Market Reports

Struggling to recover: Colombia’s Mitaca report

Colombian coffee producers continue to cope with the damaging effects of climate change. The 2011-12 coffee harvest shows the potential to become the lowest crop in 50 years.','none','  The latest reports from the world’s largest producer of mild washed Arabica coffee bring little good news to fans of Colombia’s highly priced beans.   With the harvest failing to recover to previous average levels of 11 – 11.5 million 60-kilogram bags, Colombian coffee producers have seen at least 4 million bags of their coffee replaced with Brazil and Central American origins.   Private traders and producers are now saying that the current 2011-12 coffee harvest will struggle to reach much above 7 million 60-kilogram bags, even in a best-case scenario. The result could be Colombia’s smallest crop in 50 years of registered coffee statistics.   In a report released in June, leading German coffee analysts F.O. Licht said that total production for the 2011-12 crop cycle could reach between 7 – 7.2 million bags. Volcafe, the coffee division of trading firm ED&F Man, however, reported that the poor outcome of the mitaca, Colombia’s mid-year harvest, will make it difficult for the country to reach the 7 million  mark.   “We project that total 2011-12 Colombian production will struggle to reach 7 million bags,” said Volcafe in its monthly report. It said that due to the “structural nature of the production trends in the country, at this point even with good weather we expect that supply will not exceed 7.5 million bags in the 2012-13 season.”    F.O. Licht’s projections echoed the potential negative outcome from poor weather. “Continuing rains triggered by the La Nina weather phenomenon are seen impacting the 2012 mitaca,” it said in its report. “This would point towards 2012 output falling short of the 7.8 million bags that the Colombian Coffee Growers Federation (FNC) expects.”   The FNC has maintained its latest forecast for the current crop to reach 7.8 million bags, although coffee production in the 12-month period ending 30 May was down 24 per cent at 7.1 million bags, compared to the 9.3 million bags in the same period a year ago.   Some positive signs, however, are apparent. After a poor start to the country’s mid-year crop, where harvesting traditionally peaks in June, coffee production in May was up 2.4 per cent to reach 689,000 bags, from an output of 673,000 bags in the same month a year ago, the FNC’s most recent data showed.   Many producers and exporters in Colombia are more pessimistic, having seen monthly production trailing last March’s figures, and production in the first four months of the year was down 24 per cent at 2.26 million bags, according to FNC figures. Many say there is little hope that the mitaca, the second and smaller of Colombia’s two annual crops, will close above the output seen in the 2010-11 harvest cycle, which produced the smallest mitaca in history.   The results from the first three months of the mid-year crop, which is concentrated in the southern Huila, Narino and Cauca provinces, have already led to new concerns among local producers and exporters. Many say that total output in the 2011-12 crop cycle ending 30 September could be between 6.8 and 7.1 million bags, although some exporters and traders believe the output may be as low as 6.5 million.   “The harvest for the 2011-12 coffee year is not going to get to 7 million bags and it’s going to be difficult even reaching 6.5 million bags after the poor main crop, which ended down between 30 to 40 per cent,” says Mauricio Bernal, a partner in the Medellin-based A. Laumeyer and Cia Coffee Exporters. Bernal is also the former President of the board of directors of Colombia’s National Coffee Exporters Association (AsoExport).   “The mitaca is terrible. In the best case it might turn out that we’ll get as much as we did last year, but you have to remember that last year was the worst mitaca on record and this year it may actually be even worse,” says one official at the local FNC committee branch in southern Narino.   A recent trip through Narino’s main coffee producing region of La Union, on the border of the coffee lands of Huila, shows evidence of the continuing weather problems. Many trees were baring little or no crop ahead of the onset of picking after being weakened by rust disease. The fungus, which attacks the leaf, causes trees to drop their foliage and leaves the trunk and branches with no biological defense to support the development of flowering. Rust disease caused severe damage to at least 25 per cent of all the coffee areas in Narino and Huila in 2010. The FNC has invested heavily to fight the disease, mainly through tree renewal. It’s aspiring to have 90 per cent of all trees rust resistant in three to four years, through loans direct to smallholder farms.   For many farms, however, problems still persist. “The harvest is not good, we continue to have many problems and in the best case we hope we may get as much as last year,” Hernan Castillo, a producer in La Union, tells GCR. The southern region, which is home to the main share of the mitaca crop and dominated by production from Huila, Narino and Cauca, accounted for around 35 per cent of Colombia’s total annual production in the 2008-09 crop cycle, according to official FNC figures.   From the south to the north, producers in Colombia’s largest producing province of Antioquia, which is home to around 18 per cent of the country’s total production according to official figures, local producers and exporters say there has been no mitaca at all.   In a normal crop season around 30 per cent of Antioquia’s coffee comes from the mitaca harvest, while the mitaca nation-wide in traditional crop cycles has accounted for between 40 to 45 per cent of total annual output, according to industry estimates.   “There is not going to be any mitaca from Antioquia this year, and most indicators still point to maximum production in the coffee year of between 6.7 – 6.8 million bags,” says local producer and veteran Analyst Pedro Echavarria.   Echvarria adds that if the flowering and cherry development for the next harvest escape the damage seen in the past four years, then the main crop could benefit from extra supply in September. This could help push the final figure towards 7.1 million bags.   The outlook for the next 2012-13 cycle is so far on track, with no major weather problems reported at time of print. Echavarria says, however, that the outlook for the next 2012-13 crop cycle to a large extent will depend on good prices. He notes that the recent price drop will make it more difficult for Colombia’s high-cost producers to make the necessary investment in farms for renovation and inputs such as fertiliser.   “With the prices where they are, for most of the smaller producers, there is simply not enough money to spend on sufficient inputs and fertilizer. It’s going to be very difficult,” he says. “As far as the calendar year is concerned, there is no way that Colombia will be able to get production back to over 8 million bags.” 

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