COFFEE: A LOOK FORWARD TO 2030

COFFEE: A LOOK FORWARD TO 2030 José Sette Executive Director International Coffee Organization Sintercafé, Costa Rica 11 November 2017

WHO WE ARE The International Coffee Organization (ICO) is the main intergovernmental organization for coffee, bringing together exporting and importing Governments to tackle the challenges facing the world coffee sector through international cooperation.

SUMMARY 1. Supply & Demand till 2030 2. Challenges to a Sustainable Coffee Sector 3. Role of the OIC 4. Mission to Central America First Impressions

SUPPLY & DEMAND

WORLD SUPPLY/DEMAND BALANCE 160 140 120 million 60-kg bags 100 80 60 40 20 0 Crop years Total consumption* Total production 5

Source: ICO CHANGE IN STRUCTURE OF WORLD CONSUMPTION

POTENTIAL FOR FURTHER GROWTH IN DEMAND Large potential for further growth in exporting countries and emerging markets Per capita rates still well below those in traditional markets Particularly in countries with large populations (China, India, Indonesia) Brazil as the model for other countries to emulate

WILL POSITIVE SUPPLY TREND CONTINUE? 160 14000 1400 140 12000 1200 million 60-kg bags 120 100 80 60 40 thoushand hectares 10000 8000 6000 4000 1000 800 600 400 kg/ha 20 2000 200 0 0 0 Average annual production Area Yield

SUPPLY REQUIREMENT IN 2030 250 World Consumption 2.5% p.a. = +64m million 60-kg bags 200 150 100 1%p.a. =+23m 2% p.a. = +49m 50 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 9

CHALLENGES TO A SUSTAINABLE COFFEE SECTOR

SUSTAINABILITY OF COFFEE SECTOR A sustainable coffee economy is based on the well-being of the various actors in the chain, particularly the producers who are the weakest link in this relationship. A sustainable coffee farmer will meet long term environmental and social goals while being able to compete effectively with other market participants and achieve prices that cover his/her production costs and allow him/her to earn an acceptable profit margin.

Challenges to a sustainable coffee sector Economic sustainability qadequate income for coffee farmers qimproved farm productivity qfarming profitability qaccess to market and transparency qquality product and traceability qaccess to finance qdiversified income generating activities

Challenges to a sustainable coffee sector Social sustainability: qimproved living conditions qgender equality in coffee farming qadequate farm working conditions qimproved farmer skills qhealthy farming practices qeffective farmers organizations and positive impact on their communities qfood security

Challenges to a sustainable coffee sector Environmental sustainability qadoption of good agricultural practices qnon-harmful soil fertility management qintegrated pests and diseases management qadequate water management qwaste management qconservation of biodiversity qland/forest protection

ROLE OF ICO

MISSION OF THE ICO International Coffee Agreement 2007 The objective of this Agreement is to strengthen the global coffee sector and promote its sustainable expansion in a market-based environment for the betterment of all participants in the sector 16

44 EXPORTING MEMBERS MEMBERSHIP AS AT NOVEMBER 2017 (78 COUNTRIES) ANGOLA BOLIVIA, PLURINATIONAL STATE OF BRAZIL BURUNDI CAMEROON CENTRAL AFRICAN REPUBLIC COLOMBIA CONGO, DEM. REP. OF THE COSTA RICA CÔTE D IVOIRE CUBA ECUADOR EL SALVADOR ETHIOPIA GABON GHANA GUATEMALA HONDURAS INDIA INDONESIA KENYA LIBERIA MADAGASCAR MALAWI MEXICO NEPAL NICARAGUA PANAMA PAPUA NEW GUINEA PARAGUAY PERU PHILIPPINES RWANDA SIERRA LEONE TANZANIA THAILAND TIMOR-LESTE TOGO UGANDA VENEZUELA, BOLIVARIAN REPUBLIC OF VIETNAM YEMEN ZAMBIA ZIMBABWE 7 IMPORTING MEMBERS EUROPEAN UNION JAPAN NORWAY RUSSIAN FEDERATION SWITZERLAND TUNISIA UNITED STATES OF AMERICA

STRATEGIC OBJECTIVES 1) Provide world-class data and analytics 2) Provide forum for dialogue within public sector and with private sector/civil society 3) Build partnerships for promotion and projects

CENTRAL AMERICA

7 PRODUCTION BY COUNTRY 6 5 million 60-kg bags 4 3 2 1 0 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Costa Rica El Salvador Guatemala Honduras Mexico Nicaragua Panama 20

FIRST IMPRESSIONS Domestic consumption has room to increase 21

PER CAPITA CONSUMPTION (2016)

FIRST IMPRESSIONS Domestic consumption has room to increase Robusta may be part of the solution Certifications: Doubts about benefits vs. costs avoid duplication by consolidation/collaboration Climate change is already a reality 23

EXTREME WEATHER VARIABILITY LED TO LARGEST OUTBREAK OF COFFEE LEAF RUST IN MESOAMERICA DURING 2013 Jamaica Area affected by leaf rust (2013) Area in 1000s hectares Panama Costa Rica Not impacted Impacted Nicaragua Dom. Rep. El Salvador Guatemala Honduras 0 75 150 225 300 Causes: Rain and temperature variability Humidity: ideal conditions for spores Impacts: >50% area was impacted by coffee leaf rust Estimated 375,000 jobs lost US$500 mlns in economic loss

FIRST IMPRESSIONS Domestic consumption has room to increase Robusta may be part of the solution Certifications: Doubts about benefits vs. costs avoid duplication by consolidation/collaboration Climate change is already a reality need to strengthen adaptation/mitigation initiatives Specialty market is the preferred strategy but must be allied with research into productivity/cost reduction Central America has strong coffee institutions but needs an enabling environment 25

PRODUCTION 25 16% 14% 20 12% million 60-kg bags 15 10 10% 8% 6% 5 4% 2% - 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Region Share 0% 26

FIRST IMPRESSIONS Domestic consumption has room to increase Robusta may be part of the solution Certifications: Doubts about benefits vs. costs avoid duplication by consolidation/collaboration Climate change is already a reality need to strengthen adaptation/mitigation initiatives Specialty market is the preferred strategy but must be allied with research into productivity/cost reduction Central America has strong coffee institutions but needs an enabling environment Low prices raise questions about long-term supply from region 27

CONCLUSIONS The ICO plays a key role in: Facilitating and exchanging information International advocacy of coffee Establishing partnerships between the public and private sectors, as well as with civil society 28

Muchas gracias