1. Structural Changes in the World Coffee Market Panos Varangis y Bryan Lewin Banco Mundial La Crisis Cafetalera y su Impacto en Centroamerica: Situaci ó n y L í neas de Acci ó n Antigua, Guatemala, 3-5 de abril, 2002

2. Paradigm changes in the coffee market Structural Changes in Production as Brazil and Vietnam increase the quantity and quality of their output. Structural Changes in Demand, as roasters use technology such as steaming to increase flexibility in their blending and able to work with shorter supply lines. Slow demand growth in traditional consumer markets in North America and Western Europe.

3. Coffee Prices 1967 to 2002

4. Prices and consumer stocks

5. Production changes since 1994/95 (USDA)

6. Brazil: official estimates of productive capacity

7. Brazil: trends Production has shifted from frost prone areas in the south to areas in the north; Production costs are reduced by: Higher density plantings Higher mechanization, particularly in harvesting Larger farms that reduce fixed costs Government funded research for more efficient technologies; A program (Caf é do Brasil) to encourage higher quality and marketing of higher quality coffee.

8. Brazil: Prospects New technologies are enabling the coffee sector to increase yields and lower costs. This and the the focus on quality will strengthen Brazil s ability to compete in the world coffee market.

9. Brazil: production 2001/02 estimated output of 33.7 million bags (USDA); 2002/03 estimates for well above 40 million bags; 2003/04 lower output mainly due to the bi-annual production cycle.

10. Vietnam: production and productive capacity growth

11. Coffee production in Vietnam 500,000 ha producing around 13 mill bags Around 40% of trees are less than 8 years old. Very competitive internal market with farmers receiving 90% of FOB price Low costs of production estimated to be roughly in the range of $350-400 per ton ( national average ). Major export markets: US (16%), Germany (15%), Belgium (15%), Spain (9%), Italy (7%) and France (5%).

12. Prospects for Vietnam Farmers are reducing inputs with some, but not large, impact on yields. High input applications during the last 10 years may cause natural exhaustion of the land. Government announced a reduction of robusta area by 100,000 ha but increase in arabica by 50,000 ha. Aim to stabilize robusta production to around 10 million bags. Young age of trees Quality is improving Flexibility in adjusting production while waiting for prices to rebound Expansion in arabica but more difficult than robusta

13. Brazil Off-Cycle and Falling Production In Other Countries May lead To a Deficit in 03/04.

14. Exportable production as a share of importer demand

15. Shares of coffee types in blends

16. Regional changes in consumer demand

17. Retail Prices vs. ICO price