Coffee Update

Summary

World coffee production in 1999/2000 is forecast at 107.2 million bags (60 kilograms or 132.276 pounds), up 3 percent from the first forecast made in June, but down slightly from the record 1998/99 season. Major upward revisions, since June, in 60-kilogram bags, occurred in the following countries: Guatemala, 1.6 million; Vietnam, 500,000; Uganda, 400,000; Thailand, 370,000; Cote d'Ivoire, 300,000, and India, 200,000. Partially offsetting the increases was a downward revision in Colombia of 700,000 bags. Arabica production is forecast at 70.0 million bags, down 7 percent from 1998/99 and robusta output is forecast at 37.0 million, up 13 percent from last season.

Total coffee supply is producing countries in 1999/2000 is forecast at 131.8 million bags, up about 1.7 percent from the forecast made in June 1999, but down 1 percent from the 1998/99 level. Total supply in the top 2 producing countries, Brazil and Colombia, are forecast to decline. In Brazil, it is the result of the short crop in 1999/2000, and for Colombia, it is the result of the short crop in 1998/99 that lowered beginning stocks for 1999/2000.

World coffee exports in 1999/2000 are forecast to increase by 1 percent, or 1.1 million bags from last year's level. However, this represents an increase of 2.6 million bags from the June 1999 forecast. Brazil's total exports of coffee in 1999/2000 are forecast at 17.8 million bags, unchanged from the June 1999 forecast. However, this level of exports represents a decline of 22 percent from the 1998/99 level of 22.9 million bags. Colombia's exports of coffee in 1999/2000 are forecast at 10.7 million bags, down 500,000 bags from the June forecast and from the 1998/99 level. Other major changes from the June export forecast include: Guatemala, up 1.5 million bags; Thailand, up 310,000 bags; Vietnam, up 300,000 bags; Uganda, up 300,000 bags; Kenya, up 250,000 bags; India, up 250,000 bags; and Ethiopia, down 200,000 bags. Other exporters are forecast to compensate for the drop in Brazil's and Colombia's exports.

World coffee consumption in 1998/99 is estimated at 106.0 million bags, up 2 percent from the preliminary 1997/98 level--79.8 million bags in importing countries and 26.1 million bags in exporting countries. The breakdown for 1997/98 is 78.7 million bags in importing countries and 25.2 million bags in exporting countries. Although USDA does not maintain an official database for importing and consuming countries, world consumption is calculated using the information that is available. World consumption can be estimated based on net exports from producing countries, the change in major importers' stock levels, plus consumption in producer countries. Exports from producing countries are assumed to be consumed in the importing countries, after adjusting for changes in the stocks levels in the importing countries. Domestic use in exporting countries in 1999/2000 is forecast to increase by 2 percent to 26.8 million bags. Based on the current forecast for producers' net exports to expand slightly by 1 percent, and producers' coffee consumption to increase 2 percent, this implies that world coffee consumption in 1999/2000 is likely to again increase.

Brazil

Coffee production in Brazil for 1999/2000 is forecast at 26.5 million bags, unchanged from the June forecast, but down 26 percent from last season's bumper crop. Arabica coffee production is expected to account for 85 percent of the total, 22.4 million bags and robusta, 4.1 million. The 1999/2000 harvest season was over in October.

Coffee analysts said the August-September drought negatively affected coffee trees, causing damage to the root systems and promoting leaf drop, although some tree defoliation is related to rust and leaf miner problems. Soil moisture supplies in some coffee regions are well below normal for this time of year. Minas Gerais, the largest producing state, which accounts for more than half of Brazilian production, appears to be the only state that is seriously hurt by the dry weather.

Area planted to coffee is estimated at 2.24 million hectares, unchanged from the previous season. The coffee tree population in Brazil for 1999/2000 is estimated at 4.27 billion trees, also unchanged from last season. This includes 3.33 billion bearing trees and 940 million non-bearing trees.

