Panama has invested U$32 million in a replanting program to revive coffee farming and rescue fragile trade along the Panama Canal.
The sea route is home to 5% of global trade yearly, with Robusta coffee a key commerce commodity. Given their nearness to the trade path, coffee exports from Panama rank as the 45th largest in the world.
Drought has dealt a blow to trade along the artificial canal and hence the investment to reboot waterway climate.
Since 2007, the coffee-planting program in the coffee belt of Capira has been trying to protect the Canal’s ecosystem.
For this reason, Capira’s coffee association under Roberto Benitez now wants to plant more Robusta beans around the eroded banks.
“It improves our economy…(it aids the) canal cope better with droughts.” Benitez told Reuters, on January 27, 2024.
Robusta Coffee Prices Improve
Environmental impact aside, the Panama Canal coffee program has been helping boost Robusta bean prices due to improving quality.
Robusta is hard to produce and programs like the one at Capira have to recoup rising production costs through price markups.
Current coffee prices worldwide are higher than normal due to low inventories and dry weather inside production leader, Brazil. On January 29, 2024, while Arabica fell in New York by 2.37% day-on-day, Robusta inched up by 0.18%.
The appreciation of Robusta prices could have been more, were it not for stock input by Vietnam. The global leader in Robusta bean production filled the gap with ample exports despite falling stocks in Asia for the 2022-23 season.
Capira Upping Coffee Production Amid Low Waters
While awaiting the usual bullish effects of drought on price, Capira growers are upping bean planting for the 2024 Panama Canal coffee season.
In 2023, the area, which boasts 1,700 registered farmers, reaped 1.32 million pounds of Robusta beans.
This year, the farmers are keen on the replanting effort to revitalize the waning water levels of the Panama Canal.
AP News reported on January 19, 2024 that the Canal has lost 36% of commerce from dipping water levels. Ships have to wait for days along the 84-kilometer gateway to South America to let heavier vessels pass.
Leading the replanting drive is the Panama Canal Authority. For 15 years, the authority has been developing high quality Robusta seedlings. By 2021, it had replanted 3,031 hectares of coffee in Capira, along the trade route.