Christopher Gentles, director general, Coffee Industry Board, says the CIB could record losses of US$10 million in FY 2009/10 because of falling production of quality beans. - File

The Coffee Industry Board (CIB) is projecting losses in the region of US$10 million (J$890 million) due to the failure of crops and its forecast of a near one-third decline in bean production to year end, following on an extended drought in coffee country, and the lingering effects of hurricanes.

The prolonged drought from January to August has also hurt the quality and quantity of the 2009-10 crop, according to CIB sources.

Farmers are said to be losing significant quantities of coffee due to 'lights', which are coffee berries that are not dense enough to pass the float test.

In July of this year, the Coffee Industry Board said earnings from Jamaica's coffee were estimated at half-year in the region of US$36 million, from 356,000 boxes processed.

Less earning projected

The earnings for the second half of the year are likely to be much less, according to the head of the CIB, Christopher Gentles, who expects a possible 35 per cent decline in beans for the year.

Gentles told Wednesday Business that, while there was an increase in export earnings, up from US$23.77 million in crop year 2007-08 to US$32.498 million last year, due to "diligent work on behalf of the farmers, the coffee dealers, the CIB, a pretty good market, and reasonable weather", the prolonged drought in 2009 has ushered in different conditions.

"The loss of earnings for this crop year may be in the region US$10 million, for the producers and coffee dealers, and will cost the CIB some J$30 million to J$50 million, relative to the original crop projections of a typical crop year," said Gentles.

But: "Until the CIB receives data on the crop during the month of November, and receives the crop returns from the coffee dealers, this number is yet uncertain."

The CIB itself has seen a fall in revenue from advance payments that generally finance its operations.

But Gentles said, with the help of the Ministry of Agriculture, the CIB has access to $780 million of working capital, through a financing window at the National Export-Import Bank, to facilitate its purchase of cherry from farmers.

"We have also issued a regulatory advisory to limit the first payment to farmers, in order to manage the working capital requirements for cherry acquisition," Gentles said.

The effects of drought, he added, were exacerbated by the long shadow cast by four years of storms.

40 per cent loss

Hurricane Ivan resulted in a 40 per cent loss of cherry production, which was estimated to have been 500,000 boxes, and tree loss at 20 per cent, he said, while Hurricane Dean caused at least a 25 per cent loss of cherry.

"It is estimated that the cost of losses from cherry, to roads and infrastructure is in excess of US$15 million over the last four years," said the CIB boss.

This year, though Jamaica has been spared a big storm, farmers are still faced with low yields because of insufficient rain.

The CIB notes that from May to August 2009, there has been a significant reduction in rainfall in many of the coffee-producing areas this year, and this has caused many of the coffee cherries to abort and fall off the trees.

Some of the farmers, on delivering the cherry coffee, have suffered losses due to light beans that fail the float test at coffee selectors depot, or the pulperies.

Leaching and erosion

"The agronomists at the CIB are of the opinion that the losses of soil quality, due to successive hurricanes and storms, have caused leaching and erosion; and the loss of money due to yield losses, has resulted in a reduction in the re-investment in the farms," the CIB head said.

The situation has forced stakeholders into a coalition, comprising the coffee board, the Ministry of Agriculture and Fisheries and Jamaican Coffee Exporters Association, to ensure that coffee quality is not impacted.

"The maintenance of quality is important to retaining premium price for the bean, hence the CIB's push to coordinate a strategic response to the crisis caused by drought," said Gentles.

The partners are also collaborating on a training programme, another for cherry inspection to increase the percentage of premium beans and reduce the percentage of non-premium beans, and to improve logistics around shipping of the product to overseas markets.

Such training programmes have had good results in recent years, according to Gentles, who says there was 71 per cent more coffee exported from January to May 2009, relative to the same period in 2008; and that premium beans exported rose from 36 per cent to 41.42 per cent, year on year.

avia.collinder@gleanerjm.com