Ecuador's coffee production is expected to decrease slightly in MY 2013/14 and reach 575,000 bags (60 kg per bag) of green beans.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: EC13010
Coffee Production in Ecuador Exports Imports 2013
Ecuador's coffee production is expected to decrease slightly in MY 2013/14 and reach 575,000
bags (60 kg per bag) of green beans. Exports of soluble coffee are expected to increase. Because
Ecuador mainly industrializes imported coffee beans into solubles, imports of robusta beans are
also expected to increase. Ecuador is expected to import as much as 1,400,000 bags of Robusta
beans in MY 2013/14 and export approximately 1,750,000 bags.
Coffee production for Marketing Year (MY) 2013/14 (April/March) will decrease to about 575,000
60-Kg. bags. The decrease is due to heavy rains at the beginning of this year’s crop season and a
generalized trend of declining yields. Since 2005, Ecuador has renovated or added almost 21,000
hectares (ha) of coffee but has switched production of at least 20,000 ha. In essence, harvested
area has remained the same and production has declined as older plantations grow less.
Consumption of roasted coffee has increased recently thanks to specialized coffee retail outlets and
aggressive advertising to promote coffee. Domestic consumption is forecast at 240,000 bags in
MY 2013/14, 85 percent of which is consumed as soluble or instant coffee. Coffee exports for MY
2013/14 are forecast at a record 1,750,000 bags, 67 percent of which are soluble and instant
coffee products. To meet the industry’s demand of Robusta coffee beans, in MY 2013/14 Ecuador
will import 1.405 million bags of Robusta beans, most of which will be used for industrialization
Production methods are generally traditional. Most bean picking is done by hand, coffee farmers
usually don’t use fertilizer, and rainfall is relied upon instead of modern irrigation systems. Eighty
percent of Ecuador’s coffee is produced this way, with average yields of 300 kg per ha. Twenty
percent of coffee plantations are managed using technical or semi-technical approaches. These
plantations have average yields of about 700 kg per ha.
Coffee production in Ecuador will decrease to about 575,000 60-kg bags green bean equivalent
(GBE) on 149,000 harvested hectares (ha) in MY 2013/14. The expected decline is due to a heavy
rainy season that may affect yields and an overall decline in domestic production due to declining
land productivity, accompanied by very limited efforts to rehabilitate existing plantations.
The Government of Ecuador’s (GoE) efforts to promote coffee production in rural areas as a tool for
economic development are still small compared to the needs of farmers. The GoE’s official mandate
is to renovate 50,000 ha of coffee. There is a new structure that aims at making this possible that
combines the efforts of the Ministry of Agriculture with those of Ecuador’s National Coffee Council
(COFENAC), a public-private entity that collects fees on coffee exports and represents Ecuador at
the International Coffee Organization.
Despite efforts by the GoE and foreign assistance in the past, an estimated 30 percent or more of
existing plantations are past peak production and need to be replanted with new varieties. Volatile
international prices in the past have discouraged investments in new trees. However, steady and
climbing international prices brought some optimism to farmers starting in 2005. There is an
urgent need to increase nursing facilities that can provide high-quality plants to farmers and to
make credit available to farmers so they can invest.
Ecuador has approximately 199,000 ha planted with 149,000 ha expected to be harvested in MY
2013/14. A large portion (60 percent) of this area is also shared with other crops. Arabica coffee
represents 70 percent of the total production and will reach 400,000 bags in MY 2013/14. Robusta
production represents 30 percent and MY 2013/14 production is forecast at 175,000 bags. Arabica
productivity has increased as farmers improve practices in response to high world prices.
Prices were lower in 2012 compared to 2011. Between 2010 and 2011, the average price of
Arabica in Ecuador decreased 19 percent from $305 to $247 per 60-kg bag while Robusta prices
remained flat on average for the year 2012 at around $128 per 60-kg bag. Since Ecuador’s
production and consumption are relatively small in the global market, high domestic prices,
especially for Robusta coffee, respond mainly to unsatisfied supply for the local instant coffee
industry in Ecuador and in Colombia.
