By Lise Alves, Contributing Reporter
SÃO PAULO, BRAZIL – The effects of one of the worst droughts in decades, which plagued a large percentage of the coffee-growing areas in Brazil at the beginning of the year, is likely to lead to losses both for the 2014 and 2015 seasons, according to a recent study by Procafe Foundation.
The study, ordered by CNC (National Coffee Council), for the 2014 season shows an average decrease of fourteen percent in production from initial forecasts – from 46.5 – 50.1 million bags to 40.09 – 43.3 million bags.
Joel Shuler, founder of Austin-based coffee company Casa Brasil Coffees, is already bracing for a smaller volume of beans. “The informal estimates we have gotten from some of our partner farms are between 15-20 percent loss,” he says.
Shuler, whose company partners up with seven Brazilian coffee plantations located in the states of Minas Gerais and São Paulo, says, “a lot of the beans are not developing in the fruit, and likely the percentage of floaters (overripe beans) will be higher once the harvest starts in May given the large quantity of malformed and underdeveloped beans.”
Although losses are expected this season, Nathan Herszkowicz, executive director at Abic (Brazilian Coffee Industry Association) says that they are still too early to be calculated: “There is much speculation right now, and we don’t really know the extension of the damage done by the lack of rainfall. We will only know the real situation (of the crops) after the start of harvesting season, next month.”
As for the 2015 coffee season, losses are expected to continue, with Brazil only harvesting 38.7 – 43.6 million bags, according to the study. Losses are expected to range from ten percent in São Paulo to thirty percent in some regions of Minas Gerais state.
According to Herszkowicz, the intense heat and small amount of rainfall registered in January and February of this year have damaged coffee shrubs, affecting the size and amount of fruits to be collected next season.
“Forecasts for 2015 are for a volume of approximately 40 million bags, for an average demand expected to be of 50 million bags [30 million being exported and 20 million consumed in the domestic market],” says Herszkowicz.
Although some losses are expected, Herszkowicz says that a shortage of coffee beans is unlikely for the next two years. Prices, however, are expected to increase, says the executive. “These two upcoming harvests (2014-2015) will be tricky. We should see great volatility in prices.”
According to analysts, farmers are responding to this year’s drought by bringing in the 2014 harvesting season early this year, so it will start at the beginning of May (instead of the end) and should last until August. According to Conab, Brazilian coffee production in 2012 totaled 50.8 million bags and in 2013 49.2 million bags. If the 40.09 – 43.3 million bags volume for 2014 is confirmed this will be the smallest harvest since 2009.
Brazil is the largest coffee producer in the world, producing around 1,350 million kilos of coffee per year, and is responsible for one-third of the world’s coffee production. In almost every category, the U.S. is the largest importer of Brazilian coffee products.
Therefore, if Brazil’s coffee production continues to decline, causing the global coffee shortage expected by 2014 into 2015, and a larger proportion of higher quality coffee is reserved for the domestic market, the U.S. may be the hardest hit.