World coffee production in the ongoing 2013-14 marketing year is likely to slip below last year’s record of 145.2 million bags as low prices may discourage growers.
The coffee marketing year varies from country to country. It is from October to September in India, while April to March in Brazil, July to June in Cuba and Philippines. One bag contains 60 kilos of coffee bean.
“It is too early to provide an estimate of world production in 2013-14, which is now under way in all exporting countries. But early indications suggest potential decreases in some leading exporters,” the International Coffee Organisation (ICO) said in its latest report.
Brazil, the world’s largest coffee producer, is in the off-year of its biennial cycle and the damage from coffee leaf rust disease in Central America is expected to become more evident.
“Furthermore, it should be noted that the current low prices are likely to discourage farmers from investing and maintaining their crops, which negatively affect future production levels,” the ICO said.
Global prices of arabica — the higher quality bean used in espressos and cappuccinos — have plummeted due to higher supplies.
The prices have fallen below the cost of production and farmers might refrain from investing and maintaining their trees in most countries including India, analysts said.
Currently, arabica prices are ruling at 103.05 US cents per pound in the New York market compared with 200 US cents a pound in January 2012.
According to the ICO forecast, production in Brazil is likely to decline to 48.6 million bags this year from the last year’s record output of 50.8 million bags.
Similarly, coffee production in Indonesia — the world’s third biggest producer — may drop to 11.66 million bags in 2013-14 from 12.73 million bags last year.