1. Weekly News

Algeria

Algeria Implements Coffee Price Controls to Manage High Costs

In response to soaring coffee prices, the Algerian government has enacted Decree No. 24-279, effective August 20, 2024, establishing price ceilings and profit margins for coffee importers and distributors. Under this decree, the maximum retail price for 1 kilogram (kg) of green, roasted, or ground Arabica coffee is set at USD 9.45/kg (DZD 1,250/kg), while Robusta coffee is capped at USD 7.56/kg (DZD 1,000/kg). The decree allows a maximum profit margin of 3% on imported green coffee beans sold as is and 4% for processed coffee products. Additionally, the Ministry of Trade and Export Promotion is required to regularly publish reference prices for green coffee beans based on international market rates. Importers purchasing beans above these reference prices must apply for subsidies to offset the cost, ensuring adherence to the established ceiling prices for domestic consumption.

Brazil

2024 Brazilian Coffee Harvest Projections Reflect Production Challenges and Regional Contributions

The Brazilian coffee harvest for the 2024 coffee year is projected at 54.79 million 60-kg bags, with 72% attributed to Coffea arabica and 28% to Coffea canephora (robusta and conilon). This marks a slight 0.5% decrease from the 2023 total of 55.07 million bags, primarily due to adverse climatic conditions affecting flowering and fruit formation. Arabica was cultivated across 1.52 million hectares (ha), yielding an average of 26 bags/ha, up 1.7% from the previous year, thanks to a positive biennial cycle. In contrast, canephora was grown on 378.4 thousand ha with productivity of 40.2 bags/ha, down 6% due to heat waves causing significant crop stress. Minas Gerais leads arabica production with 27.68 million bags (70% of the national output), while Espírito Santo tops canephora production with 9.96 million bags (65.5% of the national harvest). These findings are based on the Third Coffee Harvest Survey by the National Supply Company (Conab) and can be accessed through the Coffee Observatory managed by the Coffee Research Consortium, coordinated by Embrapa Café.

Impact of Prolonged Drought on Brazil's Coffee Blossoms

Although well-advanced, the coffee blossoms in Brazil are severely impacted by a prolonged drought lasting over 140 days. This lack of rain in the main producing areas not only affects the 2025 harvest but also poses risks for future yields. Weather forecasts indicate continued dry conditions and high temperatures, with significant rainfall expected only in the second week of October. An agronomist noted that even with the anticipated rains, Brazil's coffee productivity will remain critical, as losses are already irreversible. All regions producing Arabica coffee are facing drought challenges, particularly in Southern Minas Gerais and the Triângulo Mineiro, where there is a high risk of floral bud drop. The current drought is the most severe recorded in the past 40 years, leading to earlier-than-usual blossoms and causing losses for producers who have not adapted to the changing climate conditions.

São Paulo Sees 8.2% Increase in Arabica Coffee Production

São Paulo's coffee production has experienced an 8.2% increase, according to Conab’s revised estimates presented by the Federation of Agriculture of the State of São Paulo (Faesp). While the overall production estimate was decreased from 5.61 million to 5.44 million sacks, reflecting a 2.9% reduction from May, the new figure still marks a gain of 413,900 sacks compared to the 2023 harvest. The area dedicated to coffee cultivation remains stable at 198,300 ha, but the productive area has increased by 2.5%, reaching 186,100 ha, due to the recovery of previously pruned regions and the inclusion of newly planted areas. However, adverse weather conditions, including drought and high temperatures, have impacted productivity estimates, leading to a reduction from 30.1 to 29.2 sacks per ha.

Coffee Harvest in Minas Gerais Projected to Decline by 23% in 2024 Due to Adverse Weather Conditions

A recent field survey involving 1,706 producers in Minas Gerais indicates a potential 23% drop in the Arabica coffee harvest for 2024. Adverse weather, including heat waves, uneven rainfall, and high temperatures during fruit development, has significantly affected productivity, leading to issues such as poor fruit set, pest and disease increases, smaller grains, and defoliation. The prolonged drought also raises concerns for the 2025 harvest. Covering key coffee-producing regions in the state, the study underscores the need for sustainable management practices to mitigate climate change effects. The Faemg Senar System's Technical and Management Assistance program aims to support producers in addressing these challenges. It is in discussions with the government to secure increased resources and subsidies for agricultural insurance to protect affected growers.

Brazil Faces Coffee Export Challenges Amidst Logistical Delays

In August, Brazil accumulated 1.9 million 60-kg bags of unshipped coffee, reflecting ongoing logistical bottlenecks and shipping schedule disruptions, as reported by the Coffee Exporters Council (Cecafé). The country exported 3.774 million bags during the month at an average price of USD 256.55 per bag, leading to an estimated loss of USD 477.41 million in potential foreign exchange revenue. Delays affected 69% of the vessels, 197 out of 287, highlighting significant port congestion and inadequate infrastructure to handle growing export demands. Cecafé's technical director emphasized the need for increased investment and expedited project execution to mitigate these export challenges, as the accumulated volume indicates a reduction in Brazil's shipment potential.

