Since the global coffee price crisis of the late 1990s, when fundamentals of supply/demand sent coffee futures down to historic lows, there has been an increased need for accurate and transparent statistics. The need was highlighted by the International Coffee Organization (ICO) in the International Coffee Agreement (ICA) 2007: “The Agreement will strengthen the ICO’s role as a forum for intergovernmental consultations, facilitate international trade through increased transparency and access to relevant information…” The ICA 2007 also included the new provision of: “Strengthening statistical activities to include market structures, niche markets and emerging trends as well as quantities and prices of coffees relating to factors such as different geographic areas and quality.” As the coffee market supply/demand balance shifted during the 2000s and took prices to multi-year highs in 2011, again fundamentals were of increased focus. However, in the intervening years, it appears that discrepancies have become even greater now than they were before, leaving the market in a state of confusion and crying out for transparency. The persistently varied numbers, which have been reported for a prolonged period of time, have not only confused the market, but have also triggered apathy. The industry is fed up with the wide range of figures being reported, some days deciding to believe certain numbers and other days just not paying any heed to them. Hugely differing numbers were once reserved for the Brazilian crop only, with production estimates generally ranging by about 5 million bags across various reporting bodies. Now, for the impending Brazilian 2015-16 crop, the range is about 10 million bags. Even taking just the three official Brazil government estimates, there is a range of about 6 million bags for 2015-16 production – an extraordinary volume when you consider that such a difference is more than the total production of some countries. For example, that is more than the output from Honduras. The 2014-15 crop has also been subject to a 10 million bag range, with Citigroup being the lowest with 41.75 million bags, and the USDA highest with 51.2 million bags. The National Coffee Council of Brazil (CNC) pegged the 2014-15 crop at 45.34 million bags. “This significant difference between the figures is mostly given due to how the forecasts are analysed,” says CNC’s Paulo Andre Colucci Kawasaki. For many years the discrepancy in Brazilian estimates was attributed to some sources compiling reports and data with telephone contact only, and no extensive field visits. Other sources visit thousands of coffee properties and assess information from producers, technicians, and agronomists. Conab says it uses a combination of field observations and statistics methodologies to develop crop forecasts that, it says, have a margin of error of 5 per cent. For its report, Conab conducts three field surveys: the first in April (pre-harvest period), the second in August (full harvest period), and the last in November/December (after harvest and flowering). Field visits take place for two weeks for each survey. CNC’s Kawasaki states: “Considering that coffee growing is an activity which may suffer impacts in all of its productive stages, I understand that up to 2 million bags of difference between estimated and harvested is acceptable, especially in Brazil, the world’s largest producer.” The responsibility of institutions should be that data is accurate enough that there is a consensus of a mere 2 million bags difference rather than 10 million bags. Aside from the Brazilian range of estimates increasing, which clearly affects any global production surplus or deficit in a given year, the market now has to deal with wide-ranging figures for Vietnam as well. Note that as is the case in the chart for Brazil, showing Conab and ICO lines overlapping, the chart for Vietnam shows Vicofa and ICO data is similar. The ICO reports the figures submitted to it by member countries, and both Brazil and Vietnam are ICO members. For the current 2014-15 year, the range of estimates for Vietnam is larger than it has been before. Comments in early 2015 by Vietnamese officials effectively put the crop in a 10 million bags range, with official sources projecting 20 million bags and trade houses forecasting up to 30 million bags. So, considering the world’s two largest producing countries only, the total world coffee production figure could be swung by anything in the range of 20 million bags. That alone is monstrous, never mind that these days it is not only production estimates that give no transparency, but also various institutions are reporting a wide variety of figures for consumption and export levels too. World consumption variations of 3 or 4 million bags in a season are an added headache for the market on top of ranges of up to 20 million bags for global production. Looking at export variations, using Vietnam as an example, data issued by Vietnam’s General Statistics Office (GSO) continues the trend, highlighted towards the end of calendar year 2014 by CoffeeNetwork, of GSO export estimates being higher than those reported by the ICO. While issuing projections for February, the GSO revised its January figure and the cumulative October/January volume to 441,000 tonnes (7.35 million bags) as opposed to 419,600 tonnes (6.99 million bags) in the same four months a year earlier. The ICO’s data for January puts Vietnamese October/January exports in 2014-15 at 7 million bags, as opposed to 6 million bags in the same four months of 2013-14. For the full 2013-14 coffee year (October to September), the ICO reported in January that Vietnamese exports were at 23.7 million bags, whereas GSO data pinned October to September exports at 27.1 million bags. This was a much bigger difference of opinion than for the 2012-13 season. With increasingly divergent statistics circulating for the world coffee market, there has never been a more important time for institutions to focus on the importance of accurate data. Admittedly there have been extremely difficult circumstances to consider for 2015-16, given the uncharted territory the Brazilian growing areas were in given the adverse weather during calendar year 2014. But crop estimates should not vary by the degree to which they do given the substantial impact they have on altering the world coffee supply/demand balance, and therefore the market price. If there is transparent and responsible reporting of data, then plus/minus 2 million bags at most would be the case for production – not the 20 million bags possible difference for the world’s top two producing countries combined. Given the magnitude of the impact that widely varying estimates can have on the market, all governments and coffee institutions should demand a new mandate to cooperate and seek a solution to the problem of divergent data. Divergence compounds market fluctuations, with the finger often pointed at speculators for volatility – but it is the institutions that should shoulder a big share of this blame. GCR Note: All data in charts was compiled by FCStone from the sources noted. Disclaimer: Comments in this article should be construed as market commentary and not as market trading advice.