• QA 123
    Does growing concentration on the production side pose a risk to smaller producing countries?
    There seems to be a trend that the largest producers are getting larger, irrespective of low coffee prices. Is there a risk that the large producing countries will squeeze smaller producers out of the market?
    Asked by:
    Exporter - Burundi

    Unfortunately we have to answer yes in the sense that current trends suggest larger producers are gaining market share. Unless checked, over time this trend is likely to reduce the range and diversity of available coffees, something that will be to the detriment of the industry as a whole. 

    We cannot show data for all the 45 countries shown in ICO statistics as exporting coffee in 2005 as this is simply too much*. We would also point out that individual country rankings change over time, making it difficult to make detailed comparisons However, below we offer three different snapshots that confirm our statement above.

    1. The small table below shows that the seven largest exporting countries in 2005: Brazil, Colombia, Ethiopia, Guatemala, India, Indonesia and Vietnam, have increased their share in total exports from 61.9% in 1994 to 75.6% in 2005.. The share of the other 38 exporting countries meanwhile declined from 38.1% to 24.4%, a trend that first became noticeable in 2001 and has accelerated since then.







    Seven largest countries

    61.9 %

    61.1 %

    70.5 %

    75.6 %

    38 other countries

    38.1 %

    38.9 %

    29.5 %

    24.4 %

    These seven largest countries increased total exports by 21,896 million bags: from 43,628 mln bags in 1994, to 65,523 mln bags in 2005! Vietnam (robusta) gained 10,711 mln; Brazil (mostly arabica) gained 8,862 mln; Colombia (arabica) lost 0,897 mln; Ethiopia (arabica) gained 0,960 mln; Guatemala (arabica) gained 0,192 mln; India (arabica/robusta) gained 0,247 mln; and Indonesia (mostly robusta) gained 1,821 mln bags.

    2. Alternatively: in 2005 some 30 countries exported less than one million bags each. Between them they shipped 5.3 million bags or 6% of all 2005 exports (86.6 million bags). But in 1994 these same 30 countries still shipped a total of 7.3 million bags or 10.4% of all exports in that year (70.4 million bags). This shows that in a world market that is growing, the exports of a number of them are nevertheless falling.

    3. ICO data for calendar year 2005 (total exports 86.6 million bags) show that ten countries exported more than two million bags each: Brazil, Colombia, Ethiopia, Guatemala, Honduras, India, Indonesia, Peru, Uganda and Vietnam. Together these exported 72.6 million bags or 83.8 %, leaving 14 million bags or just 16 % for the remaining 35 exporting countries. In comparison, in 1994 the then ten largest exporting countries shipped 52.9 million bags out of total exports of 70.5 million bags, i.e. 75% leaving 25% for the other producers.

    All three examples confirm the large are getting larger and the small, well they are getting smaller... This is of concern because, over time, some countries might cease coffee production altogether, thereby not only suffering hardship but also reducing the choices available to the market. 

    The reasons for the decline of smaller producers are complex and extremely varied, ranging from simple changes in real estate values in some countries, to an inability to adopt modern and more cost effective production systems in others.

    We would also like to quote from a statement the Executive Director of the ICO made to the UN General Assembly Summit on the Millennium goals in September 2005:

    "Of course it may be argued that production should best be concentrated in a few main areas or countries with pronounced comparative advantages but, apart from the immense social costs arising from such an approach, this would lead to a huge potential loss in quality and variety which could pose a serious potential threat to sustained consumption.  I would add that the reliance on a few origins could exacerbate volatility by increasing the impact of climatic (including climate change) and other exogenous factors in the (fewer) major exporters."

    *   To view large amounts of historical data go to       http://www.ico.org/historical.asp .
    ** To note that Ethiopia, Honduras and Peru did  not feature in the 1994 top ten - over time they replaced Cote d'Ivoire, Ecuador and Mexico.

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