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

Brazil's Government Announces Plan to Increase Coffee Exports Outside of Export Quota

Brazilian officials announced on October 14, 1999, a plan to help the country's soluble coffee sector. According to officials, the government will lend to the soluble industry 1 million bags (60-kilograms each) of old-crop government stocks in order to encourage soluble exports. In return, the soluble industry would pay back the coffee beans to the government over a 2-year period with coffee beans bought from the current crop. The soluble industry will be getting from stocks coffee that is nearly 20 years old, but suitable for soluble coffee; and in exchange the government will be getting newer, higher-quality stocks. However, soluble coffee exports are outside of the Association of Coffee Producing Countries' (ACPC) export quota system. Soluble coffee exports would provide added value to Brazil and it is estimated that this scheme would raise $120 million in export revenue for the soluble coffee industry in Brazil. According to sources, Brazil's exporters of coffee have claimed that this plan would distort the domestic and world coffee markets and they had threatened to leave Brazil's coffee policy council.

Colombia

The production of coffee in Colombia for 1999/2000 is forecast at 12.0 million bags, down 6 percent from the June forecast, but up 10 percent from the 1998/99 harvest. The reason for the increase from last year is due to a decline in 'broca', a boring insect which damages coffee beans before harvest. Excessive rains have helped reduce the presence of this insect from 7 percent infestations in 1997/98 to 3 percent in 1998/99. The weather phenomenon La Nina is now over and weather patterns are expected to return to normal in Colombia over the next year.

The National Coffee Committee (NCC) determines a target price paid to farmers for coffee bought by the National Coffee Growers Federation (Fedcafe). Although world prices for Colombian coffee fell in the period September 1998 to September 1999, prices paid to coffee farmers increased by 10 percent, the same rate as inflation. As of November 12,1999, the NCC returned to the automatic price adjustment system whereby target coffee prices are revised every three market days, taking into account world coffee prices and the peso exchange rate. On December 7, 1999, the NCC again raised the internal price of a 125-kilogram load to 450,250 pesos, up 7.04 percent. This followed a significant 16.3 percent increase on December 3, 1999.

Vietnam

Coffee production in Vietnam in 1999/2000 is forecast at a record 7.5 million bags, up 7 percent from June and up 12 percent from the 6.7-million-bag outturn of last season. The increase was due to early rains, improved yields, and expanded area harvested. Due to the onset of early rains in 1999, farmers began harvesting coffee in early September, one month earlier than usual.

Area planted to coffee is still expanding, although the government does not encourage expansion of robusta due to environmental concerns and a policy of crop diversification. Total tree numbers are currently estimated at 462 million, up 5 percent from last season.

Indonesia

Coffee production in Indonesia, the fourth-largest coffee producer in the world, for 1999/2000 is forecast at 7.2 million bags, unchanged from the June forecast, but up 4 percent from the outturn of the previous year. Favorable weather and adequate crop maintenance are the reasons for the projected increase. Coffee area remains at 1.1 million hectares, but yields are expected to increase from 463 kilograms per hectare in 1998/99 to 480 kilograms per hectare in 1999/2000.

Although wet conditions from La Nina in 1998 destroyed coffee blossoms during the first blooming season of 1998/99, a strong second bloom was enough to result in a slight upward revision to a 6.95-million-bag crop for that season.

Cote d'Ivoire

Coffee production in Cote d'Ivoire in 1999/2000 is forecast at 5.3 million bags, up 6 percent from the previous forecast and two and a half times larger than last year's revised estimate. The new forecast was raised because of excellent weather coupled with the crop entering the on year of the two-year production cycle. In addition, harvested area is expected to increase by 3 percent to nearly 3 million hectares and the total tree population of 1.86 billion trees is up 1 percent from a year earlier.

The grain size of coffee in 1999/2000 is expected to be good because of the favorable weather. However, an increase in the number of black beans could occur because farmers may strip coffee cherries during harvesting to reduce harvesting time instead of picking them.

