honduras - sintercafe · introduction - macros – coffee in honduras • gdp: 19.5 billion usd ag...
TRANSCRIPT
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HONDURASPRODUCTIONGROWTHANDOUTLOOKPresentedbyChris.anLeSage,Email:[email protected]éSA/ADECAFEHSINTERCAFENovember13,2015
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Introduction-Macros–coffeeinHonduras
• GDP:19.5billionUSDAgGDP2.5billionUSD• CoffeeasaPercentageofAgGDP:26%• PercapitaGDP:$2236USD• Numberofproducers:100,000• Coffeeexports:5millionbags60kg
Country Bagspercapita
Honduras 0.62
Brasil 0.27
Vietnam 0.30
Colombia 0.26
Indonesia 0.03
Hondurashasthehighestproduc8onpercapitaintheworld
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HondurasExportVolume(15YEARS)
3.02.5
3.0
2.1
3.0
2.4
3.0 3.2 3.4 3.2 3.2
4.0
5.6
4.44.2
5.0
5.8
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Millionsof6
0KGBAG
S
15YearGrowth:2.5mynbags6.3%growthrate5Yeargrowth:1.8mynbags9.3%growthrate
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FarmSizeDistribution
7+HA
2-7HA
0-2HA
34%
70%
36%
25%30%5%
0%
20%
40%
60%
80%
100%
VOLUME PRODUCERS
25,000
• 1/3produc.oninhandsof70%producers,another1/3inhandsof25%and1/3Inhandsof5%.
• 95%percentofproducerspickcoffeewiththeirownfamily.
70,000
5,000
1000005million60kgbags
1.5million
1.8million
1.7million
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AgeandGenderdistributionofProducers
18-309%
31-4028%
41-5027%
51-6020%
61+16%
Age
• AVERAGEAGEIS46• HASGONEDOWNFROM56INLAST10YEARS
• HONDURASHASEXECUTEDAGENERATIONALCHANGE• 13%FEMALE
male87%
female13%
Gender
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Otherfarmissues
• Limitedcredithaskeptproducersfromoutspendingearningbutalsolimitsinvestmentprojects.
• Producerviewscoffeeproduc8onasaaninvestment.WhenhehassomecashleSoverheplants.
• Producergetsnosubsidiesandcontributes$4.25/46kgtoIhcafe,$9/46kgtoareturnablecoffeefundandissubjecttoIncomeTaxabove$5000peryear.
• Farmsproducesomeoftheirownfoodbutinaveryinefficientway.Transferingagriculturalprac.cesisverydifficult.
• CandoAftude–genera.onalchange.
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Anewgenerationofproducers
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Anewgenerationofproducers
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Humandevelopment
• Producerlivesinverysmallcommuni.es.
• Usuallynopurifiedwater,some.mesnoelectricity.
• Nutri.onaboveaverageforproducerfamiliesbuts.llwellbelowcityandinterna.onalstandardsspeciallyinproteinconsump.on.
• Schoolsarelimitedbeyond6thgradewithhighstudent/teacherra.os.
• Accesstohealthcareisverylimited.
• Limitedtransporta.on.
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WHYDOESHONDURASKEEPGROWING?BUSINESSDRIVERS
HONDURASGROWTHANDOUTLOOK
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Businessdrivers-Costofproduction2015
10282
65
28
28
28
0
20
40
60
80
100
120
140
HIGHESTCOSTPRODUCER AVGSMALL LOWESTCOSTPRODUCER
FARMTOFOB
FARMGATE+
130
111
93
USD/46KG
• Averagecostofproduc8onis$111FOB• Highestcostproduceris$130butisonly5%ofproduc.on
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Businessdrivers-costcomponents
• $69per46kgoutofpocketcost.• Familyfarmcostincludes$41aslivingexpenses.• Convertsto$2665peryearperproducer.
$82FARMGATE
$41Labor
$18Other
0
20
40
60
80
100
120
INPUTS LABOR PICKING WETMILLING/DRYING ADMIN INTEREST LOGISTICS FARMTOFOB
$23INPUTS
$4LOGISTICS
$24FARMTOFOB
$111TOTAL
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Businessdrivers-Costandsellingprice
0.0
50.0
100.0
150.0
200.0
250.0
COST
PRICE
• Averagecompositesellingpriceis$150.00FOB
GraphofcostandSellPrice(10YEARS)USD/46KG
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Businessdrivers-ProPitability
• Theweightedaverageprofitabilityhasbeen$47per46kgforthelast10years.
