Colombia At-A-Glance:
Produced 10 - 14 million bags of coffee per year from 2013-2023
Coffee Types: Washed Arabica (Typica, Bourbon, Caturra, Castillo)
Coffee Harvest: Oct – Sep (Main crop) & Apr – Mar (Mid-crop - "Mitaca")
Avg Farm Size: 4.5 hec
Why Colombia Matters
Colombia is the most important producer of Washed Milds and is the defacto benchmark for all coffees in the category.
Not only a player for washed coffees, Colombia is also a global powerhouse in the world’s Arabica market as the 2nd largest Arabica producing country and produces coffee year-round with its dual season crop.
Whether you are a consumer of coffee, a specialty roaster, or a futures trader, anyone involved in the coffee market needs a thorough understanding of this key origin.
In this article, we explore Colombia as an origin, its role in global S&D, and its influence on price dynamics.
Know Your History (of Production)
Although Colombia is a global phenomenon (in part from the Juan Valdez marketing campaigns of the 1950s), its recent production history (particularly from the 90s on) has left the country reeling from highs and lows.
The Colombian production is limited to Arabica (all washed), and this plant tends to be more fragile than its more "robust" counterpart and therefore susceptible to disease and adverse weather. Both of these factors would play a role in crises across the origin that sent prices reeling.
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Before delving into Colombia’s most recent crisis, let’s first provide some context. The graphic below tells an interesting story.
Production increased in the 1970s and 1980s [1 in figure above] following the successful marketing campaigns and a global appreciation for Colombian Coffee. This was limited by the ICO's production quota system though, which came to an end in July 1989. The end of this quota system led to an explosion in global coffee production that peaked in Colombia with 18 million bags in 1991. [2]
With the quotas gone, Global supply skyrocketed and the impact on prices was predictable. Coffee prices collapsed and with prices at multi-decade lows, coffee production fell as farmers sought more profitable crops [3].
The Brazil frost of 1994 made coffee profitable again and Colombian production maintained in the 10-12m bag range until the next crisis--Roya.
Roya (also known as rust disease) is a fungus that defoliates coffee trees, making the plants sickly and often kills them. Waves of Roya decimated Colombian production from 2008 to 2012 on account of changing weather patterns and it would be years before the country recovered [4].
The FNC started a campaign of replanting coffee trees with rust-resistant varieties (Castillo) and the country eventually recovered in 2014. However, during the worst of the rust crisis, Colombia only produced an average of only 8.5m bags per year, a number well below the previous 5 year norm of 11.5m.
The Rust epidemic then rose Northwards through the other Central American countries and the world experienced a washed Arabica shortage. Washed Arabicas are core to the certified inventory, (especially at that time because KC was a washed arabica contract with no Brazil's). Consequently, the C market experienced a major rally, from 120c to 300c, over the 2008-2011 period.
With the higher prices and a successful rust eradication campaign, Colombia began its recovery. Increasing from 2013 onwards, up to a peak of 14.6m bags in 2016.
Although Colombians are becoming less interested in growing coffee, production has been relatively stable since the rust crisis. One reason for this is that the Castillo variety not only is rust resistant, but it also makes for higher productivity.
Unfortunately, it wasn't long before disaster struck again.
Two consecutive years of bad weather (increased wetness from extended La Niña) have decimated production once again. Production came down in 21/22 by ~1.7m bags. The recent overly wet conditions are making for another decline in 22/23. Projections now suggest ~10m bags for the first time in 10 years, since the rust crisis.
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...to be continued!