Costa Rica: Coffee Industry Requires Renewal

The agro-food chain of coffee needs complete renovation, with a vision focused on value added, productivity and competitiveness from the producer all the way to the industrial sector.

Thursday, January 27, 2011

The Chamber of Coffee Roasters, representing the national roasting industry, is concerned about further price increases to final consumers due to shortage in local supply of coffee and the high price of the bean.

Inclement weather, aging plantations, increased costs of production and speculation, have caused a harvest shortage and the inevitable increase in product prices.

Jose Manuel Hernandez, president of the Chamber of toasters, explains that the price of coffee as raw material for domestic toasters has increased by over 60% between the 2008-2009 harvests to the first three months of current crop. This has forced the industry to make adjustments in prices, although not offset the rising costs which are already costing the domestic consumer.

Hernandez argues that the change in purchase price the coffee roaster has endured in order to supply domestic consumption, was even greater than that reflected by the green coffee sold for exports, this resulted in low yields which reduce available supply and raise prices at which you can get coffee.

The chief of the Chamber of Roasters warns that in a decade, coffee production will have shrunk by 45% and two harvests, it was necessary to supplement the local supply of green coffee with a fraction of imported coffee so to ensure domestic supply.

"The shortages and high international prices have caused speculation on the prices at which coffee is purchased locally. While in the 2008-2009 harvest coffee was at an average of 63.971 Colones per quintal, in this crop the average has been 101.602 Colones. Current price is even higher than the figures reported by the Instituto del Café de Costa Rica (ICAFE) as a result of mediation processes which occur in the market," said Hernando.

"This price is good for domestic producers, who are feeling the benefits, but we are concerned about consumers who are already feeling the effects of these increases. The industrial toaster has also reduced their margins because retail chains not always timely process the price increases required to offset the costs," he added.

According to Hernando, with world market prices soaring in the last harvest, prices have also risen for coffee toasters with few options from other sources. "That's why we have stressed the need to increase the national harvest, while searching market flexibility so local roasters can get sufficient supply at a cost commensurate with the purchasing power of our consumers," he said.

The national toaster sector is primarily responsible for ensuring the supply of coffee for local consumers, which after the United States, constitutes the second largest customer for domestic producers. The industries associated with the Chamber of Coffee Roasters supply 99% of coffee consumption sold in Costa Rica.

More on this topic

Costa Rica Imports Half the Coffee It Consumes

June 2014

The Producers Guild has revived efforts to create a technical regulation which requires roasters to indicate the origin of coffee on packaging.

Increased imports of coffee from countries such as Nicaragua, Guatemala and Peru have led the production sector to revive a proposal made in 2011 that would require companies to indicate whether packaged coffee is national or purchased from abroad.

Update on Costa Rican Coffee

March 2012

After several years of significant imports, it is estimated that in 2012 the country will harvest enough coffee to meet local market demand.

Until November 2011, the Coffee Institute of Costa Rica (Icafe) recorded imports of coffee totalling 208,008 bags, each weighing 46 kilos, which is 25% more than in 2010.

Costa Rican Roasters Want to Import Coffee from Peru

February 2011

Roasters are asking the Government to liberalize trade with Peru so they can have competitive access to the green coffee produced in that country.

The severe contraction of the national coffee production sector is of concern to the toasters, which are struggling to ensure market supply.

Concern in Costa Rica's Coffee Sector

November 2010

Low production and the rising international price of the bean concern the Toasters Chamber.

The anticipated decline in domestic bean harvest for 2010-2011 due to damage caused by rains, extends the downward trend in production which the country has followed over the last decade.