Colombia

Colombia's Coffee Production Expected to Surge in 2024

Colombia, the world's largest producer of washed arabica coffee, is projecting a coffee harvest of 13 million 60-kg bags in 2024, a 15% increase from the previous year, driven by resilient plantations against rust fungus and adverse weather conditions. In 2023, the harvest reached 11.3 million bags, marking a 2% rise after three years of declines due to drought linked to the La Niña phenomenon. While Brazil and Vietnam face challenges in their coffee harvests, leading to higher international prices, Colombia expects to export 12 million bags in 2024, up 14.3% from last year. Despite the potential for up to 14 million bags annually, drought remains a challenge, although over 80% of Colombian plantations are made up of rust-resistant varieties. The country is focusing on renewing 100 thousand ha of coffee farms and increasing productivity per ha to boost production and profitability, with plans to expand exports to emerging markets like China, now the sixth-largest destination for Colombian coffee.

Ethiopia

Ethiopian Coffee Producers Confront Economic Challenges from EU Deforestation Law

A report from the UK-based Overseas Development Institute (ODI) highlights the potential negative impact of the European Union’s (EU) deforestation-free supply chain law (EUDR) on Ethiopian coffee producers, particularly those with limited resources for compliance. As the law is set to take effect on December 30, 2024, concerns have arisen that smaller coffee producers may lose access to markets dominated by large companies. The report suggests that without dedicated support, lesser-developed countries like Ethiopia could face significant economic consequences, including reduced market access and increased compliance costs. The modeling indicates that even a 10% rise in compliance costs could lead to a nearly 1% reduction in Ethiopia's gross domestic product (GDP), amounting to an estimated USD 1.4 billion in export losses. The authors recommend various policy measures to mitigate these risks, emphasizing the need for support to help producers adapt to the new regulations.

Indonesia

Indonesia Faces Declining Coffee Production and Export Challenges

Indonesia, a key coffee producer, is witnessing a decline in both production and exports due to various factors, including the El Niño phenomenon in 2023, which has disrupted the harvest seasons since. An agricultural observer from Center of Reform on Economics (CORE), highlights the unfavorable trading conditions for Indonesian coffee, noting that the country fell from fourth to fifth place in global coffee bean exports in 2023 and is now surpassed by Uganda and Honduras. Indonesia's export competitiveness remains low compared to Brazil, Colombia, and Vietnam, attributed to insufficient government policies to enhance coffee productivity. The CORE observer emphasizes the need for improved quality in coffee seedlings, innovative research, and better government support for farmers, especially during the first three years of growth. The CORE observer also calls for enhancing the skills of agricultural extension workers, whose quality has declined post-regional autonomy. Indonesian varieties include around 75% being robusta and only 25% arabica.

Uganda

Uganda's Coffee Exports Surge in August

According to the Uganda Coffee Development Authority (UCDA), Uganda experienced an increase in both the value and volume of its coffee exports in August. Exports reached USD 221.63 million, marking a 13% rise from USD 210 million in July. The country exported 837,915 bags of coffee, an increase of 16,748 bags compared to the previous month. From Sep-23 to Aug-24, total coffee exports amounted to 6.39 million bags, valued at USD 1.35 billion, showing significant growth compared to 6.08 million bags worth USD 918.41 million in 2022/23. The UCDA attributes this increase to abundant harvests in several coffee-producing regions, with expectations of 700 thousand bags exported in September as more stocks are released. Global coffee prices have risen due to supply shortages from prolonged droughts in Brazil and Vietnam, further boosting Uganda's export value. The UCDA is also working to register all coffee farmers in a National Traceability System to ensure continued access to international markets, with the EU being the largest importer, accounting for over 70% of Uganda's coffee exports.

Vietnam

Vietnam's Push for Specialty Coffee Production

Despite being a major global coffee exporter, Vietnam primarily exports green coffee, resulting in low international recognition of its coffee. Recently, many Vietnamese growers and companies have begun producing specialty Robusta coffee to enhance its value and reputation in the global market. According to the president of the Buon Ma Thuot Coffee Association, the specialty coffee market worldwide has developed over the past 30 to 40 years, while Vietnam only started about a decade ago. Currently, specialty coffee accounts for roughly 2% of the global market, with Vietnam's specialty production contributing less than 1% of its total coffee output. The price of specialty Arabica coffee can reach as high as USD 500/kg . Vietnam is focusing on developing both Arabica and Robusta coffee, with a stronger emphasis on Robusta, given the country's significant production and export capabilities in this variety. Challenges in producing specialty coffee include higher technical requirements in cultivation, seed selection, fertilization, irrigation, pest control, and processing. Specialty robusta coffee samples sent to the Specialty Coffee Association (SCA) have received scores of 86 to 87.

