Coffee - Colombia has its best year for a decade

Colombia's coffee industry had its best year in 2007 for 10 years. Export revenues rose at their fastest rate since 1998 and hit US$1.9bn. The coffee industry is the biggest employer of rural labour. Around 500,000 families depend on the industry. The industry accounts or about 24% of total agricultural output.

On official statistics, the coffee industry is far more important to the economy than the illegal drug industry, though in cash terms the illegal drugs industry probably has a turnover equivalent to about 10% of the country's total official GDP of US$135bn in 2006, according to the World Bank.

Coffeemen said that the good result in 2007 is the product of an improvement in productivity which has led to an increase in the acreage planted with coffee and a replacement of exhausted coffee bushes. In 2007 the industry increased its production by about 500,000 (60kg) to 12.6m bags according to the Federación Nacional de Cafeteros. This was 4% up on 2006 and the highest production figure for 10 years. Unusually, the surge in production was accompanied by an increase in coffee prices. The average price of Colombian coffee was US$1.26 per pound, 8% up on 2006's average.

The main reason for the run-up in the international price has been poor coffee crops in Brazil and Vietnam, the two big swing producers in the world coffee industry. Colombia's elaborate system of minimum prices that are linked to the international market price means that 92% of the international price finds its way to growers. In most coffee producing countries, middlemen scoop out between 15% and 25% of the export price. Colombian coffee still commands a premium in the crucial US market.

Publication: LatinNews - Economy & Business
Provider: Latin American Newsletters
Date: January 26, 2008