Coffee Update
December 1998

Summary

World coffee production in 1998/99 is forecast at a record 106.8 million bags (60 kilograms or 132.276 pounds), 1 percent below the first forecast made in June, but 9 percent above the previous season and 3 percent above the previous 1996/97 record. Major downward revisions, in 60-kilogram bags, since June occurred in the following Northern Hemisphere countries: Mexico, 600,000 bags; Honduras, 340,000 bags; Guatemala, 302,000 bags; Nicaragua, 278,000 bags; and El Salvador, 200,000 bags. Other countries with relatively large downward revisions since June include Cote d'Ivoire, 330,000 bags; Thailand, 300,000 bags; Ethiopia and Uganda 200,000 bags each, respectively. Partially offsetting these decreases are upward revisions in the following countries: Colombia, 1.5 million bags, and Vietnam 533,000 bags. Arabica production is forecast at 73.4 million bags, up 15 percent from 1997/98 and robusta output is forecast at 33.4 million bags, down 1 percent from last season.

Total coffee supply in producing countries in 1998/99 is forecast at 133.1 million bags, up over 4 percent from the 1997/98 level. Most of the increase is attributed to Brazil where total supply is forecast to be up 25 percent from 1997/98. Partially offsetting the increase in Brazil is an 11-percent decline in the total supply situation in North America, mainly as a result of hurricane damage in key coffee-producing countries. In addition, the beginning stock levels for 1998/99 showed another decline. World beginning stocks of coffee have declined for the third-straight year.

World coffee exports in 1998/99 are forecast at 79.8 million bags, up 3 percent from the 77.3 million bags exported in 1997/98. Most of the increase is forecast to occur in Brazil, a result of the higher crop size. Coffee exports from other countries are forecast to offset the 1.9-million-bag reduction in coffee exports from Central America.

World coffee consumption in 1997/98 is estimated at 102.6 million bags, 77.1 million bags in importing countries and 25.5 million bags in exporting countries and represents a decline of 3 percent from the previous year's estimated (and revised) 105.8 million bags, 81.4 million bags in importing countries and 24.4 million bags in exporting countries. Domestic use in exporting countries in 1998/99 is forecast up 3 percent to 26.3 million bags.

Exportable production (total production less domestic consumption in producing countries) of coffee in 1998/99 is forecast at 81.2 million bags, up over 11 percent from 1997/98. As with the actual world coffee exports, most of the increase is attributed to Brazil.

The New York spot price for Brazil's arabica coffee has dropped significantly from the beginning of 1998. The November price is quoted at 96.67 cents per pound, a drop of nearly 50 percent from the $1.7983 per pound price quoted in January 1998, and a 55-percent decline from the high of September 1994.

Brazil

Coffee production in Brazil for 1998/99 is forecast at 35.6 million bags, down 1 percent from the June forecast, but up 51 percent from last season's below-normal crop. The downward revision in June was based on lower than expected yields in Bahia and in central-western Minas Gerais . Arabica coffee production is expected to account for 86 percent of the total, 30.6 million bags and robusta, 5.0 million bags. While the 1998/99 harvest season is predominantly over, the average size of the coffee beans was smaller than normal. Historically, 50 percent of the coffee beans are classified at sieve 17/18, whereas for this season about 30 percent of the beans fell in that classification. The dry spell that occurred in January and the above-average temperatures earlier this year may have damaged fruit formation.

Area planted to coffee is estimated at 2.24 million hectares, up 6 percent from the previous season. The coffee tree population in Brazil for 1998/99 is estimated at 4.27 billion trees, up 14 percent from last season which includes 3.33 billion bearing trees and 939 million non-bearing trees. About 580 million new seedlings were planted in the October through April 1997/98 planting season. The 1998/99 Brazilian coffee yield was revised downward from the June forecast of 18 bags per hectare to 17.9 bags due to lower yields in central-western Minas Gerais and Bahia. Dry weather in Bahia was responsible for lower than expected yields for that state. Reduced yields in central-western Minas Gerais and Bahia were partially offset by the larger harvest in south-western Minas Gerais.

Brazil's exports of coffee during 1998/99 are forecast at 19.1 million bags, up nearly 29 percent from the previous year. Of the total, 17.5 million bags are forecast to be bean exports, and 1.6 million bags are forecast to be soluble exports (green-bean equivalent). At this point, given the higher Brazil crop and the reduced Central American crops, Brazil will probably surpass its Association of Coffee Producing Countries (ACPC) target.

Brazil continues to offer government-owned stocks through its auction system.

Colombia

The production of coffee in Colombia for 1998/99 is forecast at 12.5 million bags, up 14 percent from the June forecast, and up 5 percent from the crop of 1997/98. The reason for the increase is due to favorable weather, coupled with early-season expectations of a reduced crop as a result of El Nino which proved to be inaccurate. Both the government of Colombia (GOC) and the coffee industry had anticipated that dry weather caused by El Nino during January-March 1998 would extend throughout the remainder of the 1997/98 season. The drought ended in April 1998 and precipitation continued through September 1998 in the major coffee producing areas.

