Olam Says Beverage Unit Volume Fell 6% on Coffee Leaf Rust

Olam International Ltd. (OLAM), a trader of commodities, said sales volume in the confectionery and beverage division fell 6 percent in the nine months ended March 31 after an epidemic of coffee leaf rust in Central and South America.

Sales volume for the unit that includes coffee and cocoa declined to 1.19 million metric tons in the period from 1.266 million tons a year earlier, the Singapore-based company said in an earnings statement today. Coffee leaf rust is a disease that damages foliage and is spreading in coffee-producing countries from Mexico to Peru and cutting the region’s output.

Leaf rust is “affecting the coffee industry across Central and South America,” Olam said. “This impacted Olam’s coffee origination and shipment volumes and margins.”

Coffee leaf rust will cut Central America’s coffee output by 2.7 million tons in the 2012-13 season that started in October, the International Coffee Organization in London said in a report on May 13. More than 50 percent of the region’s growing areas have been affected, the ICO said. The disease may cost Central American nations $500 million, the group estimated.

An export tax on cocoa in Indonesia, the third biggest producer of the beans used to make chocolate, also “adversely impacted” sales volume and margins, according to the statement.

Indonesia imposed an export tax of 5 percent to 15 percent on cocoa in April 2010 in a bid to increase local bean-processing industry. Shipments from Indonesia’s Sulawesi fell to 5,905 tons in April from 8,662 tons in March, said Firman Bakri, executive secretary at Indonesian Cocoa Association.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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