Coffee Bean

Coffee Bean Global Market Outlook

• The world’s coffee production in 2022/23 F is expected to remain at 172,750 bags (60 Kg) compared to previous year of 166,174 bags (60 Kg) due primarily to Brazil’s Arabica crop entering the on-year of the biennial production cycle.

• Also, there is a concern over the supply-related disruptions, due to the ongoing Russia–Ukraine war.

Global Coffee Supply–Demand Analysis

Market Outlook (2021/2022 E)

• Brazil's Arabica crop is expected to enter the on-year of the biennial production cycle in 2022/23, which will boost global coffee production by 6.6 million bags from the previous year to 172.8 million bags.

• It is expected that the global consumption will rise by 800,000 bags to 167.9 million, with the largest increases occurring in the European Union, the United States, and Brazil.

• Due to lower yields, the Vietnam production is expected to be 30.2 million bags, down 1.4 million from last year's record harvest.

Global Coffee Trade Dynamics

Colombia’s coffee export decreased by 10 percent in the last 12 months (from Feb 2022 to Jan 2023) compared to previous year (same period). Global coffee bean exports are expected to be 3.0 million bags lower in 2022–2023 than the previous year. Also, it is estimated that imports into the European Union, which make up around 40 percent of all imports worldwide, will decline by 2.1 million bags.

• Brazil is the leading exporter, due to its global ranking as the top producer, while the US is the second leading importer of coffee bean

• The EU countries, such as Switzerland, Germany, Italy, and France, are blenders, who process coffee beans and re-export to other countries, as EU countries are dominant coffee roasters

Cost Structure Analysis of Coffee Beans

• The cost structure for coffee cultivation varies with different factors, such as region, weather, soil conditions, type of coffee, etc. Coffee cost structure has two parts, namely the Investment or Setting up phase and the maintenance phase for four years.

• The coffee plantation setting up consumes around 58 percent of the total cost. This majorly includes land preparation, farm vehicles, watering equipment and other machineries, and working quarters for the workers to stay

• Initial phase of coffee cultivation is called the gestation period and requires extensive labor and investment in the form of maintenance, such as manure, fertilizer, etc.

• During the fruit bearing phase, which is typically during the fourth year, the labor cost for pruning, fruit picking, and transport cost is the highest