SAO JOAO DA BOA VISTA, Brazil: A towering machine rumbles through the fields of Julio Rinco’s farm in the Brazilian state of Sao Paulo, engulfing whole coffee trees and shaking free beans that are collected by conveyor belts in its depths.
This automatic harvester is one of several innovations that have cut Rinco’s production costs to a level that few who use traditional, labor-intensive methods can match.
With increasing use of mechanization and other new technologies, the world’s top two coffee producers, Brazil and Vietnam, are achieving productivity growth that outstrips rivals in places such as Colombia, Central America and Africa.
They are set to tighten their grip.
A plunge in global coffee prices in recent months, to their lowest levels in 13 years, has begun to trigger a massive shake-out in the market in which only the most efficient producers will thrive, according to coffee traders and analysts.
Rival producers elsewhere in the world are increasingly likely to be driven to the margins, unable to make money from a crop they have grown for generations. Some are already turning to alternative crops while others are abandoning their farms completely.
Such shifts are almost irreversible for perennial crops like coffee, as the decision to abandon or cut down trees can hit production for several years.
“Brazil and Vietnam have had consistent increases in productivity, other countries have not,” said Jeffrey Sachs, director of the Center for Sustainable Development at Columbia University, citing advances in mechanization, selective crop breeding techniques and irrigation technology.
In Colombia and Central America, coffee is typically grown on hillsides where mechanization is more difficult, and hand-picking cherries has kept production costs relatively high. The African sector, meanwhile, is dominated by small-scale farmers often unable to raise the capital needed for new techniques.
Rinco bought his harvesting machine for around 600,000 reais ($155,600) and is paying the agricultural supplies company with coffee, delivering 400 bags a year over four years. This kind of bartering is common in Brazilian farming.
One such machine in Brazil replaces dozens of people in the field. Even with financing and fuel bills, farmers and machine manufacturers say there is a reduction of 40% to 60% on harvesting costs.
“Beyond the lower costs, it made my life less complicated,” said Rinco, relieved at no longer having the gruelling task of hiring suitable pickers every year for the harvest at his farm in the Sao Joao da Boa Vista area.
“People don’t want to pick coffee anymore, they go to town to find something else to do.”
Brazil and Vietnam now produce more than half the world’s coffee, up from less than a third 20 years ago, and the proportion is rising, US Department of Agriculture estimates show.
Leading producer Brazil alone accounts for over a third of global supply. In a clear sign of increased efficiency, it reported a record crop of 62 million bags last year and is expected to produce another record in 2020, the next on-year in the country’s biennial production cycle — despite the fact the coffee-planting area has been falling for the last six years.
Vietnam is also regularly setting production records while, by contrast, in Colombia the largest ever crop was harvested in the early 1990s and in Guatemala nearly two decades ago, USDA data shows.
In countries such as Guatemala and Honduras, growers who are increasingly abandoning farms are swelling the ranks of migrants trying to enter the United States.
Average yields in Brazil have risen sharply over the last decade with figures from the UN Food and Agriculture Organization showing an increase of more than 40% to about 1.5 tons per hectare. Vietnam has also seen yields rise from already strong levels, climbing about 18% to around 2.5 tons.
Colombia did show some growth, about 12%, but remains well behind at about 1 ton per hectare while in Central America there was a decline of around 3% to a meagre 0.6 tons.
Businessman Alexandre Gobbi and two partners decided to enter coffee farming in Brazil four years ago. They bought an area in Sao Sebastião do Paraíso, in the main producing belt in Minas Gerais state, and sought out state-of-the-art tech.
Today, his farm has equipment including an underground dripping irrigation system with artificial intelligence, considered the world’s most advanced.
“It does almost everything by itself. Reads humidity levels, tells me when to add water and fertilizer and by how much,” he told Reuters, pointing to the digital panels in his control room.
With the system, plus other equipment including harvesters, he has doubled average yields to around 60 bags per hectare, and can make a profit even with current low prices.
Arabica coffee futures on ICE Futures US, the most widely used global benchmark for coffee prices, fell in May to 87.60 cents per lb, the weakest level since September 2005.
