Time for Guatemalan Specialty Coffee to Shine with Historic Surge in Prices

MY 2021/22 looks promising for farmers as well as for exporters in the Guatemalan Coffee industry. The productive chain of the country has invested in getting a much better yield this year, driven by high prices in the global market. In order to have a better understanding of the specialty coffee industry in Guatemala, Tridge talked to experts in the country that have provided insights on critical elements that have led to the development of the industry and its very positive projections for the future.

Substantial Growth in the MY 2020/21 for the Industry

While 2021 has been a very tough year for the global coffee industry, the Guatemalan coffee industry was very successful, judging by its numbers. According to data from the National Coffee Association (ANACAFE), coffee exports in MY 2020/21 have had a 34.5% growth in value and a 14.4% growth in volume from its previous MY year. In addition, Guatemala’s Arabica beans have benefited from the historically high price in the global market that arabica coffee has reached. As of the 20th of November, arabica soared to a 10-year nearest-futures high, reaching USD 2.38 per pound in the New York International Commodity Exchange.

Source: Macrotrends

For a more detailed historical view of the global price rise, you can refer to Trigde’s Analysis: Global Coffee Price Recovery to Take Years.

However, the high increase in value for Guatemalan coffee exporters was not the only reason for them to have a solid MY 2020/21. According to ANACAFE, the volume of coffee exported reached 3.6 million bags of 60 kilos, equivalent to 14.4% more than the previous campaign. Shipments to the US and China have driven the volume growth and other Asian and European markets. Exports to North America have taken 50% of the global share, while Asia took 23.7% and Europe 23.5%.

Edgar Grisolia, CEO of Bolcafe, a Guatemalan coffee producer and exporter, explained that Guatemalan coffee has a higher value than the usual commodity value due to the production being specialized in specialty and differentiated coffee. “Coffee production in Guatemala is only profitable when produced over 1,000 meters from sea level, as it’s then treated as high-quality coffee or premium-quality coffee. The price of that coffee is higher than the listed in the Commodity Exchange market", he explains. Because Guatemala has a higher listed value on its coffee, the current soar of international prices does not affect them directly and can potentially benefit specialty coffee consumption.

Investing in High-Quality Coffee Production

Coffee production in Guatemala is expected to increase as better yields have been achieved over the past two years. For the MY 2020/21, production reached 4.2 million bags equivalent to 252 KMT, a 12% increase from the previous campaign. For MY 2021/22, which will run from late November to the beginning of April, coffee crops are expected to reach 4.7 million bags or 282 KMT, which would be an 11.8% increase from MY 2020/21. While coffee consumption grows in global demand and prices reach historical records, the Guatemalan private sector has noticed significant profitability in coffee exports and has turned to the industry to invest in its production.

Source: ITC Trade Map, Tridge

According to Alejandro Morales, Tridge’s representative in Guatemala, the productive chain of the country has invested in getting a much better yield this year, driven by high prices in the global market. “Favorable weather conditions and high prices in the global market have encouraged all parts involved in the production to invest in getting the best of the crops,” he stated. Higher returns for specialty and differentiated coffee investments have been noticed, and it has generated more significant investments in technology and post-harvest manufacturing.

For Mr. Grisolia, it is clear that there is more significant awareness of the crop’s value, as there is now solid investment to produce better yields. “With the introduction of new arabica varieties such as the Avatar, Marcellesa, and Pacamara, that have had a great performance in Guatemalan soil, we have a better yield per hectare today. There have also been strong investments in post-harvest management to have a better quality of the bean, more global certifications, and better sustainability practices,” he explained.

Key Markets for Prime and Extra Prime Quality Coffee

Besides the export growth in the US and China, Guatemalan coffee has seen substantial growth in specific markets where the demand for specialized coffee has continued to grow. According to ANACAFE, for MY 2020/21, Asian markets like South Korea, Japan, and Taiwan have become the major drive growth in Asia, and China now accounts for 7% of the total export share. The Association estimates that exports for this year will close at around USD 880 M, representing a 34.5% increase from the previous year.

For Mr. Grosolia, increasing exports in the US and Japan is as crucial as entering new markets that have given signs of high demand for specialty coffee. “We are focusing on expanding new markets such as Saudi Arabia, UAE, and South Korea, where we know there is a growing demand for prime and extra prime high-quality coffees. We aimed to position Guatemalan coffee in those markets where there is a significant value for quality over volume,” he mentioned.

Tridge representative, Mr. Morales, also advised that Prime and Extra Prime Guatemalan qualities are already available in the market, and High- Quality SHB coffee is still in the field since the harvest season is in mid-December.

Sources:

• El Economista. "La producción de café sonríe y los precios mejoran pero cosecha está en riesgo por falta de cortadores en Guatemala."
  

• Macrotrends. Coffee Prices - 45 Year Historical Chart.

• Tridge Local Insight. Guatemalan Coffee crops expected to reach.

• Prensa Libre. "Exportaciones de Guatemala a la Unión Europea subieron un 20% en seis años y buscan dinamizar intercambio commercial."