2. Weekly Pricing

Weekly Coffee Pricing Important Exporters (USD/kg)

Yearly Change in Coffee Pricing Important Exporters (W39 2023 to W39 2024)

Brazil

In W39, Brazilian coffee prices rose to USD 7.00/kg, reflecting a week-over-week (WoW) increase of 2.49%, a month-over-month (MoM) rise of 4.79%, and a significant year-over-year (YoY) surge of 20.07%. This price increase can be attributed to several factors impacting the coffee market, notably the anticipated 2024 coffee harvest, which is projected at 54.79 million 60-kg bags, a slight decrease from the previous year due to adverse climatic conditions such as prolonged drought and heat waves. These environmental stressors have significantly impacted Arabica production in Minas Gerais, with a projected 23% yield decline due to poor fruit set and pest issues. In contrast, São Paulo has seen an 8.2% increase in production despite the challenging climate. Additionally, logistical hurdles have exacerbated the situation, with approximately 1.9 million bags of coffee unshipped due to port congestion and infrastructural limitations. These factors have driven prices upward as producers and exporters grapple with the effects of climate change and supply chain inefficiencies, underscoring the urgent need for sustainable practices and improved export capabilities to ensure future market stability.

Colombia

Colombia's coffee prices have risen recently, reaching USD 7.64 per 60-kg bag in W39, marking a 2.14% increase WoW and a 3.10% increase MoM. This price surge is driven by global coffee shortages and heightened demand within Colombia. Colombia also shows a 2.55% decrease YoY in W39 due to a significant coffee harvest of 13 million bags in 2024, a 15% increase from 2023. While Colombia's exports are projected to increase by 14.3% YoY, challenges like ongoing drought and the need to renew coffee farms remain. Nevertheless, the focus on enhancing productivity and expanding markets, including a growing presence in China, positions Colombia to capitalize on rising international prices amid supply constraints from Brazil and Vietnam.

Vietnam

In W39, Vietnam's coffee prices reached USD 4.84/kg, reflecting a 3.59% decrease from the previous week but a 1.04% MoM increase, indicating a generally upward price trend since W36. This fluctuation is attributed to low output and inventory levels, further exacerbated by Typhoon Yagi, which caused premature coffee berry drop, reduced quality, and disrupted drying operations. Additionally, the ongoing La Niña weather pattern may lead to wetter-than-usual conditions in the coming months, negatively impacting production. As global demand, due to shortage, continues to exceed supply, prices are expected to keep increasing, underscoring the need for enhanced agricultural practices and infrastructure to stabilize production and meet international demand.

3. Actionable Recommendations

Implement Strategies for Producers to Ensure Compliance with EU Deforestation Laws

Producers must implement comprehensive strategies to comply with EU deforestation laws and ensure sustainable sourcing of raw materials. This includes conducting regular supply chain audits to identify and mitigate deforestation risks, implementing robust traceability systems to track product origins, and adopting sustainable agricultural practices like agroforestry. Additionally, obtaining certifications from recognized environmental organizations can enhance credibility and attract eco-conscious consumers. Education and training for farmers and suppliers on sustainable practices, staying updated on regulatory changes, leveraging technology for compliance reporting, and partnering with non-governmental organizations (NGOs) for reforestation initiatives are also crucial steps. By embracing these measures, producers can not only meet regulatory requirements but also promote sustainability within their supply chains.

Leverage International Support for Sustainable Compliance in Coffee Production

To effectively navigate compliance with EU deforestation laws, coffee producers in least developed countries such as Ethiopia, Honduras, and Uganda should actively seek international aid and grants tailored to support sustainable practices. These producers can collaborate with NGOs, international development agencies, and government bodies to access resources aimed at offsetting compliance costs. Engaging with initiatives like the Global Environment Facility (GEF), the United Nations Development Programme (UNDP), and bilateral aid programs from countries such as Germany and Sweden can provide financial backing for sustainable agriculture projects. Additionally, producers should explore partnerships with local and international coffee cooperatives that may have established funding channels or access to grants for improving sustainable practices. By leveraging these resources, small producers can invest in training programs for farmers on sustainable methods, enhance their supply chain management to ensure traceability, and adopt eco-friendly technologies, ultimately ensuring compliance with EU regulations while improving their market competitiveness.

Advance Sustainability Through Research and Development in Coffee Production

Investing in research and development (R&D) is crucial for coffee producers aiming to enhance sustainability and resilience against climate change. By focusing on breeding new coffee varieties that can withstand adverse environmental conditions, such as drought, pests, and diseases, producers can secure their harvests and maintain quality standards. Countries like Brazil, Colombia, and Vietnam, which are among the world's largest coffee producers, should prioritize R&D initiatives to enhance productivity while adhering to sustainability standards. This can involve collaboration with agricultural research institutions and universities to explore innovations in cultivation techniques that minimize deforestation impacts. For instance, implementing agroforestry systems, where coffee is grown alongside trees, can help preserve biodiversity and improve soil health. Additionally, adopting practices such as shade-grown coffee can contribute to habitat preservation while providing farmers with additional income sources. By investing in R&D, producers not only align with international sustainability goals but also enhance their competitiveness in the global market, appealing to eco-conscious consumers seeking responsibly sourced products.

Sources: Tridge, Bursaha Kimiyet, Canal Rural, Café Point, Daily Coffee News, Embrapa, Food Mate, Industry, Kontang, Kinhte Nong Thon, Noticias Agricolas, Portal do Agronegocio, VinaNet