Coffee production expected to be good in 2012-13: ICO

Rising input cost proving to be a major constraint

Buoyed by rising consumption of coffee and high prices, International Coffee Organisation (ICO) has said that production prospects of the brew are expected to be good in 2012-13, but rising input cost is a major constraint.

"Production prospects for this crop year are considered to be good. Significant production increases are expected in Brazil in accordance with the biennial cycle for Arabica production," ICO noted in its report.

Crop year 2012-13 (October-September) has recently begun in some exporting countries including Brazil, Indonesia, Peru and Papua New Guinea, it added.

"Prospects of a continuing demand for coffee remain promising, particularly in emerging markets and exporting countries, in addition to the growth of niche markets. Buoyant world consumption should help maintain a fair balance between supply and demand," it said.

An analysis of world consumption during the last 22 years confirms the buoyancy of consumption. World consumption rose by 53.5% from 89.8 million bags in calendar year 1990 to almost 138 million bags in 2011.

ICO, however, pointed out the problems being faced on account of rising input costs and weather conditions.

"The rising costs of inputs and labour could prove to be major constraints to increased production. Weather conditions are also one of the main determining factors affecting production performance in many exporting countries," it said.

Production costs are continuing to increase as a result of the sharp rise in prices of petroleum products, which entail higher transport and fertilizer costs, it added.

Global coffee production is expected to decline by almost 2% to 131.9 million bags (of 60 kg each) in the 2011-12 coffee year from 134.2 million bags in the 2010-11 coffee year.