A severe crisis is affecting Cameroon?s coffee sector after production of Arabica and Robusta fell sharply in the 2012/13 season.


According to the Conseil interprofessionnel du cacao et du caf? (CICC), production slumped by 44.4% to 25,000 MT, the lowest outturn in 20 years, owing to the impact of poor weather and weak international prices which have persuaded many coffee farmers to switch to more profitable crops, notably maize.


The CICC expects production to fall further in 2013/14 as the sector?s decline accelerates. This has already been reflected in the level of exports which totalled just 10 MT in October, 81% lower than the same month last season.


This is a major setback for the CICC?s plans to increase production to 125,000 MT by 2015, which look all but impossible to achieve. Cameroon?s cocoa sector, which is closely linked to coffee, is facing a similar structural decline.


In response the CICC has set up a XAF100mn fund to provide credit to coffee and cocoa farmers, and has pledged to increase the fund by an annual XAF100mn over the next ten years. The fund will provide 50% guarantees for bank loans to farmers, who will assume a 30% loss in case of default, and will be used to purchase equipment and inputs.


While the fund is a welcome development, the government will need to scale up efforts to subsidize inputs to combat declining production. As part of these efforts, the agriculture ministry and the Fonds de d?veloppement des fili?res cacao-caf? (Fodecc) will work to together rehabilitate ageing coffee and cocoa plantations through the distribution of new high-yielding varieties, particularly of Robusta which makes up around 80% of coffee exports.


Uganda?s 2013/14 season gets off to a strong start

The coffee season in Uganda has started strongly, with exports surging by 18.3% in


According to the Uganda Coffee Development Authority (UCDA), coffee exports totalled 210,552 60-kg bags in October, marking the tenth consecutive month that exports have been higher year-on-year.


This follows last season?s record breaking crop, when the country exported 3.62mn bags of coffee, 35% higher than the previous season and the highest outturn in 15 years. The strength of exports has been driven by good weather throughout the previous season which has carried through into 2013/14, with Robusta making up around three quarters of exports.


The EU remains the largest market for Ugandan coffee, taking 47.6% of exports, although Sudan is becoming increasingly important, with 33.9% of exports, some of which are re-exported to the sub-region. A variety of trading houses share the export market, with Ecom Trading having the largest market share (14%), ahead of ED&F Man (11.4%), Sucafina (10.6%) and Olam (7.8%).


Despite the promising October export data, the UCDA expects exports for the season as a whole to fall slightly to 3.5mn bags, owing to dry weather which is affecting the central region.


Although there has been plentiful rainfall in the northern, western and eastern regions, persistent dry weather in the central region is likely to hinder bean development and delay planting of new higher-yielding seedlings, undermining the overall crop. This will delay the UCDA?s ambitious plans to increase production to 4.5mn bags by 2018.


Burundi?s coffee production could collapse in 2013/14

Coffee production in Burundi ? East Africa?s fifth largest coffee exporter ? is set to collapse as farmers abandon the crop in response to weak international prices.


According to the Autorit? de r?gulation de la fili?re caf? au Burundi (ARFIC), production is forecast to fall by almost half in 2013/14, to 13,000 MT, as farmers switch to more profitable crops, such as bananas, in expectation of further international price weakness.


The decline could have a serious impact on the country?s foreign exchange inflows, with coffee earnings bringing in an estimated US$66.3m in 2012/2013, up from US$61.2m the previous season.


Coffee price outlook

World coffee prices continued their slump in October, with the ICO daily benchmark ending the month 6.9% lower at 100.5 US cents/lb, its lowest level since 2006.

Prices for Robusta fell the most sharply, ending the month 7.4% lower at 77.8 US cents/lb, while Arabica fell by 6.9%, ending the month at 126.5 US cents/lb. This brought total losses this year for Robusta and Arabica to 19.7% and 21.5%, respectively.

Price weakness has reflected ample world supplies of both beans and rising stock-to-use ratios, although there are signs that the narrowing arbitrage between Robusta and Arabica is driving a structural switch away from Robusta back to Arabica.

Nonetheless, the steady rise in global stocks and expectations of bumper harvests in Brazil and Vietnam, the world?s leading producers, will continue to weigh on prices over the medium term.

Source Ecobank Research

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