Coffee Price Drop Endangers Recovery of Colombian 2013 Crop

Colombia, the second-largest supplier of Arabica coffee beans, said a slump in prices is putting at risk next year’s recovery in its harvest.

A prolonged drop poses a “serious danger” because some farmers are losing money at current prices, Mario Gomez, a member of the board of Colombia’s National Federation of Coffee Growers for about three decades, said in a telephone interview from the city of Manizales in the nation’s central coffee- farming region.

“That’s the death of coffee production,” Gomez said. “Losses lead to crops being neglected and then abandoned.”

Coffee has declined 16 percent in a month on speculation supplies will increase from Brazil, the top producer of Arabica coffee favored by brewers such as Starbucks Corp. (SBUX) The Colombian federation’s Chief Executive Officer Luis Munoz forecast last month that 2013 output may rebound to a five-year high of 9 million bags as disease-resistant crops aid production.

Arabica-coffee futures for September delivery, slid 2 percent to close at $1.5105 a pound on ICE Futures U.S. in New York.

The crop this year, which is being harvested, will be similar to 2011, Munoz said in May. Last year, the nation’s production of 7.81 million bags slid to a 35-year low after above-average rainfall damaged crops. Each bag weighs 60 kilograms (132 pounds).

Weather in coffee-producing regions has been drier this quarter after an end to the weather system La Nina, Gomez said. The weather pattern caused an increase in storms that contributed to the lowest Colombian production since 2009.

A shortage of quality coffee beans after production slid in Colombia may prompt prices to increase as global demand rises, he said.

To contact the reporter on this story: Heather Walsh in Bogota at hlwalsh@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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