coffee strategy

8/12/2019 Coffee Strategy

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Jamaica, a leading per capita exportcountry known for its commitment to

creativity, innovation and exceptional quality.

The National Export Strategy of Jamaicawas developed on the basis of the process,methodology and technical assistance of theInternational Trade Centre (ITC).

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I NDUSTRY SECTOR STRATEGY

4

Coffee

Introduction

Rationale

The Jamaican brand of coffee, Blue

Mountain, remains an iconic brand

globally and stands as a symbol of a

high-quality product from Jamaica. Itis also an example of a protected mark,

serving as inspiration and a viable model

to several other products and product

groups from Jamaica.

In addition to this qualitative rationale

for the industry, coffee contributes to the

Jamaican economy, grown in a region

with full employment, something very

few geographical areas are able to boast.

In addition to its social contribution there

is significant export potential that may be

realised from both increased production

and export volume, increased value of

export by expanding the percentage of

value added production locally, as well as

development of value-added products.

It is argued that the sector has negatively

impacted the natural environment and

is likely to continue doing so, however,

farm practices have improved with

increased utilisation of natural fertilisers

and pesticides. Further damage to

the environment is not likely to occur

with planned increase in output, which

will be based on improving yield (and

not expansion of planted lands), while

inter-cropping and other environmental

practices are also to be pursued.

Product Groups and RelatedProgrammes

The strategy covers the complete

sector, as defined by its value chain. It

is important to note that the strategy is

partially derived from a broader strategic

plan for the sectors development that

was prepared by the Coffee Industry

Board (CIB), and therefore aligned

to it. The resulting action plan covers

initiatives that complement those of the

CIB, and especially those not in its core

mandate.

Where Do We Want to Be?

The Vision

To be the global standard forquality coffee, as well as theglobal benchmark industry.

The Jamaican Blue Mountain Coffee is

already known as the premium coffee

in the world, leaving little aspirational

goals for the industry, and a focus on

maintaining the current levels of quality.

However, the industry has agreed to

transition itself as the global benchmark

for the coffee-growing and processingindustry; particularly based on anecdotal

evidence of Jamaica having originated

fair trade practices in the industry.


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COFFEE 5

Strategic Objectives

1. To access new market niches in at

least three countries.

2. To increase the volume of exports by

20% by

a. Improving clean bean yield to 980

kilograms per hectare (from 590)

b. Increasing premium exports to

45% of total (green bean) export

(from 23% baseline).

3. Increase in sales to the tourism sector

by 15%.

Value Chain


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Where Are We Now?An Assessment

Export Performance andAssessment of Overall

CompetitivenessCoffee is one of Jamaicas top ten

export products. Although not a major

producer globally, the Jamaican product

attracts the highest market value in

export markets. Jamaicas ranking in

2006 was 39.

The value of exports increased duringthe 2001- 2002 period from 30 million

to 33 million USD. Exports fell slightly

during the 2002-2003 period to 29

million but then shot up 10 million to

39 million USD in total value. Coffee

production, along with other industries,

took a devastating blow as a result of

the destruction caused by Hurricane

Ivan in September of 2004 as well as

Hurricanes Dennis and Emily in 2005.

This was reflected in the export value of

coffee dropping 17 million USD to 22

million USD between 2004 and 2005.

Annual growth in value and quantity also

reflected the blow to the industry caused

by the hurricanes as they both sharply

declined to -6% and -7% respectively.The share of total exports as well as world

exports declined similarly from 2.49% to

1.24% and from 4% to 1% respectively.

The 2005-2006 period, however, saw

the sector recover with an annual

growth in value of 44%. The number of

exported products which valued more

than USD100,000 fluctuated between

2 and 3 between 2001 and 2005 while

the number of export markets valued at

more than USD100,000 moved from 6

to 9 between 2001 and 2002 and then

remained at 9 through 2005.

In 2006, Jamaica exported coffee to the

top 9 world importers of coffee. While

the USA is the number 1 world importer

of coffee, Jamaicas principal market for

coffee was Japan. In 2006, Japan had80% share in Jamaicas exports and

imported 25 million USD of Jamaican

coffee while the USA had 9% share and

imported only 2 million USD.


