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Colombia: A Renewed Coffee Growing

Colombia: Una

Caficultura Renovada

November 2012 © Copyright FNC (2012)

Juan Esteban Orduz President

Colombian Coffee Federation New York


The Perfect Storm

•  2008 - 2009

• El Niño (Higher temperature – change in currents and winds in the Pacific Ocean)

–  Non typical dry weather in Colombia »  Increased berry borer

•  Low Fertilization

•  Lower production as of 2009


40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

1,500

3,500

5,500

7,500

9,500

11,500

13,500

15,500

17,500

19,500

Jan-

07

Feb-

07

Mar

-07

Apr

-07

May

-07

Jun-

07

Jul-0

7

Aug

-07

Sep

-07

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-07

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-07

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Feb-

08

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Aug

-08

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-08

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-08

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-08

COP

/ 5

0 k

g ba

g

Sal

es (T

ons)

High oil prices increased the cost of fertilizers - Less fertilization

Source: Agroinsumos del Café

During 2008 the urea sales fell 26%, if compared with 2007.

Urea Sales to Coffee Cooperatives

2007: 117.328 Tons 2008: 86.590 Tons


0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

Jan-‐07

Feb-‐07

Mar-‐07

Apr-‐0

7May-‐07

Jun-‐07

Jul-‐0

7Au

g-‐07

Sep-‐07

Oct-‐0

7No

v-‐07

Dec-‐07

Jan-‐08

Feb-‐08

Mar-‐08

Apr-‐0

8May-‐08

Jun-‐08

Jul-‐0

8Au

g-‐08

Sep-‐08

Oct-‐0

8No

v-‐08

Dec-‐08

Jan-‐09

Feb-‐09

Mar-‐09

Apr-‐0

9May-‐09

Jun-‐09

Jul-‐0

9Au

g-‐09

Sep-‐09

Oct-‐0

9No

v-‐09

Dec-‐09

Jan-‐10

Feb-‐10

Mar-‐10

Apr-‐1

0May-‐10

Jun-‐10

Jul-‐1

0

National Average % of Coffee Beans Affected by the Borer at the Purchasing Point

Higher temperatures in 2009 increased coffee berry borer infestation

7% of infestation


The Perfect Storm

•  2009 – 2010 – 2011 – 2012 (1st. Sem.) • LA NIÑA (Lower temperature in the Pacific

Ocean, affecting climate in Asia and America) –  Rain above normal levels

Less than sufficient sunlight and high humidity » No hydric stress »  Low and / or delayed flowering »  Increase in coffee rust

• Older trees and non resistant varietals • Less coffee production


Since 2008, coffee regions were affected by an increase in rain levels never seen before…

Observed Rainfall change from historic average (2008 – 2011)

La Niña phenomenon Rain prolongation El Niño

phenomenon La Niña

phenomenon

-‐100%

-‐50%

0%

50%

100%

150%

I -‐2008

II -‐2008

III -‐2

008

IV 20

08

I -‐2009

II -‐2009

III -‐2

009

IV 20

09

I -‐2010

II -‐2010

III -‐2

010

IV 20

10

I -‐2011

II -‐2011

III -‐2

011

IV-‐2011

Sur (El Tambo) Centro (Naranjal) Norte (Pueblo Bello)


… Decreasing the amount of sun exposure hours of the coffee trees

Observed solar light change from historic average (2008 – 2011)


phenomenon La Niña

phenomenon

-‐40%

-‐30%

-‐20%

-‐10%

0%

10%

20%

I -‐2008

II -‐2008

III -‐2

008

IV 20

08

I -‐2009

II -‐2009

III -‐2

009

IV 20

09

I -‐2010

II -‐2010

III -‐2

010

IV 20

10

I -‐2011

II -‐2011

III -‐2

011

IV-‐2011



And causing falls in the average temperature

Observed temperature change from historical average (2008 – 2011)


phenomenon La Niña

phenomenon

-‐8%

-‐6%

-‐4%

-‐2%

0%

2%

4%

6%

8%

10%

I -‐2008

II -‐2008

III -‐2

008

IV 20

08

I -‐2009

II -‐2009

III -‐2

009

IV 20

09

I -‐2010

II -‐2010

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010

IV 20

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I -‐2011

II -‐2011

III -‐2

011

IV-‐2011



5.000

6.000

7.000

8.000

9.000

10.000

11.000

12.000

13.000

14.000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Saco

s de

caf

é ve

rde

(millo

nes)