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
USD
PER
46K
G
AVERAGEPROFITS
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Businessdrivers-ProPitability
• Theweightedaverageprofitabilityhasbeen$47per46kgforthelast10years.
• Thatcomesto$3300perproducerperyear
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
USD
PER
46K
G
AVERAGEPROFITS
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ProducerIncomeSummary
• Overthepast10yearstheaverageproducerhasmade
• $2665peryearinfarmlabor• $3300peryearin“profits”• $5965peryeartotalIncome
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ProducerIncomeSummary
• Overthepast10yearstheaverageproducerhasmade
• $2665peryearinfarmlabor• $3300peryearin“profits”• $5965peryeartotalIncome
• MinimumsalaryinHondurasis$4350peryear.
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ProducerIncomeSummary
• Overthepast10yearstheaverageproducerhasmade
• $2665peryearinfarmlabor• $3300peryearin“profits”• $5965peryeartotalIncome
• MinimumsalaryinHondurasis$4350peryear.
• CostofbasicfoodinHondurasis$3000peryear
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ProducerIncomeSummary
• Overthepast10yearstheaverageproducerhasmade
• $2665peryearinfarmlabor• $3300peryearin“profits”• $5965peryeartotalIncome
• MinimumsalaryinHondurasis$4350peryear.
• CostofbasicfoodinHondurasis$3000peryear
• Theproduceriss.lllivinginpoverty
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Businessdrivers-Price/growthcorrelations
$0
$50
$100
$150
$200
$250
$300
0.0
1.0
2.0
3.0
4.0
5.0
6.0
94/95 95/96 96/97 97/98 98/9999/00 00/0101/02 02/0303/04 04/05 05/06 06/07 07/08 08/0909/10 10/1111/12 12/1313/14 14/15
Growth 1.2(15%) -0.5(-3%) 0.8(7%) 1.8(11%)
WAPrice 120 65 115 177
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Businessdrivers-Price/growthcorrelationsAdjustmentforInPlation
95-99 00-04 05-09 10-14
Growth(bags)YearlyGrowth
1.2(15%)
-0.5(-3%)
0.8(7%)
1.8(11%)
WAPrice 120 65 115 177
WAPrice(AdjforInf2%)
170 83 133 186
Ininfla8onadjusteddollarsHondurashasshowngrowthabove$130
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Businessdrivers-Productivity
2.53.0
2.1
3.02.4
3.0 3.2 3.4 3.2 3.2
4.0
5.6
4.4 4.2
5.010.0
12.0
10.2
12.2
11.011.8
12.913.7
13.112.6
14.9
20.0
16.5 16.5
18.8
0.0
5.0
10.0
15.0
20.0
25.0
-
1.0
2.0
3.0
4.0
5.0
6.0
60kg/HA
PRODUCTIONANDYIELD2000-2015
PRODUCCIÓN PRODUCTIVIDAD
• Overthesameperiosyieldhaveincreasedfrom10bags/HAto18.8bags/HA
• Accountsforbigpercentageofgrowth.
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Businessdrivers-ReasonsforimprovedProductivity
• MOREINPUTSPLUSBETTERFARMING
• $250millionUSDinvestedoverthelast10years
• ExporterandotherPrivatesectorimplementa.ons.• Sustainabilityprogramspremiumsandone.mepayments• Aidfromcoopera.ngorganisms• Producerfundedasistance,IHCAFEandSuppliers
• Genera.onalchangehasmadeproduceropentochange
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Businessdrivers-plantedarea
• Plantedareais274,000Hectares• 36,000HAlosttoRoya.
HA(´000)
ROYA
0
50
100
150
200
250
300
350
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
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WhydoesHonduraskeepgrowing?Businessdrivers
• Farmsareinthehandsofverysmallholderswhopicktheirowncrop.
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WhydoesHonduraskeepgrowing?Businessdrivers
• Farmsareinthehandsofverysmallholderswhopicktheirowncrop.
• Overthepast15yearsonaverageproducerhasbeenabletomakealivingfromcoffeeproduc.on.
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WhydoesHonduraskeepgrowing?Businessdrivers
• Farmsareinthehandsofverysmallholderswhopicktheirowncrop.
• Overthepast15yearsonaverageproducerhasbeenabletomakealivingfromcoffeeproduc.on.
• Alowcostofproduc.onhasallowedtheproducertosurvivecri.calcrisisyears.
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WhydoesHonduraskeepgrowing?Businessdrivers
• Farmsareinthehandsofverysmallholderswhopicktheirowncrop.
• Overthepast15yearsonaverageproducerhasbeenabletomakealivingfromcoffeeproduc.on.