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COFFEE 7

1 http://www.trademap.net/jamaica/product_clus_4d.htm?typetrade=E&selctry=388&product=09%20

&reporter=%20.

Performance against CriticalSuccess Factors

The industry is benchmarked on the

product quality determined by tasteand appearance of the bean. Jamaica

has the number 1 ranked brand with the

highest price internationally, however,

the brand is not considered exciting, but

old. The quality achieved is based on

the combination of (i) soil (ii) growing

and reaping practices (iii) elevation.

Some of these are unique to Jamaica

and contribute to the product quality,

however with respect to farming and

management practices the ability to

maintain standards means that the

industry has performed well against this

factor.

A critical success factor for the coffee

industry is to maintain its position as the

#1 ranked global brand, which allows

the industry to attract the highest price.

The strategy therefore looks at how

to maintain this from a market-driven

perspective; identifying threats to the

brand rank and how to mitigate these.

The table below reflects the industrys

assessment of its performance againstthe critical success factors that were

identified.

Year Exports in Value

(USD mil)

Share of

total exports

Share of

World Exports

2001 30 2.4917% .4657%

2002 33 2.9478% .5050%

2003 29 2.3921% .3865%2004 39 2.7864% .4264%

2005 22 1.2466% .1780%

20061

Exports in

value

Annual growth

(value)

02-06

Annual growth

(quantity)

02-06

Annual growth

(value)

05-06

Annual growth

in value of

imports02-06

32 mil USD -6% -7% 44% 21%


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Government Policy and Strategy in

Support of the SectorThe coffee industry has no direct policy,

but would be included in an agricultural

policy. The Coffee Industry Board is

resourced by its own revenues without

direct assistance from the GoJ.

The Sectors Trade SupportNetwork: Capacity, Competencyand Coordination

Factor Rating Comment

Freshness High This is achieved in production, but is

impacted by the period and conditions

between shipper and consumer. The industry

maintains freshness in the areas of the valuechain in which it is involved and is engaged in

monitoring the life of product on shelves, and

for its part performs well in this area.

Brand

Origin High With the Blue Mountain seal, the local

industry is the best performer in this areaglobally.

Ethical

practices

(for

example

fair trade)

Medium Farmer welfare is among the best, however

the story is not told, and practices are not

documented, and so the performance is

medium, with the potential to be high.

Environ-mental

Low-medium Performance is currently low-medium becausenot enough options for environmentally

sustainable production are being pursued, like

shade grown, or organic.


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COFFEE 9

The main entity with responsibility for

the industry is the CIB. The industry

is concerned about the capacity of the

Board to effectively carry out the roles

and functions assigned.

As is the case with other product groups,

there is support from the JEA and JTI

for export development and promotion.

There are no sector-specific functions or

programmes.

SWOT Analysis of the Sector

Strengths

Established product brands and very

strong destination reputation.

Weaknesses Very little collaboration among

members of the sector.

Few processors and roasters have

international certifications.

The industry has not successfully told

their story to drive sales, enhance

social equity of the brand.

The industry standards and

requirements do not include social

and environmental standards, and

so it may be perceived as weak in

these areas.

Opportunities Opportunities exists for increasing

use of current lands (fill gaps) to

increase the production volume

using currently dedicated lands

Threats

Low domestic consumption limits

sales for business and industry

growth.

Heavy concentration in the Japan

market


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The Way Forward

(over 3-5 years)

The desired future state of the industry

in each strategic perspective is reflected

below.

The Development Perspective:Developmental Considerationsand Priorities

The industry contributes to

environmental sustainability by

expanding environmentally friendly

practices and re-introducing newones, such as intercropping, and

organic production.

By increasing the yield and therefore

earnings, improve the welfare of

farmers in the growing regions.

Promote enhanced labour

productivity to improve the currentlow yield/acre.

Social responsibility is fostered at the

industry level with increased number

of community programmes.

Investment is directed to the industry

(for privatisation of the government

owned entities) that enhances the

industry.

The Competitiveness Perspective

Border-In Issues and Priorities

Yield increased through the

provision of technical information

and support to growers.

There is increased investment

in product research to facilitate

product development and higher

value alternatives for waste.

