Ethiopia, Africa must add value to coffee exports: ECEA!

27 October, 2014

Ethiopia, Africa must add value to coffee exports ECEAEthiopia, South Africa, Tanzania, Kenya and Uganda are the main producers of coffee in Africa, with Ethiopia being the continent’s leading coffee grower.

Coffee-growing African countries – including Ethiopia – appear unable to add meaningful value to their coffee exports, a senior official at the Ethiopian Coffee Exporters’ Association (ECEA) said.

“The value-adding on coffee to any meaningful degree is not apparent on the [African] continent,” ECEA General Manager Alemseged Assefa told Anadolu Agency.

fibc with email address“For the foreseeable future, our country – and many of the [African] coffee-growing countries – will continue trading only in coffee beans,” he lamented.

“The work of roasting, packaging, retailing and other work in the coffee value chain has long been monopolized by big companies,” he said. “It would be very difficult now to break that dominance.”

Meanwhile, he said, there were a few businesses engaged in coffee export that were trying to add value – but these, he added, “[still] lack scale.”

Ethiopia, South Africa, Tanzania, Kenya and Uganda are the main producers of coffee in Africa, with Ethiopia being the continent’s leading coffee grower.

Producers in Africa accounted for about 12 percent of the global coffee supply and less than 11 percent of global coffee exports in the 2009/10 season, according to the African Development Bank Group.

According to Assefa and ECEA President Hussein Agraw, the association plans to hold the third International Ethiopian Coffee Conference on November 6 and 7 under the banner, “Towards Quality and Traceability.”

The conference aims to “examine the quality level of our coffee and discuss ways of further improving the quality level… [and] to understand how quality is linked to marketing and better pricing,” Agraw told AA.

It also aims to introduce international research efforts for quality control, increasing market access through the introduction of traceability systems that will ultimately improve the sustainability, quality, safety and security of Ethiopian fine coffees, he said.

More than 300 producers, suppliers, exporters, cooperatives, coffee researchers, experts, investors, pertinent government institutions (such as the ministries of trade and agriculture), the Ethiopian Commodity Exchange, companies from coffee-importing countries and roasters are expected to attend the event.

Meanwhile, Assefa told AA that, last year, Ethiopian coffee exports were dismal, although they were expected to show improvement this year.

“Dry weather in Brazil, the global leader in coffee growing and export, will drive both demand and price up for Ethiopian coffee,” he predicted.

Brazil exports roughly half of the total global export of Arabica coffee.

During the 2014/15 fiscal year, said Assefa, Ethiopia is set to export between 235,000 and 250,000 tons of Arabica coffee.

According to Assefa, Ethiopia is also planning to expand its global reach by entering markets in India, China, South Korea and Russia.

Coffee used to account for 60 percent of Ethiopia’s total exports. This share has dwindled to a current 22 percent, however, due to a successful export-diversification scheme by the government, according to an earlier ECEA statement.




Cameroon Arabica coffee exports fall on year – NCCB!

31 October 2014

Cameroon Arabica coffee exports fall on year – NCCBCameroon’s arabica coffee exports fell in the just-ended season compared with last season, National Cocoa and Coffee Board data published Wednesday showed.

A total of 2,175 tons was exported between October 2013 and September this year down from 2,734 tons in the previous season, according the NCCB.

container liner Blue for coffee & Cocoa imageThe season is now unofficially closed. The export figures could be revised when the government publishes the official exports and production data at the launch of the new season in the coming weeks.

The 2,734 tons exported during the 2012-13 season was up from 2,612 tons a year earlier. Arabica output in the country has fallen steadily as farmers switch to other food crops and coffee prices fall.

The government has said it aims to raise annual production of the crop to 25,000 tons by 2020 through financial and technical support, but has yet to provide details.

Link: News


Nestle India gains after good Q3 result !

October 29, 2014

Nestle India gains after good Q3 resultNestle India rose 0.77% to Rs 6,016 at 10:29 IST on BSE after net profit rose 9.2% to Rs 311.29 crore on 8.9% rise in net sales to Rs 2557.80 crore in Q3 September 2014 over Q3 September 2013.

