The Consumer Class and Coffee Markets in Colombia

Even though China’s relations with Africa are deeper than those with Latin America, Beijing looks towards Latin America with twice the interest that it looks towards Africa. Governance in Africa is weaker and the exploitation of natural resources is easier than in Latin America, which accounts for China’s stark economic presence on the African continent. However, in spite of having somewhat stronger governance and rule of law as well as being geographically distant, Latin America has both plentiful natural resources and a growing middle class. This means that China is both able to export commodities out of Latin America as well as import manufactured goods that will be well received by a large consumer class.

The Consumer Class and Coffee Markets in Colombia

In the case of Colombia, one of China’s main interests in the South American nation is the agriculture industry, given that the country produces high-value and niche foodstuffs. Similarly, Colombia is one of the countries in the world with most natural water reservoirs and hydric resources, which represents a unique asset for the national agricultural sector. Within this context, one of Colombia’s key agricultural products, which is also exported internationally, is coffee. During the 2016/17 season, Colombia produced a historic 14.6 million 60-kilogram bags of coffee in terms of green bean equivalent (GBE) and exports reached 13.5 million 60-kilogram bags. This is mainly due to the fact that coffee plantations throughout the country have expanded and that weather conditions were favorable during the year. If these conditions are again met for the 2017/18 season, aggregate production could reach 14.7 million 60-kilogram bags and coffee exports could account for 13.6 million 60-kilogram bags. Overall, these productivity numbers represent a yield of 18.2 GBE bags per hectare.

Since 2012, the Colombian Coffee Growers Federation (FEDECAFE) and the national government have led a crop renovation program that has already replanted more than 420.000 hectares of coffee cultivation or approximately 84.000 hectares annually. Currently, the production goal of both FEDECAFE and the national government is for Colombia to reach an annual output of 18 million 60-kilogram bags GBE. Interestingly, in Colombia, the coffee industry is dominated by small farmers and the average coffee farm is 4.5 hectares. Furthermore, it is estimated that there are 560.000 coffee growing families in Colombia and that 69% of the national coffee production comes from farms that are less than five hectares large. In total, it is estimated that Colombia has 940.000 hectares of coffee plantations. Simultaneously, during the latter half of 2016, coffee prices within Colombia’s domestic market reached record highs, which pressured both production and national sales.

A recurrent issue in recent years within Colombia’s intensive agricultural sectors, such as coffee and flower picking, has been a shortage of labor. The high demand for manual labor during the peak months of harvesting and picking has led to the implementation of guest worker programs in Colombia to bring individuals from neighboring countries, such as Venezuela.

(Read more about Manufacturing and Foreign Investment in Colombia)