More aware and sophisticated

enterprises with: - roasters no

longer lacking certification and

technical competence; failureto stay ahead of the curve on

customer food safety; lack of

funds; lack of management and

system depth.

There is an increase in adaptive

research conducted on density

and planting systems, nutrition

management and Coffee Berry

Borer management (through the

support of parasitoid programmes)

to transform the efficiency of the

sector.

Border Issues and Priorities

Farm and parochial roads are

improved to significantly improveaccess to farms and national

production and sales.


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COFFEE 11

Alternative pesticides & fertilisers

are sourced to reduce the current

high costs.

There is increased availability of

credit / micro-lending for growers

to finance their production.

Processors are able to secure

more favourable cost and access

to working capital,

There is increased stock of

seedling of larger size to facilitate

plantation renewal that will

substantially increase yields in themedium term.

High cost of crop insurance

(usually needed for hurricane

recovery) is reduced.

Initiatives to reduce praedial

larceny are more effective,

reducing loss from theft.

Border-Out Issues and Priorities

The industry is able to access new

markets for the premium product.

The industry collaborates to

design and implement a sector

programme for increased brand

promotion and market penetrationthat includes (brand building

exercises, developing and

telling the story of the product

and industry, creative market

promotions based on opportunities

that exists, such as country

promotion of other sectors).

The Client Perspective

Export Client Prioritisation: Support

Requirements and Response

As noted earlier, the industry is

essentially an export industry, with

most of the production sold in export

markets. Most of the local sales are

also felt to be sales from visitors and

locals who purchase for gifts (and

therefore also classified as exports).

The export clients within the industry

therefore comprise:

o The Coffee Industry Board which

(for quality control and efficiency

purposes) is the sole exporter ofgreen beans,

o Roasters, most of whom export.

Those who do not export, produce an

export quality product (which is the

industry standard), and are therefore

potential exporters. It is therefore

proposed that export support

requirements be considered for the

entire industry. With a focus on the

quality and production for exports,

the response should be focussed on


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brand development and promotion,

market development and penetration,

export skills and other trade promotion

support.

Implications forSector Support Services

Business Development & Export

Readiness

Most enterprises in the sector,

which operate as small businesses

and lack depth in management,

are provided competency training

and counselling.

Processors and roasters are

typically focussed on the

technical aspect of production

with weaknesses in marketing,

and require support from relevant

agencies.Trade Information

Data for decision making is

required, such as product

perception.

Financing

A working capital programme is

needed that will assist with the

cost of fertiliser, coffee berry borer

prevention programmes, soil tests,

extension support services and

pesticides in order to improve

productivity.

Quality Management

Technical and financial support

are required to address the lack

of QMS (quality management

systems) and EMS (environmental

management systems) certification

which are critical to the future of

the industry.

Other Support Services

Packaging and labelling expertise

are required as a support service

for the industry.

In order to maintain the desired

standards, the effectiveness of the

current intervention to enhance

processors technical competence

will need to assessed.

The Institutional Perspective

Strengthening the Sectors Strategy

Support Network

The CIB is the lead strategy

organisation for the industry. Itsinfluence with other national strategy

support entities needs to be stronger

in order to garner support for strategy.


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COFFEE 13

For example, based on the experience

built in a model for use of a mark, it may

be a benchmark for other industries

and be supported accordingly, as well

as be integrated into national brand-

building programmes.

Strategy Coordination and

Management:

STRUCTURE

The CIB currently executes

the industrys development

programme. The Coffee Exporters

Association will need to beinvolved in the coordination,

advocacy and monitoring of the

strategy however, and engaged in

those areas in particular that are

outside the mandate of the CIB.

PROCESS STRATEGY MONITORING

Since the Board now monitors

the industrys performance,monitoring may reside with the

Board, by using similar measures

and monitoring mechanisms, at

least initially. Support should be

provided by the private sector who

will have to collaborate with the

board for reporting.

The Sectors Services Delivery

NETWORK

The mandate of the CIB is fairly

wide, but understandably so,

and as such the Board needs

the capacity and resources to

be able to deliver all its services

effectively. An aspect needing

to be strengthened is the Boards

service network and strength of

alliances and relationships in

order to ensure that the requisite

services that are within the scope

of other entities are provided tothe sector, such as export-related

services provided by JTI.


