SAO JOAO DA BOA VISTA, Brazil: A towering machine rumbles through the fields of Julio Rinco’s farm in the Brazilian state of Sao Paulo, engulfing whole coffee trees and shaking free beans that are collected by conveyor belts in its depths.
This automatic harvester is one of several innovations that have cut Rinco’s production costs to a level that few who use traditional, labor-intensive methods can match.
With increasing use of mechanization and other new technologies, the world’s top two coffee producers, Brazil and Vietnam, are achieving productivity growth that outstrips rivals in places such as Colombia, Central America and Africa.
They are set to tighten their grip.
A plunge in global coffee prices in recent months, to their lowest levels in 13 years, has begun to trigger a massive shake-out in the market in which only the most efficient producers will thrive, according to coffee traders and analysts.
Rival producers elsewhere in the world are increasingly likely to be driven to the margins, unable to make money from a crop they have grown for generations. Some are already turning to alternative crops while others are abandoning their farms completely.
Such shifts are almost irreversible for perennial crops like coffee, as the decision to abandon or cut down trees can hit production for several years.
“Brazil and Vietnam have had consistent increases in productivity, other countries have not,” said Jeffrey Sachs, director of the Center for Sustainable Development at Columbia University, citing advances in mechanization, selective crop breeding techniques and irrigation technology.
In Colombia and Central America, coffee is typically grown on hillsides where mechanization is more difficult, and hand-picking cherries has kept production costs relatively high. The African sector, meanwhile, is dominated by small-scale farmers often unable to raise the capital needed for new techniques.
Rinco bought his harvesting machine for around 600,000 reais ($155,600) and is paying the agricultural supplies company with coffee, delivering 400 bags a year over four years. This kind of bartering is common in Brazilian farming.
One such machine in Brazil replaces dozens of people in the field. Even with financing and fuel bills, farmers and machine manufacturers say there is a reduction of 40% to 60% on harvesting costs.
“Beyond the lower costs, it made my life less complicated,” said Rinco, relieved at no longer having the gruelling task of hiring suitable pickers every year for the harvest at his farm in the Sao Joao da Boa Vista area.
“People don’t want to pick coffee anymore, they go to town to find something else to do.”
Brazil and Vietnam now produce more than half the world’s coffee, up from less than a third 20 years ago, and the proportion is rising, US Department of Agriculture estimates show.
Leading producer Brazil alone accounts for over a third of global supply. In a clear sign of increased efficiency, it reported a record crop of 62 million bags last year and is expected to produce another record in 2020, the next on-year in the country’s biennial production cycle — despite the fact the coffee-planting area has been falling for the last six years.
Vietnam is also regularly setting production records while, by contrast, in Colombia the largest ever crop was harvested in the early 1990s and in Guatemala nearly two decades ago, USDA data shows.
In countries such as Guatemala and Honduras, growers who are increasingly abandoning farms are swelling the ranks of migrants trying to enter the United States.
Average yields in Brazil have risen sharply over the last decade with figures from the UN Food and Agriculture Organization showing an increase of more than 40% to about 1.5 tons per hectare. Vietnam has also seen yields rise from already strong levels, climbing about 18% to around 2.5 tons.
Colombia did show some growth, about 12%, but remains well behind at about 1 ton per hectare while in Central America there was a decline of around 3% to a meagre 0.6 tons.
Businessman Alexandre Gobbi and two partners decided to enter coffee farming in Brazil four years ago. They bought an area in Sao Sebastião do Paraíso, in the main producing belt in Minas Gerais state, and sought out state-of-the-art tech.
Today, his farm has equipment including an underground dripping irrigation system with artificial intelligence, considered the world’s most advanced.
“It does almost everything by itself. Reads humidity levels, tells me when to add water and fertilizer and by how much,” he told Reuters, pointing to the digital panels in his control room.
With the system, plus other equipment including harvesters, he has doubled average yields to around 60 bags per hectare, and can make a profit even with current low prices.
Arabica coffee futures on ICE Futures US, the most widely used global benchmark for coffee prices, fell in May to 87.60 cents per lb, the weakest level since September 2005.
Prices have since recovered slightly but remain at a level where few producers outside Brazil and Vietnam can make money.
Arabica beans, which provide a smoother and sweeter taste, constitute nearly two-thirds of the world’s coffee. More bitter and stronger robusta beans largely make up the rest of global supply, much of them hailing from Vietnam.
A warehouse owned by Vietnamese coffee exporter Simexco Dak Lak Ltd. in the town of Di An, near Ho Chi Minh City, illustrates the scale of Vietnam’s coffee operation.