About 53 percent of coffee-producing areas are located in Ecuador’s coastal provinces (for
example: Manabí, 35 percent), 22 percent in the Sierra (Loja, 15 percent), and 25 percent in the
Amazon (Orellana, 10 percent; Sucumbios, 9 percent), and 1 percent in Galapagos. Most of the
area planted with Robusta is located in the Amazonian provinces.
Domestic coffee use is forecast at 240,000 bags in MY 2013/14. The expected increase is the result
of population and income growth. Ecuadorians consume more soluble coffee than roasted and
ground coffee. This consumption pattern is explained by changes in consumer saving and ease-of-
use habits over the past 30 years. Overall, there has been a lack of coffee drinking culture. This
has started to change with the presence of Colombia’s coffee franchise Juan Valdez and several
other local outlets including Coffee Tree, Sweet & Coffee. Sweet & Coffee has been operating in
Ecuador for over ten years while Juan Valdez began operations in 2008. Coffee Tree is the latest
entrant to the market. In addition, local firm Cafe Velez has successfully entered the roasted
coffee niche market by using home delivery service and also distribution through Ecuador’s major
deli and supermarket chains. Nevertheless, instant coffee has remained popular in Ecuador and
several national and imported brands are represented in the market. A single Ecuadorian
company, El Café (Grupo Noboa) has over 50 percent of the instant coffee market. This company is
reportedly expanding its processing capacity due to increased demand in the international market.
The domestic industry produces large quantities of spray dry (instant coffee powder) and freeze
dry (lyophilized) and agglomerated for both domestic consumption and for export. The local
industry has an installed processing capacity of 1.3 million bags per year, and coffee imports are
necessary to meet this demand. Ecuador imports, in small amounts, soluble and coffee essences
from Colombia, Brazil and other countries.
Exports of coffee and coffee products are forecast to be approximately 1.75 million bags in MY
2013/14 after breaking a record in MY 2012/13 with 1,677 million bags. The increase in exports
will be driven by soluble and industrialized coffee. Most of these trade imports/exports are not
recorded in official statistics as they correspond to imported coffee that is re-exported as soluble
coffee. The increase in exports reflects the Government of Ecuador’s decision through its
Committee on Foreign Trade (COMEX) to allow more coffee imports into Ecuador for processing and
re-exporting. It is estimated that 1.11 million bags entered Ecuador in MY 2012/13 and that 1.2
million bags will enter in MY 2013/14. Exports of Arabica coffee beans experienced a dramatic
decrease and reached slightly more than107,000 bags in MY 2012/13 as farmers preferred to sell
their production in the domestic market as international prices decreased.
Despite lower world prices for Robusta in comparison to Arabica, Robusta receives a higher price
than the international price in the Andean regional market, where it is used to make instant coffee
in neighboring countries. Ecuador primarily exports Robusta beans to Colombia. Since consumers
pay a premium price for Colombian coffee, its industries are willing to pay higher prices for Robusta
beans than the Ecuadorian industry pays locally. For this reason, Ecuador exports Robusta beans to
be marketed as Colombian coffee. This is also one of the reasons why the local soluble industry
imports large quantities of Robusta, primarily from Vietnam, that enters Ecuador under a special
import regime. These beans are converted into soluble coffee and exported. The local soluble
coffee industry has gained local and international markets for soluble coffee products, especially
spray and freeze dried. Ecuadorian companies are thought to have a comparative advantage with
respect to their peers in other countries.
Imports of soluble coffee were stable in MY 2012/13.
Export Trade Matrix
Commodity Coffee, Green, in 60Kg Bags
Destination 2011 2012
U.S. 78,157 51,550
Germany 301,002 304,510
Poland 216,928 293,427
Russia 219,811 215,150
U.K. 36,646 100,476
Colombia 499,513 415,686
Other countries 194,281 190,146
Total 1,546,338 1,570,944
A non-profit public-private institution, Ecuador’s COFENAC, has dictated Ecuador’s coffee policy
since 1995. Its existence arises from Ecuador’s Special Law for the Coffee Sector, Official Record
756, on March 20, 1995. This law provided a legal framework to promote and organize a modern
coffee industry, deal with the fluctuations of international coffee prices, and provide loans to coffee
producers at preferential interest rates for the rehabilitation, renovation, and maintenance of coffee
plantations. COFENAC’s operations are financed by coffee bean exporters (processed coffee
exporters are exempt) who pay fee equivalent to 2 percent of the FOB value of exports.