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STRATEGY AT A GLANCE

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Vision

The Jamaican Coffee Sector is the global benchmark and standard of quality forthe growing and processing of coffee for export.

Development Perspective

The Jamaican Coffee Sector is promoting environmental sustainability by utilising environmentallyfriendly practices and fostering farmer welfare and increased community development

programmes.

Competitiveness Perspective

SUPPLY SIDE BORDERIN

Coffee yields increased.

Adaptive research in primary

production increased.

Research in product

development and higher

value waste alternativesincreased.

TRANSACTION COST OF BUSINESS

BORDER

Farm and parochial roadsimproved.

Alternative pesticides &fertilisers sourced.

Credit / micro-lending for

growers made available.

Stock of seedling increased.

Praedial larceny eliminated.

Crop insurance costsreduced.

DEMAND SIDE BORDEROUT

New markets Accessed.

Sector programme for

increased brand promotion

and market penetration

developed.

Client Perspective

TRADE INFORMATION

Data for decisionmaking made

available.

STANDARDS AND

QUALITY MANAGEMENT

Quality Management

Systems and

Environmental

Management

Systems certification

applied.

BUSINESS

DEVELOPMENT AND

EXPORT READINESS

Competency training

and counselling

provided.

Marketing competency

of processors and

roasters improved.

FINANCE

Affordable andaccessible finance

made available.

PACKAGING

Affordable quality

export packaging

made available

locally.

Institutional Perspective

The Coffee Industry Board of Jamaica (CIB) and the Coffee Exporters Association are the primaryvehicles for coordinating policy initiatives and implementing the sector development plan.


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COFFEE 15

ACT ION PLAN

OWNER/SUPPORT

OBJECTIVES MEASURES TARGETS INITIATIVES ENTITIES TIMELINE

THE DEVELOPMENT PERSPECTIVE

The coffeeindustry tomimises thenegativesinpact ofgrowingpracticeson theenvironment

Environmentalstandardsdeveloped

Completedin Y1

Produce and disseminate technical manuals

for the promotion of agro Forestry andintercropping, and provide technical servicesfor their implementation.

Promote organic coffee farming.

Develop National Industry Standards manual

( for growers, dealers, processors androasters) expanded to cover:

o technical manual related to production:from farm to cup.

o environmental standards.

o Health and safety standards.

o Social standards, such as employment,wage minimums/ farm gate prices, etc..

CIB

Ministry

ofAgriculture

JOAM

NEPA

Y1

Investment isattracted intothe sector

to enhancecompetitive-ness andcapacity

Percentageof investmentopportunities

attractinginvestment

50% Prepare investment opportunity profiles forNBM & BM coffee that include:

o Cost of production models (mono/

intercropped/agro forestry).

o Current partnership opportunities.

Survey coffee regions and develop an

inventory of idle land & abandoned farmsthat may be put in production and promotedfor investment.

Match prospective growers and land owners

to facilitate increased production.

CIB

Ministry

of

Agriculture

JTI

Y1 Y3

Sectorseconomic

contribution

Productionoutput

Yield

980 kgper

hectare

Promote best practices among growers

in order to foster improvement in labour

productivity through the best farmer award.

Increase the provision of technical

information and support to growers that isrequired to increase production yield.

Ministry

of

Agriculture

CIB

Y1 Y3

THE COMPETITIVENESS PERSPECTIVE

BORDER IN

SectorDiversification

The coffeesector

increasesdomesticvalue addition

Improvedfeed

conversion(from 2 to1.5)

1.5 Obtain better quality feed.

Develop business plan for Jamaica AquaFoodsLimited.

Cluster

Ministryof Agri-culture

Y1

To increaserecovery from30%

Number ofvalue addedproductdeveloped forcommercialisa-tion

2 Conduct product research to identify:o value added products that are feasible for

introduction into operations.

o higher value alternatives for waste (such asbriquettes).

Promote and facilitate commercialising feasible

products.

