Why does Peruvian coffee production increase but farmers still face many difficulties?
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Coffee production in Peru is expected to increase by about 16% in the 2023/24 crop year. However, according to USDA’s recent market report from the Foreign Agricultural Service (FAS) on the Peruvian coffee industry, many coffee farmers do not make much profit and face difficulties in coffee production and trading. coffee as production increases. Why so? Let’s find out with 43 Factory Coffee Roaster!
Peruvian coffee production increases sharply in crop year 2023/24
According to the FAS report, Peru continues to be the world’s top exporter of organic coffee in 2022/23. The major importers of Peruvian green coffee beans include Germany (20%), Belgium (12%) and Colombia (9%). However, the report says this has been a particularly difficult year for Peruvian coffee producers. Peruvian coffee production fell 13% to 3,636 bags along with lower prices in the previous crop, causing a sharp drop in producer profits. The increase in production costs, especially the sudden increase in fertilizer prices, makes the financial resources of many farms become scarce. In addition, the production and business situation was also affected by social and political instability during this period.
By 2023/24, forecast data from FAS has shown a clear recovery of Peruvian coffee production. The report estimates that the average production yield in the current market will be around 752 kg/ha, up 51% year-on-year. Total Peruvian coffee production is expected to reach 4.2 million bags in MY 2023/24, up from 3.6 million bags in MY 2022/23. This growth is being driven by higher prices, which have encouraged farm investment, agricultural inputs and fuller harvests.
Why does Peruvian coffee production increase but farmers still face many difficulties in production?
Despite higher output and prices, Peruvian coffee farmers still face many difficulties in production. Many coffee growing areas in Peru are affected by coffee leaf rust and fruit borer outbreaks. This may result in insufficient sales of finished products to cover the losses.
In addition, Peru is primarily a producer of high-quality arabica coffee. Coffee is produced according to the organic process, it is necessary to invest in input costs, certification, equipment during production and processing. Meanwhile, Peru’s coffee producers are mostly small-scale farmers with an average area of 3 hectares with limited financial resources. If farmers want to remain productive, farmers must borrow credit from coffee buyers or informal lenders (as Peruvian private banks usually do not accept mortgages on untitled land). . This leaves coffee producers in this country with a heavy burden with fixed-price sales contracts or high interest rates on debt repayments.
Furthermore, many Peruvian coffee producers are affected by the European Union’s (EU) No Deforestation Regulation. According to regulations, after December 31, 2020, products exported to the EU (including coffee) must ensure that they are not produced on deforested land. To implement this regulation, manufacturers need large enough financial resources for the process of construction, operation and also the ability to access and complete related procedures and certifications. In addition, under Peru’s current agricultural law, coffee producers will face difficulties in accessing certification, hindering their ability to export coffee to the EU. This caused the Peruvian coffee market to shrink, affecting the business and profits of farmers.
It can be seen that Peruvian coffee production has increased, but the situation of coffee production is still inadequate. Most of the producers are small-scale, limited in finance, access capacity, market barriers, etc. But they are always loyal to high-quality coffee and always on the list of countries. leading producer of organic coffee in the world. If you want to enjoy them, please refer to the coffee at Finca El Lechero – Peruvian coffee farm famous for the quality of coffee beans is always guaranteed at the highest level.
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Source: dailycoffeenews
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