Panama
Sees Less Specialty Coffee Crop, High
Prices
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Panama Sees Less
Specialty Coffee Crop, High
Prices
By Sean Mattson
Boquete, Panama (Reuters) - Panama's
specialty coffee growers say they harvested
fewer high-priced beans this year and
struggled to meet contracts with buyers
because of bad weather and problems with
labor and investments.
Panama produces a tiny amount of coffee
compared to its Central American neighbors
-- about 190,000 60-kg bags a year -- but it
has a dedicated clientele of specialty
buyers who pay top dollar for its gourmet
crop, like the prized geisha beans.
Poor flowering and heavy rain and wind
during the harvest season, which is coming
to a close this month, halved the output of
some of the Panama's best known producers,
including Hacienda La Esmeralda, which set
an online auction record in 2007 when it
sold its coffee for $130 per pound.
"It was a rough year," said Daniel Peterson,
of the family-owned farm high in the
forested mountains of western Panama's
Boquete region. Peterson said La Esmeralda
produced 150 60-kg bags this year compared
with 300 bags last year.
A labor shortage in Panama has pushed up
costs for farmers as workers found
better-paying jobs in the construction
industry or across the border on coffee
farms in Costa Rica. Growers with tight
budgets invested less in maintenance.
Government estimates show the size of
Panama's small coffee crop will stay flat or
decrease slightly in the 2008/09 cycle.
But Ricardo Koyner, the president of the
Specialty Coffee Association of Panama,
estimates output among the members is down
30 percent.
One sign production is off was a drop in the
number of farmers at Panama's annual coffee
cupping this month, where international
buyers rate quality in blind testing.
Only 33 coffees were entered into the
contest this year compared with 54 in 2008,
said Francisco Serracin, owner of Don Pachi
Estate coffee farm, also in Boquete.
Small lots of the top-rated beans go to an
online auction in late May.
"Many producers have had to see what they
can do to meet their commitments with their
buyers," said Serracin.
TIGHT SUPPLY ACROSS THE REGION
Panama's tight supplies mirror the situation
in larger Latin American coffee-producing
nations like Colombia and Guatemala where
high-end coffees are commanding record
prices.
The International Coffee Organization, or
ICO, said a shortfall of around 2.5 million
bags of Colombian milds pushed prices up in
April to their highest monthly average since
February 1998.
Prices also rose as weather problems and
high labor and fertilizer costs limited the
replacement export ability of Central
America, the ICO said in a report.
Coffee buyers and analysts said demand for
Panama's gourmet, expensive beans will
remain strong despite the economic downturn
since most consumers who seek out the
country's crop are connoisseurs like
followers of fine wine.
"Once you drive an expensive car and
appreciate the fine differences, it's hard
to go back to an old clunker. And it's the
same thing in terms of coffee," Judy Ganes,
a New York-based coffee consultant, said.
Panama has found a niche with these high-end
buyers who are still willing to shell out
cash for the best lots, but larger coffee
chains like Starbucks (SBUX.O) are trying to
lower prices and cut costs.
"We're probably less inclined to go out on a
limb for a really expensive coffee right
now," said Doug Welsh, a vice president of
Peet's Coffee & Tea (PEET.O), a
California-based specialty coffee buyer and
smaller rival of Starbucks.
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