Market Reports

ICO Executive Director José Sette questions if 2021 will be a “Year of Renewal”

José Sette

While 2020 proved no crystal ball is accurate, GCR invited industry leaders to share their hopes, ambitions, and predictions for 2021, in what is likely to be a defining year for the international coffee market.

As if 2020 did not already put me off from prognosticating forever, the end of the year fast approached and GCR magazine wanted to know what will happen in 2021.

Of course, much will depend on the evolution of the COVID-19 pandemic, which is still uncertain. As I write, London, where the International Coffee Organization (ICO) is located, has just entered its second lockdown. However, the last few days have brought promising news about new vaccines. Most projections are that reliable vaccines should become widely available by the second half of 2021 at earliest.

At the most basic level, the coffee value chain has shown a certain resilience, in that the flow of product remained quite smooth and no significant shortages occurred. We must recognise the enormous efforts made by the governments of coffee-producing countries to establish social safety nets, despite limited resources. Safety protocols were quickly established and coffee was declared an essential economic activity in many countries, thus limiting the impact of movement restrictions. Coffee production has held up well under challenging conditions. We can expect this tendency to continue in 2021.

Let’s look at the demand-side. ICO preliminary estimates indicate that coffee consumption suffered a 0.9 per cent drop in coffee year 2019-20. For sure, coffee is not a staple food, however, millions of consumers showed that, even during a pandemic, a good cup of coffee is like a friend that we want to meet every day. We are confident that coffee consumption will rebound to its historic growth rate of more than 2 per cent, but the timing is uncertain. Analysts are calling 2021 a “Year of Renewal”, but a full recovery can only be expected in 2022.

On top of all this, we also have a joker in the pack: the climate. After the recent dry spell, which may already have reduced the next crop, all eyes are on rainfall in the coffee-growing regions of Brazil. At the same time, Central America has been buffeted by two hurricanes in succession – although crop losses appear to have been limited so far, damage to logistics may be a significant challenge to transporting the beans from growing regions.

Let us hope that all these factors combine in a way that brings higher prices to growers, who were already caught in an enduring price crisis when the pandemic arrived.

Whatever happens, let’s hope that the upcoming year will not spring any more surprises like 2020 did. 

Written by José Sette, Executive Director of the International Coffee Organization.

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