Coffee harvested during October-January accounts for about 45 percent of production and coffee output in this period is 10 percent higher than the same 4-month period a year ago. The increase is due to the April 1998 rains which arrived after a period of moisture stress and subsequently produced an excellent bloom. The secondary crop, harvested during May-July 1999 is forecast to be about the same as a year earlier. The number of coffee trees is estimated at 3.65 billion, up slightly from last year. The number of bearing coffee trees is estimated at 3.1 billion, and the area harvested is estimated at 900,000 hectares, both unchanged from last year.

Indonesia

Coffee production in Indonesia, the third largest coffee producer in the world, for 1998/99 is forecast at 6.8 million bags, up 3 percent from the June forecast, but down 6 percent from the previous year. The 1997 drought pushed back the peak-harvest period by about two months, from March/April to May/June, as there was insufficient moisture for coffee trees to form blooms during July/September.

Indonesia's coffee production for 1997/98 was revised upward by 100,000 bags to 7.2 million bags, down 9 percent from the record previous harvest of 7.9 million bags. The decline in 1997/98 was due to the El Nino-induced drought which affected the major growing regions, Lampung, Bengkulu, and South Sumatra which account for about 70 percent of Indonesia's production. The area planted to coffee tress, harvested area and coffee tree population are all unchanged from last year.

Vietnam

Coffee production in Vietnam in 1998/99 is forecast at 6.3 million bags, up 9 percent from June, but down 6 percent from the record 6.7-million-bag outturn last season. The increase from June was due to an unexpectedly large increase, 8 percent, in harvested area, while the decline from last season is attributed to prolonged dry weather exacerbated by the demand for water resulting from the rapid expansion of coffee which is grown mainly in areas that require irrigation. Moisture stress was apparent throughout the Central Southern Highlands as bushes wilted and yields declined. Very little rain fell in this area from October 15, 1997 through April 1998, the most severe drought in the past 20 years. In Daklak province, the drought destroyed about 12,000 hectares of coffee from a total planted area of 168,000. Environmentalists have expressed concern over Vietnam's rapidly expanding coffee industry. Deforestation and rapidly growing coffee areas are linked.

Arabica coffee production is expanding in the northern mountains and in the North Cental provinces where soil and climate conditions are suitable for growing. Recognizing the higher export value of arabica coffee, the government has launched a program for expanding arabica coffee areas through the year 2010. According to the plan, Vietnam will have 100,000 hectares of arabica, 70,000 hectares in the north and 30,000 in the Central Highlands. The target is for a total volume of 2.5 to 3.3 million bags of arabica coffee by the year 2010. However, in order to achieve this target, Vietnam needs large investments that are proving difficult to obtain. The France Development Fund has implemented an agreement to lend $40 million for 40,000 hectares of arabica coffee in northern Vietnam. This fund will be used to make loans of about $1,000 per hectare to growers for a duration of 10 years.

Mexico

Coffee production in 1998/99 is forecast at 4.95 million bags, down 11 percent from the June forecast, but unchanged from last season. The decline from the June forecast was attributed to heavy damage caused by the recent flooding throughout the state of Chiapas, Mexico's principal coffee producing state, and in other coffee-growing regions. As a result of lower world coffee prices, growers have cut back on cultural practices and tree maintenance, thus reducing coffee quality and quantity. The area planted to coffee and area harvested estimates have been increased 4 percent to 700,000 hectares and 650,000 hectares, respectively. The number of bearing trees is also up by 4 percent from last year.

The 1997/98 coffee crop was also revised downward by 10 percent due to lower-than-expected production from Mexico's main coffee producing regions which suffered heavy damages from the recent hurricane season.

India

India's coffee production in 1998/99 is forecast at 3.8 million bags, up 9 percent from the first forecast, but virtually unchanged from the 1997/98 harvest. India's area planted to coffee in 1998/ 99 is estimated at 322,000 hectares, up 2 percent from the previous year and the number of bearing trees at 565 million is up 3 percent. India produces both arabica and robusta coffee and expects to produce 1.6 million bags and 2.2 million bags of each kind, respectively.

Cote d'Ivoire

Coffee production in Cote d'Ivoire in 1998/99 is forecast at 3.75 million bags, down 8 percent from the previous forecast and last year's revised estimate. The new forecast was lowered because of drought conditions during the crop's formative period and aging trees. Harvested area is expected to increase by 2 percent to 1.245 million hectares and the total tree population of 1.84 billion trees is up 1 percent from a year earlier.

The government of Cote d'Ivoire has reiterated its intention to liberalize coffee marketing in the 1998/99 crop year. However, specifics, including an announcement on export taxes, a check-off system and the start of operation of the new CAISTAB are needed to enable operators to plan their market strategies and to start negotiations with farmers on farmgate prices. CAISTAB is the government agency responsible for monitoring coffee and cocoa marketing.

Field reports indicate farmers are joining existing cooperative groups or forming new cooperatives in increasing numbers due to the extension activities by the government which urges them to organize themselves to protect their interest with the advent of market liberalization. More exporters are expected to establish upcountry purchasing centers as the liberalized market takes off, and an increasing number of exporters are either setting up their own buying centers or negotiating with cooperatives for a source of coffee.

