Coffee Working Group_Aug 27 2014

JAMAICA COFFEE

ASSESSMENT &

STRATEGIC ACTION PLAN

OVERVIEW

Coffee Working Group Meeting

August 27th, 2014

JAMAICA COFFEE PRODUCTION TREND: WHY ARE WE HERE?

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Bo

xes

Year

BM HM

Ivan

Dean

JAMAICA COFFEE ASSESSMENT: OBJECTIVE

What this study did NOT do:

Focus on post harvest

quality aspects

Examine markets

Take a statistically

significant sample of the BM

or HM regions

What this study did do:

Focus on factors that affect

farm yield / overall

Jamaican production

Determine farmer trends

Capture farm data to

support short, medium,

long-term solutions

Benchmark

SCENARIO: DO NOTHING

Collapse of coffee

value chain

Quality deterioration

Price drops

Smallholder mass exit

Strong social impact

Panama

Model

SCENARIO: BEST CASE

Sustainable and

profitable industry

Quality preserved and enhanced

Price maintained

Organized value chain

Win-win between farmers & producers

Champagne

model

FARM VISITS: SAMPLE OVERVIEW

Portland 20%

St Andrew 28%

St Thomas 23%

Hanover 3%

Manchester 5%

St Ann 5%

St Catherine 8%

West Moreland 8%

Farm visits 28 BM / 11 HM

39 farms visited

32 farms with

sufficient data

29 were further

analyzed (4 outliers)

15 5

8

2 2

7

Small Medium Large

Sampled Farms by Size

BM HM

Combination of data, field observation and expertise

PROTECTING & CONTROLLING YOUR DNA

97

56 53

13

Typica Catimor Geisha or Special Other (Caturra,Catuai)

% Farms with Varieties

Jamaica is an origin known for Typica, however there is

an increase in Catimor presence across high % of farms.

PROTECTING & CONTROLLING YOUR DNA

• We understand why - problem with yield, problem

with rust

• It will change cup quality and eventually damage

brand reputation

• Common thread across all stakeholders - varieties

• Any other agronomic recommendations need to

take variety control into account.

IMMEDIATE SOLUTIONS: VARIETIES

Conserve Typica

• Take serious rust control measures

• Create technical standards for nurseries

• Provide training on good planting techniques

Introduce new varieties

• ASAP

• Immediately stop planting first generation Catimor’s

• Consider Java

• Start parallel intro and trials with shortlist varieties

DATA TRENDS: FARMER PROFILES

Low yield

(8 bx/acre)

Average age: 62

Ave size: 5 acres (coffee)

Income from coffee: 62%

Average alt: 441 mts

Group 1 Average

yield

(20 bx/acre)

Average age: 49

Ave size: 4 acres (coffee)

Income from coffee: 28%

Average alt:

552 mts

Group 2

High yield (37 bx/acre)

Average age: 66

Ave size: 13 acres (coffee)

Income from coffee: 82%

Average alt:

672 mts

Group 3

Opportunist Smallholder Technified

Benchmarking

JAMAICA VS OTHER ORIGINS: YIELD PER ACRE

8

20

37

16 16

57 52

34

57

97

0

10

20

30

40

50

60

70

80

90

100

Bo

xes /

acre

JAMAICA VS OTHER ORIGINS: LABOR PRODUCTIVITY

36 29

174

120

40

150

0

20

40

60

80

100

120

140

160

180

200

Bo

xes p

er

100 m

an

days

JAMAICA VS OTHER ORIGINS: PRODUCTION COSTS / BOX

5,600

6,720

4,480

1,277 700

1,400

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

JM

D/

Bo

x

JAMAICA VS OTHER ORIGINS: INPUT COST / ACRE

18,989 23,200

26,330

79,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Smallholders Opportunist Technified Colombia

