Coffee output may rise substantially. And soon

by Agrimoney.com

Could soaring coffee prices bankroll a plantation revolution?

Prices which have hit a 34-year high in New York's Ice futures market, and set a record $2,424 a tonne in second-ranked producer Vietnam on Wednesday, are expected to stimulate farmers to raise output dramatically.

However, the increase may not play out as many investors expect, through growers in the major producing countries rolling out fresh plantations to accommodate extra trees.

There are far quicker, and less onerous, ways to increase coffee harvests than acquiring extra land, especially in Brazil, the top producing country, coffee expert Carlos Brando said.

'Slow and expensive'

"Will Brazil embark on a new massive coffee-planting programme? This is highly unlikely because coffee land prices have increased markedly, up to three times in some areas," Mr Brandon, at Brazil-based P&A Marketing, said.

"But actually, new planting is the slowest and most expensive way."

Besides the cost of acquiring land, on top of planting it, the three years or so it takes coffee trees to start producing cherries means that "by and large, by the time you starting harvesting coffee, prices have gone down".

Record ahead?

Substantial, and quicker, wins can be gained from better husbandry techniques, such as irrigation, pruning techniques and fertilizer.

"Even a small rainfall deficit can cause substantial crop losses," Mr Brando said, quoting research that, the Brazilian area of south Minas, 45% had been lost over a decade.

And, if trees are to be planted, more intensive strategies can reap dividends.

Brazil's jump in production this millennium has been achieved largely through a ramp up in trees per hectare, to 2,600 from 1,200 in the late 1990s, with "a lot of high yield growers getting close to 4,000 per hectare".

"The area planted with coffee has remained relatively stable."

In fact, assuming Brazil's growers opt for raising yields over major increases in plantings, "the 2012 and especially the 2013 crops should show sizeable increase, with a good potential for the 2014 crop", when new trees will have started producing, "to be the largest ever".

Yield gap

But this impact could be multiplied if other countries too fulfil their potential, Mr Brando said, noting that Brazil and Vietnam hold some 25% of world coffee plantings, yet account for one-half of production – implying yields three times those elsewhere.

"There is huge opportunity for other producing countries to increase their coffee yields."

Sure, some had a high proportion of shaded plantations, which will tend to produce lower yields.

"But there are many areas of South America, for example, which are not shaded at all, but produce lower yields," Mr Brando told Agrimoney.com.

'Think afresh'

The question is whether growers in the likes of Indonesia and east Africa do invest.

"If there is a lot of money around, you can afford to think afresh," Mr Brando said.

"There is room for countries to increase yields dramatically. Yet still people talk about more area, and taking land away from food production."

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