The research paper, Modeling Profitability in the Jamaican Coffee Industry, written by Mario Mighty and Gabriel Granco for the Department of Geography, University of North Alabama, Florence, in the United States and published in January 2021 outlines the challenges to economic feasibility in the Jamaican coffee industry.

They begin by pointing out that production anywhere outside of the Jamaica Blue Mountain (JBM) region is a low-profit undertaking and this continues to drive the concentration of coffee farmers into the JBM region.

The researchers propose that, “A producer would need to cultivate at least 25 acres or 10 hectares in the non-Blue Mountain region to achieve the mean GDP [gross domestic product] level in the country [US$5,100] as compared to 1.3 acres or 0.5 hectares in the JBM region in the 2016-2017 coffee year.

“However, the results for the 2018-2019 coffee year paints a grimmer picture. With the sharp decrease in prices paid per box to producers, a farmer would need to cultivate at least 8.7 acres or almost 3.5 hectares in the JBM region.”

Mighty and Granco advise that, with losses being incurred with every unit area being cultivated in the non-Blue Mountain region, farmers would need to implement measures to further reduce production costs or increase revenues in order to achieve the nation’s mean GDP level.

The authors outline, “The implications of these numbers are clear: In ‘good’ years, when there is limited production and prices rise there is money to be made, but when farmers increase production in response to this, then oversupply results in lower prices and economic loss.

Overcrowding

Mighty and Granco note, “With the conventional coffee market saturated with coffee for the last several decades and the specialty market becoming ever more crowded, stakeholders in the Jamaican coffee industry may need to consider the best route forward in order to remain economically viable, particularly at the farmer level.”

They state that, considering that a significant proportion of the island’s small farmers cultivate less than one hectare of coffee, the attraction to remain in coffee production is likely to continue waning and decreasing the number of stakeholders in the industry.

One possibility, they suggest, may be the creation of production quotas (similar in concept to the international coffee agreements of the 1960s through to the 1980s in the global coffee market). Such a mechanism may include a provision allowing for the suspension of quotas if prices remain high and their reintroduction if prices become too low.

Mighty and Granco explain, “This would be useful since most producers lack the ability to process and store their harvest and sell at times when prices are higher. Some producers may consider diversification away from pure coffee production if this crop has become a money-losing venture.”

The researchers further add, “Unless farmers are able to ally themselves with other areas of the coffee value chain (particularly the export or resale of green or roasted coffee) or increase their production to gain greater economies of scale, then it may be more feasible to focus on diversification to other crops or livestock.”

They estimate a market correction to stable prices of approximately $7,000 (US$53.5) and $4,000 (US$30.5) per 60-pound box for JBM and non-Blue Mountain coffee cherries should occur over the next few years.

But, even at these prices, they state, “It remains very clear that Jamaica’s current small farmers engaged in coffee production, those cultivating under 0.4 hectare or 1 acre of coffee, will be engaging in a money-losing proposition depending solely on coffee.”

Mighty and Granco say farmers, meanwhile, want better prices for cherry coffee, but say, “However, this ignores the reality that there is a decreasing demand for JBM and other Jamaican coffees from their primary market of Japan.”

They note that efforts that have been made to expand the market for Jamaican coffee in the USA, Europe, and Asia must be reinforced in order to viably increase the prices paid per box, and consequently, the income that can be received by the producer.