LIMA – FAS Lima forecasts Peru ’s coffee production in marketing year (MY) 2014/15 (April/March) at 4.5 million bags (60-kilograms per bag), up by 600,000 bags or increasing over 15 percent compared to our MY 2013/14 estimate.
Coffee production in MY 2013/14 is estimated at around 3.9 million bags, down some 438,000 bags or about 10 percent less compared to MY 2012/13.
The production drop in MY 2013/14 is attributable to the outbreak of the fungus Hemileia vastatrix which causes coffee leaf rust disease. Approximately 40 percent of Peru ’s total area planted has been affected by the outbreak.
With the coffee leaf rust outbreak in the main production areas expected to abate somewhat in MY 2014/15, a slight recovery in total area harvested is expected.
FAS Lima forecasts total area harvested in MY 2014/15 at about 350,000 hectares, up some 16,000 hectares or 5 percent compared to MY 2013/14. Harvesting commences in April and peaks in the June-September period; 85 percent of the crop is however brought in between April and July.
The increased in harvested area is due to an uptick in total area planted outside of traditional plantings areas. We are forecasting total area planted in MY 2014/15 to reach 390,000 hectares, up 20,000 hectares or almost 5 percent compared to our MY 2013/14 estimate of 370,000 hectares.
Total domestic consumption in MY 2014/15 is forecast at about 192,000 bags, essentially unchanged from MY 2013/14.
While overall coffee consumption remains low, it has nonetheless doubled in the past five years. Peruvians are primarily consumers of soluble (instant) coffee. Instant coffee accounts for 75 percent of total domestic coffee consumption. However consumption patterns are changing and a roasted, ground coffee drinking culture is taking root. Peru ’s exports of coffee in MY 2014/15 are forecast at roughly 4.3 million bags, up by some 549,000 bags or 15 percent compared to our MY 2013/14 estimate of 3.7 million bags.
Export volumes are expected to increase as the coffee leaf rust outbreak abates and planted area expands as a result of the government’s program to renew coffee lands.
The Ministry of Agriculture and Irrigation established in 2013 a program to renew 80,000 hectares of coffee land over the next four years. Some $70 million has been budgeted for this program, whose funds will be channeled through the country’s AgroBanco (i.e., agricultural development bank). These loans are to be repaid in eight years at a ten percent interest rate.
While some farmers are questioning the credit terms, these are understood to be better than what the country’s private banking sector is currently offering.
Source: USDA Foreign Agricultural Service