SRC

CEA

CIB

Ministry

of Energy

Y2


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ACT ION PLAN OWNER/SUPPORT


Capacitydevelopment

There isincreasedyield (output)resultingfromimprovedpractices andefficiencies

ProductionoutputYield

980 kgper

hectare

Increase adaptive research conducted on

the density and planting systems, nutritionmanagement and Coffee Berry Borermanagement, to transform the efficiency ofthe sector.

Increase the stock and size of seedlings.

Ministry

ofAgriculture

CIB

Y1-3

The JamaicanCoffeeIndustry isrecognisedas the globalindustrystandard

TBD TBD See initiative to Develop Industry StandardsManual for Objective 1

CIB

Ministry of

Agriculture

JOAM

NEPA

Ministry

of Labour

Y1-2

BORDER

Cost of Doing

BusinessThere isimprovedinfrastructureand businessenvironmentfor growersandprocessorsto enhancerevenue

Percentageof farm roadstargeted thatare improved

50% Advocate GoJ to improve farm and parochialroads.

Facilitate and promote alliance to source and

purchase alternative pesticides & fertilisersto reduce the current high costs.

CIB

CEA

Advocate for increased availability of credit

/ micro-lending for growers to finance theirproduction.

CIB

CEA

Programmeredesigned

Engage stakeholders in review and design of

crop insurance programme. CIB

CEA

Y2

Crime

Percentagereduction inloss due totheft

50% CROSS-CUTTING INDUSTRY INITIATIVES ARERELEVANT

Ministry

ofAgriculture

Ministry

of NationalSecurity

JCF

Y1-3

BORDER-OUT

The sectorbenefits froman improvedbranding andmarketingprogramme

Percentageincrease inexport sales

20% Design and implement a programme forincreased brand promotion and marketpenetration that includes (brand buildingexercises, developing and telling the storyof the product and industry, creative marketpromotions based on opportunities that exists,such as country promotion of other sectors).

CIB (R)

JEA (R)

JTI (R)

CEA (A)

Y1


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OWNER/SUPPORT


ACT ION PLAN

SectorPromotion

International As above Generate and communicate positive messagesabout the brand.

Identify and recruit branding and marketing

expertise for the sectors programme.

Determine/validate market positioning &

promotion strategy.

Maintain and improve our relationship with

Japanese Importers.

CIB

JEA

JTI

CEA

Y1-2

Domestic Tourism

Percentageincrease intourism sales

15% Design and execute a promotional campaigntargeting buyers at all ports (air & sea) thatincludes partnering with retailers on supportingpromotional activities.

Develop a promotional campaign to be

integrated into Restaurant Week.

Create linkage with HEART Runaway Bay to

train hospitality staff in coffee preparation &terminology.

Initiate training programme in hotel sector.

CIB JEA

JTI

CEA

Y1

THE CLIENT PERSPECTIVE

BusinessDevelopmentand ExportCompetency

CROSS-CUTTING INDUSTRY INITIATIVES ARERELEVANT

Increasedparticipationin exports inthe sector,and improvedexportperformanceof enterprises

Percentage ofroasters andprocessorsparticipating

80% Design and deliver and export awareness andreadiness programme for the sector.

Inform the enterprises of export agencies and

their services.

JTI

JEA

Quality

Management

The JamaicanCoffeeIndustry isrecognisedas the globalindustrystandard

Standardsand supportprogrammesdeveloped

Completedin Y1

Execute a certified seed program for private

coffee nurseries. Collaborate with relevant entity(s) and lobby for

funds for the certification of Coffee ExtensionAgent.

Provide technical and financial support to firms

to address the lack of QMS and EMS certificationwhich are critical to the future of the industry.

CIB

Ministry

of

Agriculture

JOAM

NEPA

Ministry

of Labour

Y1

Trade

Information

Develop and disseminate market reports for the

sector to provide firms with data for decision-making.

JTI

JEA

Other TradeSupportServices

Identify packaging and labelling expertise as a

support service for the industry. JTI

JEA

THE INSTITUTIONAL PERSPECTIVE

Provide support for cluster development to

facilitate collaboration among enterprises withinthe sector.

CIB diversi-fies andexpandsits revenuestreams

Strengthen agency network and relationships.

Lobby to modify the Cess order to include

Imports of coffee.

CIB


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