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Last year, coffee prices hit a decade-low, falling below production costs. Do you think the situation will improve on the price front?
I agree we witnessed a decrease in prices last year; the situation is unbearable for farmers. But I firmly believe things are turning around and we foresee better prices for Arabica in the coming days. Though we don’t make predictions on prices, we can expect some recovery in the sector once the Brazilian crop hits the market later this year. Some countries such as India, Brazil, Colombia and Vietnam are taking various measures. Also, we have seen the supply isn't as much as we had anticipated earlier.
Production in Brazil is expected to be lower than last year. Do you see any impact of this on prices?
Certainly! The governments of Brazil and Colombia have taken a series of measures to help farmers and I think these measures will support the market. However, I do not have the means to predict prices. All I can say is I see a recovery coming as soon as the market sees the next Brazilian crop coming to the market.
Will there be any shortage in the supply of Arabica coffee this year?
There will not be a big shortage. We have some carry-forward stocks in member countries, built through the last four years. But the short crop expected in Brazil could result in a comfortable situation for the sector, as the market will absorb the carry-over stocks and adjust it with the shortage in Brazil.
There should be 33-34 million bags (of 60 kg each) available in the market. Roya (leaf rust disease) has affected 2.7 million bags in many central American countries, according to our estimate. It will take some time for this to be recovered.
What is your estimate of global coffee production for 2014-15?
In 2013-14, the production is estimated at 145.8 million bags, a little more than in the previous year. However, it could be less in 2014-15. We need a sustained recovery in terms of prices, but it should be at a fair level, which doesn’t harm consumption.
Is ICO taking steps to address the crisis in coffee-growing countries?
We have taken up a number of programmes for the generic promotion of coffee in specific countries. To promote consumption, we are appointing companies and people with knowledge of the coffee sector to act as Coffee Ambassadors. We are also trying to seek new alternatives to fund projects. ICO members will meet on March 6 in London to discuss a road map for consumers and producers alike. All member countries and observers will participate.
How is ICO trying to raise global coffee production?
Currently, ICO has 77 member countries under its fold, and we are constantly working on expanding our network. We want China and South Korea to become members of ICO. We have invited them as observers for the meeting on March 6. China grows about 1.4 million bags of coffee annually, while South Korea is a growing market for coffee. In Asia, Laos has great potential for producing coffee. We are coming out with a programme to raise production in new and traditional markets. Besides China and South Korea, Russia is in advanced stages of becoming an ICO member. To promote coffee, we plan to generate an additional $2 million this year. This could come from existing members. We also want talks between producers and consumers to bring more sustainability into the market.
