3. THE SITUATION IN LATIN AMERICA
üMexico: 80% of coffee lands affected. Organic farms
devastated. Sharp increase in differentials, loss of markets for
Mexican coffees. Spillover effect in Guatemala, Mexican
intermediaries buying, creating prices distortions and losses
for Guatemalan coffee exporters.
üPeru: The Central and Southern regions have suffered heavily,
due to old plantations and poor husbandry. The organic
production has fallen sharply. Differentials under pressure,
conventional coffee not competitive and roasters are switching
origins. The Northern region is doing better (younger
plantations).
Renaud Cuchet / Efico Central America
4. üDominican Republic: no more coffee for exports, not
enough for the internal market.
Renaud Cuchet / Efico Central America
ü Bolivia: coffee output cut by half. Defaults.
üEl Salvador: the whole sector is in crisis. The output has
fallen sharply. Wash outs, contracts not delivered. Coffee
producers are cash-strapped and cannot renew their
plantations.Exportershave laid-off many workers.
5. üGuatemala: production is slowly recovering, but many
producers don’t have enough financial capacity to react
faster. Recovery will be slow. Future will depend on New
York prices.
Renaud Cuchet / Efico Central America
üCosta Rica: through their good husbandry, Costa Rican
producers have been able to control a bigger damage.
However, the rust infestation is just another blow to the
country’scoffee output,which is slowly goingdown.
6. üNicaragua: reduced impact. New plantations and rust
resistant varieties. However, the organic producers were
affected.
Renaud Cuchet / Efico Central America
üHonduras: the winner in the region. They were well
prepared with Catimor varieties. Massive certification of
coffee areas and better agriculture practices have prevented
a big rust infestation. Production on the rise again, bright
outlook for the coffee sector.
7. HOW COFFEE BUYERS PERCEIVE THE
RUST CRISIS
üRoasters concerned about quality in the future, they express doubts
about the cup profile of rust resistant varieties
üDisruptions on the supply chain for the industry. Some can change their
blends, others cannot (small operators / micro roasters tied to a specific
region or Estate).
üPrices go up because of less availability, roasters need to pay more but
can they keep up since need to stay healthy in a very competitive
environment?
üRoasters worried about fungicides residues in coffee, asking
a lot of information about traceability of the coffee
üSmall and medium-size roasters affected by defaults in
Mexico, Bolivia, Dominican Republic and Peru
üRoasters not able to buy coffee in the Dominican
Republic since 2014.
Question # 1: “In which way does the coffee rust crisis have an impact on
your company?”
Renaud Cuchet / Efico Central America
8. üIf roasters are committed to a certain region or origin affected
by rust, they need to be flexible on volume availability as output
slowly recovers
üRoasters turning towards certified coffee. They know that Good
Agricultural Practices will enable the producers to fight the rust
infestation in a more efficient way.
üRoasters who work with sustainable supply chains claim they
have not been affected, their suppliers use improved agriculture
practices and have been able to weather the storm
üSome roasters are switching origins, they are frustrated
with lower quality and higher prices in rust affected
countries.
Question # 2: “Are you making any changes in the way you buy
coffee now?”
Renaud Cuchet / Efico Central America
9. üNot a threat, but a wakeup call: climate change is definitely a
contributing factor to the spread of plant diseases and pests.
üNot a threat, but a real concern.
üThe ECF informs that the overall impact on the European market has
not been significant
üA big challenge for the coffee industry
üRust affected trees produce flat cup coffees, weakness in the cup. Many
roasters are concerned with lower qualities and customer
dissatisfaction, which can turn into loss of market share.
üRisk for the sustainability of the roaster’s supply chain in affected
countries
üLarge roasters have the capacity to switch origins
üRoasters depending on organic coffees from Mexico,
Peru and Bolivia are having issues with quality and
availability. Faced with defaults and breach of contract
with their distributors.
Question # 3: “Is the coffee leaf rust crisis in Latin America a
threat for your company? Why?”
Renaud Cuchet / Efico Central America
10. üNot a threat, rather a good reason to purchase coffee through
sustainable supply chain and to invest in training the producers. The
rust incidence is much lower with certified coffee producers.
Renaud Cuchet / Efico Central America
üThe name of Mexico comes up a lot in our discussions about rust with
our customers
11. WHAT THE COFFEE BUYERS ARE
DOING
üThe ECF is not involved in programs to fight coffee leaf rust, but they
participate in the Sustainable Coffee Programme (IDH –Sustainable
Trade Initiative), which includes climate change in its agenda
üIsolated (smaller) sustainable projects between traders, roasters
and producers on topics such climate change adaptation
üIntroduction of rust resistant varieties and hybrids by a few large
roasters
üSome roasters invest in sustainability of the coffee supply
chain: they believe switching to rust resistant varieties
is not the primary solution. Good husbandry is more
important (fertilization, pruning, pest and disease
control).
Question # 4: “Is your company involved in any program to
fight the coffee rust, or do you support any existing
initiative?”
Renaud Cuchet / Efico Central America