Coffee is stacked in neat piles several meters high, awaiting export to Europe. The warehouse has enough capacity to store 20,000 tons during the harvest season.
“At the height of the harvest, having enough space to create an aisle to walk through the warehouse becomes a luxury,” said Thai Anh Tuan, who manages one of three warehouses for Simexco, which exports over 80,000 tons of robusta a year.
“Every tiny bit of space will be taken up by these little beans,” Tuan added. “We have to hire additional warehouses nearby for extra storage.”
Tuan also credited the steady increase of Vietnamese coffee exports over the last four to five years to an increase in innovative farming techniques, including intercropping — growing different crops together — and the use of better technology in irrigation and cultivation.
Coffee is still the key cash crop for Dak Lak, Vietnam’s largest coffee-producing province, although durians, jack fruit, mangoes and avocado trees have all been intercropped with coffee trees to maximize income in recent years, farmers told Reuters.
Ksor Tung, a coffee grower with a 10-hectare farm, said intercropping coffee with durian trees resulted in better protection from direct sunlight and pests.
“Farmers here have experimented with intercropping for nearly a decade,” Tung told Reuters.
“Peppers used to be the most popular tree when it comes to intercropping but for the past three years, with the prices falling, almost all farmers have turned to fruit trees instead,” said Tung, adding that farmers who intercrop can triple their income per hectare.
Farmers in Colombia face a far different future.
Battered by low prices and high costs, some are contemplating switching to other crops or selling up, despite tens of millions of dollars in government aid.
Jose Eliecer Sierra, 53, has farmed coffee for three decades but low prices have forced him to look at alternatives — Hass avocados and cattle among them.
“Avocados are in high demand abroad and it’s one of the options,” he said, standing amid some of his 41,000 coffee trees on a mist-shrouded mountainside near Pueblorrico, in Antioquia province.
“Another very tempting option that people are thinking about is cattle — knocking down coffee trees and planting grass for cows,” said Sierra.
It is not the first time Colombian coffee growers have looked to other crops for a better living. Many in the south — sometimes under pressure from armed groups — abandoned it for the more lucrative coca, the raw ingredient in cocaine, though coffee has since rebounded.
For some growers, even switching crops may not save them.
Uriel Posada, who worked for more than 30 years as a house painter in the United States, dreamed of coming home to Colombia to grow coffee. Now his land is up for sale.
“I’m up to my neck in debt,” the 52-year-old said, gazing up the steep hill where his 30,000 coffee trees are planted.
“Brazil has a huge advantage over us — the land is flat and they have machinery,” Posada said. “Here I have to pay a human being to go tree by tree, branch by branch and pick the red berries.”
Avocados and cattle are good alternatives, Posada said, but require start-up funds and transition time that many local growers do not have.
“I’ll sell, pay what I owe and go. End my Colombian dream.”
How Brazil and Vietnam are tightening their grip on the world’s coffee
How Brazil and Vietnam are tightening their grip on the world’s coffee
- A plunge in global coffee prices in recent months, to their lowest levels in 13 years, has begun to trigger a massive shake-out in the market in which only the most efficient producers will thrive
Fortune Global Forum to be held in Riyadh in 2025
RIYADH: The Saudi capital will welcome world business elites next year as the Fortune Global Forum makes its first appearance in Riyadh.
The forum, which is organized by Fortune magazine, brings together top business leaders from across the globe on the dynamic frontiers of global enterprise.
Fahd bin Abdulmohsan Al-Rasheed, the chairman of the Saudi Convention and Exhibitions General Authority, said the forum has in the past 30 years brought together “the titans of industry around the world to the forefront of economic development.”
“And that forefront today is the Kingdom of Saudi Arabia,” Al-Rasheed told the forum in New York, where delegates have been taking part in the three-day gathering, which concluded on Tuesday.
He urged delegates to come to the Kingdom’s business epicenter to engage and explore what Saudi Arabia has to offer.
Saudi Arabia launches company to transform Asir into global tourism hub
RIYADH: Saudi Arabia’s Asir region has launched a new tourism venture through a partnership with the aim of creating a holding company to transform the area into a global tourist destination.
The collaboration between Aseer Investment Co., a subsidiary of the Public Investment Fund, and Rikaz Real Estate, aligns with the goal of transforming Asir into a world-class tourist destination that combines authentic heritage with sustainable development, according to the Saudi Press Agency.
The holding company seeks to contribute to enhancing a tourism environment that enriches guests’ experiences with unique offerings, connecting visitors to local culture and community traditions, SPA reported.
It is also committed to promoting sustainable tourism by protecting the environment, developing local communities, and collaborating with artisans and local businesses to preserve the authenticity of Asir’s heritage.