JM

D/A

cre

JAMAICA VS OTHER ORIGINS: NET INCOME / ACRE

-22,000

-39,000

-16,000

54,000 51,200

25000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

JM

D /

Acre

JAMAICA VS OTHER ORIGINS: DENSITY

800-871 50%

600-800 25%

300-600 25%

Density : Plant per Acre (Ideal = 871 plants for Typica intercropped with banana)

Jamaica (Mean) = 700

Uganda = 912

Oaxaca Sur = 600

JAMAICA VS OTHER ORIGINS: AGE OF TREES

Young (0-5) 4%

Adult (5-25) 64%

Old (>25) 32%

In most countries:

60% > 25 years

A VERY SMALL GROUP OF HIGHLY TECHNIFIED FARMS

82

58

0

10

20

30

40

50

60

70

80

90

Jamaica high tech Colombia

Yield

228,000

25,000

0

50,000

100,000

150,000

200,000

250,000

Jamaica high tech Colombia

Net Income / Acre

DATA TRENDS: FARMER PROFILES

Low yield

(8 bx/acre)

Average age: 62

Ave size: 5 acres

(coffee)

Income from coffee: 62%

Average alt: 441 mts

Whole farm gross income:

JMD 398,975

Group 1

Average yield

(20 bx/acre)

Average age: 49

Ave size: 4 acres

(coffee)

Income from coffee: 28%

Average alt:

552 mts

Whole farm gross income: JMD

1,683,713

Group 2

High yield (37 bx/acre)

Average age: 66

Ave size: 13 acres (coffee)

Income from coffee: 82%

Average alt:

672 mts

Whole farm gross income: JMD 2,387,500

Group 3

High yield (82 bx/acre)

Average age: 62

Ave size: 107 acres (coffee)

Income from coffee: 80%

Average alt:

550 mts

Whole farm gross income: JMD

24,100,000

Group 4

Opportunist Smallholder Technified Highly

Technified

YIELD & NET INCOME

INPUT PRODUCTION RESPONSE

Low Yielder

More yield is not always translated in more net

income

High Yielder

More yield more net income ΔO >> ΔI

ΔO < ΔI

Comparing Δ Input and Δ Output

DATA TRENDS: NET INCOME AND YIELD

R² = 0.0194

-200,000

-150,000

-100,000

-50,000

-

50,000

100,000

150,000

200,000

0 10 20 30 40 50 60 70 80JM

D $

BOXES PER ACRE

Net income is NOT always correlated to Yield

DATA TRENDS: YIELD

R² = 0.1961

0

10

20

30

40

50

60

70

80

0 1 2 3 4 5

Yie

ld (

Bo

xes /

Acre

)

# OF APPLICATIONS

Pesticide treatment frequency can increase yield

but does not translate in net income

R² = 0.1177

-200,000

-150,000

-100,000

-50,000

-

50,000

100,000

150,000

200,000

0 1 2 3 4 5

Co

ffee

net

Inco

me

/ A

cre

# OF APPLICATIONS

DATA TRENDS: YIELD AND NET INCOME

R² = 0.1844

0

10

20

30

40

50

60

70

80

0 50000 100000 150000 200000 250000 300000

Yie

ld

LABOR COSTS PER ACRE (JMD

Labor input / Acre can increase yield

but decreases coffee net income

R² = 0.609

-200,000

-150,000

-100,000

-50,000

-

50,000

100,000

150,000

200,000

0 50000 100000 150000 200000 250000 300000

NE

T IN

CO

ME

(JM

D)

LABOR COSTS PER ACRE (JMD)