Nestle India said that net domestic sales in Q3 September 2014 grew by 9.9% mainly from better realisations while export sales declined by 3.9% due to lower coffee exports.

container liner Blue for coffee & Cocoa imageNestle India said that while cost of materials consumed has increased mainly due to significantly higher cost of milk and its derivatives in India which was even higher than those in international markets, finance costs have reduced mainly due to repayment of External Commercial Borrowing (ECB). The operating margins have been stable, Nestle India said

Commenting on Q3 earnings, Nestle India, managing director, Etienne Benet said, Despite severe input cost pressure, focus on various efficiency and cost containment programmes have enabled us to deliver healthy margins. We continue to rationalize the product portfolio to eliminate low margin SKUs which are not in line with our vision of Nutrition, Health and Wellness or growth strategy. Though the sales dynamics is better, we remain cautious as we are yet to feel the buoyancy from the external environment.

Nestle India is a subsidiary of Nestle S.A. of Switzerland. It manufactures milk products and other food products.

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Indonesia coffee exports surge as drought hits Brazil!

11 October, 2014

Indonesia coffee exports surge as drought hits Brazil!Despite lower national production, the country’s foreign exchange earnings from coffee exports is expected to increase by at least 10 percent this year, thanks to the surge in the commodity’s price in the global market.

The Trade Ministry’s director general for export development, Nus Nuzulia Ishak, said in Jakarta on Friday that the long drought that had hit the world’s largest coffee producer and exporter, Brazil, had resulted in a sharp increase in the global price of coffee.

Nus Nuzulia said that with the surging prices, she was upbeat the value of Indonesia’s coffee exports would increase by around 10 percent to US$1.3 billion from $1.17 billion last year.

fibc with email address“We will benefit from the crop failure experienced by Brazilian coffee growers as their markets are switching to our coffee,” she said at the 29th Trade Expo Indonesia.

Brazil, which produces about one-third of the world’s coffee and about half the world’s Arabica beans, has been experiencing an extended drought, which has resulted in a decline in its production this year.

According to Brazil’s National Coffee Council, the country’s coffee output this year may fall by at least 18 percent to 40.1 million bags this year after a 3.1 percent slide last year.

  • Value of coffee exports expected to increase by 10% to $1.3 billion this year
  • Price of Arabica beans almost doubles, as Brazilian production affected
  • More than 80% of RI’s coffee production is exported

The drought-hit harvest in Brazil this year, along with forecasts of more dry weather in the Latin American country, had caused the price of Arabica beans — most commonly used in espressos and cappuccinos — to hit its highest level in two-and-a-half years, The Wall Street Journal recently reported.

According to Bloomberg, Arabica coffee prices reached US$2,255 per ton, last week, their highest level since Jan. 20, 2012.

Indonesian Specialty Coffee Association (AKSI) chairman Leman Pahlevi said that Indonesia’s own Arabica coffee was currently being exported at a price of $100 per kilogram, while luwak coffee was priced at between $150 and $200 per kg for the global market.

More than 80 percent of the country’s coffee output was exported, he said.

“Domestic coffee consumption is still relatively low. Only 10 to 15 percent of the total coffee output goes to the domestic market,” he said, adding that Indonesia’s annual coffee consumption was only 600 grams per capita, lower than in Brazil, whose consumption is 3 kg per capita.

Leman said Indonesian coffee could look forward to a bright future, as both production and demand were expected to be relatively stable.

He said that while the country’s coffee production between October last year and September this year had fallen to 500,000 tons, down from an annual average output of 700,000 tons, he remained optimistic that output over the coming year would be higher.

“The decline was mainly caused by a longer-than-average dry season last year. For the October 2014 to September 2015 period, we expect our output to increase to 600,000 tons,” he said, adding that his association defined the coffee season as running from October through September.

Meanwhile, Deputy Trade Minister Bayu Krisnamurthi previously said that he was pessimistic about the country meeting this year’s coffee output target of 450,000 tons.

The country’s total coffee exports hit 192,985 tons in the first seven months of this year, 33.05 percent down from the same period last year, according to the ministry’s data.

Bayu said on Friday that Indonesia was currently the world’s third- or fourth-largest coffee producer, while Brazil and Vietnam were ranked first and second



Coffee exports dip 1.7% in 2013-14 crop year!

