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A coffee crisis


March 26, 2013
By Brian Martell

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March 26, 2013 – As coffee rust is plaguing the coffee regions of Central America, Brian Martell discusses what this means for the rest of the coffee world.

March 26, 2013 – The coffee growing regions of Central America are in a state of concern as they deal with a fungal infestation known as roya, or more commonly, coffee rust. Roya attacks the leaves of the coffee trees leaving orange-coloured spores (hence the name “rust”) on the underside, which eventually will turn them black before they fall off completely. If left un-checked, coffee rust can kill a tree. In most cases, roya will weaken the tree, leaving it unable to produce cherries.

Earlier in 2013, it was reported that more than half of El Salvador’s coffee plantations were infected, more than 40 per cent of Guatemala’s plantations also had the blight, and Honduras, the region’s largest producer, was to see a decline in exports by as much as five per cent, with at least 10 per cent of their crops affected. Costa Rica, which boasts some of the most sought-after coffees for the gourmet trade, has seen 30 per cent of its coffee plantations affected with rust. In the late 1800s, coffee rust was responsible for Ceylon’s (current day Sri Lanka) transformation from a coffee producer to a tea producer, and some believe that the trend towards less plant diversity in the coffee industry is leading to the possibility of the same thing happening in Central America. Farmers in these regions, while concerned about dropping production at a time when prices have come off of their peaks, are faced with spending more on field husbandry in the form of fungicides to counter the blight; something the Ceylonese did not have back 130 years ago.

The coffee market is driven by two main markets – the ICE in New York and LIFFE in London, U.K. – so world prices may not necessarily catch up with these regional shortages. Relative abundance of world coffee has seen the decline in the market from the highs of mid 2011 and the market continues to soften to lows not seen since early 2010.

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So what is to become of the coffees from Central America? Like most agricultural regions, farmers will continue to maximize their earning potentials while looking out for their investment in their land and crops. The coffee industry still is a major source of income for many families and communities in Central America and they will explore the possible solutions that make the most sense to them. Of these, continued use of fungicides will help farmers maintain yields necessary to sustain economic viability in the short term while the introduction of rust resistant trees through their nurseries may provide mid to long term relief from rust. It is possible that farmers will also look to ways of genetically diversifying their coffee plantations to make it harder for rust to propagate as easily. Like bananas, many coffee trees are virtual clones leaving them susceptible to opportunistic blights, similar to what is happening with the Cavendish banana.

For consuming countries, the near and midterm effect may be a shortage of good quality coffees coming from Central America or inflated differentials for what is available. The vast majority of coffees from this region are washed Arabicas that do have a distinct flavour profile not easily replicated elsewhere in the coffee growing world. So while the price of coffee traded on the exchanges may remain static, the possibility exists that there will be price fluctuations for blends requiring Central American coffees. As with all events in every industry, nothing good ever lasts forever, but then again, nothing bad does either.