ProducciónPromedio hasta 2008

Adverse Weather Conditions Affected the Coffee Production

Coffee production vs. Weather conditions (Niño/Niña) (1998-2011)

Neutro Niño Niña

(mile

s)


6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

Jan-

07

Mar

-07

May

-07

Jul-0

7

Sep-

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-07

Jan-

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Mar

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May

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Jul-0

8

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Jul-1

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-11

Production and Exports 000´s 60kg bags

exports

Production


In a nutshell

2009 to 2011 Colombian coffee production and exports decreased:

• Bad weather: El Niño and La Niña (2008 – 2012). • Low fertilization: Mostly due to high prices of oil

(2008). • Rust and berry borer: The weather and the lower

use of fertilizers caused higher levels of rust and berry borer.

• Old and non rust resistant trees: Low productivity due to old coffee trees.


Light at the End of the Tunnel

RECONFIGURATION: •  Our goal is to reach higher productivities and production every

year.

Renovation: •  Renovation: 117.000 hectares (290.000 acres) renovated in

2011. The process will continue at a rate of approximately 120,000 hectares (297,000 acres) renovated with resistant varietals per year.

•  High productivity and rust resistant varietals: Castillo varietal and its regional strands in all coffee departments.

•  Climatically Intelligent Coffee Agriculture: This is our top challenge this year. Since not all its repercussions manifest in the same form in the different coffee regions, multilevel solutions are the answer - CENICAFE


Circumstances have improved and measures have been taken:

•  Better weather: End of La Niña phenomenon / mid 2012. •  Good flowering: Less rain at the beginning of 2012 has

resulted in a better main crop. •  More fertilizers: Lower prices and FNC incentives with

governmental support. •  Renovated areas start producing: The results from the

first stages of the renovation start to increase productivity. •  Expansion of total cultivated areas: Incentives for

expansion of the total cultivated areas. Now Colombia has 917,000 (2.26 million acres) cultivated hectares compared to 850,000 hectares (2.1 million acres) a couple of years ago.

Light at the End of the Tunnel


85.853 78.748

72.145

83.732 94.496 95.153 96.737

-‐

20.000

40.000

60.000

80.000

100.000

120.000

2006 2007 2008 2009 2010 2011 2012

Sales of Fertilizers January -‐ July [Tons]

May 2012: Inicio Fase II Ola Invernal

Source: FNC -‐ Inteligencia Competitiva


Better Weather Conditions (Hydric Stress) and flowering for Mitaca


STAGE I (2011)

STAGE II (Until Sep 10 of 2012)

161 K hectares (398 K acres)

180 K coffee

growers

US$ 31 million

90 K hectares (222 K acres)

105 K coffee

growers

US$ 11 million

EMERGENCY PLAN EXECUTION FOR PRODUCTION RECOVERY. II STAGE (2012)

Como complemento a los recursos aportados por Colombia Humanitaria, los cafeteros han invertido $24.454 millones en la compra de fertilizante.

As a complement of the resources given by Colombia Humanitaria, coffee growers have invested $20.237 millions buying fertilizers.

In 2012, we will continue fighting against rust through the execution of the second phase of the “Ola Invernal”

program


0

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40

Mayo Julio Noviembre Febrero Mayo Julio Noviembre Febrero Mayo Julio

2010 2011 2012

Porcentaje

As a result of these programs, the rust infection percentage has declined sharply.

Rust infection. National average( July 2012)

National mean: 7,7%


Thanks to the renovation program, the area planted with young technified coffee in resistant varieties has

doubled in the last three years.