In October, the Kingdom’s Abha city secured a new investment partnership to boost tourism by developing culturally rich dining and retail experiences.
PIF firm Aseer Investment Co. signed the deal with Nimr Real Estate and the National Co. for Tourism, or Syahya, to propel the project, the Saudi Press Agency reported.
This aligns with the objectives of developing Abha, which will offer a range of benefits, including retail stores that reflect the cultural heritage of the Asir region.
The partnership also seeks to be a model for multiple collaborations with private sector investors and create more regional job opportunities.
Investments in the region are expected to create between 14,000 and 18,000 job prospects and contribute to up to 6 percent of the non-oil gross domestic product within 10 years, as outlined by AIC Chief Executive Osama Al-Othman in February.
Saudi Arabia emerged as a leader in tourism growth among G20 nations, experiencing a 73 percent increase in international visitors in the first seven months of 2024 compared to 2019.
According to the UN World Tourism Barometer report in September, the Kingdom welcomed 17.5 million international tourists during this timeframe, showcasing its growing allure as a global travel destination.
This surge is part of the nation’s Vision 2030 initiative, which aims to diversify the economy and reduce dependence on oil revenues.
“Saudi Arabia cements its global leadership and takes the first spot among G20 countries in international tourist arrivals growth, with a 73 percent increase in the first seven months of 2024 compared to the same period in 2019,” stated the Saudi Tourism Ministry on X.
Under the National Tourism Strategy, the Kingdom aims to attract 150 million visitors by 2030 and increase the sector’s contribution to the nation’s gross domestic product from 6 percent to 10 percent.
These goals reflect the country’s commitment to strengthening its tourism sector and enhancing its global appeal.
IMF, Saudi Arabia announce new annual conference tackling global economic challenges
RIYADH: The International Monetary Fund and Saudi Arabia will jointly organize a high-level annual conference in AlUla to discuss global economic challenges, it has been announced.
The AlUla Conference for Emerging Market Economies will bring together a select group of finance ministers, central bank governors, and policymakers, along with leaders from the public and private sectors, representatives from international institutions, and members of academia.
According to a joint statement by Kristalina Georgieva, managing director of IMF and the Minister of Finance Mohammed Al-Jadaan, the first edition of this series will be held from Feb. 16-17, 2025.
“The world is confronting deeper and more frequent shocks, including from conflicts, geoeconomic fragmentation, pandemics, climate change, food insecurity, and the digital divide,” according to the statement.
They continued: “If not addressed adequately, these shocks put at risk emerging market economies’ hard-won improvements in living standards. Such setbacks would affect large segments of the world population and put at risk global growth and macro-financial stability.”
The gathering will offer a platform to exchange views on domestic, regional, and global economic developments and discuss policies and reforms to spur inclusive prosperity and build resilience supported by international cooperation.
Recent economic issues affecting the global landscape include rising inflation rates, driven by supply chain disruptions and increased demand for goods post-pandemic.
Supply chain delays continue to impact the availability of essential products, causing bottlenecks in manufacturing and increasing costs.
Additionally, geopolitical conflicts, such as the war in Gaza, have disrupted energy supplies and food exports, leading to global food insecurity and fuel price volatility.
Concerns over the using the Red Sea shipping lane increased dramatically at the end of 2023, when Houthi militants stepped up attacks on vessels in the wake of the escalation of the Israel-Hamas conflict.
The effects of these challenges pose significant risks to economic stability, especially for emerging markets that are more vulnerable to such global shocks.
The AlUla conference is the latest example of the growing relationship between Saudi Arabia and the IMF, with the organization in April establishing its first office in the Middle East and North Africa region in Riyadh.
The facility was launched during the Joint Regional Conference on Industrial Policy for Diversification, jointly organized by the IMF and the Ministry of Finance, on April 24.
The new office aims to strengthen capacity building, regional surveillance, and outreach to foster stability, growth, and integration, thereby promoting partnerships in the Middle East and beyond, according to the Saudi Press Agency.
The work hub will promote closer collaboration between the IMF and regional institutions, governments, and other stakeholders, according to the SPA report.
The IMF also expressed its gratitude to the Kingdom for its financial contribution aimed at supporting capacity development in member countries, including fragile states.
Closing Bell: Saudi Arabia’s TASI ends in the red, trading volume hits $2.95bn
RIYADH: The Tadawul All Share Index concluded the last session of the week at 11,791.18 points, down by 139.27 points or 1.17 percent.
