The crop year 2009-2010 is likely to witness a huge shortage of coffee due to rising coffee consumption around the world and expected lower production in Brazil, the world’s top coffee producing country.
In fact, unexpected production cut in the current crop year 2008-09 will have noticeable consequences in the next crop year, trade sources said. Total production for 2008-09 has been adjusted down wards from 133.4 million to 127 million bags mainly as a consequence of reduction in the estimates of India, Columbia and Vietnam.
The production cut in the current year is expected to drag down the opening stock of 2009-10 by around 20-25% compared to 17.24 million bags of opening stock maintained for crop year 2008-09. Further, Brazil will record lower production in 2009-10 as the country will be in the off-year as per biennial coffee production cycle.
In accordance with the Arabica production cycle in Brazil, an abundant crop in one year is followed by a smaller crop in the next, said Nestor Osorio, executive director of International Coffee Organisation (ICO) in a statement.
For crop year 2009-10, commenced in April, the Brazilian authorities have forecast a total crop of between 36.9 and 38.8 million bags. While it is still too early to forecast world production for crop year 2009-10, it is expected that there will be a significant decrease in the supply in relation to current levels of demand, the latest ICO report said.
The cut in production is expected at a time when the world consumption has been increasing at an alarming rate. It seems that the current economic slowdown has not affected the world coffee consumption yet.
Looking at the current consumption rate and marketing initiatives taken by the federal governments in the countries like India, the world coffee consumption in 2009 is likely to increase by around 1.5 million bags, industry experts projects.
As per the ICO report, world consumption in 2008 was estimated at 128 million bags, up from 126.5 million bags consumed in 2007.
While consumption in exporting countries including India and Brazil stood at 35.6 million bags compared to 34.4 million bags in the same period, consumption in importing countries increased to 92.4 million from 92.1 million bags.
Notably, as per the preliminary figures of ICO, per capita consumption in Brazil increased to 5.59 kgs in 2008 from 4.80 million kgs in 2004 while per capita consumption in Honduras more than doubled to 3.88 kgs from 1.86 kgs.
In the same period, per capita consumption in Bulgaria increased to 3.22 kgs from 2.81kgs, from 5.71 kgs to 6.89 kgs in Estonia, from 11.87 kgs to 12.67 kgs in Finland, from 4.72 kgs to 5.26 kgs in Greece, from 5.61 kgs to 6.05 kgs in Italy, from 2.46 kgs to 3.03 kgs in the UK.
Per capita consumption in Switzerland increased dramatically to 9.22 kgs from 5.86 kgs while that of in Vitenam, it was nearly doubled to 0.70 kgs from 0.36 kgs.