* Mexico, Colombia, Guatemala little affected by rust
* Smaller farms in Central America, Peru worst hit
* Stocks offset concerns over rust losses
By Reese Ewing
BELO HORIZONTE, Brazil, Sept 12 Coffee rust, which wiped out as much as 30 percent of some Central American and Andean coffee crops recently, will take a smaller toll this season on production of mild arabicas, the New York ICE deliverable beans that roasters use to smooth out their blends, officials and specialists said at a conference this week.
Colombia and Mexico, the two heavy-weight producers of the region, will suffer no significant losses to the disease that can destroy whole crops if left unchecked by spraying, causing immature coffee fruit to drop off trees.
"Our production will be similar to last year, about 10 million bags, with not much loss to la roya (rust)," Juan Esteban Orduz, President of the Colombian Coffee Federation, said while participating as a delegate at the International Coffee Organization conference in Brazil.
He said production from the world's leading producer of washed arabicas, the staple for U.S. blenders, should grow steadily over the coming few years as new varieties of rust resistant trees mature into productive age.
The Andean producer has struggled to return to its typical annual harvests of 10 million or 11 million bags due to bad weather and an aggressive program of tree replacement with varieties better resistant to rust.
"The government's technical assistance to our 563,000 coffee farms has limited the impact of la roya (rust)," he explained, adding that the biggest challenge for producers was the falling price of coffee.
Benchmark coffee prices have fallen 30 percent over the past year. Orduz said producers were earning half what they did for coffee in 2011 when prices briefly shot above $3 per lb.
Cristobal Pozos, the Mexican delegate to the ICO conference being held in Brazil's biggest coffee producing state of Minas Gerais, also said rust would have little bearing over his country's expected 6 million bag output this season.
"There's just one small region that has registered some outbreaks of rust but it is not a widespread problem as in other producers in the region," Pozos said.
But other smaller producers in Central America and the Andes, which have suffered from the dry, hot weather that rust loves, were not as lucky as Colombia and Mexico.
Costa Rica's vice minister of agriculture, Xinia Chaves Quiros, said: "The market needs to realize that rust will not simply disappear overnight. It's something you have to manage."
Quiros estimated that of Costa Rica's 1.87 million bag output this season, 200,000 to 400,000 bags of that potential would be taken by rust. The small Central American country produces some of the higher priced arabicas in Central America.
The countries with the greatest risk of losses from rust were those with a bigger percentage of smaller subsistence farmers, who lack the financial or technical support to control the disease's spread, said commodities specialist Judith Ganes-Chase at J.Ganes Consulting.
"Honduras and Peru are being hardest hit based on export volumes shrinking," she said. "Guatemala is not seeing as much (rust) as they feared due to support programs also (as in Colombia and Mexico)."
The U.S. Department of Agriculture's Honduran crop specialist Ana Gomez said that Honduras was expected to export 5.06 million bags of arabica in 2013/14, down from the 5.5 million bags in 2011/12, due in part to rust over 25 percent of the productive regions.
Of the country's 112,000 coffee farms, 85 percent or 94,829 were producers of less than 77 bags per farm, Gomez said.
Coffee markets do not seem to be exceptionally concerned about the bigger losses to rust in some of the worst hit countries.
One of the factors offsetting concerns over lost production to rust according to analysts was the growing stocks of mild washed arabicas both in warehouses linked to the ICE Futures exchange and on farms as prices for the beans continue to fall.
Bumper harvests of natural arabicas from Brazil and expectations of a good crop of robusta from Vietnam were providing plenty of supply for blenders to mix and match to achieve consistent tastes in their products. (Reporting by Reese Ewing; Editing by Marguerita Choy)