Prices have since recovered slightly but remain at a level where few producers outside Brazil and Vietnam can make money.
Arabica beans, which provide a smoother and sweeter taste, constitute nearly two-thirds of the world’s coffee. More bitter and stronger robusta beans largely make up the rest of global supply, much of them hailing from Vietnam.
A warehouse owned by Vietnamese coffee exporter Simexco Dak Lak Ltd. in the town of Di An, near Ho Chi Minh City, illustrates the scale of Vietnam’s coffee operation.
Coffee is stacked in neat piles several meters high, awaiting export to Europe. The warehouse has enough capacity to store 20,000 tons during the harvest season.
“At the height of the harvest, having enough space to create an aisle to walk through the warehouse becomes a luxury,” said Thai Anh Tuan, who manages one of three warehouses for Simexco, which exports over 80,000 tons of robusta a year.
“Every tiny bit of space will be taken up by these little beans,” Tuan added. “We have to hire additional warehouses nearby for extra storage.”
Tuan also credited the steady increase of Vietnamese coffee exports over the last four to five years to an increase in innovative farming techniques, including intercropping — growing different crops together — and the use of better technology in irrigation and cultivation.
Coffee is still the key cash crop for Dak Lak, Vietnam’s largest coffee-producing province, although durians, jack fruit, mangoes and avocado trees have all been intercropped with coffee trees to maximize income in recent years, farmers told Reuters.
Ksor Tung, a coffee grower with a 10-hectare farm, said intercropping coffee with durian trees resulted in better protection from direct sunlight and pests.
“Farmers here have experimented with intercropping for nearly a decade,” Tung told Reuters.
“Peppers used to be the most popular tree when it comes to intercropping but for the past three years, with the prices falling, almost all farmers have turned to fruit trees instead,” said Tung, adding that farmers who intercrop can triple their income per hectare.
Farmers in Colombia face a far different future.
Battered by low prices and high costs, some are contemplating switching to other crops or selling up, despite tens of millions of dollars in government aid.
Jose Eliecer Sierra, 53, has farmed coffee for three decades but low prices have forced him to look at alternatives — Hass avocados and cattle among them.
“Avocados are in high demand abroad and it’s one of the options,” he said, standing amid some of his 41,000 coffee trees on a mist-shrouded mountainside near Pueblorrico, in Antioquia province.
“Another very tempting option that people are thinking about is cattle — knocking down coffee trees and planting grass for cows,” said Sierra.
It is not the first time Colombian coffee growers have looked to other crops for a better living. Many in the south — sometimes under pressure from armed groups — abandoned it for the more lucrative coca, the raw ingredient in cocaine, though coffee has since rebounded.
For some growers, even switching crops may not save them.
Uriel Posada, who worked for more than 30 years as a house painter in the United States, dreamed of coming home to Colombia to grow coffee. Now his land is up for sale.
“I’m up to my neck in debt,” the 52-year-old said, gazing up the steep hill where his 30,000 coffee trees are planted.
“Brazil has a huge advantage over us — the land is flat and they have machinery,” Posada said. “Here I have to pay a human being to go tree by tree, branch by branch and pick the red berries.”
Avocados and cattle are good alternatives, Posada said, but require start-up funds and transition time that many local growers do not have.
“I’ll sell, pay what I owe and go. End my Colombian dream.”
How Brazil and Vietnam are tightening their grip on the world’s coffee
How Brazil and Vietnam are tightening their grip on the world’s coffee
- A plunge in global coffee prices in recent months, to their lowest levels in 13 years, has begun to trigger a massive shake-out in the market in which only the most efficient producers will thrive
Saudi e-commerce thrives as sales using Mada cards reach $3.76bn in February
RIYADH: Saudi e-commerce sales using Mada cards reached SR14.11 billion ($3.76 billion) in February – an annual increase of 25 percent, the Kingdom’s central bank has revealed.
This figure includes transactions through online shopping, in-app purchases and e-wallets, and excludes transactions by Visa, MasterCard and other credit cards.