 6 October, 2014

Coffee exports dip 1.7% in 2013-14 crop yearCoffee exports dip 2.6%Coffee exports decline 5.4% in Jan-AugCoffee output dips 12% in 2013-14

Arabica coffee output headed for a record low Coffee exports declined by 1.7% to 294,011 tonnes for the coffee crop year ended September 2014 compared to 298,951 tonnes in the previous year. The coffee crop year is between October and September and crop harvesting begins in November and goes up to March.

container liner Blue for coffee & Cocoa imageOn a financial year basis, exports were down 6.9% to 137,348 tonnes during the first six months compared to 147,618 tonnes. Normally, most of country’s exports take place between January and June. During the fiscal ended March 2014, India?s bean exports stood at 312,454 tonnes, the state-owned Coffee Board said.

However, the Board has issued export permits only till September 17, 2014.

“Exports were more or less in line with our expectations. At the beginning of the year, we had projected 5% decline in green bean exports. However, strong demand for instant coffee arrested the decline to less than 2%,” Ramesh Rajah, President, Coffee Exporters’ Association told Business Standard.

The drop in exports was mainly on account of lower than expected production at 304,500 tonnes during 2013-14, he said. The production came down mainly due to adverse weather conditions like extreme drought in the early part of 2013 and excess rains during monsoon damaged the crop.

He said shipments were at lower side during the last quarter of the crop year. The demand is likely to pick up during the second half of December as the fresh crop starts coming to the market by then.

With better crop projected for the crop year 2014-15 at 344,000 tonnes, bean exports for next year are likely to be around 10% higher, Rajah said.

In value terms, during the crop year, Indian exporters earned Rs 4,758 crore as against Rs 4,524 crore in the previous year, showing a year on year increase of 5.2%. This was mainly due to depreciation of rupee against the dollar. However, in dollar terms, exporters earned $777 million compared to 826 million, a decline of 6%.

Bean prices witnessed a wide fluctuation during the year. While they hit their peak during the January-March quarter, they went down to their lowest of the year during the April-June quarter before recovering in the July-September quarter.

The average unit value increased 7% to Rs 1,61,832 per tonne from Rs 1,51,332 per tonne in the previous year.

According to exporters, the depreciation of rupee against the dollar and higher prices that prevailed between February and May this year helped them to increase their exports during the year. The rise in prices was mainly due to rumours that Brazil was heading towards a shorter crop for 2014. Subsequently, this proved wrong as Brazil went on to harvest better crop than anticipated.

There are increasing reports that the 2015-16 crop will also be affected by the drought in Brazil that occurred at the beginning of this year.

Coffee prices have been fluctuating over the last one year. After witnessing a record low of around 100 cents per lb in November 2013, the prices hit the peak of 210 cents per lb in the first quarter of 2014 as the news of lower crop in Brazil hit the markets. Bean prices went down to around 165 cents per lb between June and July.

Italy remained the main market for Indian coffee accounting for 25% of the total exports. It was followed by Germany (11%), Russian Federation and Belgium among others.



Volcafe sees brewing demand for China’s coffee!

 29 October, 2014

Volcafe sees brewing demand for China’s coffee!Volcafe, one of the world’s biggest coffee merchants, has signed a joint-venture deal with China’s Simao Arabicasm Coffee Co (Sacco) to export beans from China, among the first global traders to enter the fledgling market.

The Swiss-based coffee division of commodities house ED&F Man said on Tuesday it will set up local operations to export beans grown in Yunnan province, providing a new source of supply as drought and disease ravage crops in the world’s main coffee growing regions.

fibc with email addressThe joint venture, Yunnan Volcafe Ltd, will focus on sourcing coffee beans from the Yunnan region, where Volcafe estimates the crop is “regularly in excess of” one million 60kg bags. That is equivalent to Ecuador’s annual output.

“Chinese mild arabica is still relatively new to the world coffee scene, but its improving consistency means it is rapidly growing in acceptance with global roasters,” said Jan Kees van der Wild, global head of commodities at ED&F Man.

To be sure, China’s crop is tiny when compared with top grower Brazil, which exports roughly 30 million 60kg bags of beans a year. It also represents less than 1% of 2013/14 global coffee production of 145.2 million bags.

But the move reflects burgeoning interest in China, as its farmers expand beyond traditional centuries-old tea growing and the quality of their beans improves.

Yunnan grows mainly the hybrid Catimor variety of arabica beans, according to research from Shanghai-based consultancy Dezan Shira & Associates, and traders said that could appeal to commercial roasters who need bulk supplies for their blends.

