MANAGUA – The keys to Nicaragua’s full recovery from the 2000-2004 global coffee crisis are to focus on quality, not quantity, and to create new product demand by promoting domestic consumption, according to Nestor Osorio, executive director of the International Coffee Organization.
Though Nicaragua has never fully recovered its historic coffee-export volumes from the 1970s, achieving pre-revolutionary production levels shouldn’t be the goal of the industry, Osorio said.
Instead, coffee producers need to work on improving the quality of their current harvests and work to better promote the name of Nicaraguan coffee, both abroad and at home.
“The best thing for Nicaragua would be to maintain its current production level and not try to increase production by 1 or 2 million bags, because there is no point,” Osorio told The Nica Times during last week’s Ramacafe industry conference in Managua.
“The name of the game is money, not volume. Specialty coffee is a tremendous opportunity for Nicaragua.”
Nicaragua exports around 1.3 million 60-kilogram bags of coffee a year, about 500,000 bags less than neighboring Costa Rica and one-third the yearly yield of regional-leader Guatemala. Nicaragua’s coffee sector is made up of 30,000 mostly small producers, providing 300,000 rural jobs and representing onethird of the country’s agricultural economy.
For Nicaragua to compete effectively with other countries in the region and larger coffee producers in South America and Africa, coffee farmers here need to focus on renovating their farms and replanting old trees to improve harvest quality, Osario stressed. The renovation process, he said, will take time and require some sort of government or micro-financing, but ultimately will help Nicaragua produce a better quality product.
In Nicaragua, he said, many coffee plants are too old to continue producing quality cherries. Coffee producers should therefore focus on replanting sections of their farms each year to improve their long-term prospects.
The concept, he said, is to “increase productivity, not production.”
Osorio noted that strong efforts are already underway here to improve quality and farmmanagement conditions. Nicaragua, along with Uganda, is the country with the greatest amount of international aid and technical assistance for its coffee sector, with a total of $7.8 million invested in various projects to improve coffee quality here, Osorio said. As a result, the coffee industry here has improved consistently over the past five years, he said.
“Nicaragua is very much being recognized as a small provider of some quality coffee,” Osorio said, noting the importance of industry events like Ramacafe, the annual coffee conference, which just celebrated its seventh year. “At the first Ramacafe there were 100 people, now there are 500 people from 30 countries.”
While the private sector has organized and advanced dramatically in recent years, it is yet to be seen whether the new Sandinista government will be on the same page.
Orlando Solórzano, Minister of Industry, Development and Trade (MIFIC), told The Nica Times that the Ortega administration is working with the private sector to develop a new coffee-production policy to “favor production and exportation.”
He said the government’s new production policies are aimed at “increasing extraordinarily the production in this country, which is very low.”
The minister did, however, also acknowledge the importance of producing select, quality coffees, not just increasing production levels.
“Coffee is still the principal export product, but we shouldn’t still consider it a purely traditional export,” he said. “Coffee has advanced in the past 10 years and it has practically become a non-traditional product due to its diversification.”
“This is one of the areas of our policy,” he stressed; “to diversify production and get more money for the coffee.”
Domestic Consumption
World coffee consumption, which continues to grow every year, is on mark to reach 120 million bags in 2007, reaching a level of relative parity with world coffee production, which is estimated to be around 122 million bags this year. At 60 kilos per bag, that’s 7.2 billion kilos of coffee consumed this year.
The United States is the top consumer, accounting for 21 million bags a year, followed by Germany’s 9 million and Japan’s 7 million.
When it comes to per-capita consumption, Finland leads the way, with its citizens downing an average of 12 kilos of coffee a year, according to the International Coffee Organization.
Yet with the notable exception of Brazil, and to a lesser extent Costa Rica, most coffee-producing countries don’t drink their own product. Nicaragua’s per-capita coffee consumption, for example, is only 2 kilograms a year, compared to a per-capital consumption around 5 kilograms a year in Brazil and Costa Rica.
Osorio says the reason why coffee-producing nations generally don’t have a coffee drinking culture, is because the product is so important to the countries’ export sectors that everything except the really horrible coffee is shipped abroad.
“If there is no good quality coffee in the country, people don’t learn how to drink it,” he said.
Osorio said a challenge for Nicaragua will be to promote domestic consumption and foster a new market here, learning from the success of Brazil, which in the past decade has gone from consuming 8 million bags of coffee to 16 million annually.
The role of coffee houses, which have started popping up in Nicaragua over the past three years, will do wonders for promoting domestic consumption, he said.
“This gives the market great force, with real consumption, not artificial retention of the product,” he said.
Eventually,Osorio said, the domestic market can become an attractive option to local producers, who will find that they save on shipping and export costs by selling locally.
“This creates a situation where the foreign market will have to pay more if they want to buy the coffee,” he said.
Felix Didn’t Affect Harvest
Despite initial fears that heavy rains predicted from Hurricane Felix could destroy much of Nicaragua’s 2007/08 coffee harvest, which begins next month, reports from the coffee-growing region this week suggested that those concerns would not pan out.
Walter Navas, executive director of Nicaragua’s National Coffee Council, told Reuters business wire Sept. 4 that Hurricane Felix could wipe out half of the country’s coffee harvest, and coffee prices on stock markets in London and New York surged on speculative buying.
The hurricane, however, didn’t have the effect on the coffee harvest that many feared, according to coffee producer and industry leader Henry Hüeck.
Hüeck spent two days after the hurricane passed traveling around the coffee-growing region up north to check on his farms and speak with other producers in Matagalpa, Ocotal, Estelí and Jinotega.
“Everything is normal,” Hüeck reported. “There is no problem in the coffee-growing zone.”
