Expanding Jamaica Blue Mountain Coffee in the EU

Getting Serious About Supply

Expanding Jamaica Blue Mountain coffee in the EU Windward Commodities 30th June 2022

The results from a profitability model established in the Journal of Agriculture byMarioMighty and Gabriel Granco align with numbers in the more recent FAO study. This looked in detail at two year (2016-17 and 2018-19) and concluded that in ‘good’ years, when there is limited production and prices rise there is money to be made in smallholder JBM production, but when farmers increase production in response to this, oversupply results in lower prices and economic loss—the classic supply and demand curve. Between 2016-17 and 2018-19 harvest years, the average cost of production at current yields has not changed significantly at USD575 per average farm (below a quarter of an acre giving a USD2,600 cost per acre). This contrasts with the average income per farm of USD723/ farm in 2016-17 (an overall profit) and USD483 (an overall loss) in 2018-19. However, for JBM farmers, income is much more volatile, albeit from a much higher level. In 2018-19, Non-Blue Mountain (NBM) coffee farms saw a 31.5% drop in income turning a USD111 profit to a USD98 loss per farm. JBM farms saw a larger, 51.1% drop in profits but went from USD847 to a USD130 profit, keeping the farms marginal but still viable. The model confirms the challenges to economic feasibility in the Jamaica Coffee Industry. Production anywhere outside of the JBM region is a low profit undertaking and this continues to drive the concentration of coffee farmers into the JBM region. The 2017 GDP per capita for Jamaica was just over USD5,100 (World Bank Group 2019), a producer would need to cultivate at least 25 acres in the NBM region to achieve the mean GDP level in the country as compared to 1.3 acres in the JBM region in the 2016–2017 coffee year. However, the results for the 2018–2019 coffee year paints a grimmer picture. With the sharp decrease in prices paid per box to producers, a farmer would need to cultivate at least 8.7 acres or almost 3.5 hectares in the JBM region to achieve the mean GDP level for the island. With losses being incurred with every unit area being cultivated in the NBM region, farmers would need to further reduce production costs or increase revenues through yield or price in order to achieve the nation’s mean GDP level. These profitability differences by area are shown below: 7.3. The Trouble with Profitablity

Profitablity in the Easter Extension Region of the Jamaican Coffee Industry (2018-2019) Legend

JBM Region Parish Boundaries Eastern Region

Production Profitability 2018-2019 Eastern (USD) US$

($143.99) - ($50.00) ($49.99) - $0.00 $0.01 - $100.00 $100.01 - $200.00 Excluded Areas

Industry stakeholders need to consider the best route forward to remain economically viable, particularly at the farmer level. Considering that a significant proportion of the island’s small farmers cultivate less than one hectare of coffee, the decline in coffee production is likely to continue. A focus on improving yields and increasing farmer pricing to manage this lack of profitability will take time.

Time to Wake Up and ‘Cup’ the Coffee | 41