The world’s major merchants, including Noble Group Ltd and Louis Dreyfus, have operations in major growing regions such as Vietnam, Indonesia, Africa and South and Central America.

The deal comes as China’s urban population is drinking more coffee. Consumption, while still low on a world basis, has quadrupled since 1999 to 44,142 tonnes, and is expected to grow by more than a third by 2018, according to data from market research firm Euromonitor.

SACCO focuses on shipping beans to European markets like Switzerland and Germany, its website said.

Volcafe is among the first international traders to set up local operations in China, with some major retailers established in the market.

In November 2010, Starbucks announced plans to build a farm in Yunnan to build out its share of China’s nascent coffee shop market. At the time, it had 400 stores in mainland China.

That year, Yunnan’s annual production was just 38,000 tons, Starbucks said.

Nestle has been active in the region for decades, training farmers and investing in infrastructure. In 2011, it announced plans to double the amount of coffee it buys from Yunnan farmers.

The maker of Nescafe has been responsible for more than a fifth of purchases from the region in recent years, it said in an April 2013 press release. – Reuters, October 29, 2014.



Coffee Prices Soar As Drought Ravages CropS!

Oct 23, 2014

Coffee Prices Soar As Drought Ravages CropS!As the world’s most prolific Coffee (MILAN:COFF) grower, Brazil is an integral component of the commodities market. Approximately 35% of global coffee production and an estimated 50% of the world’s Arabica coffee bean crop comes from Brazil. Some commodities brokers have even likened Brazil’s dominance in the coffee market to Saudi Arabia’s dominance in the oil market. Unfortunately, coffee is one of those crops that are heavily dependent on weather phenomena and climate change. 2014 has been particularly harsh on the coffee crops in Brazil, owing to a severe and protracted drought which has left many crops destroyed.

container liner Blue for coffee & Cocoa imageWhen the supply of coffee is reduced, global demand cannot be met and prices rise. This is precisely what is happening with Brazilian coffee right now. The regions which have been hardest hit by the prolonged drought include Cerrado, Mogiana and Sul Minas, resulting in the flowering period being delayed. This typically takes place between the months of October and November. This has a knock-on effect on next year’s crops, since the absence of flowers automatically translates into the absence of coffee cherries. The numbers speak volumes: 2014 production will be reduced to 48 million x 60 kg bags – down 13% from 2013.

Price Shocks Hit Customers in their Pockets.Coffee charts from 2009 – 2014 reflect seesawing production levels. Brazilian coffee production increased between 2009 and 2010, and decreased between 2010 and 2011. Production increased between 2011 and 2012 and has been on the decline ever since. As a result in the sharply reduced supply of Brazilian coffee, prices are now at multi-year highs with the benchmark index – ICE March – trading as high as $2.29 per pound. While this figure may not resonate with everyday coffee drinkers, the effects of decreased coffee supply are clearly felt at Folgers and Starbucks where prices rose 9% and 8% respectively.

If the Brazilian drought continues, analysts expect Brazilian coffee exports to drop below 40 million x 60 kg bags in 2015. In the event that this happens, the price could soar to as high as $3 per pound of coffee beans. Price falls for Arabica coffee futures dropped to 199.40 cents in NYC for December delivery. That marks a 5.3 percentage point decline. Robusta coffee for delivery in January dropped to $2060 per tonne in London, a 3.2 percentage point decline. It is expected that at least 2 1/2 inches of rain could fall across large parts of Brazil in November. Even with all this projected rain, there has been significant damage to coffee crops and prospects for next year’s production are grim. Banc De Binary commodities experts caution that it may be too late to stave off a coffee price increase, owing to a sharp reduction in supply. On a positive note, rain will definitely assist in crop stabilisation, which will calm global fears about coffee price shocks.
Global Demand for Coffee Steadily IncreasingDemand for coffee is constantly on the rise. One of the fastest-growing coffee consuming countries is China with an annual growth rate hovering around 13%. Japan is another international market which is showing strong demand for coffee. It now ranks third behind the US and Germany as the biggest consumer of this commodity. During 2013 Japan’s coffee consumption topped 446K tons. The biggest driver of coffee demand in Japan has been the changing habits of coffee drinkers, who now perceive it as an anytime beverage, rather than a social drink to be consumed at coffee shops, delis and restaurants. What is true about global coffee demand is that it is always on the increase, and people are price insensitive as they need their daily fix of caffeine.