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Coffee and Tea Reports from the Front Lines

Brazil Coops Create Coffee Trading Company

The principal coffee cooperatives from Minas Gerais and São Paulo announced the creation of the Trading Company, Coffee Sul de Minas S/A, to promote their quality and brand name locally and abroad for roasted and green coffees.

Trading Company is reported to unite 17 coops from the two states representing 25,000 producers with the objective to industrialize and commercialize about 4.5 million bags of their production per year in the internal and external markets.The head office of the Company will be located in Varginia, Minas Gerais.

The company will be presided by Federal Deputy Carlos Melles, former president and now a director of the Cooperativa dos Cafeicultores de Sao Sebastiao do Paraiso.

It is reported the Company will operate with a capital of R$ 140 million (about US$ 48 million) composed of R$ 40 million formed by existing stocks of the cooperatives and R$ 100 million to be raised in financial markets. The Company will be associated with the São Paulo export firm Sertrading S/A. - Harry C. Jones

Brazilian President to Attend Coffee Seminar

The Executive Committee of the 15th International Santos Coffee Seminar scheduled to be held May 25-28 at the Casa Grande Hotel in Guarujá/SP, has invited Brazilian President, Luís Inácio Lula da Silva to attend the event at a special audience with the President in São Paulo. The committee was represented by José Moreira da Silva, president of the Santos Commercial Association, sponsors of the event, and Michael Timm, president of the Exporters Department of the Association and Coordinator of the Seminar. João Antonio Lian and Carlos Domingues, president and director of CECAFE, the Council of Coffee Exporters were also part of the Committee.

The Committee explained the importance of the Santos Coffee Seminars to the international and local coffee trade which have since 1972 brought together leaders of the coffee world to participate in business and social meetings.

The Committee reported that the theme of this year’s Seminar was “Coffee and Sustainability,” which President Lula commended as very opportune to show Brazil’s international partners that Brazilian coffee culture is a sustainable and socially responsible activity that does not employ child or slave labor and preserves the environment. The President also noted the importance of the coffee agribusiness to the Brazilian economy, generating income and millions of employment.

The President stated that he hoped he would be able to attend if official commitments permitted. - Harry C. Jones

Out of Africa: Coffee & Tea News Special Update
By James Jason Mangeni

Burundi
Burundi’s coffee this year dropped to its lowest level in more than 40 years due to harsh weather, which damaged the crop in all its coffee growing areas. Figures obtained from Burundi Coffee Board say 6,100 metric tons were produced this year, sharply down from 36,000 tons in 2002.

“This has been a devastating year for our coffee industry. Prolonged dry weather virtually damaged the crop in all areas,” said an official at the board. He said Burundi, which predominantly produces the Arabica variety, closed the year’s harvest in July, and 5,500 tons comprise the fully washed grades while the rest are semi-washed. Burundi exports the bulk of its coffee through a weekly exchange in the capital Bujumbura. Exports for the 2003 crop are expected to close in the early part of the year, instead of the usual July/August due to lack of stocks. Coffee is Burundi’s second leading hard currency earner after tea. Our source said the industry is set to recover following good rains for the 2004 crop, whose harvest is due starting in March.

Uganda
Uganda is likely to produce 10,000 metric tons of washed Robusta this year - half its initial target of 20,000 tons - an industry spokesman said. David Kiwanuka, a spokesman for the Uganda Coffee Development Authority, said the shortfall has been caused by delays in installing mills. Uganda, which produces negligible volumes of wet processed Robusta, imported 16 mills last year from Brazil, all with a combined annual capacity of 20,000 tons, but only six are in the final stages of installation and are due to start running.

The country’s drive into wet processed Robusta targets obtaining niche prices. “We are installing the machines in stages. Because of this delay we may produce around 50% of our earlier forecast of 20,000 tons since only a few machines will start working when significant volumes have been harvested,” said Kiwanuka.

Uganda’s main coffee harvest, which accounts for 60% of its annual output, started earlier in 2003 and will close in January/February. UCDA projects output during the season at 3.1 million 60-kg bags, up from three million this closing season. Around 85% of the crop is projected to be Robusta.

The country abandoned Robusta wet processing in 1969 when government nationalized coffee exports and was paying low prices for the crop. The industry was later liberalized in 1991.

The UCDA imported the mills and has loaned them interest-free to local processors on a long-term basis under its initiative to enhance the country’s coffee quality and earnings.

Uganda projects its tea output this year at just less than 35 million kilograms, its highest output ever due to better field management, trade officials said.

“We are looking at a little lower than 35 million kilos this year which is a very good yield. The increase is because all the producers are significantly improving field management efficiency,” said Isaac Munabi, executive secretary for the Uganda Tea Association (UTA). “We shall record a good crop in the remaining period due to the prevailing good weather,” he said.

The association, which brings together all producers and exporters, says 24.7 million kilos were produced in the first nine months of the year, up from about 21.1 million in the corresponding period in 2002.

Uganda exports the bulk of its annual tea output, with around three percent of total production locally consumed. The commodity is largely exported through the Mombasa weekly auction in neighboring Kenya.

Tea is Uganda’s third main visible export earner after coffee and fish, and it brings in $30-35 million annually. Uganda’s tea output, which had plunged from 23 million kilos in 1972 to 8.8 million kilos in 1991, has posted a steady recovery due to massive investments over the last ten years. Production had slumped following the 1972 expulsion of Asians who owned most estates by the late dictator Idi Amin, who distributed the tea estates to his cronies who in turn ran them down due to mismanagement.

The crop is wholly produced by private firms, most of that are foreign, having entered the market following the advent of privatization in the early 1990s.

UTA hopes output could rise to 40 million kilos in 2005 due to the ever improving field management skills, but it would still depend on favorable rains.

Tanzania
Tanzania has introduced new Arabica varieties to replace less productive old trees and boost output.These high yielding and disease resistant varieties were developed by the country’s state owned Tanzania Coffee Research Institute (Tacri). Twahir Nzallawahe, head of research at Tacri, said they have started distributing planting materials to farmers, but said the quantities are still marginal. They plan to distribute five million seedlings to farmers annually by 2006. Tanzania has an estimated 200 million old Arabica trees.

“We have introduced improved varieties which we are distributing to farmers although the number is still small. We expect this program to boost our coffee production,” said Nzallawahe.

Tanzania produces 45,000-55,000 metric tons of green coffee annually hopes to boost its output to 60,000 tons in three years. Arabica accounts for around three-quarters of Tanzania’s annual coffee output.

Coffee is one of Tanzania’s leading foreign exchange earners, and the country exports nearly all its entire output as green coffee through its weekly auction in Moshi.

James Jason Mangeni is a freelance journalist. He has worked for Dow Jones/ OsterDowJones, and currently works at the regional Economic News.



Tea & Coffee - March/April, 2004
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