Malawi is expected to reap the benefits of a surge in global coffee demand brought by supply constraints which will push up prices, a local coffee expert has projected.
The price surge will largely be due to fundamental changes in the world’s coffee market, most notably, the supply of premium Arabica coffee beans, which is down pushing up demand.
This is because of the worst drought in decades that hit the coffee belt region in Brazil, the world’s largest coffee producer, destroying yields which will cause the price of coffee to shoot up by more than 50 percent.
Harrison Kalua, an authority in coffee issues, who is also chief executive officer of Mzuzu Coffee Planters Cooperative Union, told Business News this week they expect to profit from the world production output drop at a time the crop’s output this year is expected to jump by about 30 percent over last year.
“There will be speculation on the price largely due to drought in Brazil between January and February this year which will affect production and trigger prices to go up. We estimate that the price will go up by about 80 percent but our hope is they will be sustained,” he said.
Kalua, who is also chairperson of Coffee Association of Malawi (Camal), said the crop this year looks good and the country is estimated to produce about 2 000 tonnes, thanks to increased production by smallholder farmers.
As for Mzuzu Coffee Planters Cooperative Union, a grouping of 300 smallholder farmers in the Northern Region, they expect their output to peak at 400 tonnes.
The trend of coffee price increases on the global market became noticeable in 2010 and has continued unabated over the past the few years due to changes in the world’s coffee market, most notably, the supply of premium Arabica coffee bean which has been down while demand has been up, according to global coffee forecasts.
Data from Camal shows that about 11 estates bring in 70 percent of the total output which have not been expanding over the years, with the rest provided by more than 3 000 smallholder farmers.
Early last year, Malawi coffee, regarded as one of the finest, was put on the Starbucks reserve signalling its outstanding fine nature, a development which boosted the beverage’s global demand.
Starbucks is the largest coffeehouse company in the world based in the US, with 20 366 stores in 61 countries, including 13 123 in the US, 1 299 in Canada, 977 in Japan, 793 in UK, 832 in China, 473 in South Korea, 363 in Mexico, 282 in Taiwan, 204 in Phllippines and 164 in Thailand.
It basically purchases and roasts whole beans coffees and sells them along with Italian style espresso beverages, a variety of pastries and confectioneries and coffee-related accessories and equipment—primarily through its company-operated retails stores.
Starbucks praised Malawi coffee for having rich flavour with smooth finish and said for only the second time, Starbucks was offering a single origin coffee from Malawi, a country with one of the smallest yields in East Africa.
But an expert said by being put on the Starbuck reserve, means Malawi’s coffee is recognised the world over.
Export destinations for Malawi’s coffee include United Kingdom, US, Japan, Netherlands, South Africa, Germany and Switzerland.
Malawi’s coffee output, according to Camal, has been on a downward trend over the past year since 1991 when the country reached a peak of 7 720 tonnes of coffee beans.