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Growing call for Colombian coffee sees country turn to imports

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Colombia is beginning to register as one of the world’s larger coffee importers, thanks to the growth of its domestic consumption, and its recovery as an exporter, helped by better-than-expected quality.

 

The South American country, and the second-ranked grower of arabica beans, will import a record 1.35m bags of coffee in 2019-20, the US Department of Agriculture’s Bogota bureau said.

 

That volume - 60% more than the USDA has officially forecast for the season which started last month – is enough to put Colombia among the top 15 world coffee importers, ahead of the likes of Ukraine on USDA data.

 

And it would follow a 2018-19 season when imports totalled 1.24m bags, according to the bureau, a figure 50% ahead of the official USDA estimate.

 

Flowering signal

The forecast of further growth in 2019-20 in imports – which totalled just 775,000 bags in 2017-18 – comes despite expectations of production increasing to 14.30m bags.

 

That would be a rise of 430,000 bags year on year on attache estimates, reflecting in part the fruits of a “successful replanting programme” with rust-resistant trees, which is still ongoing, after Colombia a decade ago saw its output badly hit by an outbreak of the fungus.

 

Furthermore, “the flowering period in the main coffee regions have indicated better production levels”.

 

The bureau too flagged a recovery in coffee prices since May back above average production costs, helped by the devaluation of Colombia’s peso besides a revival in global arabica values.

 

Raised profitability tends to increase farmers’ willingness to invest in inputs such as fertilizers to improve yields.

 

Growing domestic drinking

However, the bureau also flagged the growing popularity in Colombia of coffee drinking, with consumption in 2019-20 seen at a record 2.0m bags – up 350,000 bags in two years.

 

“Consumption rates in production countries such as Colombia has grown at a faster pace in the last years, mainly driven by an increasing number of coffee shops and the creation of new coffee products,” the bureau said.

 

Meanwhile, Colombian exports are proving popular too, in the likes of the US and the European Union, with shipments, at 13.70m bags, proving larger than had been thought for 2018-19, and expected to remain at that level this season.

 

“Despite lower-than-expected production [in 2018-19], the quality of Colombian coffee improved and was thus more attractive for exports.

 

Demands on supplies

Thus raised imports were needed last season “to satisfy the growing domestic demand along with increasing exports and lower production”.

 

And imports are expected to expand further in 2019-20 “to meet increasing local demand as export levels are high”.

 

Imports are often of lower quality beans, for the domestic market, with Brazil the top origin for Colombia’s purchases, with a 61% market share, followed by Pero on 24% and Honduras on 12.1%.

 

Subsidy factor

Colombia also represents an increasingly important source of mild arabica beans given the travails in Central America, where higher production costs mean that the low prices which reigned until late are expected to have made a larger dent in output prospects.

 

Rabobank last week, while forecasting a decline of 5% year on year in Central American coffee output in 2019-20, said that “mild production outside Central America is not expected to drop that much, in part because we see Colombian output steady, given the amount of government support”.

 

Colombia’s government early this year allocated some $50m to supporting coffee farmers, subsidising internal purchases by up to 30,000 pesos (about $9.50) per 125-kilogramme bag when prices fell below 715,000 pesos per bag.

 

“The subsidy was effective only in February, March and April 2019, as prices have been above this breakeven point in other months,” the USDA bureau said.

 

Export boost

Colombian coffee exports have also been boosted by a move by producers’ group Fedecafe three years ago allowing the export of lower-quality beans.

 

As the USDA bureau nearer the time, “although the Green Coffee Association of New York’s standards catalogue Colombian beans that pass through a screen of 14/64 and have a 5% tolerance as Excelso Colombian coffee, Colombia had traditionally self-imposed a 1.5% maximum tolerance, which prevented the export of a significant amount of high-quality beans”.

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