The 1998/99 coffee production estimate was lowered to 2.1 million bags, based on updated official estimates. The dramatic drop in output from the previous year was attributed to the effect of the 1998 drought.

Mexico

Coffee production in 1999/2000 is forecast at 5.2 million bags, unchanged from the June forecast, but up 12 percent from last season. The recent flooding in the main coffee producing states of Chiapas, Veracruz, Puebla, and Oaxaca is not expected to seriously reduce the size of the 1999/2000 coffee crop. This assessment is based on consultations with coffee producer associations and other private sources in the above-mentioned states.

Mexico's 1999 Safeguard Quota Filled for Coffee Products from the United States

On November 5, 1999, Mexico's Secretariat of Commerce and Industrial Development (SECOFI) published in the "Diario Oficial"(Federal Register) an announcement that the quantity of coffee and coffee product imports from the United States exceeded the 232-ton NAFTA safeguard tariff rate quota (TRQ) for 1999. According to Mexico's trade data, 235 tons were imported as of June 30, 1999. Given that the safeguard quantity has been reached, the tariff on imports of these products from the United States was raised from 8 percent to 20-percent ad valorem on November 6, 1999. This directive will remain in effect from November 6, 1999, through December 31, 1999. The commodity codes affected are: 2101.11.01, Instant Coffee non-aromatic; 2101.11.02, Extract of liquid coffee concentrate, frozen or non-frozen; 2101.11.99, Others; 2101.12.01, Preparations of coffee essence or concentrates.

Guatemala

Production of coffee in Guatemala for 1999/2000 is forecast at 4.9 million bags, up 46 percent from the June forecast and the same as last season's revised estimate. The upward revision in the 1998/99 estimate was due to favorable weather and good yields. An earlier forecast of a decrease in production was based on inclement weather during the season, including the damage from hurricane Mitch. However, conditions were favorable following the hurricane season and good yields were experienced. Generally, coffee is a cyclical crop in Guatemala, with a good harvest every other year. Although 1997/98 was an off year, and 1998/99 an on year, 1998/99 turned out to be a bumper crop, despite the devastating effects of Mitch.

Low coffee prices have forced some farmers to diversify, but coffee continues to be the number one agricultural export in the country. The trend of certifying farms for organic coffee production continues to increase, in response to premiums of up to $20 per bag for organic coffee.

India

Indian coffee production in 1999/2000 is forecast at a record 4.7 million bags, up 4 percent from the first forecast, and 6 percent more than the 1998/99 harvest. India's area planted to coffee in 1999/2000 is estimated at 310,000 hectares--unchanged from the previous year--and the number of bearing trees at 500 million is up 1 percent. India expects to produce 2.0 million bags of arabica coffee and 2.7 million bags of robusta.

Costa Rica

Costa Rica coffee production in 1999/2000 is forecast at 2.6 million bags, unchanged from the June forecast, but up 4 percent from last season. Preliminary reports indicate the quality of the 1999/2000 crop will be better than last season. Producers and processors are working together to process almost strictly ripe coffee. This has been working very well so far during the current crop year.

United States

The following excerpt is from an article from FAS's "AgExporter" magazine, written by Jill Lee, a public affairs specialist with the FAS Information Division, USDA:

Moloka'i residents like to say that theirs is the most Hawaiian island. It's the fifth largest and least developed island in the chain--home to 7,000, with the highest percentage anywhere of native Hawaiians. Tired of the glitzy, pink and blue cement sand castles of tourist areas? Moloka'i has the State's largest white sand beach--and the world's highest sea cliffs. But for all its natural beauty, Moloka'i has an economic headache: the decline of its sugar and pineapple industries. The island has an unemployment rate of 16.8 percent, roughly quadruple the U.S. average. But new crops are coming to Moloka'i. They can't yet replace what was lost, but they are already making a difference. One of them is coffee.