The number of e-commerce transactions also increased by 44 percent on a year-on-year basis to reach more than 84 million in February.
The shift in consumer behavior post-COVID-19, supported by regulatory reforms, robust internet infrastructure, and the continuous advancement of sophisticated e-commerce businesses, has been key drivers of the shift away from cash.
In the past three years, online sales in Saudi Arabia surged by almost 60 percent across various categories, with significant growth seen in media products, apparel, and footwear segments, according to the American International Trade Administration in a January commercial guide.
Additionally, the average spend per e-commerce user in the Kingdom rose by over 50 percent.
The organization anticipates continuous growth, projecting Saudi Arabia to reach 33.6 million e-commerce users by 2024, marking a 42 percent increase from 2019.
Factors contributing to this growth include the country’s 97 percent smartphone penetration rate, high mobile broadband subscriptions, and ranking as the 10th country globally for internet speed.
Moreover, 72 percent of Saudis over the age of 15 possess bank accounts highlighting the readiness of the population for digital transactions and online commerce.
The organization emphasized the prevalence of local platforms and the introduction of new entrants like Amazon Prime, which debuted in January 2021.
Other contributing factors include the government’s initiatives to enhance the sector’s regulatory framework, aimed at bolstering confidence among Saudis and encouraging the use of its platforms, with a focus on protecting consumers and businesses alike.
However, the organization also highlighted challenges for this sector, particularly the need to strengthen cyber-security measures to counter malicious emailing, which poses risks such as phishing scams exposing sensitive information like passwords, financial details, and personal data.
The shift to online shopping became apparent in the wake of the COVID-19 pandemic, significantly altering consumer behavior and impacting traditional retail outlets. The rise of e-commerce has proven essential, providing digital access to products and enabling businesses to adapt to changing market trends and consumer preferences.
This trend is reflected in data from the Kingdom’s central bank, also known as SAMA, showing a remarkable surge in e-commerce sales. In 2020, at the onset of the pandemic, sales increased by 279 percent, soaring from SR10.25 billion in 2019 to nearly SR39 billion.
This momentum continued in 2021 with a further annual rise of approximately 91 percent, reaching SR74 billion, and a subsequent increase of 65 percent in 2022 to SR123 billion. By the end of 2023, e-commerce sales through Mada cards had reached SR157 billion, underscoring the sector’s robust growth.
According to data from the German e-commerce database website, the top five online retailers in Saudi Arabia’s e-commerce sector for 2023 are jarir.com, nahdionline.com, amazon.sa, extra.com, and namshi.com.
Jarir.com leads the market with revenues of $452.8 million in 2023, followed by nahdionline.com with $330.1 million in sales, and amazon.sa with $328.5 million.
These top three online retailers collectively account for a market share of 38.7 percent among the top 100 stores in the Kingdom’s e-commerce market, as reported by the database.
The ranking is based on the top stores by net sales in the market for the year 2023.
According to a 2023 Deloitte Digital report, these companies are utilizing data and analytics to gain deeper insights into their customer base, tailoring their offerings to better meet their needs.
The Kingdom has come a long way from a population initially lacking trust in online retailers, limited payment options, and product diversity, to now holding the potential to become a thriving e-commerce market, according to the firm.
This transformation is particularly supported by the Saudi government’s implementation of various initiatives aimed at boosting the digital economy’s contribution to the Kingdom’s gross domestic product.
The adaptability of the regulatory framework and its adjustments to market dynamics have created an environment conducive to the growth of e-commerce and the flourishing of innovative technologies.
As the industry evolves, new payment methods are emerging, prompting the central bank to establish a sandbox for testing and regulating these innovations. This serves as a crucial platform for the industry to experiment with and adopt new technologies.
Additionally, the Communications, Space, and Technology Commission introduced a dedicated sandbox for delivery applications, streamlining operations and enhancing efficiency for e-commerce businesses.
Regulatory initiatives have facilitated the entry of major players like STC, and partnerships such as Aramco’s collaboration with Google Cloud have further supported and provided infrastructure for all participants in the e-commerce ecosystem, Deloitte added.