• Alowcostofproduc.onhasallowedtheproducertosurvivecri.calcrisisyears.
• Anewgenera.onofproducershasbroughtnewenergyintoproduc.on.
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WhydoesHonduraskeepgrowing?Businessdrivers
• Farmsareinthehandsofverysmallholderswhopicktheirowncrop.
• Overthepast15yearsonaverageproducerhasbeenabletomakealivingfromcoffeeproduc.on.
• Alowcostofproduc.onhasallowedtheproducertosurvivecri.calcrisisyears.
• Anewgenera.onofproducershasbroughtenergyintoproduc.on.
• Theproducerhasreinvestedsomeofhismoneyintohisfarmsasshownbyimprovedproduc.vi.es.
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WhydoesHonduraskeepgrowing?Businessdrivers
• Farmsareinthehandsofverysmallholderswhopicktheirowncrop.
• Overthepast15yearsonaverageproducerhasbeenabletomakealivingfromcoffeeproduc.on.
• Alowcostofproduc.onhasallowedtheproducertosurvivecri.calcrisisyears.
• Anewgenera.onofproducershasbroughtenergyintoproduc.on.
• Theproducerhasreinvestedsomeofhismoneyintohisfarmsasshownbyimprovedproduc.vi.es.
• Theexporter,privatesectorandNGOimplementa.onshavecontributed
tothisdevelopment.
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WHYWASTHEROYARECOVERYSOFAST?HONDURASGROWTHANDOUTLOOK
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CurrenttrendvsNoRoyatheoreticalTrend
3.24.0
5.6
4.4 4.25.0
5.8
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
25%
• 1.4mynbags60kg“lost”in2013-14vstrend=to25%ofprojectedvolume
• 18%permamentlossofproduc.oncapacityinpastcrop.
18%13%
NoRoyatheore.caltrendline15%growthrate.
NEWCROPNoRoy
aTheore.cal
TrendLine
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DistributionofResistantversusnon–resistantvarieties100%Chart
• 29%nonresistantand13%overallloss.• Currentlyalmost70%ofplantsareRoyaResistant
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pre-Roya Post-Roya
5568
4532
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ThestoryoftheRoyarecovery….
• Volumewasgrowingveryfast(15%)beforeRoya.• Significantamountofnewplan.ngstriggeredbythemarket.
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ThestoryoftheRoyarecovery….
• Volumewasgrowingveryfast(15%)beforeRoya.• Significantamountofnewplan.ngstriggeredbythemarket.
• Theperfectstormhits:• Record2011-12croplerplants.red.
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ThestoryoftheRoyarecovery…
• Volumewasgrowingveryfast(15%)beforeRoya.• Significantamountofnewplan.ngstriggeredbythemarket.
• Theperfectstormhits:• Record2011-12croplerplants.red,• Lowerpricescausedlowerinputsbyproducers
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ThestoryoftheRoyarecovery…
• Volumewasgrowingveryfast(15%)beforeRoya.• Significantamountofnewplan.ngstriggeredbythemarket.
• Theperfectstormhits:• Record2011-12croplerplants.red,• Lowerpricescausedlowerinputsbyproducers• Hotandhumidweathercreatedperfectcondi.onsforRoyagrowth
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ThestoryoftheRoyarecovery…
• Volumewasgrowingveryfast(15%)beforeRoya.• Significantamountofnewplan.ngstriggeredbythemarket.
• Theperfectstormhits:• Record2011-12croplerplants.red,• Lowerpricescausedlowerinputsbyproducers• Hotandhumidweathercreatedperfectcondi.onsforRoyagrowth• LongtermcomplacencyonRoyapreven.onbyproducer
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ThestoryoftheRoyarecovery…
• Volumewasgrowingveryfast(15%)beforeRoya.• Significantamountofnewplan.ngstriggeredbythemarket.
• Theperfectstormhits:• Record2011-12croplerplants.red,• Lowerpricescausedlowerinputsbyproducers• Hotandhumidweathercreatedperfectcondi.onsforRoyagrowth• LongtermcomplacencyonRoyapreven.onbyproducer
• Royaresistantplantslimitlossto13%
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ThestoryoftheRoyarecovery…
• Volumewasgrowingveryfast(15%)beforeRoya.• Significantamountofnewplan.ngstriggeredbythemarket.
• Theperfectstormhits:• Record2011-12croplerplants.red,• Lowerpricescausedlowerinputsbyproducers• Hotandhumidweathercreatedperfectcondi.onsforRoyagrowth• LongtermcomplacencyonRoyapreven.onbyproducer
• Royaresistantplantslimitlossto13%• Dispersionoffarms–somefarmsandareasnotaffected.
