As some green coffee output is hit by weather, some by crop pest, and some by alleged stockpiling, one international commentator suggests that we should stop complaining about climate change and take action to improve the entire worldwide industry.

As weather problems hit many of the coffee industry’s prime origins, there have been further worries about availability, and what lack of availability might mean to prices.

The World Crops Organisation has reported that earlier this year, it encountered predictions that arabica coffee would reach four dollars a pound, but that anyone speculating on that ‘will have been bitterly disappointed’. The price in recent weeks has been around $2.35, and where, asked World Crops, might prices be headed now – up or down?

The intriguing answer that the organisation came up with was – both.

In the short-term, it predicted, the latest hurricane warning would ‘send futures markets into a tizzy’, pointing out that there has been an extremely heavy storm season in Central America, the most active for six years. Torrential rainfall and mudslides in Colombia have contributed towards the expectation that the country will again miss its own production target. Rainfall in Indonesia has been blamed for poor production there. Certified arabica stocks in general are now down to the lowest level for eleven years.

Therefore, the short-term prediction was – prices up.

However, said the same analysts, it is difficult to see this continuing. The extra rainfall is expected to help Brazil produce around 20 per cent more. India is predicted to be almost 50 per cent up on last year. And, says World Crops, once the La Niña weather pattern has passed, Central America and Colombia will return to more normal production.

Therefore, said the analysts, by the second half of 2012, they expect to see arabica futures down by as much as a dollar a pound from today’s prices. Meanwhile, the international press has been taking an extremely close interest in the coffee industry, with every major news agency reporting regularly on the problems of some countries.

In early November, Colombia’s coffee federation said the country might miss its expected total this year by half a million bags, (although the head of the federation added that in the circumstances, even that total would be ‘a triumph’),  but would be back on target for 2012.

The AFP news agency has recently reported that in the heart of one Colombian growing region, the coffee trade has given way to a well-known business phenomenon – the call centre.

“We tried to increase our coffee production, and raise the number of hectares used,” said the local mayor. “We also tried to specialise in a quality niche coffee, but nothing seemed to work. Meanwhile, Brazil solidified its position as the world’s top coffee producer.”

So he turned to establishing a call-centre industry. Apparently, Colombians have a ‘neutral’ accent which lends itself well to such spoken-word work. Fifteen thousand young workers were trained in telemarketing, big firms moved in to hire them, and 9,800 jobs were created in the sector in a four-year period. An estimated seventy percent of the workers are from families who suffered job losses from coffee.

Central America has been particularly badly hit. Guatemala and Honduras are reported to be suffering from rains, while El Salvador is described by one importer simply as ‘a country in calamity’’. In Guatemala, the problem has apparently been as much from rain damage to transport as the actual crop. In Honduras the rainfall has eased, and there appears to be optimism. Nicaragua is nine per cent down, and there have been losses in quantity in Costa Rica.

However, reports from Africa say that arabica prices from Tanzania rose, with reports of good quality beans. The Uganda Coffee Development Authority reported its coffee exports up by 14.5 per cent, following an early arabica harvest, although one British importer observed that the country had done well with its robusta, benefitting from a lack of cheap Vietnamese competition.

Kenyan coffee is reported to have drawn an increase of almost a third in value in the 2010/11  marketing year, although that was due entirely to price rises – in the first ten months of the season, earnings had passed the total for the entire previous year. Nevertheless, the country has also reported a likely increase in production, up from 40,000 tonnes to a predicted 51,000 tonnes.

In the Pacific, there are varying reports about Papua New Guinea, where it is said that while the country’s coffees are now popular and in demand, some availability has dropped.

The Indonesian Coffee and Cocoa Research Institute has forecast a drop of potentially 30 per cent, again weather-related.

Both Morgan Stanley and Agrimoney report declines in some of the large robusta-producing countries, such as Vietnam, where exports were down 26 per cent.  However, there are reports that Vietnamese producers may have been encouraged to hoard and stockpile, with plans to form a reserve of 420,000 tonnes.

In Hawaii, the President of the Hawaii Coffee Association has referred to insect damage as an ‘epidemic’. Coffee growers have held mass meetings to create a concerted effort against the ‘berry borer’, and while six farms are reported to have shut down, the association has said that “if we do this together, this industry should turn right around within a year or two.”

In the middle of all this reporting activity, there was a fascinating criticism by the World Crops news organisation, which seized on what it describes as ‘loose comments’ from Starbucks, who were quoted in the British press as predicting significant risk to the arabica supplies in maybe twenty years’ time, due to climate change.

The analysts remarked:

“Everyone is getting excited about ‘peak coffee’ and ‘peak chocolate’, the moment when production begins to tail off, demand exceeds supply, and prices just go up and up as a consequence of climate change. Are we about to see coffee and cocoa production slump? Not yet. Not in the next two generations. Probably not ever.”

Worries about climate change, say the analysts, are unfounded. Nobody really knows how local and regional climates may be permanently changing or just ‘temporarily adjusted’ – it’s all guesswork.

The two factors affecting coffee production are temperature and rainfall. Even if we assume that global temperatures will rise by two degrees over the next century, we still do not know what will happen to coffee. A far bigger threat, says World Crops, is that population increase over the next two generations will squeeze the amount of available agricultural land.

“There are myriad ways that coffee output can be easily raised,” say the analysts. “Rather than raise the hysteria about climate change, the coffee world needs to focus on greater levels of pest and disease control; planting more coffee trees in suitable areas; improve irrigation and prevent soil erosion; and come up with a radical solution to the smallholder curse.”

That remarkable phrase is a reference to the well-known fact that so much coffee production is in the hands of small family farms. This has always been accepted – except by the analysts.

“Outside Brazil, most coffee production is in the hands of smallholders,” commented World Crops.

“That’s no way to run a business.”

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