COFENAC’s future has been in doubt since Ecuador’s adopted a new constitution in 2008.
Ecuador’s Constitution (article 2987) establishes that only public agencies can benefit from fees
and special contributions established by public law. The fees that COFENAC collects can be
interpreted as a tax on exports of coffee. Since 2010, COFENAC no longer authorizes imports of
coffee. This authority has been transferred to COMEX. Nevertheless, exporters have continued to
pay the 2 percent fees because despite limitations COFENAC’s achievements are considered highly
relevant to the sector. Thus, despite legal challenges, COFENAC continues to operate in
coordination with Ecuador’s Ministry of Agriculture while its long-term legal viability is clarified.
COFENAC’s actions have aimed at providing access to better coffee seedlings in order to improve
quality and increase yields. COFENAC is currently focusing its research efforts on three areas:
assessment of new coffee varieties, good agricultural practices, and post-harvest quality
Since the creation of COFENAC, its membership, which includes producers and government
officials, was responsible for approving temporary imports of coffee for transformation into soluble
coffee which is re-exported after the process. Although this is no longer the case, COFENAC is still
the authorized entity by The International Coffee Organization (ICO) to issue the certificates of
origin required for exporting.
COFENAC has included in its annual plan of activities for 2013 the establishment of almost 6,000
ha of new plantations, technical assistance to improve production in about 12,100 has, and the
renovation of 6,600 ha of old plantations. At the time of writing this report, the Ministry of
Agriculture has announced a long-term plan called “Reactivation of Ecuador’s Coffee Cultivation” for
about $70 million aimed at renovating 135,000 ha of old coffee plantations.
Since 2007, the private sector has become pivotal in promoting coffee consumption and higher
quality levels through the annual coffee tasting contest “Taza Dorada” (Golden Cup). The contest is
organized by Ecuador’s Association of Coffee Exporters (ANECAFE) with the goal of identifying the
best Ecuadorian coffee during a national competitive event. Small producers, producer
organizations and exporters gather yearly and submit to a panel of international judges. The event
has received assistance from USAID and USDA in the past.
Production, Supply and Demand Data Statistics:
Coffee, Green Ecuador 2011/2012 2012/2013 2013/2014
Market Year Begin: Apr 2011 Market Year Begin: Apr 2012 Market Year Begin: Apr 2013
USDA Official New Post USDA Official New Post USDA Official New Post
Area Planted 199 199 199 199 199
Area Harvested 169 169 149 149 149
Bearing Trees 156 156 137 137 132
Non-Bearing Trees 29 29 25 25 30
Total Tree Population 185 185 162 162 162
Beginning Stocks 143 143 137 137 169
Arabica Production 400 400 415 405 400
Robusta Production 200 200 190 185 175
Other Production 0 0 0 0 0
Total Production 600 600 605 590 575
Bean Imports 1,150 1,150 1,400 1,350 1,400
Roast & Ground Imports 0 0 1 1 2
Soluble Imports 3 3 2 2 3
Total Imports 1,153 1,153 1,403 1,353 1,405
Total Supply 1,896 1,896 2,145 2,080 2,149
Bean Exports 575 575 525 575 575
Rst-Grnd Exp. 0 0 0 0 0
Soluble Exports 946 946 1,275 1,102 1,175
Total Exports 1,521 1,521 1,800 1,677 1,750
Rst,Ground Dom. Consum 25 25 30 35 37
Soluble Dom. Cons. 213 213 193 199 203
Domestic Use 238 238 223 234 240
Ending Stocks 137 137 122 169 159
Total Distribution 1,896 1,896 2,145 2,080 2,149
1000 HA, MILLION TREES, 1000 60 KG BAGS