HOW ABOUT FERTILIZER

R² = 0.2863

0

5

10

15

20

25

30

35

40

- 10,000 20,000 30,000 40,000 50,000

Yie

ld

Fert cost / Ac

R² = 0.0603

-200,000

-150,000

-100,000

-50,000

-

50,000

100,000

- 10,000 20,000 30,000 40,000 50,000

Net

co

ffee i

nco

me /

Acre

Fert cost / Acre

Fertilization can increase yield

but has no effect on coffee net income

DATA TRENDS: YIELD

R² = 0.0361

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600 700 800 900 1000

BO

XE

S

# OF TREES

Yield vs # of trees per acre

Low density tends to generate lower yields

DATA TRENDS: YIELD

Footer

0

10

20

30

40

50

60

70

80

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

BO

XE

S

INCOME FROM COFFEE

Farms depending less on coffee tend to have lower yields

DATA TRENDS: NET INCOME

R² = 0.1827

-200,000

-150,000

-100,000

-50,000

-

50,000

100,000

150,000

200,000

0 1 2 3 4 5 6 7JM

D $

# OF FAMILY MEMBERS

Larger sized households tend to have better net income

MAIN TAKEAWAYS: LABOR, FERTILIZER, PESTICIDES

• Better yields with more inputs does not necessarily translate

in higher net income, specifically for low yielders

• Clear antagonism between volume strategy and smallholder

economic model

Technical assistance should focus on improving efficiency to increase

farmer return:

1. Utilize higher yielding varieties

2. Increase # of trees per acre

3. Revise labor use strategy and cut back where possible

4. Increase input use efficiency: revise fertilizer mix & dosages and

frequency of pesticide applications

MAIN TAKEAWAYS: VARIETIES

• Immediately stop planting Catimor

• Short term introduction of Typica like

varieties (JAVA)

• Develop comprehensive strategy on variety

introduction

STRATEGIC ACTION PLAN

SOLUTIONS: GENETICS

Short Medium Long

Identify reliable seed sources 4 months Determine nursery certification criteria

2 months

Certify nurseries against new criteria 6 months Ban planting of first generation Catimor

ASAP

Produce 1 million certified plants (typica, java)

2015 planting season

Determine preferred varieties for Jamaica

Start ASAP 18 months

Develop commercial pilot plots (seed, hybrid varieties)

2016 planting

season

Release short-listed seed varieties 2020 planting

season

Release short-listed hybrid varieties 2020 planting

season

SOLUTIONS: AGRONOMIC

Short Medium Long

Train the Trainers on tree based recommendations

3 months

Create mentor program using experienced international peers

6 months 2 years

Fine tune fertilization recommendations 2-6 months Create demo plots showing recommendations

Prep ASAP 2016 planting

season

Organize farmer field days in demo plots 6 months after

creation

Reinforce basic messages on pesticide 3 months Introduce new products to control CBB 2 years Reinforce basic messages on rust 3 months Reinforce basic messages on good planting practices

ASAP

Explore service provider models to increase labor efficiency

18 months

SOLUTIONS: DETERMINE STRATEGY FOR JAMAICAN COFFEE

Short Medium Long

Include private sector representation in CIB's Board

ASAP

Determine specifications for Geographical Indication

2 years

Organize group to control & enforce GI

2 years

Achieve GI registration 5-6 years Achieve analytic authentication of BM coffee (NIRS)

2 years

SOLUTIONS: DEVELOPING INCLUSIVE BUSINESS MODELS

Develop efficient farmer technical assistance strategies (firm level)

6 months

Offer multi-year contracts with premiums for increased yields

Benchmark 2015 / 2016 harvest

Deliver on-time inputs that correspond to agronomic needs

2014 / 2015 harvest

Ensure that (registered, appropriate) inputs are accessible

2014 / 2015 harvest

Utilize text messaging to prepare farmers for action

2014 / 2015 harvest

Know your farmers: update / create farmer database

Start ASAP

Improve access to working capital lines 2 years Explore options for concessional finance for planting material for farmers

Start ASAP

Short Medium Long

DISCUSSION & NEXT STEPS

How do you see this Plan being implemented?

Genetics Agronomy

Inclusive Business

Group Strategy

IFC CAN SUPPORT

• Match project funds on pre-competitive activities

• Bring partial project funding for firm specific activities

• Oversee the strategic action plan

• Explore commercial finance options for producers and farmers (medium term)

• Identify potential partners for activities that are not under IFC’s mandate

• We cannot provide grant funding, fund public sector entities or subsidize purchases of goods/assets.

