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Ecuadorian coffee production is in decline and now supplies only 50% of national consumption

Published on April 08, 2024

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Coffee production has declined to the point where Ecuador is now importing coffee from Brazil, Vietnam, Colombia, Central America, the United States, and other markets.

Coffee production in Ecuador has been declining for many years. Although there are no accurate figures, the Ecuadorian National Coffee Association (Anecafé) estimates that in the last three years, production has averaged 200,000 quintals per year, equivalent to 150,000 60-kilogram bags of coffee.

However, the national consumption demand is more than 300,000 60 kg bags per year, showing that national production cannot supply local demand, which has instead been growing between 5% and 10% per year.

The president of Anecafé, Joseph Massoud, estimates that the production deficit is around 215,000 bags per year, which includes not only what is needed to supply national consumption but also the additional amount that must be available in warehouses and points of sale.

The drop in production, ongoing for several decades, is attributed to factors such as a sharp decline in grain prices in the 1990s, pest problems, and especially a lack of public policies, adds Pablo Pinargote, general manager of Anecafé.

“The State has not had a policy focused on agriculture,” says Pinargote, who recalls that several decades ago the country produced 2.5 million bags of coffee per year.

According to the union representative, the sector requires lines of credit with three years of grace and low interest rates to boost production and supply local consumption.

Sweet & Coffee Supplier

In Ecuador, two varieties of coffee are produced: Arabica or Arabica, which is grown above 800 meters above sea level, and Robusta, grown in low areas, between 200 and 600 meters above sea level.

Vicente Cárdenas is an agronomist and has been dedicated to the production of Arabica coffee for more than 25 years.

On his Modelo Puyango farm in Loja, he harvests 20 to 40 quintals per hectare per year at 1,300 meters above sea level. There are four hectares, but not all of them are always in production. In 2023, he harvested between 60 and 70 quintals of coffee beans.

Cárdenas produces natural coffee, in which the coffee cherry, the fruit of the plant, is dried with the peel, and special, in which the coffee cherry is pulped and then goes through a fermentation, washing, and drying process at 11.5% or 12% humidity.

This special Arabica coffee is sold to the Sweet & Coffee chain as part of a group of 80 coffee producers from the Puyango canton in Loja. Every year, this group supplies about 800 quintals of parchment coffee (dry beans, covered by a thin shell) to the first coffee shop chain in the country, founded in Guayaquil by the company Dulcafe, which in 2022 reached sales of $54.3 million.

Sweet & Coffee continues processing that coffee for consumption in its cafes. As it is a special height coffee, the Puyango producers sell the quintal to the chain between $250 and $300.

Cárdenas has also added value to his coffee, producing ground roasted coffee under his Exquisito Coffee brand, which he sells in small quantities to intermediaries or individuals. In 2019, he was a finalist in the Anecafé Golden Cup contest, and his brand was exported to Japan, along with those of other finalists.

Although he has managed to sustain himself, he admits that the sector is increasingly diminished. In his canton alone, production has dropped from 60,000 bags to 4,000 a year in 15 years.

“The coffee sector has been abandoned by the State for 20 years, but we producers have put up resistance so that coffee crops do not disappear, as happened with cotton. We have made it known to the world that we have the best quality coffee,” says Cárdenas, proud of his product.

But the private sector has not been absent. Cárdenas says that Dulcafe has been promoting the Sowing a Commitment program, with which 200,000 coffee plants are renewed per year in the canton of Puyango, for three years.

Import for Two Purposes

Given the production deficit, the country imports soluble coffee from other markets to cover local consumption. In 2023, Ecuador imported 140,390 bags of soluble coffee or 3,233 tons, representing a growth of 63% compared to 2022.

However, most of it is imported in grain by the industrial sector, which adds value to this raw material for re-export to other markets as soluble or instant coffee. A minimal part, close to 5%, stays in Ecuador for local consumption.

Imported coffee comes from Brazil, Vietnam, Colombia, Central America, the United States, and other markets. “We need to produce about 3 million quintals again to supply the installed capacity of the national industry. This is a gold mine,” says Pinargote.

Rising Prices

In 2023, Ecuador exported 608,374 bags of coffee, equivalent to $122 million. This represented a growth of 13% in volume and 8% in value, according to Anecafé reports.

However, ten years ago, the sector doubled its current export levels. In 2013, the country exported 1.3 million bags, equivalent to $218 million.

This drop responds, in part, to the strong competition in soluble coffee from large markets such as Vietnam.

Of the total volume exported in 2023, 95% corresponds to industrialized or soluble coffee.

Germany is the main export country for soluble coffee from Ecuador. It is also exported to destinations such as the United States, Russia, Poland, Colombia, and Peru.

In the last six months, the soluble coffee industry has faced the rise in the price of robusta coffee, green beans, which is its raw material. The price per pound of this variety, which is cheaper than Arabica, has gone from $1.10 to $1.70, details Joseph Massoud, president of Anecafé.

This price increase responds to lower supply from Vietnam, the largest producer and exporter of robusta coffee in the world.

Arabica coffee has remained on the rise in the last two years, at around $2 per pound.

Although exports rose, driven by industrialized coffee, grain exports (Arabica or Robusta) fell by 60% in 2023, due to greater internal demand, in a market with a production deficit, explains Pinargote.


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