The future of Jamaica’s coffee will likely be determined by its present and past as foward production has been slashed by a third and the state has yet to divest Wallenford — a major coffee factory .

Former director general of Coffee Industry Board (CIB), Graham Dunkley, told Caribbean Business Report that given the impact of the drought conditions and the effect of the worldwide recession on demand for Jamaican coffee, projections place exports of Blue Mountain Coffee at even lower levels this year while output returning to pre-crisis levels — even after an economic rebound — remains uncertain.

By Dunkley’s reckoning, by the time the recession ends, some consumers may already be weaned off the luxury product.

“This recession has caused many people to look at future income, job uncertainty, a decline in asset values and less credit availability,” Dunkley, said. “Conspicuous consumption goes and so to does consumption of ultra premium goods. People will look to less expensive substitutes.”

Jamaica’s Blue Mountain Coffee is regarded as a premium beverage on the world market and exports of the product earned the country US$33.9 million between January and October last year, a 31.9 per cent improvement over 2008 according to the Bank of Jamaica.

Blue Mountain Coffee is one of the island’s top ten exports and there is a thrust to expand the percentage of value added production locally.

Jamaica’s National Export Strategy (NES) positions coffee as a priority industry from which additional revenue can be gained through exports. However, all of this may be affected by what has been done to the industry over the years.

Almost six years after the government-owned Wallenford Coffee Company was earmarked for divestment, there has been no substantial progress in the process.

The way was cleared for the commercial coffee company to be divested and for the government to refocus its efforts on regulating the industry in 2004 when the commercial and regulatory functions of the government-run Coffee Industry Board were separated and the commercial activities were transferred to Wallenford.

However, the Development Bank of Jamaica, in response to queries made by Caribbean Business Report said that the coffee company, the largest exporter of the bean in Jamaica, was still not prepared for divestment.

“The Government of Jamaica, through the Development Bank of Jamaica Limited (DBJ) is now in the preparatory stages of divesting its interest in the Wallenford Coffee Company,” Claudette White, Manager, Communication, DBJ said in a statement. “On completion of the preparatory phase, an appropriate information memorandum will be prepared to be available to all interested parties, and bid proposals will then be invited through public advertisements,”

Wallenford processes both the Jamaica Blue Mountain and High Mountain brands of coffee products and is vertically integrated in the growing, purchasing and processing of the beans.

But Dunkley added that while the divestment by itself would not have a negative impact on the overall coffee industry, provided it is divested into “capable hands which have the requisite capital, technical resources and can bring positive value proposition to the farmers”, the pace at which it is currently being done may affect the productivity of the entity.

Another issue affecting local coffee is the current drought conditions affecting agricultural products. Coffee is a rain-fed agricultural item, therefore extremes in weather condition impacts the quality of the crops and production output.

Under drought conditions, coffee beans are smaller in size with varying quality, which ultimatley results in lower yields and earnings.

Already, the CIB has revised its estimates of expected production downwards from approximately 406,000 boxes of Blue Mountain Coffee, to 275,000 boxes and from over 80,000 to 60,000 boxes of High Mountain Coffee to be exported this year, signalling a drop in export earnings for the sector.

However estimates of overall earnings for the sector this year are difficult to project as the product attracts varying values based on the quality of the beans and whether the product is roasted or exported green. Roasted beans attract a higher price — as much as US$7.50 per kilogram more than green beans, or US$32.20 a KG.

In addition, the crop year, which begins in August 2010 and ends July 2011 doesn’t look too promising. A source at the CIB said that the crops that are currently being harvested are in very low volumes, while harvesting of what is hoped to be the premium berries have not yet begun.

“This year the industry is affected by drought, but if we step back from the drought we find that one of the issues that affects the industry is the poor infrastructure to support it,” Graham said.

Infrastructure also hampers growth of the industry.

The roads which lead to coffee farms across the island are still severely damaged following the effects of Hurricanes as far back as Ivan in 2004 and Gustav and Dean more recently.

Graham said that this issue is among the primary factors affecting the ability of the industry to produce at optimum levels, make timely deliveries to and from the farms and to the markets.

“I have not seen the government making attempts to address these infrastructural issues,” he added.