2011 Supply and Demand Update Production & Market Trends UTZ CERTIFIED: certification and traceability of sustainable agricultural commodities. www.utzcertified.org UTZ CERTIFIED Foundation | De Ruyterkade 6 | 1013 AA Amsterdam | THE NETHERLANDS Supply & Demand Update April 2011 Introduction UTZ CERTIFIED is a market-oriented sustainability program In this Supply and Demand Update we provide specific that enhances professional farming and has a positive chapters for coffee, cocoa, tea and rooibos which include: impact on productivity, quality and efficiency. UTZ aims to 1) Quantitative data on historical supply and demand create recognition for responsible coffee, cocoa, tea, 2) A forecast of the 2011 supply rooibos, palm oil and cotton producers of all sizes and 3) A qualitative assessment of the supply and origins and to provide the tools for processors and brands demand situation. to respond to the growing demand for sustainably sourced agricultural products. UTZ CERTIFIED purchases are fully Given that UTZ CERTIFIED has now expanded to become a traceable throughout the supply chain, enabling buyers to multi-commodity program, there is an additional chapter know where their produce came from and how it was referring to the development of the palm oil and cotton produced and therefore give assurance to their consumers programs. UTZ is proud to introduce rooibos as new of responsible sourcing. certified product under the tea program starting in 2011. UTZ CERTIFIED Good Inside periodically provides an analysis to its participating producers and buyers about the historical and potential future supply and demand of UTZ CERTIFIED Good Inside responsible coffee, cocoa and tea. This is done to provide the best possible insight to support commercial decision making. Please contact UTZ CERTIFIED if you have any questions or comments. NOTE OF CAUTION WHEN USING THIS INFORMATION 2007, 2008, 2009 and 2010 figures are actual historical data collected by UTZ CERTIFIED. The 2011/2012 figures are estimates. Producers and buyers should use these figures with care. UTZ CERTIFIED makes no claim about their accuracy. Information can change over time. UTZ CERTIFIED Good Inside 2011 © Contact us at [email protected] © UTZ CERTIFIED Good Inside 2011. Page 1 of 14 Supply & Demand Update April 2011 1. Coffee 1.1 Demand and Supply Data 1. Dried coffee. Uganda uring 2010 UTZ CERTIFIED coffee D sales achieved their highest since the Sales increased by almost 50% compared to 2009, with start of the coffee program in 2002. 121.234 MT green coffee sold in 2010 equivalent to 2.020.564 bags (60kg/bag). The forecast for 2011 is to reach over 140.000 MT sales. UTZ CERTIFIED coffee is consumed in at least 46 countries. Still the producers are benefitting from better farm In the Netherlands and Switzerland 40% of all coffee management, increased productivity, yields and improved consumed comes from UTZ CERTIFIED farms. Sara Lee, quality although they may not sell their entire produce as Friele, Migros and Ahold Coffee Company are, amongst UTZ. Besides that, not the whole crop has the quality for others, large mainstream buyers of UTZ CERTIFIED coffee. export and some part is sold for local consumption, specialty and conventional markets or under other From the total sales, 73% was produced in Latin America. In certification programs. most of the producing countries (65%) more than 25% of the total certified supply was sold as UTZ coffee. The Premiums for UTZ coffees have been quite stable; the average ratio sales – supply is 1:3 or 33%, which is needed weighted average Arabica premium was US$ 5.69 c/lb and for mainstream buyers so that a wide range of qualities is Robusta premium was US$ 2.13 c/lb. A total amount of US$ available and the risk of paying scarcity premiums on top of 13.152.826 has been paid directly to the certificate holders. the UTZ premium is minimized. Notes for table 1 (next page) Purchased coffee is only called “UTZ CERTIFIED coffee” when it has been registered with UTZ CERTIFIED through our sales announcement process and given a unique UTZ CERTIFIED tracking and tracing number. The supply figures for 2010/2011 include certificates until March 2011. The