Furthermore, the establishment of free zones has played a pivotal role in simplifying logistics and expediting the movement of goods, thus bolstering Saudi Arabia’s e-commerce landscape.
Deloitte forecasts a remarkable surge in the sector, with a projected market volume of $23.46 billion by 2027. Additionally, the number of e-commerce users in the Kingdom is expected to reach 34.5 million by 2025, with user penetration increasing from 66.7 percent in 2023 to 74.7 percent by 2027.
Oil Updates — Crude rises more than $1 a barrel on tighter supply outlook
NEW YORK: Oil prices jumped more than $1 a barrel on Thursday, closing out the month higher on the prospect of OPEC+ staying the course on production cuts, ongoing attacks on Russia’s energy infrastructure and a falling US rig count tightening crude supplies, according to Reuters.
Brent crude futures for May settled at $87.48 a barrel, its highest level since Oct. 27, after gaining $1.39, or 1.6 percent. The more actively traded June contract settled at $87 a barrel, rising $1.58, with the May contract expiring on Thursday.
US West Texas Intermediate crude futures for May delivery settled at $83.17 a barrel, rising $1.82, or 2.2 percent.
On the week, Brent rose 2.4 percent and WTI gained about 3.2 percent. Both benchmarks finished higher for a third consecutive month.
In the prior session, oil prices had come under pressure from last week’s unexpected rise in US crude oil and gasoline inventories, driven by an increase in crude imports and sluggish gasoline demand, according to Energy Information Administration data.
However, the crude stock increase was smaller than the build projected by the American Petroleum Institute, and analysts noted the increase was lower than expected for the time of year.
“We ... expect US inventories to rise less than normal in reflection of a global oil market in a slight deficit,” SEB analyst Bjarne Schieldrop said. “This will likely hand support to the Brent crude oil price going forward.”
US refinery utilization rates, which rose 0.9 percentage point last week, also supported prices.
The oil and gas rig count, an early indicator of future output, also fell by three to 621 in the week to March 28, according to energy services firm Baker Hughes.
The US economy, meanwhile, grew faster than previously estimated in the fourth quarter. Gross domestic product increased at a 3.4 percent annualized rate from the previously reported 3.2 percent pace, the Commerce Department’s Bureau of Economic Analysis said.
“The strength in the stock market suggests strong forward earnings that are, in turn, hinting at a surprisingly strong US economy conducive toward better than expected energy product demand,” said Jim Ritterbusch of energy consultancy Ritterbusch and Associates.
Inflation data also affirmed the case for the US Federal Reserve to hold off on cutting its short-term interest rate target, a Fed governor said on Wednesday, but he did not rule out trimming rates later in the year.
“The market is converging on a June start to cuts for both the Fed and the European Central Bank,” JPMorgan analysts said in a note. Lower interest rates typically support oil demand.
Investors will watch for cues from a meeting next week of the Joint Monitoring Ministerial Committee of producer group the Organization of Petroleum Exporting Countries.
Increased geopolitical risk has raised expectations of possible supply disruption, but OPEC+ is unlikely to make any oil output policy changes until a full ministerial gathering in June.
Attacks by Ukraine on Russian energy infrastructure have also boosted the sentiment around global crude supplies tightening and helped to support oil prices, said Again Capital LLC partner John Kilduff.
“It’s a prime target, and they appear to have not heeded the ask by the Biden administration to not attack Russian energy infrastructure,” Kilduff said.
UAE, Saudi Arabia ranked as leading global entrepreneurial ecosystems
RIYADH: The UAE and Saudi Arabia have been ranked first and third respectively in the Global Entrepreneurship Monitor report for 2023-2024.
The report, which assesses the entrepreneurial ecosystems of countries worldwide, is highly regarded by international bodies such as the World Bank, International Monetary Fund and various UN organizations,
Saudi Arabia showed significant progress in its entrepreneurial environment, with its National Entrepreneurship Context Index score increasing from 5.0 in 2019 to 6.3 in both 2022 and 2023.
