Coffee economics

As Robusta demand grows, so does Robusta quality

There are many reasons why Robusta has gained popularity in the past few years. Setting aside the fact that it is the Robusta-fed soluble industries in emerging markets and producing countries that have driven an annual average increase in the global coffee market of 2.4 per cent  for the past 14 years, the answer is, quite simply, quality. “We are starting to see Robusta coffee playing an increasingly important role in the overall coffee market,” says Manuel Diaz, one of the world’s leading cuppers of Robusta coffee. “As more people are getting educated about coffee, it is becoming clear that Robusta coffee is very much where the future consumer is centred.” Diaz says it is exciting to see that Robusta coffee is finally starting to get the recognition it deserves. “We have known for years that when it comes to developing new coffee markets, growth comes primarily from instant coffee consumption. Robusta is the type of bean most widely used in the soluble industry because of the higher extraction rate and lower price,” Diaz says. “But in the last five years we have started to realise that not only do we not know very much about Robusta to start with, but Robusta coffees actually have cupping profiles that in many cases can be far superior and more complex than Arabica coffees.” Robusta has long been known for its higher caffeine content, with levels up to more than double those found in Arabica coffee. But even the name is often reported wrongly. Robusta beans are the most popular commercial variety of the canephora coffee species. Robusta beans are to the Canephora what varieties such as typica and caturra are to Arabica. The Robusta tree is taller than Arabica trees, has significantly larger leaves and its cherries grow in much more concentrated clusters than those seen on Arabica trees. As the name indicates, Robusta coffee is much more ‘robust’ and resistant to crop diseases. It also grows easily at lower altitudes in more tropical and humid climates, and produces higher net returns than the much more vulnerable and attention demanding Arabica tree. In the current 2012-13 harvest year, which won’t be wrapped up until the end of September, the International Coffee Organization (ICO) has forecast the boom in both Robusta production and demand to continue in a crop year that is forecast to produce about 145 million 60-kilogram bags. “World production of Robusta coffee in 2011-12 reached a historical record,” the ICO said in a special report on consumption trends released at the end of 2012. “The most significant change was observed in Robustas.”  The report added that Robusta in the 2011-12 crop cycle represented close to 40 per cent of total production of a little over 134 million bags, while world exports of 108 million bags in the last cycle showed Robusta beans climbing to 42 million bags. With that market share, the growth in Robusta coffee is one of the most significant changes seen in the past decade. Even as the price margin between Arabica and Robusta coffee has narrowed considerably in recent months, the ICO says there is no indication of demand for Robusta starting to cool off. “The arbitrage between Arabicas and Robustas has also narrowed further, with the price differentials between the three Arabica group indicators and the Robustas group indicator all at their lowest level since December 2008. Furthermore, certified stocks on the London futures market have fallen to their lowest level since October 2007, indicating a sustained appetite for Robusta coffee,” said the ICO’s Excecutive Director, Roberio Silva, in the July 2013 market report. Robusta output alone is forecast to rise 8.1 per cent to 56.6 million bags in the 2012-13 harvest – or 39 per cent of the total market – while Arabica production is seen rising 7.4 per cent to 88 million bags thanks primarily to the on-cycle in the 2012-13 crop in the world’s largest grower Brazil, which ended in May. “I am bullish on Robusta and I have been bullish on Robusta coffee for quite a while now,” says commodity analyst Judith Ganes-Chase, from J.Ganes Consulting Co.
Ganes-Chase, like many other veterans in the coffee industry, cites the awakening of coffee consumption as the main reason behind the newfound industry interest in Robusta coffee. She says this is not just fuelling demand, but is becoming increasingly vital in order to keep supply in line with demand. This has become problematic as producers in many traditional Arabica producing countries struggle due to multiple socio-economic factors such as low yields and dwindling land size per family, which has led thousands of small growers to abandon the land. Raising output in Robusta-growing regions, ultimately, is easier and faster because growers don’t have to struggle with crop pests like leaf rust, which is currently causing a severe impact on the new harvest in Central America. “It’s been fascinating to be able to discover so many good Robusta coffees,”  says Ted Lingle, one of the founders of the Specialty Coffee Association of America and recently retired Executive Director of the Coffee Quality Institute (CQI). “As the quality has improved we are realising that the Robustas that are well processed and well picked, just like Arabicas, can be completely neutral in their flavour attributes while the best robustas also can have very good cupping profiles.” Lingle says one of the many surprises found during a special Robusta cupping project undertaken by the CQI was to discover that  Guatemala has “extraordinary” high quality Robustas, even if the share of overall Robusta coffee from Guatemala is only minor and hardly shows up in statistics. “Guatemala is a model for what producers should be doing to move to toward a better valued-added pricing and marketing of their coffees,” he says. “The only advice I would have for them at this point is to start looking a bit more at Robusta now because they are growing some phenomenal Robustas in the lands that are too low for quality Arabica coffee.” Some officials in Robusta growing countries have felt as though they have been snubbed by the ‘Arabica elite’ in the specialty market. That lack of focus was one of the reasons why, at the height of the coffee crisis in the 1990s, Uganda started the World Alliance of Gourmet Robustas. “We decided it was unfair we couldn’t compete in the specialty market just because we grow mostly Robusta coffee when many of our growers for years have produced high quality washed Robusta coffee, which is very well sough after in the market,” says the Managing Director of the Uganda Coffee Development Authority (UCDA), Henry Ngabirano. Historical research by the UCDA points to Robusta coffee first being found growing close to the upper Nile region in Uganda around the 1860s. Botanists reported the discovery of wild plants that resembled the Arabica species that had been found in Ethiopia some 1000 years earlier. Between the 1930s and 1940s, Robusta was increasingly introduced as a cash crop in West Africa, while in both Sri Lanka and Madagascar Robusta had almost entirely replaced Arabica by the 1950s after a century of problems with leaf rust that wiped out most of the original Arabica plantations. While Robusta beans from both Uganda and Mexico have stirred interest for their high-quality cupping profile, it is the history of Madagascar that in the past year has gotten coffee buyers all wired up, and it’s not just because of the higher caffeine content. “One of the greatest surprises of all was when we came across a coffee from Madagascar with truly unique characteristics. It had a lot of acidity yet an incredible soft cup and there were so many different flavour attributes, from floral notes and notes of cardamom that we had a room full of traders wanting to buy it on the spot when we first presented the findings,” says Robusta expert Diaz. To Brazilian coffee columnist Lucio Caldeira, coffee lovers should not be so surprised or worried about the core ingredients in the coffee they drink as long as they get the flavour they like in the final cup. “The idea of a blend can be found in many popular products,” Caldeira says in his column on Portuguese-language website, CafePoint. “Whiskey, for instance, has been blended since 1853 and nobody complains about that. In coffee, from the harvest to everything else, the roaster will make the blend according to how he can extract the best coffee with what he has available, combining flavours with aromas, acidity and body to produce the perfect cup of coffee.” The coffee market in the past few years has seen increasing volatility caused by a variety of factors from prices to macro-economic indicators for the global economy. This has made flexibility the name of the game, says Caldeira. And that, he says, is exactly what roasters get with better quality Robustas, while delivering to consumers their daily cup at a reasonable price.

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