Impacto de la roya sobre la cadena del café Renaud Cuchet Managing Director Efico Central America
TOPICS 1. THE SITUATION IN LATIN AMERICA 2. HOW COFFEE BUYERS PERCEIVE THE RUST CRISIS ü Question # 1: In which way does the coffee rust crisis have an impact on your company? ü Question # 2: Are you making any changes in the way you buy coffee now? ü Question # 3: Is the coffee leaf rust crisis in Latin America a threat for your company? Why? 3. WHAT THE COFFEE BUYERS ARE DOING ü Question # 4: Is your company involved in any program to fight the coffee rust, or do you support any existing initiative?
THE SITUATION IN LATIN AMERICA ü Mexico: 80% of coffee lands affected. Organic farms devastated. Sharp increase in differentials, loss of markets for Mexican coffees. Spillover effect in Guatemala, Mexican intermediaries buying, creating prices distortions and losses for Guatemalan coffee exporters. ü Peru: The Central and Southern regions have suffered heavily, due to old plantations and poor husbandry. The organic production has fallen sharply. Differentials under pressure, conventional coffee not competitive and roasters are switching origins. The Northern region is doing better (younger plantations).
ü Bolivia: coffee outputcut by half. Defaults. ü Dominican Republic: no more coffee for exports, not enoughfor the internalmarket. ü El Salvador: the whole sector is in crisis. The output has fallen sharply. Wash outs, contracts not delivered. Coffee producers are cash- strapped and cannot renew their plantations. Exportershavelaid- offmany workers.
ü Guatemala: production is slowly recovering, but many producers don t have enough financial capacity to react faster. Recovery will be slow. Future will depend on New York prices. ü Costa Rica: through their good husbandry, Costa Rican producers have been able to control a bigger damage. However, the rust infestation is just another blow to the country s coffee output, which is slowly going down.
ü Nicaragua: reduced impact. New plantations and rust resistant varieties. However, the organic producers were affected. ü Honduras: the winner in the region. They were well prepared with Catimor varieties. Massive certification of coffee areas and betteragriculture practiceshaveprevented a big rust infestation. Production on the rise again, bright outlookfor the coffee sector.
HOW COFFEE BUYERS PERCEIVE THE RUST CRISIS Question # 1: In which way does the coffee rust crisis have an impact on your company? ü Roasters concerned about quality in the future, they express doubts about the cup profileof rust resistantvarieties ü Disruptions on the supply chain for the industry. Some can change their blends, others cannot (small operators / micro roasters tied to a specific region or Estate). ü Prices go up because of less availability, roasters need to pay more but can they keep up since need to stay healthy in a very competitive environment? ü Roasters worried about fungicides residues in coffee, asking a lot of information about traceability of the coffee ü Small and medium- size roasters affected by defaults in Mexico, Bolivia, Dominican Republic and Peru ü Roasters not able to buy coffee in the Dominican Republic since 2014.
Question # 2: Are you making any changes in the way you buy coffee now? ü If roasters are committed to a certain region or origin affected by rust, they need to be flexible on volumeavailability as output slowly recovers ü Roasters turning towards certified coffee. They know that Good Agricultural Practices will enable the producers to fight the rust infestation in a more efficient way. ü Roasters who work with sustainable supply chains claim they have not been affected, their suppliers use improved agriculture practices and have been able to weather the storm ü Some roasters are switching origins, they are frustrated with lower quality and higher prices in rust affected countries.
Question # 3: Is the coffee leaf rust crisis in Latin America a threat for your company? Why? ü Not a threat, but a wakeup call: climate change is definitely a contributing factor to the spread of plant diseases and pests. ü Not a threat, but a realconcern. ü The ECF informs that the overall impact on the European market has not been significant ü A big challenge forthe coffee industry ü Rust affected trees produce flat cup coffees, weakness in the cup. Many roasters are concerned with lower qualities and customer dissatisfaction,which can turn into loss of market share. ü Risk for the sustainability of the roaster s supply chain in affected countries ü Large roasters have the capacity to switch origins ü Roasters depending on organic coffees from Mexico, Peru and Bolivia are having issues with quality and availability. Faced with defaults and breach of contract with their distributors.
ü The name of Mexico comes up a lot in our discussions about rust with our customers ü Not a threat, rather a good reason to purchase coffee through sustainable supply chain and to invest in training the producers. The rustincidence is muchlower with certified coffee producers.
WHAT THE COFFEE BUYERS ARE DOING Question # 4: Is your company involved in any program to fight the coffee rust, or do you support any existing initiative? ü The ECF is not involved in programs to fight coffee leaf rust, but they participate in the Sustainable Coffee Programme (IDH Sustainable Trade Initiative),which includes climate change in its agenda ü Isolated (smaller) sustainable projects between traders, roasters and producers on topics such climate change adaptation ü Introduction of rust resistant varieties and hybrids by a few large roasters ü Some roasters invest in sustainability of the coffee supply chain: they believe switching to rust resistant varieties is not the primary solution. Good husbandry is more important (fertilization, pruning, pest and disease control).
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