Medellin, Colombia, March 27 - Colombian coffee shortages will start to ease by August with volumes normalizing by September as the mid-year crop from southern and northern regions is delivered, Gabriel Silva, director of the National Federation of Coffee Growers, said on Thursday.
Silva said the federation was still analyzing an initiative to buy a stake in Starbucks with other coffee producers despite an increase in stock price since he first proposed the idea last year.
Shortages caused by heavy rains and a renovation program to replace old coffee trees with new ones have trimmed Colombian coffee production, delayed some shipments for up to two months and driven up premiums for the country's arabica beans.
The federation said recently its 2009 first half crop would be around 4.5 million bags, down 1.5 million bags from a year earlier, but said strong recent flowering indicated a normal second half of the year.
"We will see volumes starting to get normal by mid-August. We still have three months that are going to be very difficult in terms of availability. By September we should be at full normalization of the monthly flow," Silva told Reuters on a sidelines of the Inter-American Development Bank meeting.
Production for 2009 is seen at more than 11 million 60-kilogram bags with specialty coffee exports by the federation alone at 1.5 million bags or the same as last year, Silva said.
About 25 percent of 260,000 hectares of coffee land currently under renovation -- replacing aging crops for new trees -- will come back into production in the second half of this year, giving output a boost, he said.
Colombia -- the world's No. 3 coffee producer -- had output of 11.48 million bags in 2008 and wants to increase production to 17 million bags by 2014.
STARBUCKS, SPANISH CLOSURES
Silva said Colombia was still talking with banks and Brazilian and Central American coffee organizations about the project to purchase an influential share in Starbucks though the U.S. company's share price had increased recently.
"This initiative is related to the behavior of the stock price. It has recovered significantly since we started analyzing this. So it is under evaluation right now. But our initiative is still there and we have been working on it," he said without giving further details.
Starbucks has not commented directly apart from saying they valued their Colombian ties.
Hurt by the global crisis and slower demand for premium coffee, Starbucks announced it would close 600 stores and cut costs. In late December when Silva made his announcement shares were below $10. On Thursday, the shares closed at $12.39.
Silva said the federation's target to have 300 coffee shops worldwide under its Juan Valdez brand is now under review as the global economic crisis could force the closure of some of its stores in Spain.
But he said the federation's programs to improve coffee quality, train a younger generation of farmers in modern techniques and rejuvenate old crops were not affected by the crisis. The government guaranteed financing for federation programs through 2011.
Silva said he saw a global coffee deficit for 2009 at 6 million bags in the best case scenario and 10 million in the worst case as green coffee inventories remained low. A combination of the crisis and market fundamentals could eventually hurt consumption, he said.
"With the level of inventories today it is going to be tough," he said. "My concern is that maybe this in addition to the difficult economic environment could effect not only Colombian coffee but also the trend for recovering consumption."