This reflected the country’s successful efforts to diversify its economy and foster a supportive climate for entrepreneurship, said the report. A notable highlight was increased female entrepreneurship, with eight women starting new businesses for every 10 men in 2023.
The country also has the highest proportion of adults who know an entrepreneur, perceive ease in starting a business, recognize good business opportunities, and believe they possess the necessary skills and experience to start a business.
However, despite high acknowledgment of opportunities and capabilities, there remains a considerable fear of failure, the report concluded.
Additionally, a significant percentage of Saudi entrepreneurs are expected to leverage digital technologies and focus on minimizing environmental impacts and maximizing social impacts, indicating a readiness for future challenges.
Meanwhile, the UAE set a record with its National Entrepreneurship Context Index score of 7.7, the highest in the report’s history.
The report also positioned the UAE as the best environment in the world for starting and conducting new business ventures, surpassing many advanced economies. It also ranked third globally in terms of physical infrastructure.
Significant strides have been made in entrepreneurship education within schools, emphasizing skills like creative thinking, problem solving, opportunity recognition and risk assessment. The country ranked among the top five out of 49 in this aspect.
Saudi Arabia, Azerbaijan discuss climate action cooperation ahead of COP29
- Two ministers discussed opportunities for work and cooperation between their two countries in the field of climate change
JEDDAH: Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman met with Azerbaijan’s Minister of Environment and Natural Resources Mukhtar Babayev on Thursday.
Babayev has also been appointed president of the UN COP29 climate talks which will be held in Baku in November.
During the meeting, the two ministers discussed opportunities for work and cooperation between their two countries in the field of climate change. They also talked about joint efforts to achieve the goals of the UN Framework Convention on Climate Change and the Paris Agreement, the Kingdom’s ministry said in a statement.
They reviewed the Kingdom’s efforts and initiatives in dealing with the effects of climate change, such as exploiting renewable energy sources, and managing, reducing and eliminating emissions through the Saudi and Middle East green initiatives.
In addition, the ministers discussed implementing the circular carbon economy approach and its technologies, which was developed by the Kingdom during its G20 presidency and endorsed by leaders, along with other national and regional programs and initiatives.
Saudi Arabia unveils Green Finance Framework in sustainability push
RIYADH: Public and private participation in climate financing in Saudi Arabia is poised to receive a boost with the introduction of the Green Finance Framework.
This initiative, launched by the Ministry of Finance, is aimed at propelling the nation toward its sustainability goals and achieving net-zero emissions by 2060, Saudi Press Agency reported.
The framework is expected to contribute to the efforts aimed at reducing emissions through a circular carbon economy approach, along with positioning Saudi Arabia as a regional leader in sustainable finance.
It was in October 2021 that Saudi Arabia announced its ambitious goal to achieve net-zero emissions by 2060.
With this framework, the Kingdom aims to significantly reduce greenhouse gas emissions by 278 million tonnes annually by 2030, aligning with the commitments under the Paris Agreement.
The Paris Agreement is an international treaty on climate change that was produced in 2015 and compels signatories to work toward limiting the global temperature increase to 1.5 °C above pre-industrial levels.
The Kingdom has been spearheading several initiatives including the Saudi Green Initiative to combat the adverse effects of climate change over the past few years.
On March 27, the Kingdom celebrated its first Saudi Green Initiative Day highlighting the importance of fostering a sustainable legacy for future generations.
The celebration was organized under the theme “For Our Today and Their Tomorrow: KSA Together for a Greener Future” and it highlighted the collaboration of more than 80 public and private sector projects that are part of the SGI.
To date, Saudi Arabia has deployed 2.8 gigawatts of renewable energy to the national grid, powering more than 520,000 homes, with additional projects underway to increase capacity.
Moreover, more than 49 million trees and shrubs have been planted throughout the Kingdom since 2021, and extensive land rehabilitation efforts have been undertaken.
Additionally, energy giant Saudi Aramco, in collaboration with the Kingdom’s Ministry of Energy is building a carbon capture and storage hub in Jubail, which will have 9 million tonnes annual storage capacity upon its completion in 2027.