Indonesia’s 2015-16 Coffee Harvest Seen Up But El Niño Drought Looms

Dear Followers and Coffee Lovers, in the last few months SpillingTheBeans has been working on a major article project on the state of coffee production in Indonesia, one of the coffee origins in the world notoriously difficult to get credible information and data from. For these reports we travelled back to Indonesia last December for the first time in 10 years, visiting with Tsunami-survivor coffee growers in Aceh and conducting a fact-finding 2-week mission on the merits, quality, ethics, culture and history surrounding the amazing Kopi Luwak. We are SO EXCITED to let you know that in the coming weeks we will start to publish the first Indonesia articles, coffee reviews and other findings of this inspiring and highly adventurous crop trip, so please stay tuned RIGHT HERE for our Indonesia updates, coming up NEXT!

…and P.s. we have good news, coffee production from Indonesia’s new 2015-16 coffee harvest is set to recover to about 10 million bags after the last 5 years of disastrous weather-hit crops. But even if all the initial reports are promising, we still caution the effects of the latest El Nino-provoked drought that hit many Indonesian coffee regions between January and March. More news on this coming up NEXT right here at SpillingTheBeans, as well as our EXCLUSIVE Special Series on the over 300 years old coffee history and culture of Indonesia, world famous Luwak beans and unique reviews of Indonesian coffees!

For more information on the fundamental challenges Indonesia’s coffee sector is going through:
Indonesia’s 2012-13 and 2013-14 Coffee Crops Both Down As Rains Continue To Cause Havoc
JUL 29, 2013 (SpillingTheBeans)–Heavy rains and other weather problems continue to cause havoc to coffee farms in Indonesia, the world’s 3rd largest coffee producing country. The results are that not only the harvest in the last 2012-13 crop cycle, which was completed in April, but also the new 2013-14 crop are both coming in “significantly lower” than initial expectations.

SpillingTheBeans have in recent weeks conducted a series of interviews with traders, exporters and producer groups across Indonesia’s key growing areas and all agree that the ongoing problems of heavy rains during the entire last year continue to lead to damage.

They agree that production in the last 2012-13 harvest ended at a maximum of 10.5 million 60-kilogram bags with some saying actual output may has been as low as 10.3 million bags. They also say the negative effects of the rains have been so extensive that total production in the new 2013-14 crop is unlikely to reach more than about 9 million bags. And if the current rains continue, the figure for output in the 2013-14 harvest year could drop to as low as 8.5 million bags.

As domestic consumption even by the most conservative estimates is seen at at least 4.2 million bags today, this could send Indonesian coffee exports to repeat the low of the 2011-12 disaster crop where exports reached just over 4.9 million bags with exports preliminarily projected at between 4.5-4.9 million bags in the 2013-14 marketing year (April-March). A part of the deficit in the local market will likely be met by imports of Vietnamese coffee to use by the soluble industry.

All these reports come just – contrary to what has been reported by the International Coffee Organization’s (ICO) in the group’s latest monthly market report for the month of June – as evidence continues to grow of increasing crop losses from the recent rains to the new crop and from the severe drought to the last crop.

(Photo courtesy by AEKI in drought-hit Central Java from USDA Attache report May 2013)

In the last June market report released earlier this month the ICO said the 2012-13 crop from Indonesia was forecast to reach a potential record of over 12.7 million bags. This is, in theory, correct as all analysts and market players in Indonesia at the onset of the last harvest in April of 2012 (yes, LAST year) saw a potential for a harvest of between 11.5 and 12.5 million bags. In reality, however, the problem with the ICO figure is that the 2012-13 harvest already has been COMPLETED and we are ALREADY well into the new crop year.

There is no doubt that the 2012-13 crop was significantly better than the drought-hit crop of 2011-12 which according to most estimates ended at a little over 8 million bags. Exports in Indonesia’s 2012-13 crop cycle from April through March ended up 23 percent at 6.1 million bags but there is a long way from 6.1 million bags to 12.7 million bags. And while there is no doubt about the solid growth in local consumption, unless the local demand figure is adjusted upward to 6.6 million bags — which we clearly don’t believe is realistic — we do need to see the ICO figure come down dramatically or someone show us where the secret warehouse with 3-4 million bags of coffee is stored in Indonesia 🙂

Further evidence was revealed in the latest coffee export figures from Indonesia, which showed May exports down 10 percent at 600,000 bags from May exports last year of 665,749 bags, according to official data from Indonesia’s Ministry of Agriculture. This is a significant indicator of the availability and harvest size for the new crop as May is the first month where exports of the new crop start reaching the market.

Unless the local demand figure is adjusted upward to 6.6 million bags — which we clearly don’t believe is realistic — we do need to see the ICO figure come down dramatically or someone show us where the secret warehouse with 3-4 million bags of coffee is stored in Indonesia

The U.S. Department of Agriculture said in its first world coffee outlook for the 2013-14 marketing year that severe drought in most Indonesian coffee regions led to significant damage to the flowering and pegged the new crop to fall by 1.3 million bags to 9.2 million bags.

“The vast majority of growing regions had drought conditions during the flowering period, followed by heavy rains that caused many developing cherries to drop before the harvest,” said the USDA in the report which was released in late June.

Interestingly, the USDA “Attaché report” released directly from the U.S. Embassy in Jakarta, has the 2012-13 figure as low as 9.7 million bags. Time will soon enough, through the combination of the pace of exports and the value of premiums in the local cash market, show just where the Indonesian crop is headed but there is no doubt that the last 2012-13 harvest ended sharply down on expectations and the new crop will similarly end below early hopes of a rebound.

The only question will be how much lower the 2013-14 will be because of the heavy rains which are leaving freshly picked coffee rotting on the ground or causing mature coffee to ferment on the trees.

We welcome your comments – Happy Coffee Drinking