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ThestoryoftheRoyarecovery…
• Volumewasgrowingveryfast(15%)beforeRoya.• Significantamountofnewplan.ngstriggeredbythemarket.
• Theperfectstormhits:• Record2011-12croplerplants.red,• Lowerpricescausedlowerinputsbyproducers• Hotandhumidweathercreatedperfectcondi.onsforRoyagrowth• LongtermcomplacencyonRoyapreven.onbyproducer
• Royaresistantplantslimitlossto13%• Dispersionoffarms–somefarmsandareasnotaffected.• Mostfarmscon.nuedproducingtosomedegree.
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ThestoryoftheRoyarecovery…
• Volumewasgrowingveryfast(15%)beforeRoya.• Significantamountofnewplan.ngstriggeredbythemarket.
• Theperfectstormhits:• Record2011-12croplerplants.red,• Lowerpricescausedlowerinputsbyproducers• Hotandhumidweathercreatedperfectcondi.onsforRoyagrowth• LongtermcomplacencyonRoyapreven.onbyproducer
• Royaresistantplantslimitlossto13%• Dispersionoffarms–somefarmsandareasnotaffected.• Mostfarmscon.nuedproducingtosomedegree.• Produceraftude• MarketrallyFeb2014giveshopestoproducers• Surprisingaftude-producersplantmorethantheylost.
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HOWMUCHCANHONDURASGROW?ARESOURCEANALYSIS
HONDURASGROWTHANDOUTLOOK
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Resourceanalysis-AgeofPlantationsin2015
1YR
1-2YRS
3-5YRS
6-9YRS
9-15YRS
16-25YRS
• 65%ofplanta.onsarelessthan9yearsold.• Planta.onshavebeenrenewedandwillnot
presentaproblemforthenext10years
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ResourceAnalysis-Land
• Nomajorconflictswithpopula.oncenters• Hondurasdoesnothavealandlimita.onfor
coffeeplan.ng.
57
52
3
55
AllofHonduras112,000km2
Landabove1000mSuitableforcoffee
55,000km2
Coffeeplanta8ons3,000km2
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ResourceAnalysis-Rains(Acompositeof5regions)
2602
2224
1767 1827
1159
0
500
1000
1500
2000
2500
3000
Y2011 Y2012 Y2013 Y2014 Y2015
Mm/year
Rainshavebeenlowthisyear10months
• Rainshavebeenlowerthanexpectedthisyearandwillimpactcrop.
• Timingofrainsnotop.mal
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Coffeelabordemand
0100200300400500600700
1 2 3 4 5 6 7 8 9 10
Pickersneeded
• 300,000pickerscurrentlyemployedofwhichsomeareproducersfamilies.
• 2millionpeopletheore.callyavailable.• Produc.vityoffarmss.mulatespickers
Volume(millionbags60kg)
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OtherLaborIssues
• Popula8ongrowthrate2.5%popula.ongrowthrateadds200,000peopleperyear.
• Distribu8on:50%urban50%rural
• Salaries:Minimumsalaryis$4350peryear
• Emmigra8on• URBAN:Significantgrowthinurbancenters,SanPedroSulaand
Tegucigalpa,butpopula.onisdispersedinvariousotherurbancenters,Comayagua,LaCeiba,SantaRosaandCholoma.
• FOREIGN:Hiringrestric.onsintheUShaveslowedemmigra.on.Around40,000peryearbutnotincreasingsignificantly.
• Compe88on• TEXTILES:Wasabigcompe.torinthe2000sbutnowgrowthhasslowed
significantly.242,000totalemployees.• AGRICULTURAL:350000noncoffeefarmjobs.
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Processingcapacityestimates
• Hondurashasenoughprocessingcapacitytoreach6.5millionbags.• Significantcapacityinvestmentsweremadearer2011-12cropwhichremainunused.
• Thereisabotleneckinwetmillingwhichwillrequirealotofinvestmentand.me.
• 25milliondollarsincapacitywouldberequiredforeachaddi.onalmillionbags.
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Threatstosustainedgrowth• Climatechange:• Produc.vitybeltwas500m-1200meleva.on20yearsago,• Todayitis900-2000meters.
• Deforesta.on• Highamountofdeforesta.onusedforfarmingdecreasesbio
diversity,andincreaseserosionandotherbiologicalrisks.
• Wateravailability:• Rivers,rains,otheragriculturaluses.
ForestandWaterconserva8onseemslikeakeyelementforthelongtermfuture.
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HowmuchcanHondurasgrow?
