BOGOTA -
Colombia, one of the world's top coffee exporters, could more than double
production by the end of the decade if its drive to tap new markets such as
Russia and China prove successful, said the head of the
coffee federation.
The world's top
producer of high quality arabica beans aims to churn out a record 18 million
bags for export by 2020 as it increases crop area and recovers output levels
curbed by bad weather, fungus and a tree renovation program, federation chief
Luis Genaro Munoz told Reuters.
Coffee output slumped
last year to a three decade low of 7.8 million 60-kilogram (132-pound) sacks.
The last time Colombia produced close to Munoz's goal was in 1992 when it
reached above 16 million sacks.
Munoz, who expects
production next year to hit 9 million sacks, is betting that young, affluent
Chinese and Russian consumers will develop a taste for Colombian coffee,
bolstering overseas sales that last year reached 7.7 million sacks.
"The day that
every Chinese person drinks one cup of coffee a month, we would have no trouble
selling 18, or even 20 million sacks," Munoz said in an interview last
week for the Reuters Latin America Summit. "The key is Russia and China."
Colombia exports most
of its beans to the United States and Japan,
but the Andean nation has made inroads into China and Russia and shipments to
these markets are on the up.
In
the first four months of the year China bought about 4,000 sacks of Colombian
coffee and is on track to outstrip last year's total of almost 6,500 sacks.
Sales will likely double to $2 million this year, he said.
Colombia sold almost
40,000 sacks to Russia through April, compared with 83,000 during the whole of
last year.
Colombia pays between
9 percent and 30 percent import duties to enter China, so "coffee growers
are enthusiastic about seeking a free trade accord with China," Munoz said.
Colombia aims to start talks on an agreement with Beijing in June 2013.
"There are
opportunities. We have to be intelligent to sell our coffee in niche markets,
at prices and in quantities that will be representative of the producer and not
flood the market," he said.
Munoz expects coffee
production to remain little changed at under 8 million bags this year and start
to pick up in 2013.
"If there are
improved conditions in the second half of this year, Colombia has the capacity
to reach 9 million sacks without problem," said Munoz, whose organization
represents more than 550,000 coffee farmers.
COFFEE AREA TO EXPAND
The weather could be
a major hurdle for Colombia's plans to boost coffee output. Torrential rains
have prevented crucial sunlight from reaching plants and affected flowering,
adding a third consecutive year of missed production goals.
Too much rain damages
key flowering stages, knocks beans off trees and washes away roads that are the
only way the product can get to ports.
Low availability of
high quality beans such as those produced in Colombia has helped boost global
arabica prices and pushed the nation down to fifth place on the list of world
producers, behind Brazil, Vietnam, Indonesia and Ethiopia.
Arabica coffee futures trading on ICE have fallen roughly 45
percent in the past year, after soaring above $3 per lb in May 2011. The market
dropped as speculators left and on the expectation for a bumper crop from top
coffee grower Brazil.
About a third of the
900,000 hectares (about 222,000 acres) planted with coffee in Colombia are
being renovated and therefore currently unused.
Munoz is confident
that in about four years, once most trees enter into full production, Colombia
will be able to harvest 11 million bags regardless of La Nina or El Nino - the
weather phenomena causing drought then heavy rains.
"The renovation
program coincided with the most terrible weather, but the new production will
start to come on line soon and at some point it has to stop raining, so
statistically you have to assume it will come together and output will
increase," said Craig Holt, founder of Atlas Coffee Importers in Seattle.
"And once China
opens up to high end coffee, that's a huge amount of coffee."
Colombian farmers
renovated 117,000 hectares with roya-resistant varieties of trees last year,
and a similar amount is planned for 2012.
Fungus-resistant
coffee trees have helped bring down the area affected by roya to about 12
percent from more than 30 percent a few years ago, and that should come down to
single digits this year, Munoz has said.
With new planting
areas coming online in the next several years - such as Putumayo, one of
Colombia's regions that has been most damaged by war and drug trafficking -
Munoz expects cultivation to reach a record 1 million hectares.
The thirst for
Colombian coffee is still strong in existing markets including Europe, said
Munoz, where cash-strapped consumers are cutting back on luxury foods and
beverages.
"They would sell
the car, or delay buying one; but a good cup of coffee is the last thing to
go."
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(Editing by Eduardo Garcia, Daniel Wallis and W Simon)