TJ Resistente

21%

TJ Susceptible

40%

Tradicional14%

Tecnificado Envejecido

25%

TJ Resistente

43%

TJ Susceptible

30%

Tradicional7%

Tecnificado Envejecido

20%

Productive structure 2008 Productive structure 2012 (Aug)

The area planted in young technified and resistant coffee is 418.000 hectares (1 million acres).

Traditional 17%

Traditional 7%

Non resistant Technified 61%

Non resistant Technified 43%

Resistant Technified 50%

Resistant Technified 22%


The sun is shining again

Higher production

Renovation

Healthy coffee trees

More fertiliztion

Better weather

conditions


5351.106

1.6822.262

2.951

3.6654.333

4.8985.417

7.809

8.923

7.812

0,00,51,01,52,02,53,03,54,04,55,05,56,06,57,07,58,08,59,09,5

10,010,511,011,512,0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2012 2011 2010 2009

Colombian Coffee Production[Thousand 60Kg Bags]

Source: Competitive Inteligence -‐ FNC


Positive trend in production and exports

9,582

7,040

7,593

8,532

7,016

7,256

6,000

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10,000 Ja

n-10

Feb-

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Mar

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Jul-1

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Aug-

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Exports

Production


Despite the production crisis, FNC has developed multiple strategies to add value to Colombian Coffee


From the Farm to the Cup

•  CENICAFE - The most modern Research Center in coffee producing countries

•  “Extension” Service – Productivity, social fabric and traceability

•  Quality Control – Labs, directions, inspection at port •  Value Added

–  Specialty Coffees – Cup profile, origin, certified –  Freeze-dried coffee (high quality soluble coffee) –  Juan Valdez Café (Cafés in the U.S., Colombia,

Ecuador, Chile and Spain) –  Coffee Extract


The Manuel Mejía Foundation is a private entity created by the

coffee guild back in 1960. It is an asset of the coffee

growers with the mission of

teaching the coffee grower, its family and the rural community to

contribute to their well being, competitiveness and

sustainability.

Manuel Mejia Foundation


Technical Support: Direct Contact with the Communities in the Coffee Region

The Extension Service (more than 1,400 agronomists and technicians) helps the rural population to: •  Improve the agricultural methods and techniques, hence ensuring quality •  Raise productivity and earnings, and •  Improve the educational and social standards of the rural life with the assistance of educational methods.

November 2012 © Copyright FNC (2012) 27

Updated Information

Daily

Regionals Weekly

Committees

INFORMATION CYCLE

Headquarters

Monthly

Coffee grower Farms

Education

Lots Crops

Visits

Coffee farm

SICA


2011-2012 Between 4 to 5 thousand

coffee growers will have tablets for virtual information.

Last minute information about

coffee prices, weather and real time data without even leaving

the farm.

Technology and Education From the Farm to the Tablet


68.624 66.912

103.275109.77

0

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40.000

60.000

80.000

100.000

120.000

140.000

2008 2009 2010 2011 jun-‐12

Certificados Verificados

129.627

Currently, 20% of Colombian coffee growers produce coffee under differentiated production programs

Number of coffee growers in certification or verification programs (2008 – 2012)


Structure of coffee exports 2000 – July 2012

Colombia’s structure FoNC’s structure

70% 36%

This has led to a change in the structure of the coffee exports: At the beginning of 2000 only 9% of coffee exports was sold

with aggregated value, in 2012 aggregated value exports account for 36%


70%80% 80% 76%

63%52%

43%

27%34%

29% 24%

2%

1% 1% 7%27%

37%47%

63% 51% 60% 65%

28%19% 18% 17%

10% 11% 11% 9%15% 12% 11%

209.385 542.923 676.558 616.018 713.668 771.411 1.068.631 991.065 750.444 966.459 598.109

-‐

2 0 0 . 0 0 0

4 0 0 . 0 0 0

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1 . 0 0 0 . 0 0 0

1 . 2 0 0 . 0 0 0

0%

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100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

FNC: Specialty Coffee ExportsPreparation Sustainable Origin

Source : Inteligencia Comptetitiva -‐ FNC2012 until July

Preparation Sustainable Origin

THANK YOU

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