COFFEE farmers and dealers are experiencing a 58 per cent drop in coffee export sales, or US$10 million ($856 million) up to June, which will affect their ability to finance next year’s crop.

The ongoing recession in Japan — which buys some 85 per cent of the total crop — has resulted in the reduced pace of purchases and also the reduction in the price at which it is sold, argued head of the Coffee Industry Board (CIB) Christopher Gentles in written response to Observer queries. The decline comes amidst promotions by US based Starbucks and also in China with Hangzhou City Coffee and Western Cuisine Association.

“The global recession has reduced the pace of sales and the cancellation of advanced payments from our customers overseas have increased the interest cost of financing the crop. The average sale price for the 2009/10 crop is trending downwards when compared with the previous crop,” he said. “Most coffee dealers, and importers have lost a significant level of revenue, resulting in serious cash flow problems. These financial constraints were further exacerbated due to the fact that a certain level of throughput of good quality is required to run the Coffee Works successfully.”

Gentles stated that the declines also reflected drought and bad market conditions especially in Japan. Last week the CIB disclosed that some US$10.1 million up to June was sold versus US$24 million during the same period a year prior. Annualised, the CIB expects coffee sales to total US$23.4 million which would reflect a decline on the US$35 million earned for the 2008/9 crop.

Under normal market conditions, Gentles explained that at least 56 per cent of the crop would have been already sold, but it currently stands at 43 per cent which represents an “adverse variance of US$3 million dollars”.

This year’s crop yielded 273,800 boxes of coffee cherry up to June which was 26 per cent below the previous 2008/9 crop.

Annualised, this year’s crop is expected to yield 442,000 boxes of cherries. Next year’s crop ending in 2011 however is expected to yield even less at 360,000 boxes of cherries or some 18 per cent below this year’s crop.

“A major targeted marketing campaign for Jamaican coffee in the United States and Europe will ease the suffering that this recession is causing,” Gentles stated of the Starbucks and China campaign.

Between June to August 30, Starbucks offered for sale Jamaica blue mountain coffee and it received an enthusiastic response from both customers and partners. It sold Jamaica blue mountain whole bean coffee for US$40 for a half pound, and some US$5 a cup. It would only offer the coffee at some 50 stores in the US. Starbucks stated that it did not have any plans to continue to offer Jamaica Blue Mountain® coffee.

Also in July, Government signed a US$1.7-million (J$147,900,000) deal to supply 7,300 kilograms of Blue Mountain Coffee to China over two years.

Agriculture Minister Dr Christopher Tufton inked a Memorandum of Understanding (MOU) with representatives of the Hangzhou City Coffee and Western Cuisine Association (WCA), two Chinese organisations which will market the product in over 800 outlets in the eastern country.