are some of the more long-term factors at play.”

Ideam, Colombia’s meteorological office, has forecast that rains fuelled by the La Niña weather phenomenon will continue until at least March, the start of the first harvest for 2011, or possibly until June.

Keith Flury at Rabobank said record-low inventories would support prices. Certified stocks have dropped to 1.7m bags from 3.1m at the start of 2010. On Thursday, ICE May Arabica coffee rose to an intraday peak of $2.43 a pound, just short of the 13½-year high of $2.435 touched last week. Liffe March robusta coffee surged 6.3 per cent to a two-year peak of $2,152 a tonne.

In other commodity markets, precious and base metals looked set to close out the year in bullish form, with copper hitting a new record and silver and palladium both at multiyear highs. Copper for delivery in three months on the London Metal Exchange reached a peak of $9,550 a tonne, up 1.4 per cent on the day, while silver gained 1.1 per cent to a fresh 30-year high of $30.88 a troy ounce.

Sugar tumbled from a 30-year peak as profit-taking took hold. ICE March raw sugar dropped 7.6 per cent to 31.28 cents a pound.

Tanzania Initiates Coffee Development Program To Improve Varieties

NAIROBI, Dec 29, 2010 (Dow Jones Commodities News via Comtex) — The Tanzania Coffee Research Institute, or TaCRI, has started a coffee development program to discover varieties that are higher yielding and disease-resistant, the Daily New Newspaper reported Wednesday.

“It is a conventional approach of developing true coffee seeds and may require five to six breeding cycle, each of five to six years, that is 25 to 30 years,” the state-run daily quoted James Teri, TaCRI chief executive director, as saying.

Teri said the program, which is being implemented at TaCRI’s Lyamungo Sub-Station located in Hai District, Kilimanjaro Region, was at its first cycle and had been able to develop 10 crosses, the daily reported.

In neighboring Kenya, a new coffee variety, which is higher yielding and disease-resistant, was launched in September.

Tanzania aims to double its coffee output over the next 13 years to 120,000 metric tons, Coffee Board of Tanzania marketing director Primus Kimaryo told Dow Jones Newswires earlier this month.

Coffee production in the 2010-11 crop year, which runs May to April, is estimated at 65,000 tons, up from 55,000 tons the previous year, Kimaryo said.

In 2008-09, Tanzanian coffee output reached 67,000 tons, a record high mainly due to trees’ natural alternating crop cycle of a high season followed by a low season.

Tanzania produces both arabica and robusta varieties.

Tanzania is Africa’s fourth-biggest coffee producer after Ethiopia, Uganda and Ivory Coast.