May 5, 2011 / 7:00 PM / 6 years ago

Torrential rains threaten Colombia's coffee crop

6 Min Read

 * 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.
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 Graphic on Colombia harvests:  r.reuters.com/zad78r
 Graphic on coffee prices:   link.reuters.com/guf49r
 Colombian production, exports: r.reuters.com/wet48r
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 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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