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Coffee: low prices leave bad taste

Tuesday, September 3, 2013

For producers with money, this may be a good time to buy, or to go into partnership with small Central American plantations, some of which face a triple threat.

On one hand “coffee leaf rust” – a fungus – has during the past two years destroyed as much as a third of the region’s crop, driving up production costs.

At the same time, increased output in Brazil, Colombia and Vietnam, has driven down prices.

A tendency of major wholesalers to add cheap Robusta beans to their coffee, has also depressed prices.

High-quality Arabica coffee – the only kind produced in Central America - currently sells on international markets for $3 a kilogram, compared to $6 two years ago.

It takes only about two years for a bush to recover from the fungus, which destroys leaves and beans, but leaves the roots and branches intact.

On the other hand, some producers – especially small ones – will have a hard time surviving with reduced income, not to mention the cost of treating sick plants.

Central America is the world’s second-biggest producer of Arabica coffee, at 13 million fanegas, or 60-kilogram bags.

Brazil at 39 million fanegas, is the biggest grower, with more than a third of world-wide Arabica production, followed by Colombia at 9 million.

Among individual countries in the region, Honduras will this year produce close to 5 million fanegas.

Leaf rust is not expected to affect the Honduran crop by more than 5 percent.

However, one in three Nicaraguan plants was destroyed by the fungus, while the damage in Costa Rica is estimated at 13 per cent.

The International Coffee Organization and the Food and Agricultural division of the United Nations, along with several non-governmental institutes, say they are working on ways to combat coffee rust.

Some Central American growers may not be able to wait.