Tegucigalpa, Sept 14 - Honduras plans to more than double its coffee exports to as much as 7.7 million 60-kg bags by 2010/2011 thanks to low production costs and a large land reserve, officials said.
The country, which sees exports at 3.22 million bags in the 2006/07 cycle ending Sept. 30, is aggressively following a policy of raising production, even as some market analysts warn against increasing global supply.
Increasing output from Honduras counters the trend in neighboring countries, where output is steadily falling.
"In Central America in coffee, we are the only ones that can increase production and we are doing just that," the technical manager of the Honduran Coffee Institute (IHCAFE), Omar Funez, told Reuters late on Thursday.
"We hope that in the 2010/2011 harvest we can reach exports of 6.1 million bags and up to 7.7 million bags,"
The country expects 2007/08 exports of 3.4 million bags.
Honduran coffee is generally used anonymously in blends, a market that countries like Guatemala, Costa Rica and El Salvador have largely dropped for differentiated and "specialty" coffees.
Urban expansion, particularly in Costa Rica and El Salvador, has helped raise land prices and has encroached on coffee growing areas, an issue less present in Honduras.
"We also have competitive advantages compared to the other countries in the region," Funez said. "Our production costs are lower, we have more hands available to harvest and more and relatively cheaper labor."
Officials at IHCAFE, as well as those at producer and exporter organizations, peg Honduras' production costs at between $0.65 and $0.70 per pound of green coffee, while in Costa Rica the national average is above $0.90 per pound and some specialty coffees much higher than that.
"Coffee farming is a business and one important point of that is the production cost, which is lower than in other countries in the region," said Christian Lasaje, president of the Association of Honduran Coffee Exporters.
The production hike is backed by financing provided by the Honduran government. The state has been subsidizing fertilizer costs in recent years and a $159 million local bond issue is pending, its funds to be used for replantings and farm renewals.
Asterio Reyes, president of the powerful Honduran Coffee Producers' Association, predicted coffee prices would hold in coming years.
"The outlook now is that prices will be good in three or four years. We also hope that in two or three years renewed and replanted farms enter full production and supply an important amount of coffee."
That counters warnings by market analysts who say that rapid growth in global output could outpace demand. Last week, International Coffee Organization executive director Nestor Osorio warned producers in Nicaragua that rapidly increasing exports could cause a price collapse.
Honduras is focusing the bulk of its attention on yields, one area where Osorio said farmers should make improvements. Currently, the country produces 8.4 bags of coffee per hectare on the 285,000 hectares planted with coffee. IHCAFE wants to nearly double that average through promotion of more intensive farming.