Participants in the coffee industry in Jamaica are trying to recapture the past. In the 1940s the Government of Jamaica stepped in to help redevelop the local coffee industry when overseas buyers complained of poor quality. Regulations on quality, growing, and geographic location were created and, in time, Jamaica Blue Mountain coffee (JBM) earned the ranking of the world’s best coffee.
Japan became the largest market for JBM, taking around 70 per cent of the crop each year, most of which are green bean exports. In 2000, a record year of production, 1.85 million kg of green coffee beans were exported.
Annual exports of coffee average about US$15.9 million. The United States receives about 5 per cent of the total exports from the Jamaica coffee industry. The European Union receives another 5 per cent of the exports.
The Government of Jamaica, which at one time was a major investor in the largest coffee estates, Mavis Bank and Wallenford in St Andrew, divested these properties around 2013 and has been looking to the private sector as the engine of growth.
But, market development has been static. Efforts to vary market profile have not been greatly successful.
Performance this current crop year might boost hopes of change. Exports for January to March 2022, according to the Jamaica Agricultural Commodities Regulatory Authority (JACRA) was valued at US$3.511 million. The JACRA report for the period states that the “export trend is currently at 21.4 per cent over the prior year of 2021, with 2022 expected to attain an export value of over US$21.70 million by year end December 2022”.
JACRA says that the 2021/2022 crop is showing some of the highest volumes in the past five crop years, noting also that December 2021 was 95.52 per cent greater than the previous crop of December (2020)
However, processor/dealers, who asked not to be identified, have said that those who hope that the island will recover high levels of production and the product price of 2016-2017 when JBM attracted US$60 per pound from overseas buyers, including the Japanese, are living a fantasy.
One processor noted that, since this period, the Japanese, who are the main buyers of JBM, have become resistant to price increases and will not pay more than an average US$28 per kilogram.
It is true, nevertheless, he admitted, that sales can be found for any JMB of marketable quality produced, and so processors have resorted to encouraging higher production by paying farmers up to $9,000 per box.
The processors complain that JBM remains the most expensive coffee in the world, with too many players, farmers, and roasters alike, resulting in margins under pressure.
Back to the past
One processor is appealing for government intervention in the style of the 1980s when government subsidies made coffee cheaper to produce.
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, and published January 2021, outlines how during the 1980s, “relatively low production costs and access to government subsidies in Jamaica combined with high prices from large external demand made it possible for farmers to remain profitable regardless of location”.
However, as Mighty and Granco state, “Since the 1990s, global production and competition in the specialty coffees market have soared and production costs have increased several fold due to a severely weakened Jamaican dollar, increased impacts of pests and diseases, and the evaporation of government subsidies.”
They note how regulatory authorities have attempted to provide some stability by establishing a price minimum to be paid to farmers per 60-pound box of coffee at the start of each season. However, with all the challenges, thousands of farmers have left producing, with those who stay doing so because it “is part of their way of life”.
The authors cite production data obtained from JACRA, indicating that almost 90 per cent of Jamaica’s coffee production has been derived from the JBM region for the past several years (236, 513 60-pound boxes from the JBM region vs 27,988 60-pound boxes in the high mountain region in the 2017-2018 crop year).
A major influence driving this imbalance is the fact that farmers are paid almost twice as much for coffee grown in the JBM region as opposed to the others.
Changing customer profiles
Mighty and Granco note that over the past 15-20 years, the customer base has changed significantly: “The loyal post–World War II customer base is being replaced by a new generation of coffee drinkers who are not as loyal, given a wider choice of specialty coffees and coffee blends.”
They note how, combined with a steadily declining local currency, stakeholders have had to adapt to the challenges of declining profitability due to rising production costs. Stakeholders all have their own ideas about what is needed to regain production levels, if not the profitability of the past.
JACRA remains optimistic about the future. For the period ending March 2022, which represents eight months of the 2021/2022 crop, the body reports, “This crop continues on the upward trajectory in the biennial crop pattern. The distribution of fertiliser to coffee farmers from late 2019 into early 2021 still appears to be a contributing factor in the increase volumes.”
It adds, “Fairly good weather (no heavy winds and rain) during peak reaping of the lower elevations in October to November of 2021 also contributed to higher volumes. The 2021/2022 crop as at March is trending at over 8,000 boxes above the base projection for JBM, which is expected to be at least 253,000 boxes.”
Meanwhile, JACRA reports, higher prices still being offered to farmers by processors (as high as $7,000 to $8,500 per box) is also a motivating factor why farmers will go and reap their berries.
The JACRA report concludes, “Despite the COVID-19 and its potential impact on the coffee industry throughout the entire pandemic, the industry is showing significant buoyancy in exports. The quarterly comparison is showing that export value is US$1.9 million greater than the comparable first quarter of 2021.”
JACRA’s cess and licensing fees were cut by 50 per cent by the Ministry of Finance in 2020 based on the pending impact to the coffee business and a possible drastic cut in sales. The regulator says there was, however, no real downturn in sales volumes, and processors\dealers have benefited from the lower rates which they have kept.
Processors are calling for more government subsidising of farming. Farmers, meanwhile, want to be paid more per box, citing expenses. Regulator JACRA says it believes processors who buy from farmers can do better in incentivising production. They also say processor/dealers have a role to play in marketing the product. The processors themselves say it is the Government which has the ability, the deep pockets, and the potential reach for better market impact.