The MSCI Tadawul 30 Index also saw a decline, dropping 19.18 points to close at 1,481.36, reflecting a 1.28 percent loss. In contrast, the parallel market Nomu finished Thursday’s trading at 29,467.71 points, up 262.18 points or 0.90 percent.
TASI reported a trading volume of SR11.10 billion ($2.95 billion), with 51 stocks advancing and 182 declining. The top performer of the day was Saudi Cable Co., which saw its share price surge by 5.10 percent to SR92.70.
Other strong performers included Shatirah House Restaurant Co., which gained 3.75 percent to reach SR21, and Arabian Mills for Food Products Co., which rose by 3.08 percent to SR53.60. Naseej International Trading Co. and Saudi Real Estate Co. also posted notable gains.
The worst performer was Saudi Real Estate Co., which dropped 4.94 percent to close at SR10. Alkhaleej Training and Education Co. and Red Sea International Co. also suffered significant losses, with their share prices falling by 4.90 percent to SR29.10 and 4.84 percent to SR68.80, respectively. Astra Industrial Group and Al-Omran Industrial Trading Co. were also among the day’s largest decliners.
On the parallel market, Nomu, Alqemam for Computer Systems Co. was the top gainer, rising by 9.57 percent to SR103. Other gainers included Dar Almarkabah for Renting Cars Co., which climbed 9.10 percent to SR42.55, and Horizon Educational Co., which rose by 7.58 percent to SR79.50. Mulkia Investment Co. and Knowledge Tower Trading Co. also saw significant increases.
On the losing side of Nomu, WSM for Information Technology Co. recorded the largest drop, with its share price falling by 6.18 percent to SR44. Osool and Bakheet Investment Co. and Natural Gas Distribution Co. also experienced notable declines, with their shares dropping by 5.37 percent to SR37.85 and 5 percent to SR57, respectively.
Leaders stress urgent need for climate finance at COP29 ministerial dialogue
RIYADH: Global climate finance continues to fall short of expectations, as leaders gathered at the COP29 Ministerial Dialogue on Climate Finance to address ongoing challenges and map out next steps.
The meeting, held in Baku, Azerbaijan, underscored the urgent need for increased and more effective funding mechanisms. COP29 President Mukhtar Babayev emphasized that climate finance plays a central role in the broader negotiations.
“The urgency of the situation is evident,” Babayev remarked, pointing to the severe impacts of climate change observed over the past year. “Recently, we witnessed catastrophic flooding in Spain, and in the Pacific region, island communities are faced with the possibility of being wiped out entirely. We must act now; failure to do so will have grave human and economic costs.”
The president stressed the importance of fulfilling the $100 billion-per-year commitment made in Copenhagen and reiterated in Paris, urging leaders to reflect on lessons learned and consider the quality and allocation of financial resources.
Developing countries once again voiced the need for tangible action, with Fiji’s Deputy Prime Minister Biman Prasad highlighting the importance of aligning climate finance with the goals of the Paris Agreement.
“This is a ‘put your money where your mouth is’ moment,” Prasad said. “The 1.5°C temperature goal and the Paris Agreement itself will not be deliverable from both an economic and scientific perspective if we do not invest right. The New Collective Quantified Goal is critical for aligning our priorities and addressing major inconsistencies,” he added.
The EU reaffirmed its commitment to climate finance, noting that the $100 billion goal was first collectively met in 2022, with contributions reaching $115.9 billion.
“The EU and its member states contributed €28.5 billion, or around $30 billion, in climate finance from public sources,” a representative said. “Almost half of the public funding came in the form of grants, with a significant portion provided on concessional terms. We need to make further efforts to facilitate the mobilization of private funding, as it remains a key source of climate finance,” the representative added.
Simon Stiell, executive secretary of the UN Framework Convention on Climate Change, emphasized the critical juncture at which the global community now finds itself.
“The huge opportunities we have and the terrible risks we face are real,” Stiell said. “It’s time to take action to bridge gaps, solve problems, and come together to ensure climate finance and climate action benefit everyone.”
Sweden also announced a significant new contribution, with Ministerial representatives unveiling an $8 billion Swedish krona ($723.6 million) pledge to the second replenishment of the Green Climate Fund.
“This makes Sweden the largest per capita donor to the GCF among the larger donors,” the Swedish representative noted.
As discussions progressed, leaders acknowledged the widening gap between current financial commitments and the funds required to meet the 1.5°C target. There were calls for more robust mobilization of both public and private finance.
The COP29 president concluded: “Delivering the climate fairness that developing countries need is one of the main metrics of shared success. We can learn from past efforts to inform the road ahead, but significant determination and leadership from all parties are required to bridge these critical gaps.”