John H. Magoon, Jr., has been an entrepreneur in Hawaii for over 50 years. He is also a kamaina, meaning his family goes back to the early white settlers of Hawaii. In 1986, he leased 500 acres of farmland from Moloka'i Ranch, Ltd. and planted coffee. In 1990, he purchased a processing plant and harvesting equipment. Today his company, Coffees of Hawaii, Inc., employs 25 full time and 40 seasonal workers during the 3- to 4-month harvesting period. Next year, the company expects to have more than $2 million in sales.

The US. mainland makes up 75 percent of the firm's sales, which include private label stocks for some major department stores. A gift shop with locations at the Los Angeles airport and San Francisco International Airports is also a customer for 100 percent Moloka'i coffee. Twenty percent of the sales were in Hawaii. Five percent of the firm's coffees are currently exported, mainly to France and Japan, with a little sold in Canada. "We have three roasted coffee brands; Malulani which translates roughly into 'heavenly aroma; 'Muleskinner Dark Roast, with a kickback attitude; and Island Princess, flavored with a Polynesian vanilla bean," said marketing expert Chela Lopez-Kuhn. "France was the first country we exported to via a roaster, Café Savor in Paris." Café Savor buys green Malulani, roasts it at their plant in France and then packages it as Hawaiian Estate coffee.

Lopez-Kuhn credits international trade shows sponsored by the Western U. S. Agricultural Trade Association with helping her make the French connection; FAS's Market Access Program (MAP) helps marketing experts like Lopez-Kuhn attend these shows. "At the SIAL food and beverage show in Paris, I was impressed with the sophistication of the set-up. The organizers knew what they were doing," said Lopez-Kuhn. "Having a translator there to help us share our products with more of the importers--that really helped. "Of course, she noted, Coffees of Hawaii, Inc.'s Moloka'i coffee must make a niche for itself within the world's specialty coffee market. Maui, Oahu, Kauai and the famous Kona coffees all mean competition. "We strive for distinction with a rich, full and mildly acidic coffee. Someday, consumers worldwide will hopefully know our coffees like they know the fine wines of California," said Lopez-Khun. For a subscription to the "AgExporter", contact the National Technical Information Service on, (703) 605-6060.

U.S. coffee stocks at the end of October totaled 2.71 million bags, down 111,000 bags from the September 30, 1999, level. Details follow:

On December 3, 1999, Procter & Gamble announced that it was raising the price of its Folgers brand coffee by 30 cents per 13-ounce can on its ground regular and decaffeinated coffees. The increase is scheduled to go into effect December 6, 1999. According to company officials, this increase takes the price of a 13-ounce can of ground regular coffee to $2.50 and for decaffeinated to $3.20 per 13-ounce can.

COCOA UPDATE

EU Ministers Allow Chocolate Products to Contain Other Vegetable Fats

On October 28, EU Internal Market Ministers approved an agreement allowing the use of 6 non-cocoa vegetable fats in the manufacture of chocolate. This agreement will settle a dispute that has raged for 25 years, but still may take another year to complete. The Ministers endorsed the provisional agreement reached in June 1999 to allow chocolate products to contain 5 percent of vegetable oils as long as the products are labeled. Six tropical oils (illipe, palm, sal, shea, kokum gurgi, and mango kernel) could be included in chocolate instead of cocoa butter. The dispute began when the United Kingdom, Ireland, and Denmark joined the EU in 1973 and were granted an exemption from the ban on making chocolate only from cocoa butter. African producing countries predict that EU demand for cocoa beans could drop 200,000 tons; while other analysts predict that existing chocolate products would not change upon ratification of the agreement as consumers are very much taste-oriented. In addition, because some vegetable fats are more heat resistant, some analysts predict an increase in sales, especially to countries with higher temperatures.

Spice Update

Other U.S. Export Chart Updates