Brazil is the largest coffee producer in the world followed by Vietnam, Indonesia and Columbia. In 2017, the supply shortage in the global coffee market is expected to continue for a third consecutive year. In particular, the production of Robusta is expected to be at a low level comparable with 2012.
A global shortage in supply of coffee to the tune of 3.5 million 60 kg bags of coffee for the year beginning in October 2017 was projected. Even though Arabica crop have faced bumper crops in Brazil, Colombia and Honduras, still the global shortage is expected to continue.
Brazil is globally the largest producer, consumer and exporter of coffee. Key export destinations include the United States, Germany, Italy, Belgium and Japan. Approximately 90% of Brazil’s Robusta beans are used within the country and cater to the country’s instant-coffee industry.
In 2017, unfavourable weather conditions and insect infestation are expected to negatively affect production of coffee in Brazil, particularly hit is the Arabica production in the country.
Areas such Espirito Santo have been hit by draught for several years now and farmers have started switching to growing to black pepper, the price of which has witnessed a steady rise.
The current lack of supply in the country has led the international price to land at a five-year high. Due to the rise in Robusta prices, the Government is contemplating import of 60,000 tonnes of green Robusta beans.
This is a rare situation, as while Brazil has imported roasted and ground coffee earlier, a situation where green coffee beans have to be imported, has not arisen for over 200 years. It is expected that in 2017, the consumption of coffee in Brazil will approximately 3-3.5% year-on-year and reach 22 million bags of 60 kg.