Devouring profit - International Coffee Organization

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Because of these factors it can be difficult to isolate the true national economic impact
due solely to CBB attacks because variables interact and affect the price. However it
is possible to carry out a simulation of the CBB impact, in economic terms, based on
a ceteris paribus analysis, i.e. to analyse the effect of one variable (in this case CBB), it
is isolated from the influence of other factors, which should remain constant (Hill,
1990). Hence we make some basic assumptions about the coffee quality variables
that remain constant whilst the CBB damage varies. It should be noted that this scenario
is developed in absence of any control costs against the pest.
Thus we first estimate that the annual Colombian coffee production as about 10.5
millions sacks and the internal price at US$0.38/lb (US$10.4 per arroba 19 ) of parchment
coffee. Then by keeping the percentage of traditional defects constant as well as
the yield of green coffee from parchment coffee, we can simulate the national economic
loss due to CBB alone.
The economic loss is estimated as the income not received by the coffee farmers due
to quality reduction and it is depicted in Figure 14, with the infestation level on the
parchment coffee plotted against losses expressed in millions of dollars. As can be
seen the economic impact is very significant because if the national production would
face only 3% CBB damage on average, the loss would be equivalent to about US$16
millions. For CBB damage of 10%, the income lost would rise to US$66 millions.
But the economic losses seen generally in Colombia are those resulting from efforts to
control CBB. If CBB were not controlled at all in Colombia we estimate that there
Economic loss (millions of
US$$/year)
160
140
120
100
80
60
40
20
0
1% 3% 5% 7% 9% 11% 13% 15% 17% 19%
% of CBB in Parchment coffee
Figure 14. Simulation of economic impact of CBB country-wide.
(Expressed as income reduction through loss of quality).
19 Arroba= 12,5 kg