Yunnan's coffee planting area climbed from just over 300,000 mu in 2008 to more than 1.4 million mu today, and its output once accounted for over 99% of the national total. Yet behind this industrial expansion, the road has not been smooth. Since 2012, international coffee futures prices have continued to fall, leaving Yunnan coffee farmers struggling at the edge of the cost line; in the 2014 production season, they were hit by a triple blow of drought, cold damage, and abandoned harvesting, with output plunging from an expected 100,000 tons to less than 60,000 tons, while purchase prices, driven by factors such as drought in Brazil, saw their largest single-month increase in 20 years. Lincang, as an emerging main production area, rose rapidly, and companies such as Lingfeng Coffee began implementing a quality traceability system. This article will review the cultivation situation, flavor characteristics, and future development trends of Yunnan Arabica coffee beans.

In recent years, Yunnan's coffee industry has been advancing rapidly. In 2008, the province's coffee planting area was only just over 300,000 mu, but today it has exceeded 1.4 million mu; output has also risen from around 30,000 tons to more than 80,000 tons in 2013. On China's coffee map, Yunnan accounts for more than 99% of both planting area and output.

However, this path of rapid rise has not been smooth, and the outside world knows little about the twists and hardships involved.

Coffee prices ride a roller coaster

After 2012, international coffee futures prices continued to decline, and Yunnan's coffee market was dragged down along with them. For two consecutive years, local coffee prices hovered near the cost line, growers' returns were meager, and coffee farmers' livelihoods could not be effectively guaranteed.

According to the Yunnan Coffee Industry Association, by late March, Yunnan's coffee harvest was nearing its end. The encouraging news was that purchase prices had rebounded noticeably; the worrying news was that output had shrunk sharply.

It is understood that in February just past, coffee prices recorded their largest single-month increase in 20 years: rising from 114 cents per pound on January 28, 2014, to 180 cents per pound on February 28. But at the same time, Yunnan's coffee output fell from an expected 100,000 tons to possibly less than 60,000 tons.

According to the association, at the end of January 2014, as the international coffee futures market recovered, Yunnan coffee prices rose rapidly for a time, with purchase prices climbing from about 13 yuan per kilogram to about 25 yuan. Especially in February 2014, international coffee prices posted their largest single-month increase in 20 years, while Yunnan coffee purchase prices fell back from 26 yuan per kilogram a week earlier to 22 yuan.

A relevant person in charge of the Yunnan Coffee Industry Association analyzed that there were roughly three reasons for the rapid rise in coffee prices: first, since November 2013, Brazil, the world's largest coffee producer, had suffered drought, which was expected to drag down coffee output; second, some coffee-producing countries in Central and South America were hit by coffee leaf rust, reducing expected output; third, coffee futures had been depressed for a long time, and speculators intended to push prices up to invigorate trading in the futures market.

Experts pointed out that from the perspective of supply and demand, once coffee output is expected to decline, the market may face shortage, and price increases become inevitable.

As for whether coffee prices will continue to rise or turn downward afterward, the association's responsible person said: setting aside other factors and judging only from the relationship between production and consumption, coffee prices are expected to fluctuate around 200 cents between March and May. After May, producing areas such as Brazil and Central and South America will successively enter the harvest period. Only then, depending on whether output increases, remains flat, or decreases, will coffee futures prices take a new direction—if output is high, prices face downward pressure; if output is flat, prices tend to stabilize; if output is low, prices may rise to varying degrees.

Coffee output falls sharply

Statistics show that in 2013 Yunnan produced more than 80,000 tons of coffee, but prices were low, leaving coffee farmers and coffee enterprises with little profit. In 2014, the planting area increased to more than 1.4 million mu, and the area in production expanded to more than 700,000 mu. According to the association's initial estimate, output for this season should have reached about 100,000 tons. But as of March 20, 2014, with the harvest nearing its end, output was less than 60,000 tons.

Hu Lu, deputy secretary-general of the Yunnan Coffee Industry Association, gave an example, saying that Baoshan's output this harvest season was less than 50% of last year's, at only about 9,000 tons; Pu'er's output also fell by at least 30% from last year. Total output for the entire Yunnan season would be hard pressed to exceed 60,000 tons, meaning the reduction exceeded 40%.

Yang Zhiqi, executive vice president of the association and chairman of Lingfeng Coffee, analyzed that there were three reasons for the sharp decline in Yunnan coffee output this season: first, coffee suffered varying degrees of drought in the early harvest period; second, in the early stage of coffee ripening, prices fell below the cost line, and some coffee farmers gave up harvesting, causing the fruit to rot on the trees; third, from December 15 to 22 last year, more than a week of continuous cold damage affected large areas of Yunnan coffee. Under this triple blow, output fell from an estimated 100,000 tons to less than 60,000 tons.

The coffee industry rises rapidly

Wang Kuirong, director of the Lincang Municipal Agriculture Bureau in Yunnan, introduced that by the end of 2013, Lincang's coffee planting area had reached 554,200 mu, making it Yunnan's second-largest main coffee-producing area.

"Lincang's altitude and latitude are basically comparable to those of Colombia, a major global coffee country, and its climate conditions are very suitable for growing coffee. In addition, of its 24,000 square kilometers of land, one-third lies below 1,300 meters in altitude, and these places are all suitable for coffee cultivation, so Lincang has great space and potential for developing the coffee industry." Wang Kuirong is full of confidence in Lincang coffee's prospects.

Wang Kuirong said: At present, Lincang is promoting the rapid development of the coffee industry through a model led by the government, supported by enterprises, and involving farmers, having introduced leading enterprises such as Lincang Lingfeng Coffee Industry Development Co., Ltd. and Lincang Hogood Coffee Co., Ltd., and driving industrial growth through the "company + base + coffee planting professional cooperative + farmer" approach. With government support and funding guarantees, most farmers have adjusted their planting structure, opening a new path for local farmers to escape poverty and become prosperous.

Yang Zhiqi said: Coffee planting produces no output in the first two years, so Lingfeng Company has actively promoted intercropping models such as "coffee + corn" and "coffee + beans," adhering to the combination of long-term and short-term crops, ensuring that both coffee production and grain production are not neglected, and solving the income problem of the people before coffee comes into production.

Building a coffee quality traceability system

In recent years, Yunnan's coffee industry has developed rapidly, with planting area and output continuing to increase, but Yunnan coffee is rarely consumed domestically and has long been mainly exported as raw materials, making it difficult for domestic consumption to drive the industry. The key factors are incomplete industrial development and a lack of brand building by enterprises.

To this end, Lingfeng Coffee Company, currently the largest coffee planting enterprise in China, is registering its coffee bases, with census registration expected to be completed by the end of April 2014. This is the first step in Lingfeng Coffee's launch of "coffee quality traceability system construction."

Yang Zhiqi, chairman of Lingfeng Coffee Company, said: "Through the quality traceability system, consumers can consume Yunnan coffee with clear understanding: What is the quality? When was it planted? What variety? In what environment did it grow? How was it harvested, processed, produced, and transported? Consumers can learn accurate information."

In the past, Yunnan coffee was mainly exported as raw materials, and a quality traceability system had not yet been established, making it impossible to achieve "high quality at a high price." Exporting beans in bulk inevitably allowed individual low-quality products to affect the overall image of Yunnan coffee.

At present, Lingfeng Coffee Company is exploring the establishment of a coffee quality traceability system featuring "records in production, queryable information, traceable flow, accountable responsibility, and recallable products."

This measure marks that Yunnan coffee now has its own identity card when entering the market.

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