How Is Peru's Coffee Production Recovering After El Niño?

Peru's coffee production fell in the first quarter of the 2023/24 marketing year because El Niño brought higher temperatures and scarce rainfall, and coffee leaf rust added further pressure on coffee trees. Output then rebounded to 3.95 million bags, a 9% rise over the previous year, according to the latest USDA report.

For 2024/25, the USDA expects Peru's coffee production to reach 4.22 million bags and exports 4.07 million bags, gains of 7% and 6%. High international prices are prompting farmers to invest more in planting and fertilizer. Progress on the Chancay Port project with China also supports future exports.

The latest report from the United States Department of Agriculture shows that Peru's coffee industry is gradually emerging from the shadow of El Niño. After facing severe challenges in the first quarter of the 2023/24 fiscal year, production has recovered to 3.95 million bags, achieving a 9% year-on-year increase. Looking ahead to the 2024/25 marketing year, Peru's coffee production and exports are expected to rise by 7% and 6% respectively, reaching 4.22 million bags and 4.07 million bags. International coffee prices remain high, encouraging coffee farmers to increase investment in planting and fertilizers, injecting momentum into the industry's recovery. Meanwhile, Peru and China have made new progress in cooperation on the Chancay Port project, creating favorable conditions for increased exports of coffee and other agricultural products to China in the future. Front Street Coffee will continue to monitor the origin dynamics and flavor performance of Peruvian coffee.

Recently, the United States Department of Agriculture released its latest status report on the coffee industry of the South American country Peru. The report shows that in the previous year, Peru's coffee production declined due to the impact of El Niño.

However, Peru has now largely shaken off the negative effects of El Niño, with both coffee production and exports showing growth trends, expected to achieve increases of 7% and 6% respectively in the 2024/25 marketing year.

Looking back at the first quarter of the 2023/24 fiscal year, coffee growers faced numerous difficulties. El Niño led to rising temperatures and scarce rainfall, and combined with the continued ravages of coffee leaf rust, severely constrained the normal growth of coffee trees.

In the subsequent quarters, the production areas gradually escaped El Niño's grip, and production rebounded to 3.95 million bags. Although this figure was 6% lower than previous forecasts, it still represented a 9% increase compared to the previous year.

Based on this, coffee production in the 2024/25 marketing year is expected to reach 4.22 million bags (60 kg each), with exports expected to reach 4.07 million bags. This is mainly due to current international coffee prices remaining high, prompting coffee farmers to increase investment in planting and fertilizers, thereby boosting production and exports.

Currently, Peru's national coffee harvested area is estimated at 335,000 hectares, unchanged from the previous year. In terms of yield, average production is expected to be 756 kg per hectare, a slight increase from the previous year.

Despite the upward trend in production, coffee production is still plagued by lingering issues from the 2013 coffee leaf rust outbreak. In addition, the 2020 coffee berry borer infestation continues to affect nearly 40% of current coffee production, requiring ongoing phytosanitary treatment and mitigation measures such as improved tree varieties.

In terms of exports, Peru's coffee exports in the 2024/25 marketing year will increase by 6.4% compared to the previous year along with production growth, expected to reach 4.07 million bags (60 kg each).

Currently, the United States remains the largest export market for Peruvian coffee, accounting for 28% of total exports, followed by Germany and Belgium at 18% and 9% respectively.

In 2019, a Chinese company invested 1.3 billion USD to acquire 60% equity in Peru's Chancay Port (Terminales Portuarios Chancay S.A.). Peru's National Port Authority (APN) granted COSCO Shipping Group exclusive operating rights to Chancay Port, and the Chinese company immediately began construction. However, as the project neared completion, Peru unilaterally announced the revocation of the Chinese company's exclusive operating rights.

Recently, on June 5, the President of Peru signed an amendment to the National Port System Law, explicitly stipulating that Peru's National Port Authority has the right to grant exclusive operating rights to private enterprises. This means the Chinese company is expected to regain exclusive operating rights to the Chancay Port under construction in Peru.

Peru's Minister of Labor and Employment Promotion stated that this move is extremely beneficial for maintaining good relations with China. China's investment in Chancay Port will create numerous job opportunities, help establish Peru as a port hub in Latin America, and promote the growth of bilateral trade between China and Peru.

In 2023, bilateral goods imports and exports between China and Peru reached 37,691,294,300 USD, covering agricultural products such as fruits and coffee. In this regard, Peruvian coffee farmers generally believe that China's coffee consumption market continues to expand, and the deepening of China-Peru trade will help increase Peru's coffee exports to China. Front Street Coffee will also continue to monitor the development of Peruvian coffee in the Chinese market, bringing more quality origin beans to enthusiasts.

The above content is compiled by CoffeeHunters, a coffee news website.