• Doesnothaveresourceconstraintstocon.nuegrowing.
• Capacityinvestmentswillberequiredforgrowthspeciallyinwetmilling.
• Climateandwaterrepresentanimportantthreat.
• Aproduc.onof8mllionbagsinthenext5yearsseemsfeasible.
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WHATARETHECHALLENGESFORTHEFUTURE?HONDURASGROWTHANDOUTLOOK
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Somethoughtsaboutthefuture• Whereisyourcoffeegoingtocomefrom10yearsfromnow?
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Somethoughtsaboutthefuture• Whereisyourcoffeegoingtocomefrom10yearsfromnow?
• Astheworldwideconsump8ongrowsaremostcoffeesgoingtocomefromtwoorigins?Or
• Shouldwesupportorigindiversity?
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Somethoughtsaboutthefuture• Whereisyourcoffeegoingtocomefrom10yearsfromnow?
• Astheworldwideconsump8ongrowsaremostcoffeesgoingtocomefromtwoorigins?orShouldwesupportorigindiversity?
• Hondurancoffeeproduc8ongrowthhasbeenselfsustainingsoletussupport(notsubsidize)theproducer.
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Somethoughtsaboutthefuture• Whereisyourcoffeegoingtocomefrom10yearsfromnow?
• Astheworldwideconsump8ongrowsaremostcoffeesgoingtocomefromtwoorigins?orShouldwesupportorigindiversity?
• Hondurancoffeeproduc8ongrowthhasbeenselfsustainingsoletussupport(notsubsidize)theproducer.
• WeneedtofindawayfortheHonduranproducertoimprovehisincomeandcon8nuethisgrowthtrend.
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Somethoughtsaboutthefuture• Whereisyourcoffeegoingtocomefrom10yearsfromnow?
• Astheworldwideconsump8ongrowsaremostcoffeesgoingtocomefromtwoorigins?orShouldwesupportorigindiversity?
• Hondurancoffeeproduc8ongrowthhasbeenselfsustainingsoletussupport(notsubsidize)theproducer.
• WeneedtofindawayfortheHonduranproducertoimprovehisincomeandcon8nuethisgrowthtrend.
• Whatchallengesmustwemeet?
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Challenges-Productivity
• Improvingproduc8vityiskeytoremainingcompe88ve.
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Quality-Pulpingstations
• Eliminatepulpingsta8onsandqualitysepara8onkeytoqualityimprovement.
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Quality-Wetmills
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Challenges–Waterconservationandenvironment
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WeneedtobringsustainableeconomicandhumandevelopmenttoHondurasthroughcoffeeproduc8on.
Producer-Productivity-quality-water-forrest
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NEWCROPPROJECTION
HONDURASGROWTHANDOUTLOOK
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NEWCROPPROJECTION(‘000s)60kgbags
2014-15 2015-16EXPORTABLE
+CARRY-IN 186 267
+PRODUCTION 5101 5700
=AVAILABLE 5287 5967
-SHIPMENTS 5020
=CARRYOUT 267
TOTALPRODUCTION
EXPORTABLE 5101 5700
LOCALCONSUMPTION 241 400
SMUGGLING 300 300
TOTAL 5642 6400
Commited 20%
Farmersold Below10%
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Factorsaffectingcrop2014-15
• Largeamountsofunpricedcoffeedeliveredtobeneficiostooksellingpressureofthemarket.
• Producersoldwellbutintermediaryremainedlongandmany.meslost.
• Qualitywasbeterthantwopreviouscrops.• Yieldswerejustok.• Smugglingwasanimportantfactorspeciallyattheendofthecrop.
• Bigdemandforinferiorsfrommanypartsoftheworld.• Venezuelabuyerscameinatkeypurchasing.mestopickupdemandslackinFeburaryandApril.
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Factorsexpectedtoaffect2015-16
• Floweringswelldistributedshouldcontributetodistributedcrop.
• Rainsnotenoughduringthesummer,limitfer.liza.onandbeandevelopmentinspeciallyinlowereleva.ons,es.mate5%lossoncroppoten.al.• Farmerunabletomakenewplan.ngs,limitedgrowthin2018.
• StrongrainsinSeptemberandOctobercompensatesomerainloss,slowcropadvance.
• Marketperceivedtobeverylowbyproducerswillbereluctantsellersandwilldepositcoffeeagain.
• Yieldsexpectedtobelowerspeciallyatthebeginning.• Newtaxlawscreatenewcosts.• StronginferiordemandinCentralAmericaandCaribbeancon.nuesasdemandoutpacessupply.