Peru's 2012 coffee exports drop sharply - minister

LIMA Wed Oct 31, 2012 2:17pm EDT

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LIMA Oct 31 (Reuters) - The world's top organic coffee exporter, Peru, says its shipments have fallen sharply this year on weaker global demand, while production problems at home have shrunk its harvest.

Coffee exports from the Andean nation in 2012 will drop 37 percent over last year to just $1 billion, as the price of coffee has fallen and orders have scaled back, the minister of agriculture told Reuters.

Peru's coffee harvest will shrink by a quarter from last year's bumper crop to yield just 5.5 million 45-kilogram bags this year. The smaller-than-expected harvest follows 2011's output of 7.2 million bags.

Agriculture Minister Milton von Hesse said old, low-yielding coffee plantations and a lack of technical know-how are hurting production in Peru. It ranks in the top 10 of global growers and has carved out a niche in organic coffees, but lags far behind bigger producers like Brazil and Colombia.

Unusually wet weather and a plant disease spreading through the region's plantations have hurt the Peruvian harvest, said Lorenzo Castillo, the general manager of the National Coffee Group (JNC).

The agriculture ministry said coffee growers should be using more fertilizers to ward off disease.

"A plant that isn't fertilized is like a child that doesn't eat," said von Hesse. "It lacks nutrients and is more sensitive to pests."

Von Hesse said the coffee industry also struggles to compete for workers with the illegal coca trade thriving in the same hilly rainforest region that is ideal for coffee growing.

Coffee companies say workers who pick coffee usually earn between 35 and 40 soles a day ($13-$15) while an illegal coca plantation pays up to 100 soles ($38).

The government and growers expect production to rebound next year, expanding 20 percent because of fertilization programs and plantation renovations in progress now.

"Hopefully the price of coffee in international markets also improves," Van Hessen said.

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