Guatemala

Production of coffee in Guatemala for 1998/99 is forecast at 2.8 million bags, down 10 percent from the June forecast and 29 percent less than harvested last season. The reason for the decline from the June forecast is the effects of weather damage from hurricane Mitch. Extremely dry conditions prevailed during the January-May flowering period which negatively affected this year's crop.

Coffee continues to be the number one agricultural export in the country, accounting for 21 percent of total exports. Farming of organic coffee is increasing in popularity in Guatemala. In 1998, registered organic coffee production accounted for 5 percent of total production and in 1999, it is expected to increase to 5 to 8 percent of the total. The area where organic coffee is grown had slight damages from hurricane Mitch, but the crop is expected to continue to increase in the future.

Honduras

Honduras's coffee production in 1998/99 is forecast at 2.3 million bags, down 13 percent from the earlier forecast and down 24 percent from last year. Prior to the storm, a downturn in the production cycle suggested that production would fall by 10 percent to about 2.65 million bags. The damage from Mitch that resulted in coffee production losses is thought to be about 390,000 bags. It is estimated that three quarters of the country's plantations were affected by the storm in varying degrees. The immediate effects were cherries falling from trees due to excessive rainfall and strong winds. Of far greater concern is the extensive amount of destruction caused by the hurricane to Honduras's coffee industries' infrastructure. More than 90 bridges have either been destroyed or seriously damaged and the damage to the roads will make it extremely difficult for growers to transport products and supplies. Further, most of the coffee industries' road maintenance equipment was concentrated elsewhere in the country, making it difficult to reach the coffee-producing areas that suffered damage. The abnormal weather may cause premature ripening of cherries which will increase the necessity to rebuild roads and bridges.

The total effect on the coffee industry remains with their ability to repair roads in the coffee growing areas. Coffee was one of the few export crops not totally destroyed by the hurricane. The rebuilding program of the damaged coffee sector becomes critical to Honduras's economy not only for the 1998/99 season but well beyond.

Costa Rica

The 1998/99 coffee production forecast in Costa Rica is 2.16 million bags, unchanged from June, but down 10 percent from a year ago. However, had hurricane Mitch not struck in Central America, the forecast would have been increased. Preliminary estimates of the coffee loses from the hurricane range from 76,000 bags to 100,000 bags. A significant amount of coffee was lost in the Southern areas of Coto Brus and Perez Zeledon as a result of the hurricane. These two areas were expected to produce about 530,000 bags of coffee in 1998/99. Coto Brus suffered the most damage since the coffee beans were ready for harvest when the hurricane struck. Serious damage to roads incurred and gravel roads remain in poor condition. Large trucks have not been able to reach coffee farms and coffee can only be transported by small 4x4 trucks to the processing plants.

The late arrival of the rainy season, earlier this year, delayed the harvest in the Central Valley by 22 days. Rains from the hurricane did not affect coffee production in this region since the coffee beans were not ripe.

Nicaragua

The 1998/99 coffee production forecast for Nicaragua is 792,000 bags, down 26 percent from June and last year. The Nicaraguan Union of Coffee Growers (UNICAFE) said expectations were for a crop of 1.13 million bags or a loss of 338,000 bags that can be attributed to hurricane Mitch. UNICAFE said the expected losses are due to direct damage to early-ripening beans and the proliferation of the coffee fungus Roya. There is concern that marketing of harvested coffee will be difficult because of damage to secondary roads and bridges. UNICAFE estimates that $20 million is needed and is encouraging the government of Nicaragua to address these problems immediately.

Philippines

Coffee production for 1998/99 is forecast at 700,000 bags, down 3 percent from the earlier forecast and down 12 percent from last season's output. The decline in production is the result of generally old and poorly-maintained coffee trees and an extended drought caused by El Nino.

United States

U.S. coffee stocks at the end of November totaled 1.27 million bags, down 209,000 bags from the October 31, 1998, level. Details follow:

Cocoa Update

U.S. exports of cocoa and cocoa products during FY 1998 declined by 7 percent to $409.8 million. Shipments to Canada, which account for about 50 percent of the total, declined by 2 percent to $201.5 million, from $205.6 million in FY 1997. Exports to Mexico continue to increase and rose to $50.5 million, up nearly 7 percent from the previous year. U.S. exports to Japan took a hit as a result of the economic situation there. Shipments to Japan in FY 1998 dropped 11 percent from FY 1997.

Spices Update

U.S. exports of spices during FY 1998 rose to $100.3 million, up 15 percent from the previous year. Canada, which accounts for about one-third of the total, accounted for much of the increase as well. U.S. shipments to Canada were valued at $33.3 million, a rise of 26 percent from the FY 1997 level. The two largest categories for value for shipments to Canada are: Other plants and parts of plants (including seeds and fruits), of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar cut, fresh or dried, a basket category; and mustard flour and meal and prepared mustard. These two categories accounted for 55 percent of the total value to Canada. Germany is the second-largest market and shipments were valued at $10.9 million in FY 1998, up 20 percent from the previous year.

Other U.S. Export Chart Updates

Last modified: Thursday, April 06, 2000