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USDA: Peru Production

USDA Attache: Peru’s 2018-2019 Coffee Crop Pegged at 4.3 Million Bags

CoffeeNetwork (New York) – According to the latest USDA attache report, Peru continues recovering from the rust infestation of 2014 that affected nearly half of the country's coffee plantations. Coffee production in marketing year (MY) 2018/19 (April/March) is forecast at 4.3 million bags (60-kilograms per bag), increasing five percent compared to the previous year. Peru’s exports of coffee in MY 2018/19 are forecast at 4.1 million bags, up five percent compared to the previous year.

Coffee production in marketing year (MY) 2018/19 (April/March) is forecast at 4.3 million bags (60- kilograms per bag), increasing five percent compared to the previous year. Harvested area in MY 2018/19 is forecast at 360,000 hectares. Peru’s exports of coffee in MY 2018/19 are forecast at 4.1 million bags, up five percent compared to the previous year. The United States was the top market for Peruvian coffee, accounting for 24 percent of total exports. Export prices of Peruvian coffee in CY 2017 averaged $2.89 per Kilogram, falling 9 percent compared to CY 2016.

Harvested area in MY 2018/19 is forecast at 360,000 hectares, remaining at the same levels as the previous year. As part of the Ministry of Agriculture’s program to recover from coffee rust, producers continue receiving plants and fertilizer to replant and cultivate new areas. Harvesting commences in April and peaks in the June-September period; about 85 percent of the crop is brought in between April and July.

Peru continues combating the rust outbreak that first affected plantations in MY2013/14. Coffee rust arrived from Central America and entered Peru through the northern border of the country, spreading quickly to the south. Along with the presence of moisture, Hemileia vastatrix requires temperatures of between 10 and 35 degree Celsius. Reduced moisture after the fungus spore germination begins will inhibit the infection process. Under extreme conditions, the disease will kill a tree. Normally, the loss in leaf foliage diminishes the plant’s ability to photosynthesize and store energy for fruit production, resulting in vastly lower yields.

While coffee production occurs throughout the eastern slope of the Andes, production is concentrated in three main growing areas. Coffee production is gradually shifting from Chanchamayo (i.e., one of the nine provinces of the Junín region) in Peru’s central highlands to the northern highlands of the Amazonas and San Martín regions. Although Chanchamayo still accounts for 16 percent of overall production, Amazonas and San Martín combined now account for 47 percent of national production. Peru produces almost exclusively Arabica coffee, of which over seventy percent is of the typica variety followed by caturra (20 percent), and others (10 percent). Roughly 75 percent of Peruvian coffee cultivation occurs between 1,000 and 1,800 meters above sea level. Most coffee is shade grown and plant density on farms averages 2,000 plants per hectare.

Average yields in MY 2017/18 are estimated at 683 kilograms per hectare and is expected at 716 kilograms per hectare in MY 2018/19. High plant replacement costs remain a concern. Sources indicate it costs $3,000 per hectare to replace old, less productive and or diseased plants. This forces many producers to replant on average every twenty to thirty years instead of every ten years as in other coffee producing countries. Annual plant maintenance costs on average about $1,200 per hectare. Based on these and other factors, FAS Lima calculates the average cost of production at about $1.75 per kilogram, 49 percent of which is labor. Though coffee rust infestation has been reduced to less than 20 percent of the area, many coffee producers in the central highlands of Peru are still facing financial challenges. While all producers are affected, organic coffee producers are the most impacted. Organic fields yield twelve to fifteen 100 pound bags per hectare compared to forty-five to fifty 100 pound bags per hectare of conventional fields. The premium paid for organic coffee, no more than $40 per 100-pound bag, does not compensate for the low productivity. Moreover, organic producers have to face total destruction of their fields since fungicides cannot be used to control rust. Peru’s organic producers are mostly poorer, small-scale farmers.

Consumption:

Domestic consumption in MY 2018/19 is estimated at 180,000 bags. While overall coffee consumption remains low, it has nonetheless increase over one hundred percent in the last six years. Peru, with a population of 32 million, has an annual per capita consumption of 650 grams. This contrasts with neighboring Colombia where per capita consumption reaches two kilograms, or Brazil where it exceeds four kilograms. Peruvians are primarily consumers of soluble (instant) coffee. Instant coffee accounts for 75 percent of total domestic coffee consumption. Nonetheless, consumption patterns are changing and a roasted, ground coffee drinking culture is taking root. Coffee consumption among young, urban consumers is growing; consumption levels are now reaching the one-kilogram per capita threshold. Domestic coffee consumption still only accounts for about 10 percent of total production. Small corner stores (60 percent) and supermarkets (30 percent) account for the bulk of domestic coffee sales.

Trade:

Peru’s exports of coffee in MY 2018/19 are forecast at 4.1 million bags, up five percent compared to the previous year. We foresee export volumes increasing as the coffee leaf rust outbreak abates and planted area expands as a result of the government’s program to renew 80,000 hectares of coffee land.

Peru’s total calendar year (CY) 2017 exports were 3.9 million bags (234,600 MT). The United States was the top market for Peruvian coffee, accounting for 24 percent of total exports. Germany and Belgium were also important export markets with 22 and 9 percent of exports respectively. Export prices of Peruvian coffee in CY 2017 averaged $2.89 per kilogram, considerably lower than $3.16 in CY 2016, $3.32 in CY 2015 and $4.03 in CY 2014.

Alexis Rubinstein