UPDATE Colombia’s Coffee Output To fall Below 14 Million Bags in 2021 Because of Two Years of Inclement Weather: FNC
(Adds further comments of FNC’s general manager)
Coffee Network-( Bogota)- The general manager of Colombia’s coffee growers federation Roberto Velez reiterated Colombia will produce around 13 million- 13.5 million bags in the calendar 2021 because coffee plantations have endured two years of strong rainfall associated with climate change.
Speaking at the Colombia’s coffee exporters association summit, Velez said, it has been raining “without mercy “for two years, and the rainfall regime in the central area has far exceeded the historical records of rainfall in those areas.
And Colombia’s coffee output in 2022 could face a similar threat because Colombia is experiencing a similar weather phenomenon associated with the arrival of La Niña in 2021.
This will be the first year in six consecutive years in which coffee output will be sharply below the 14 million bags.
Colombia, the world’s third largest coffee exporter, and one of the world’s largest producers of Arabica beans, produced 13.9 million bags last year. Production was above 14 million bags in the prior five years.
The global trade of coffee and the global coffee industry face a big challenge: coffee production is being concentrated in very few market participants such as Brazil, Vietnam, and Colombia, while smaller producers in Central America including Costa Rica, El Salvador and Nicaragua are gradually reducing output.
2021 has been characterized for be a year with a small global harvest but the coffee industry still faces uncertainties with Brazil’s coffee production, the incapacity to foresee future coffee prices amid high volatility.
“This is the scenario in 2021, a scenario of a small harvest in the world, a scenario with a lot of uncertainties in relation to Brazil and a future price scenario that no one is able to measure, which only leaves us with volatility problems and concerns” he said during the Asoexport conference.
Velez also said Colombia needs to produce an excess of 2.5 million bags more of coffee without elaborating on this idea
“We need to emerge from this hole,” he said.
In the future, global coffee supply most likely will be below the world’s coffee demand. “Inventories are going to be more and more scarce. And this is subject that must worry the industry,” he noted.
Velez said premiums of Colombian coffee reflect that buyers are willing to pay a higher price for excelso-type of coffee. Colombian premiums have averaged around $0.50 above New York for most of 2021. “Who said that keeping premiums above 0.50 cents was easy?. the question is are we going to continue with those premiums in the future?. That is the thing that we must ask ourselves,” he said.
In other news, Velez said Colombia’s coffee consumption has grown an average of 8% per year. He updated coffee consumption figures to around 2.3kg per capital to 2.8kg per capital per year.
In addition to inclement weather, Colombia has also faced a difficult year in 2021. A national strike that lasted about 60 days with protestors blocking roads and access to ports became one of the greatest challenges in history.
But private coffee exporters proved their ability to get around with this difficult situation as they managed to ship 350,000 bags of 70-kg of coffee to ports during the road blockades.
During the blockades, roasters and international coffee buyers told Velez that they could not replace Colombian coffee and Colombia coffee could not be substituted.
Velez invited coffee growers to honor their delivery of beans in the futures market. Velez said growers have listed a series of reasons why they are not meeting contracts including: higher coffee prices, lower output, and rising costs.
“But what is worse is having to live in the future without the possibility of making our sales when the market gives us the opportunity to sell (coffee) above production costs,” he said.
A coffee exporter, who preferred to remain anonymous, said the market is extremely concerned as at least 1 million bags of 60kg, committed in the futures market may not be delivered in the period 2021-2022. Others said that figure will be surpassed by far.
FNC is mulling selling certificates of emissions of the 4.4 billion trees planted in coffee.
“The CO2 capture of those trees multiplies by four,” he said. Velez shared this idea with Colombian president Ivan Duque during a recent visit to Dubai in United Arab Emirates. “There should a market for this”, he said. FNC is planting 1 million coffee trees this year.
In addition, Colombia will end with 80,000 hectares of coffee renovated in 2021. An annual renovation of 80,000-100,000 hectares per year will allow Colombia to maintain coffee output high.
“We are setting up coffee farming for the next 5 to 10 years. We have to keep coffee plantations young and productive.”
Velez concluded saying the future of Colombia’s coffee is going to be brilliant.
By Diana Delgado
