Business

Coffee imports rising to cover plunge in local production

BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com

Wednesday, February 19, 2014    

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COFFEE imports are set to rise amidst a 40 per cent dip in local production to 20-year lows.

Consequently, Government aims to formulate a coffee importation policy.

"This year's crop is without doubt the worst experienced in 20 years," insisted John Minott, president of the Jamaica Coffee Growers Association, (JCGA) at the Coffee Industry Stakeholders Retreat on the weekend at the Jamaica Conference Centre in Kingston.

The effects of rust disease along with hurricanes and the abandonment of farms has reduced available trees and therefore production since the onset of the Western financial crisis in 2008.

"It's not something that the JCGA is trying to promote but the stark reality is that today...we have to import coffee for certain segments of the market."

Minott argued for an importation window during which replanting should occur.

Coffee imports hit some US$1.78 million in 2012 up some 23 per cent since 2008, according to data from the International Trade Centre (ITC) a joint agency of the World Trade Organisation and the United Nations.

Contrastingly, exports dipped by double-digit levels to some US$17.3 million in 2012, according to the latest Bank of Jamaica data. The crop traditionally earned about US$25 million annually up to the onset of the financial crisis.

"It's a troubling situation," said Minott who is also general manager at large processor Jamaica Standard Products — producer of Wallenford Blue.

Jamaica Blue Mountain (JBM) and Jamaica High Mountain coffee production is expected to dip towards 130,000 boxes and 31,000 boxes respectively for the ensuing 2013/14 crop, according to Minott.

"Those figures represent a 40 per cent decline for JBM and 27 per cent decline for High Mountain [compared with the 2012/13 crop]. These are extremely startling figures," indicated Minott.

JBM, grown on the island's eastern mountain range, garners the highest retail price at some US$50 a pound based on its smooth luxury taste. High Mountain, grown in central and western side of Jamaica, offers a more chocolate-like taste and garners about US$30 a pound.

The island produced some 213,000 boxes and 43,000 boxes of JBM and High Mountain coffee respectively in 2012/13 crop.

Stakeholders process cheaper imported beans in order to fill the demand of the local and hospitality sector. Secondly, foreign and local entities import branded coffee products to retail in supermarkets or at dispensers.

The legal importation of coffee requires that an entity makes a request via the Coffee Industry Board of Jamaica (CIB). The approval however comes from the Minister of Agriculture Roger Clarke upon the recommendation of the CIB.

"These recommendations are coming in now quite frequently. There is a significant increase in the requests coming forward," said Delano Franklyn, CIB chairman at the conference. "We are in total agreement with you [stakeholders] that there is a need for an importation policy so that all stakeholders can have an understanding of the playing field."

Franklyn added that a number of distributors indicated a rise in demand from Japan.

"We are unable to fill those demands. So there is a gap in terms of demand and supply which triggers the request for importation to fill that gap," explained Franklyn.

Agriculture minister, Roger Clarke indicated that developing a importation policy was necessary in order to avoid informal importation.

"So it's better we know where it comes from because people will smuggle it in," Clarke reasoned.

Interestingly, the reduction in supply has resulted in small farmers getting record prices for the crop.

"Now I am being told that there is a competition about who can pay more and now I hear it has reached a plateau of $5,500 [a box] but even then some farmers still not happy," said Clarke addressing the stakeholders.

Farmers received a total of some $3,090 a box in 2012 from large processors. Coffee represents one of the few areas in which the island holds a competitive advantage. Clarke contextualised that in 1998 the industry was in "crisis" and the Government rescued the industry to the "tune of $3 billion".

The meeting came to a consensus that 100 boxes per acre would allow for a profitable farm. However, the majority of farms yield 30-40 boxes in the Blue Mountains and some 70 boxes in High Mountain.

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