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348. Coffee rust: All along the watchtower.

2013-04-11 Comments Off on 348. Coffee rust: All along the watchtower.

There seem to be very few conversations in coffee these days that are not influenced in some way by the coffee rust crisis in Central America.

And there are other long-standing conversations that seem to be assuming renewed importance in the current context.  One of these is the return on the investments that farmers make to add value to their coffee through quality improvements and certifications.

While plenty of coffee experts have weighed in on this issue over the years, the words that resonate loudest in my mind are those of Bob Dylan:

Businessmen drink my wine.
Plowmen dig my earth.
None of them along the line
Know what any of it is worth.

The threat posed to production by coffee leaf rust is weighing heavily on the minds of coffee farmers these days.  As they respond, their decisions about how much to invest in coffee quality and whether to farm organically will likely depend in large part on the implications of their choices on farm productivity.  But those decisions will also depend in some measure on how willing they believe buyers will be to compensate them for their efforts at differentiation.

Traditional varieties.

In Colombia, where coffee leaf rust has decimated coffee production, farmers have opted – to the chagrin of quality-focused roasters who prefer traditional cultivars — to renovate their coffee plantations with the rust-resistant Castillo hybrid.

I have written at length here on the choice farmers face in the Colombian context.  In general, if farmers choose Castillo, it is to minimize production risk and maximize yields.  If they opt for Caturra and other traditional cultivars that are more susceptible to coffee rust, they accept greater production risk while increasing the likelihood of earning quality-based premiums in the marketplace.  But are these farmers getting enough of a payoff to justify the additional production risk they accept in the name of quality?  Unless roasters are willing to compensate farmers for the risks they take to plant traditional varieties, the rust crisis will almost certainly lead to deeper penetration of rust-resistant hybrids.

Organic certification.

The organic certification rolls have thinned in Central America in recent years, with significant numbers of farmers abandoning organic practices and opting instead for agrochemicals in the hope of achieving higher yields and cashing in on high market prices.  This was especially true during the market rally that took the NY “C” market up to $3 a pound in 2011.  The trend has been driven by the perception among farmers that organic farming is a losing proposition economically: it requires more labor and carries higher production costs than conventional farming and cannot generate the same yields as a conventional approach.  While the market is no longer providing the same kind of financial incentives for abandoning organic farming as it did back in 2011, farmers facing the prospect of a coffee rust epidemic are asking the question: is organic farming worth it?

In coverage of the rust issue, and even in the communications I have had with farmers and others in the coffee sector, there seems to be a stubborn belief that organic farmers are more vulnerable to coffee rust than farmers who apply agrochemicals.  Our experience in the field suggests that production losses to coffee rust have been more a function of farm management than a question of whether a grower employs conventional or organic farming methods.  Synthetic fungicides can help control coffee rust when applied at the precisely the right times of the coffee cycle.  But there are also organic recipes for fungicides that have a strong track record when applied with the same kind of precision.

The official response to coffee rust in Central America so far seems to have been heavily skewed toward agrochemical-intensive approaches, with little government support pledged to date in support of organic methods of rust control.  If buyers interested in organic coffee don’t demonstrate a willingness to compensate farmers for the added cost and perceived risk associated with organic production, the conventional response to the coffee rust crisis may tempt more farmers to leave the organic fold.