THANK YOU!

TODAY’S DISCUSSION: ROAD MAP

Needs / Challenges

Objectives Impact

Relevance Effectiveness

Means

Increasing Jamaican coffee volume Preserve and reinforce Jamaican coffee reputation

1. Agronomy 2. TA & Inclusive business 3. Genetics 4. Group strategy

Jamaican coffee reputation reinforced through varietal control and GI registration

Bridge the gap between farmer’s yield and coffee net income Control coffee varieties Have a GI for Jamaican coffee

Volume is increased b/c yield does provide more net income to farmers

Efficiency

Benchmarking

JAMAICA VS OTHER ORIGINS: MAN DAYS / ACRE

26

72

21

65

0

10

20

30

40

50

60

70

80

Smallholders Opportunist Technified Average world

MD

/ A

cre

JAMAICA VS OTHER ORIGINS: % OF COFFEE INCOME

54

27

71

0 0

10

20

30

40

50

60

70

80

90

100

Smallholders Opportunist Technified Averageelsewhere

JM

D /

Acre

JAMAICA VS OTHER ORIGINS: PRICE OF COFFEE

5,000

2,200

1,662

1,200

0

1,000

2,000

3,000

4,000

5,000

6,000

BM JM Colombia Mexico

JM

D/B

ox

Catimor

Footer

Genetic Control Cont’d

Hybrid introduced - 1980’s & early 1990’s

Predominantly: Hybrid De Timor x Caturra

crosses

Hybrids: e.g. T5157, T5159 & 2308

Only resistant to some races of Rust

However, taste, beans size & shape did not

conform to our Jamaican coffee profile. As such propagation of these hybrids have been discouraged. COFFEE LEAF RUST WORKSHOP

CICAFE, COSTA RICA MARCH 13-14, 2008 Presented by: Louis Campbell Advisory Services Manager ( [email protected] )

Cost Incurred • Slight to moderate infection

Labour - 2 md/ac @ 1000/md $2,000

Material - Champion/Kocide $650/lb

x 4 lbs/application /ac $2,600

Sticker 50 ml/drum $ 150

Equipment – Pump (hire) $700/day $ 700

Water $ 300

Transportation $ 500

Lubricants & Gas $ 500

$6,750

2 application per ac = $13,500 (US$190)

Decision Trees

DECISION TREE: PRUNE OR PLANT

Coffee tree

Productive Productive

trees

Unproductive Prune Resuscitated

trees

Exhausted Uproot Healthy,

young trees

Gap Healthy,

young trees

Current situation Medium term

impact

DECISION TREE: FERTILIZER USE

Productive trees

Adult 3 x 3 oz

1 urea + 2 NPK

Pruned trees

Year 0 2 x2 oz

1 urea + 1 npk

Year 1 3 x 2 oz

1 urea + 2 NPK

Adult 3 x 3 oz

1 urea + 2 NPK

Young replanted trees

Year 0 2 oz urea after planting

Year 1 2 x2 oz

1 urea + 1 npk

Year 2 3 x 2 oz

1 urea + 2 NPK

Adult 3 x 3 oz

1 urea + 2 NPK

Type o

f tr

ee

Further fine tune

with soil

sample analysis

VARIETY INTRODUCTION

• Informational material and assistance for farmers to help them choose the most adequate mix of varieties.

• Develop farm planting strategies

Comprehensive introduction and use of modern rust resistant varieties

• Make a rational choice of available varieties to be grown

• Identify reliable seed stock

• Technical certification of nurseries to ensure good planting material

• Genetic

• Physiological status

• Phytosanitary status

Control of existing historical varieties

• Mix of varieties • Use of low cup quality varieties (catimor) • Risk of losing original type

Uncontrolled variety strategy

Current

situation Short term

situation

Medium term

situation