Wet weather and higher production costs have reduced Colombia's coffee output, pushing prices higher.
Lower production helped push Colombia's coffee prices in February to the highest level in the country's history, at 2,213,333 Colombian pesos ($540) per 125-kilogram bag, according to Colombia’s Coffee Growers Association (Fedecafe).
Output fell significantly. Colombia’s National Federation of Coffee Growers (FNC) released its revised production estimate for the 2021/22 marketing year, at 13.0 million bags green bean equivalent (GBE), a 5.8% drop from the previous forecast of 13.8 million bags and a 10% drop in production for the 12 months up to May 2022, compared to the preceding year. And that’s down from the 2020/2021 crop, which was about 3% smaller than the 2019/2020 crop.
Various factors have dragged on production. Along with excessive rain, this year’s high costs of both fertilizer and labor have hampered growers’ ability to maximize output, with the average cost of production increasing nearly 45% over the last 12 months.
“The cost of materials and labor were two of the main factors affecting overall production cost for farmers,” said researcher Oscar Hurtado Ramirez of Sucafina Specialty, a New York-based global distributor of green coffee.
Colombia is highly dependent on imported simple fertilizers. As prices for this input skyrocketed, growers likely reduced use of fertilizer, which hindered output. “We expect materials to remain expensive for the rest of the year,” Hurtado said. He added that the availability of farm workers would be hard to predict now as the pandemic recedes.
Then there’s weather. Excessive rain and cloudiness from the La Niña weather phenomena during the first five months of 2022 had a serious impact on production. The Colombian Institute of Meteorology, IDEAM, published rainfall figures that ranged from 20% to 40% above historical averages in some coffee regions right up to July.
Roberto Suescún a leading agronomist and grower from the major coffee region of Quindío, said that the region’s second annual harvest, from August to the end of October, could yield 50% less than the average. "Climatic factors of recent years have had a great impact on flowering,” he said. “This second harvest of 2022 compared to harvests of other years, I would think will decrease between 40% and 50%.”
As for labor costs, he explained that “when the harvest is very soft and spread out” like this one is expected to be, it means a longer harvesting period, which becomes very expensive. “If the harvest were more concentrated the picker would do better," he explained.
This factor, along with the displacement of workers during and after the pandemic, means that harvesting the crop will cost double what it did before the pandemic. "In previous years harvesting a kilo of coffee paid a worker 450,000 or 500,000 pesos [roughly $100–110]. But with labor shortages and the longer harvesting period, it will cost 1,000,000 pesos this year.”
These factors, and the quality premium that the market recognizes in Colombian coffee, will likely result in continued high prices this year.
Nevertheless, quality is expected to be very good because the wetter weather diminished infestation by coffee berry borers. “We expect to have more mid-grade coffees, and fewer low-grade coffees, due to reduced borer attacks,” researcher Ramirez says. reduce
As for l factors that could affect the next marketing year, MY 2022/23, the Institute of Meteorology projects that rainfall will be back to normal in most of the country between August and October 2022. Colombia's production is forecast to remain flat, at 13 million bags GBE, though a glimmer of hope could be seen in the harvest reported by the FNC for August 2022, at 949,000 60-kg bags, a 4% increase year-on-year.