Record African Coffee Bean Production Leads To Surplus

Record African Coffee Bean Production Leads To Surplus

The low cost of African coffee production and governments’ willingness to support growers have sheltered African countries somewhat from weakness of the international coffee market, according to a report in AgriMoney.com.

But high quality Kenyan coffee, sought after for blending with other varieties from other countries, is in such demand that theft at every level of the supply chain has been a problem, the report says.

Africa’s eastern coffee-growing heartland – Ethiopia, Kenya, Tanzania and Uganda – is set to produce a record 11.9 million bags of beans in 2013-14, U.S. Department of Agriculture foreign staff said in the AgriMoney.com report.

Coffee is an important export in East Africa, accounting for 45-50 percent of export earnings for Ethiopia. The region is regarded as the birthplace of arabica, believed to have originated in Ethiopia, and robusta, in Uganda. Cameroon and Ivory Coast are Africa’s only other notable coffee growing countries outside of East Africa, according to AgriMoney.com.

Tanzania’s robusta is particularly prized by Italy, which uses it for expresso coffee and was  the top importer of the country’s coffee in 2012-13 with a 29 percent market share.

Favorable weather and rainfall will help add extra coffee supplies to a world market already struggling with existing availability, especially of arabica beans, the report says.

Arabica futures have more than halved in the last two years in New York, and London-traded robusta futures lost nearly 25 perent of their value. But some African beans attract a premium, particularly those from Kenya, which in 2011 got more than $1,000 per 110-pound bag, according to the report.

While prices were down to a maximum $319 per kilo at last week’s auction in Nairobi, that was still equivalent to 290 cents per pound, far more than arabica futures trade at in New York, the report said.

Demand for some beans has resulted in coffee thefts at almost every stage of the coffee supply chain – farm, factory, warehouse and auction floor – owing to the favorable world prices and lack of a tracking system, USDA staff said in the report.