Indonesian coffee production to decline, despite La Nina relief

Indonesian coffee production is set to decline in 2016-17 on the dryness effects of the El Nino in late 2015.

The USDA’s Jakarta bureau predicts that coffee production next year will fall to 8.9m bags, compared with official estimates at 10m bags. Last year’s production was at 12.1m bags.

Although wet weather is expected to provide relief to the excessive dryness in early to mid-2017, it says Indonesian exports will decline due to “growing consumption” and “low productivity” in 2016-17.

Trade data in the first five months to May in 2016 showed that green bean shipments from Indonesia fell 33% to 117,000 tonnes.

Weather woes

Indonesian traders and farmers have indicated production declines in both Arabica and Robusta to USDA officials.

Weather data indicates that the July to September period was wetter than usual and wet conditions are to continue.

But “it is still not clear to what extent this will improve Indonesia’s prospects for coffee production,” said the USDA.

“Growers notes that although the rain is providing a welcome relief, its frequency and duration, as well as its interference with pollination will determine yields in the coming year,” it said.

Moreover, Indonesian coffee is mostly produced by small farmers who use archaic low yield management practices, so it is highly affected by weather conditions.

Companies operating larger plantations are able to employ better farming techniques and avoid such weather-induced conditions.

Exports decline

Consumption of coffee in Indonesia is set to rise to 3.3m bags, from 3.1m bags a year earlier, triggered by a rise of coffee outlets.

Growing consumption and low productivity in 2016-17 will mean that coffee exports from Indonesia – already sharply down – will fall.

The bureau estimates exports will fall next year to 5.5m bags from the 6.1m bags it had estimated earlier.

Declining production and increasing consumption will also reduce coffee stocks to 84,000 bags next year from 94,000 in 2015-16.

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