Torrential rains threaten Colombia's coffee crop

Thu May 5, 2011 2:56pm EDT

Related Topics

 * Rainiest April on record hits coffee trees
 * Damage to roads will complicate exports
 * Coffee prices seen staying high on fundamentals
 By Diana Delgado and Mica Rosenberg
 TENA, Colombia, May 5 (Reuters) - Colombia's rainiest April
on record drenched Ismael Garcia's hillside coffee farm,
causing a landslide that wiped out thousands of his trees in
one swoop.
 The loss would sting any year but hurts more now that
coffee prices hit their highest levels in more than three
decades this week.
 Damage to farms like Garcia's from months of heavy rains in
Colombia, the world's No. 1 producer of top-quality washed
arabica beans, may threaten to push coffee prices even higher
-- bad news for drinkers around the world.
 Colombia harvests coffee year-round and landslides blocking
roads are complicating exports of already-picked beans, while
downpours expected to continue for at least another month could
knock ripe coffee cherries off trees and rot them in the
fields. Wet weather can also cause fungus that cuts output.
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 Graphic on Colombia harvests:  r.reuters.com/zad78r
 Graphic on coffee prices:   link.reuters.com/guf49r
 Colombian production, exports: r.reuters.com/wet48r
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 Trekking through soft mud with a machete and rubber boots,
Garcia estimates he lost 40 percent of his crop, which he sells
to gourmet roasters such as Italy's premium coffee brand 
illycaffe.
 "It sounded like the world was ending," Garcia, 54, said of
the mountainside collapse near his cinder block house in the
lush municipality called Tena, several hours from the capital.
 Heavy rains caused by the La Nina weather phenomenon began
late last year, flooding towns, killing 400 people and
displacing 3 million in what the government calls Colombia's
worst natural disaster. After a short dry spell, rains
intensified last month, the wettest in the country's history.
 Colombia usually produces more than 11 million 60-kg bags
of coffee annually and was hoping for a comeback after two
years of paltry output. Production dropped to just 7.8 million
bags -- the lowest since 1976 -- two years ago because of bad
weather and a widespread crop renovation program, since newly
planted coffee trees take several years to mature.
 That crimped global supplies, helping July arabica KCc2
futures reach a 34-year peak of $3.0890 per pound on Tuesday.
 The market has fallen since then, caught up in a
commodity-wide selling spree on worries about tepid economic
growth.
 But some analysts say the factors underpinning coffee, such
as tight supplies of quality beans and increasing global
consumption, will send the market higher again.
 "We don't have fresh coffee for the next month. The
fundamentals show that prices can go back to levels that we saw
(recently) or even higher," Rodrigo Costa, vice-president of
institutional sales for Newedge USA, said on Thursday.
 With the cost of coffee more than doubling since June 2010,
roasters such as Starbucks (SBUX.O) and Maxwell House maker
Kraft KFT.N have already been forced to raise prices on
products.
 JUAN VALDEZ AND HIS DONKEY
 Colombia's national coffee federation says it is too soon
to assess the damage from the latest rains and is sticking to
its forecast of between 9 million and 9.5 million 60-kg bags of
output this year.
 Growers in central provinces -- where 60 percent of
Colombia's coffee is produced -- are confident their main
harvest in September-December will be strong.
 And some coffee traders say concerns over Colombia's
weather have already been priced into the market, making the
damage less relevant.
 "Eventually the sun has to come out," said James Cordier,
of brokers optionsellers.com in Florida. Next year's crop
flowering begins in dry months after July.
 Even if the crops survive, ruined infrastructure could
cause export delays.
 Six provinces in the south -- responsible for nearly 40
percent of the country's overall production -- harvest the bulk
of their beans from April to June, but rains have washed out
tiny dirt roads snaking to hard-to-reach farms.
 In Narino, a state near the southern border with Ecuador
known for its specialty coffees, mudslides have blocked access
to 14 municipalities growing 65 percent of the state's coffee.
 These provinces were already expecting smaller harvests
after last year's rains hurt the plants' development, so the
farmers are desperate to bring what they have to market.
 "With these prices, coffee seems like gold ... People bring
their coffee to where there is a landslide and then they
transfer it to the other side by mules and horses," said an
official from Colombia's coffee federation in Cauca province on
the Pacific coast.
 That is fitting since the federation earned international
fame with a successful advertising campaign around its
trademark brand "Juan Valdez", showing a traditional farmer and
his donkey.
 (Additional reporting by Marcy Nicholson in New York; Editing
by Kieran Murray and Dale Hudson)


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Comments (2)
kc10man wrote:
The Columbians say this, at the same time they are burning their massive stock reserves of coffee beans to keep the market price artificially high.

I wonder how or if the US/Columbia free trade agreement will impact American coffee prices; will the price fall or will it just translate into bonuses for speculators?

May 05, 2011 10:53pm EDT  --  Report as abuse
I think you are just making an uninformed comment right here. Firstly we like to be called Colombians; Columbia is a state in the USA as you may know; our Country is spelled Colombia. Secondly and taking into account that you didn’t even know how to spell our name I tend to think that you are just making a horrible assumption about our behavior toward coffee production, is one of our main assets, and with the hoorible rains we are getting now how on earth would we think on burning our main income source.
I don’t really know much about economics or stock market or dealing prices of coffee but as a proud ColOmbian i know we would not dare to burn our loved coffee.

May 06, 2011 3:16am EDT  --  Report as abuse
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