supply forecast for 2011 includes the amount of coffee currently registered with UTZ CERTIFIED and in the process of becoming certified. This excludes any estimate of harvests which may be higher or lower due to many factors and does not include the many producers working towards their certification who have not yet registered with us. © UTZ CERTIFIED Good Inside 2011. Page 2 of 14 Supply & Demand Update April 2011 Coffee supply and demand overview 2010/2011 (Table 1) Historical Demand in MT Historical Supply in MT Forecast Purchased as Certified supply Certified supply UTZ CERTIFIED UTZ CERTIFIED UTZ CERTIFIED End of 2006 End of 2007 End of 2008 End of 2009 End of 2010 2007/2008 2008/2009 2009/2010* 2010/2011 2011/2012 ARABICA Brazil 10.737 22.221 25.211 30.659 51.574 92.463 111.834 108.615 136.444 160.000 Honduras 1.445 2.726 5.958 6.693 14.732 5.450 17.331 36.774 33.548 39.720 Colombia 3.374 7.116 12.371 10.190 6.625 23.000 38.447 48.348 50.649 50.000 Peru 3.126 1.902 4.531 2.705 5.910 7.000 19.490 13.661 20.789 19.000 Guatemala 1.500 2.022 2.065 1.427 4.407 5.420 7.455 7.924 10.333 12.000 Costa Rica 1.390 1.847 2.015 1.108 2.443 3.447 3.600 2.466 3.059 3.500 Nicaragua 458 591 1.646 2.300 1.816 2.869 4.993 3.992 7.051 10.000 Indonesia 84 407 2.077 2.024 1.594 6.497 5.624 3.224 7.105 7.500 India 2.246 1.865 2.122 570 1.417 4.298 4.224 5.183 4.788 5.700 Mexico 809 618 633 1.192 1.063 2.394 1.389 3.657 4.668 5.000 Kenya 1.084 850 1.104 1.391 865 6.127 7.413 7.503 6.760 5.000 Uganda 1.767 480 96 210 305 4.550 3.320 5.334 6.808 4.800 Burundi 265 295 0 338 357 357 250 Viet Nam 36 0 626 443 294 500 3.812 8.472 1.985 2.000 Bolivia 172 171 165 190 275 358 193 275 221 300 Papua New Guinea 0 0 0 20 250 0 200 885 505 500 Zambia 568 114 0 18 242 1.376 1.171 1.171 0,5 1.000 Ethiopia 622 149 1.000 147 216 9.430 5.348 2.029 7.612 3.000 El Salvador 0 0 19 145 76 238 850 564 354 354 Tanzania 0 27 0 109 38 673 1.502 711 1.461 1.200 Dominican Republic 0 0 0 0 38 0 0 115 115 115 Total Arabica 29.418 43.106 61.639 61.806 94.477 176.090 238.535 261.258 304.612 330.939 ROBUSTA Viet Nam 5.418 7.313 13.989 17.482 23.771 21.119 50.386 85.162 65.869 70.000 India 470 791 1.118 961 1.669 8.282 7.423 9.139 13.268 14.500 Uganda 128 769 562 1.205 1.183 4.046 3.838 5.060 4.269 4.000 Indonesia 627 637 190 563 133 6.417 5.619 4.323 4.947 5.000 Mexico 0 0 0 0 0 0 0 94 107 107 Tanzania 0 0 0 0 0 0 0 937 930 930 Total Robusta 6.643 9.510 15.859 20.211 26.756 39.864 67.266 104.714 89.391 94.537 TOTAL ARABICA & ROBUSTA 36.061 52.616 77.498 82.017 121.233 215.954 305.801 365.972 394.003 425.476 in bags (rounded) 601.017 876.933 1.291.626 1.366.950 2.020.554 3.599.233 5.096.688 6.099.525 6.566.713 7.091.267 *The certified volume of 2009/2010 has been adapted according to the real values which became apparent in 2010. UTZ CERTIFIED has the largest volume of certified coffee worldwide. Produced in 21 countries the volume of certified coffee reached 394.003 MT (6.566.713 bags) in 2010/2011. The top three producing countries where UTZ sales originate are Brazil, Vietnam and Honduras, which account for 75% of the total 2010 sales. © UTZ CERTIFIED Good Inside 2011. Page 3 of 14 Supply & Demand Update April 2011 1.2. Supply Overview Changes in prices have been influenced by the scarcity of 162.164 certified farmers. Arabica coffee as a result of an off-cycle year with a much The certified farms employ around 232.000 workers of lower crop in Brazil and two successive below average which 23% are permanent and the rest are seasonal annual crops in Colombia associated to heavy rains, workers. Throughout 2010 the UTZ CERTIFIED coffee reduced use of fertilizers because of higher prices, and program has supported farmers with implementing the UTZ increased incidence of pests and diseases. Another country Code of Conduct and will continue to work together with that experienced a decrease in production during 2010 due partners to achieve their demand of certified coffee. to bad weather conditions was Vietnam; being the world’s largest Robusta producing country this will have its 5% of the world coffee production is UTZ CERTIFIED1; this is consequences in driving international coffee prices.