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Coffee market to face shortage in 2014-15, says Volcafe

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The global coffee market is set to face a shortage in 2014-15, according to a report by Volcafe – the first time this has happened in three years.

This deficit will be in part as a result of output by the world's largest producer, Brazil, not reaching its potential. Consequently, global volumes are set to miss consumption levels by around five million bags, according to a prediction by ED&F Man Holdings, Reuters reports. 

Interestingly, this follows a forecast made in November that the global market would enjoy a 5.3 million-bag surplus.

Slashed volumes

It has been suggested that in 2014-15, Brazil will only realise 51 million bags of coffee, compared to 57.2 million in 2013-14 and 56.8 million the season before this. The region has the potential to produce approximately 60 million.

Volcafe, in its own words, a "market leader in green coffee procurement and preparation, quality control, risk management and the logistics of delivery", states: "With a 51 million-bag Brazil crop figure, our 2014-15 statistical balance becomes a deficit of around 5 million bags, coming after two years of statistical surplus in 2012-13 and 2013-14."

With Brazil having churned out 40.7 million bags of Arabica and 16.5 million of Robusta in 2013-14, Volcafe believes these figures will drop to 35 million and 16 million respectively.

Arabica is primarily grown in Latin America, while Robusta crops tend to herald from Asia and parts of Africa. The 2014-15 coffee season in Brazil starts in July, compared to October for most other coffee-producing nations.

Industry challenges

The coffee industry has faced its fair share of hardship over recent years. Arabica coffee futures plummeted by 23 per cent last year, representing the third consecutive and most enduring annual decline.

Most notably, a leaf rust epidemic has proved ruinous to many plantations. The fungus, known scientifically as Hemileia vastatrix, destroys plants by penetrating the leaves of the tree, causing abnormal ripening, a loss of quality and for the crop to fall from the coffee plants.

For example, the local press in Honduras reported that the country was set to lose around $600 million (£395 million) as a result of it.

Given that coffee tends to be grown in developing, poorer areas of the world, this is scarcely something that farmers and cooperatives can afford.

Nevertheless, some regions are showing signs of improvement, despite the plague that has blighted the industry. 

For example, exports from Honduras are showing signs of recovery, having increased by 0.3 per cent in December, Agra-net.com reports. According to the national coffee institute Ihcafe, the country shipped 344,094 60 kg bags during the month, which was a year-on-year improvement on the 343,080 bags recorded for December 2012.

Similarly, the Financial Times reported in November that it expected Colombia's output to increase by almost a third that year, to ten million 60 kg bags. This came after the primary Arabica bean producer was particularly hard-hit by the leaf rust epidemic. However, a four-year restoration programme that saw around 40 per cent of the crops replanted set the wheels well and truly in motion for a recovery.

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