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Is Africa Changing From Coffee Exporter to Consumer?
In countries such as Tanzania, Rwanda and Burundi, output is down almost 50 percent as plantations fall into neglect. In Uganda, local consumption is still small, but growing demand from local drinkers adds to an already strained market. Severe drought in Brazil impacted supplies from the world’s largest coffee producer. Demand is up among big roasters in Europe and the U.S. coffee prices on global exchanges have skyrocketed, WallStreetJournal reports.
The cost of arabica coffee, known for its mild taste, has increased more than 80 percent this year, while robust demand is up about 27 percent, according to the ICE Futures U.S. exchange. Prices for coffee in Uganda, Burundi and Tanzania have risen an average of 30 percent since the beginning of 2014, according to WSJ.
However, outdated farming practices and neglect from years of volatile coffee prices left many parts of Africa with decreased capacity to produce. Whenever prices drop, farmers abandon plantations, even uprooting their trees. They attempt to boost output again only when the market recovers.
“Every exporter is now looking for more coffee beans,” says Nelson Niwahebwa, the general manager of an exporting company, Banyankole Kweterana Ltd., in Uganda’s main robusta-growing region. He then stated, “It’s not easy to even meet contractual obligations with our existing clients.”
Uganda historically produces robusta beans, but the government has been encouraging farmers to plant the more desirable arabica variety. The WSJ then went on to say, Arabica now accounts for 30 percent of production, up from around 15-to-20 percent three years ago.
Source: AFK Insider
