Ensuring the brew

Adverse climate conditions are affecting LatAm’s coffee production.

Unpredictable and adverse weather conditions continue to wreak havoc on Latin American coffee production. Colombian coffee production declined 16% in February compared with the same month of 2021 whilst exports fell 23% year on year, according to the country’s National Federation of Coffee Growers (“NFC”).  

An agronomist with more than 15 years of experience working with coffee producers from the NFC explained, “One of the main challenges for the sector is to increase the internal consumption of good, varied coffees, so that the consumer can find coffee from each of the different municipalities in the country. Colombia’s domestic consumption remains very low (2Kg per capita, while Finland’s is 12Kg and Brazil’s is 5.6Kg per capita).”

“One of the main challenges for the sector is to increase the internal consumption of good, varied coffees, so that the consumer can find coffee from each of the different municipalities in the country.”

An agronomist, Colombia

Colombia must continue to compete for quality and continue to establish itself as a strong competitor for good quality coffees. Political peace is also a fundamental element to be able to produce coffee from different areas of the country and it is a challenge to maintain it in order to consistently produce good quality coffees. Across Colombia, there are many opportunities, especially for investment in higher-end coffee. For example, coffee growing in many areas is relatively new, as is the production of specialty coffees. 

A Colombian coffee specialist explained, “In Brazil, frosts are cyclical so it is easier to predict threats to production volume. The problem today is that the Colombian peso is highly devalued against the dollar and this affects even more than at other times when this phenomenon had already occurred in Brazil. I think that, although other countries are also going to be impacted by what is happening in Brazil, (they have stronger currencies), it will be less than the impact in Colombia. For example, Ecuador, although it may be affected, is dollarised.”

“The problem today is that the Colombian peso is highly devalued against the dollar and this affects even more than at other times when this phenomenon had already occurred in Brazil.”

A coffee specialist, Colombia 

Notably, specialty or high-quality coffees are governed outside the New York Stock Exchange, specifically Arabica coffee is governed by that Exchange and that Colombian coffee has an important premium (USD40-60 cents a pound). 

February’s coffee production in Colombia, the world’s largest producer of washed mild arabica, was 928,000 60 Kg bags, 16% less compared to the 1.1 million bags produced in the same month in 2021. Production so far this year is close 1.8 million bags, 18% less than the almost 2.2 million bags produced in the same period a year ago. As fiscal strains increase and unemployment soars, the importance of the industry to Colombia has never been in sharper focus.  

 

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