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The latest news and views from the Bennetts team

Featuring the latest news on the coffee industry and business insight from senior members of the Bennetts team.

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The recent leaf rust or Roya in Spanish, outbreak throughout Central and South America has remained a prevalent topic in the industry this week, with output estimates from affected origins for 2013/14 crop beginning to appear.

Early season production estimates from a well-managed cooperative in El Salvador are projected to drop by up to 40 percent, with the country’s total output estimated to drop 36 percent according to the National Coffee Council. The Peruvian Prime Minister has predicted a 25-30 percent decline in Peru’s coffee output due to the widespread damage. The disease attacks the leaves of Arabica plants, gradually defoliating the tree. This severely reduces yields and ultimately kills the plant. Leaf rust can be contained by quick diagnosis and efficient use of approved fungicides.

As a result of the coffee plantation renovation program implemented in Colombia in 2008 after the last leaf rust epidemic, the origin has not been as heavily affected by the current outbreak with 57 percent of plantations now rust-resistant. However, low international coffee prices and reduced productivity due to climate change have left a mark on the Colombian coffee sector of late. Truckers, miners and agricultural producers have called for protests this week in response to poor infrastructure and fuel costs. These protests are likely to cause disruption to economic activities across the country, including coffee shipments. The Colombian Coffee Growers Federation (FNC) has implemented a contingency plan to diminish the impact of a truckers strike. A small number of coffee growers have threatened to join the strike; however these farmers do not represent the majority. Despite the current challenging conditions within the coffee sector, the FNC have stated that they will not support a coffee strike. As customary, they will continue to support program implementation rather than social disruption to foster change. In response to the current conditions, the FNC has continued to support growers’ interests and distribute their income support programs. Since implementation, they have allocated more than $300 million US dollars in income support to coffee growers across the origin.

Unexpected weather conditions have also affected crop projections from certain African origins. The Coffee Board in Tanzania have forecasted that 2013/14 crop will most likely be 37 percent lower than the previous crop, to total only 750,000 bags. This decline has come about for a combination of reasons, particularly due to unseasonal rains late last year and into the new year, bridging the two rain seasons, which resulted in only one rather than two flowerings for many northern coffee farmers.

In other coffee news, the much-anticipated farmer’s aid program in Brazil was finally announced last week. The program, implemented in response to the recent sharp decline in price of Arabica beans in Brazil, will see the government purchase as many as three million bags at BRL 346 ($163 AUD) per bag through options contracts offered to farmers. Coffee prices in Brazil have dropped 18 percent this year. One positive outcome to emerge out of the price slump is the increased purchasing of Arabica beans for domestic consumption. Previously only Robusta has been used by local roasters due to the comparatively high prices of Arabica.

Ref: DRWakefield.com, I&M Smith, FNC Coffee Insights, and Daily Coffee News by Roast Magazine.

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