Cooparaiso Sees Brazil Reaping Record Off-Year Coffee Harvest

Coffee growers in Brazil, the world’s largest producer, will harvest a record crop for a season in which trees enter the lower-yielding half of the two-year cycle, according to growers cooperative Cooparaiso.

Production will be 47 million to 48 million bags in the 2013-14 season, Francisco Ourique, a manager at the cooperative in Sao Sebastiao do Paraiso in the state of Minas Gerais, said in an interview in London yesterday. That is down from 51 million bags a year earlier. The season in Brazil usually starts in July, according to the U.S. Department of Agriculture. A bag of coffee weighs 132 pounds (60 kilograms).

The output fluctuations between the high and low-yielding half of the cycle have been decreasing because of new pruning techniques and better husbandry as well as growers increasing the amount of trees per hecatere, Ourique said. While the historical record decline for an off-year is about 30 percent, the drops in production now are about 10 percent, he said. Output this season may fall as much as 7.8 percent, according to Cooparaiso. In the last off-year, it fell 10 percent, data from Conab, Brazil’s government crop-forecasting agency, showed.

“People are attributing the reduction in the biennial cycle from a historical record of about 30 percent to around 10 percent to what we call harvest zero,” Ourique said. Harvest zero is a pruning technique that allows producers to maintain constant average production. That together with planting more trees per hectare allows for smaller fluctuations from one year to the next.

Dense Plantings

Coffee growers in Brazil have on average 2,700 trees per hectare (2.47 acres) now, up from an average 1,750 trees per hectare in the 1980s and 1990s, according to Ourique. That may climb to 3,500 trees a hectare, he said. Cooparaiso has almost 6,000 members and produces on average 3.74 million bags of coffee a year, according to its website. Minas Gerais, where it is based, is Brazil’s largest arabica coffee-producing state.

The reduced fluctuation in Brazil’s production during the on and off-year cycles due to a combination of new pruning techniques and more dense plantings is “confusing players,” Ourique said.

“If I have 4,000 trees competing for the same soil and the price doesn’t pay for farmers to apply fertilizers three times a year, the reaction to less adequate husbandry in the longer term will bring some surprises,” he said.

“That’s because that same soil that had 2,000 plants per hectare had a whole base of natural nutrients and applied inputs. Now if I have 4,000-5,000 plants per hectare, if I don’t feed them, they will starve. Today we know that for the next harvest, few people applied inputs three times, most did it twice.” More pronounced fluctuations may still occur, he said.

Leaf Rust

Arabica coffee fell 37 percent in New York last year, partly on speculation that Brazil would have a record crop and due to rising stockpiles. Inventories in warehouses monitored by ICE Futures U.S. stood at 2.69 million bags yesterday, the highest since March 2010, exchange data on Bloomberg showed. The beans favored by Starbucks Corp. were the worst performer in the Standard & Poor’s GSCI gauge of 24 raw materials in 2012.

Demand for Brazilian coffee will probably rise as roasters look to fill in the gap left by supplies from Central American nations, which are battling leaf rust, a disease that affects foliage, he said. Production from Mexico to Peru may drop by 2 million to 4 million bags the 2012-13 season that started Oct. 1 and more damage may occur in 2013-14, Ourique said.

“There is no way out,” he said. Roasters need 55 million to 60 million bags of arabica a year, he said. “Where are they going to get it from? This is an issue that evidently the market has to start worrying more about.”

Leaf rust is a disease hard to treat because fungicides have to be applied and re-applied every time it rains, said Cooparaiso’s Ourique. Falling prices make it harder for producers in Central America to fight the disease, according to researcher F.O. Licht GmbH in Germany.

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