Can Indonesia’s Upstream Coffee Industry Take Advantage of High Coffee Bean Prices?
In early May 2024 the International Coffee Organization (ICO) released a statement in which it said global robusta coffee bean prices have reached their highest level in 45 years amid tightening supplies (as coffee bean harvests in Vietnam, which is the world’s biggest robusta producer, have been disappointing since last year when the El Nino weather phenomenon brought prolonged dry weather to Southeast Asia).
Chart A shows robusta prices experiencing a clear upward trend since the start of 2021. However, they really skyrocketed between November 2023 and April 2024. It somewhat reminds us of cocoa (which we discussed in our March 2024 report).
Meanwhile, arabica bean prices show a different trend (see chart B). While these too remain elevated (compared to historic levels and trends), arabica prices remain far from record-high territory.
What explains the difference between the arabica and robusta bean prices? Well, the difference can be explained by taking a quick look at where these two types of coffee are produced. In the case of arabica beans, South America is the dominant force with countries like Brazil, Colombia and Honduras being among the top four producers.
In the case of robusta, however, it is Southeast Asia that plays the dominant role as Vietnam and Indonesia rank among the three biggest producers of this type of coffee. And as a whole, Southeast Asia accounts for more than half of global robusta beans supplied on the world market (see table 1). So, when Southeast Asia is hit by severe dry weather, then the world will see a decline in the production of robusta beans.
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This Coffee Industry report discusses:
- Recent developments (production and consumption) that led to high global coffee prices;
- Analysis of coffee bean production across Indonesia;
- The challenges faced by Indonesia's upstream coffee industry;
- Indonesian coffee bean producers and the size of their plantations;
- National coffee productivity (kg/ha per year), and which are the most and least productive provinces;
- Government programs to support Indonesian coffee farmers;
- Indonesia's coffee trade (which coffee-related products are exported and imported).
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