Coffee Update

Summary

World coffee production in 2000/01 is forecast at a record 115.1 million bags (60 kilograms or 132.276 pounds), up 6 percent from the first forecast made in June, and up slightly from the 1999/2000 season. Major upward revisions since June, in 60-kilogram bags, occurred in the following countries: Brazil, 4.5 million bags and Vietnam, 3.2 million bags. Partially offsetting the increases was a downward revision in Uganda of 1.1 million bags. Arabica production is forecast at 72.8 million bags, down less than 1 percent from 1999/2000 and robusta output is forecast at a record 42.2 million bags, up 3 percent from last season.

Total coffee supply in producing countries in 2000/01 is forecast at 138.5 million bags, up 5 percent from the forecast made in June, but down about 1 percent from the 1999/2000 level. Total supply in some of the key producing countries will decline, mainly the result of lower beginning stocks levels as a result of higher exports in 1999/2000. Although down slightly from a year ago, total supplies of coffee are still at levels that will continue to put downward pressure on prices.

World coffee exports in 2000/01 are forecast to decline by nearly 6 percent, or 5.2 million bags from last year's level. Brazil's total exports of coffee in 2000/01 are forecast at 17.0 million bags, up slightly from the June 2000 forecast. However, this level of exports represents a decline of 16 percent from the 1999/2000. Colombia's exports of coffee in 2000/01 are forecast at 10.3 million bags, up slightly from the June forecast and up 13 percent from the 1999/2000 level. Other major changes from the June export forecast include: Vietnam, up 2.5 million bags; Cote d'Ivoire, up 720,000 bags; India, up 500,000 bags; Mexico, up 400,000 bags; Uganda, down 1.17 million bags; Honduras, down 350,000 bags. The numbers assume that some countries will be able to adhere to the coffee retention scheme as recently established by the Association of Coffee Producing Countries (ACPC). On September 29, the ACPC agreed to withhold 20 percent of the exportable supply of coffee beans from the market in an attempt to raise coffee prices. The retention plan went into effect on October 1. Some countries have the resources to withhold portions of their supply from the market, where others do not. Some countries are expected to move coffee into the market because their economies rely heavily on the foreign exchange generated from coffee sales. Producing countries exported significantly more coffee in 1999/2000 leading to higher stock levels in importing countries.

World coffee consumption in 1999/2000 is estimated at 109.6 million bags, up 3 percent from the preliminary 1998/99 level-84.3 million bags in importing countries and 25.3 million bags in exporting countries. The breakdown for 1998/99 is 80.8 million bags in importing countries and 25.6 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 2000/01 is forecast to increase by 5 percent to 26.5 million bags.

Brazil

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

United States

U.S. coffee stocks at the end of October totaled 6.0 million bags, down 236,000 bags from the September 30, 2000, level. Details follow in 60-kilogram bags:

Spice Update

The following is excerpted from a pepper update report from India:

Pepper Exports Lag

Sluggish production growth, increasing global competition, and rising domestic use have led to a 60 percent decline in India's pepper exports in recent months. Exports in the first six months of the 2000/01 fiscal year (Apr-Mar) were only 9,750 metric tons, valued at rs. 1,964.5 million ($42.7 million) compared with 24,940 metric tons, valued at rs. 4,830 million ($112 million) during the corresponding 1999/00 period. Although producers had been holding larger stocks in anticipation of higher prices, the promising 2001 production outlook, combined with declining world prices, has recently lowered domestic prices by more than 30 percent to the current level of rs. 150,000/metric ton (around $1.50/lb). Prices are likely to decline even further due to increased supplies and anemic demand. Pepper exports in 1998/99 were 35,000 tons valued at $152 million, and accounted for 36 percent of India's total spice export value. India's market share has been declining due to growing competition from other countries, particularly Vietnam.

Production Growth Sluggish

India's black pepper production has stagnated due largely to the limited availability of suitable land. Spices are grown mostly on small holdings as an inter-crop. Major producing states are Kerala and Karnataka. Last year's (1999/00) production is estimated by the trade at 57,000 tons, although government estimates typically are much lower. Despite moisture stress followed by heavy rains at critical stages, 2000/01 production (whose picking will peak in winter) is expected to be 20 percent higher at around 70,000 tons.

Most of the small increases in production in recent years have occurred in Karnataka, where pepper is inter-cropped on coffee plantations. The per hectare yield of pepper in such plantations is reported to be higher, and the quality superior, due to better management practices. In view of the typically low productivity of pepper in India (300 kg/ha versus the world average of 610), segments of the industry have pleaded for plantation status which should help lead to more scientific study of the crop and higher yields.

Going Organic

In view of the rapidly growing demand for organic food in some developed countries, the Spices Board of India has begun to heavily encourage the production and export of organic spices. The GOI is in the process of setting up indigenous certification programs as there are no approved domestic certifying agencies. Services of certain international certifying agencies such as SKAL and IMO are, however, available. The Board also helps foreign buyers to source organic spices in India.

Annual organic spice exports currently total only 50 tons as the high cost of inspection and certification and lack of an adequate premium for organic spices are dissuading farmers from switching from conventional practices. To encourage organic farming, the Spices Board has begun to subsidize inspection charges by International Inspection agencies. The government also is proposing a 50 percent subsidy on production costs ( up to rs. 20,000/ha) to spice growers in northeastern India. The United Nations Development Program (UNDP) is providing financial support to the Spices Board for the development of the production and export of organic spices.

The International Federation of Organic Movements (IFOAM) is playing a key role in promoting organic agriculture in India. Indian IFOAM members created a National Standards Committee in January 1996 with scientists and experts from 13 organizations located throughout the country, and entrusted them with the task of preparing Basic National Standards for Organic Agriculture in India. The Basic Standards have been submitted to the Government, Universities and other organizations, and are expected to provide a broad framework for the systematic promotion of organic agriculture in India. There are also several voluntary organizations in India encouraging and supporting organic agriculture.

For additional information on Indian spices, please visit the Indian Spice Board Web Page:

www.indianspices.com

Other U.S. Export Chart Updates

Last modified: Wednesday, February 20, 2002