Due to the prolonged dry season impacting on harvests, coffee production in Indonesia as well as coffee exports from the world’s third-largest coffee grower continued to decline. Based on the latest data from the International Coffee Organization (ICO), Indonesia’s coffee output plunged 23 percent to 540 million kilograms in the period April 2014 to March 2015 compared to the same period in the previous year, while Indonesia’s coffee exports declined to 336 million kilograms from 612 million kilograms over the same period.

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It is increasingly believed that the El Nino weather phenomenon will hit Indonesia in the next couple of months. Over the past weeks reports already surfaced about unusual dry weather impacting negatively on harvests of agricultural commodities in parts of Southeast Asia. In Indonesia, dry weather traditionally lasts from May to August. However, El Nino may cause warmer conditions and extending these into September hence affecting output in the peak harvest season. This will cut agricultural output and provide inflationary pressure.

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The Association of Indonesian Coffee Exporters and Industries (AEKI) expects coffee bean production in Indonesia to decline by about 11 percent to 650,000-670,000 tons in 2014, from 740,000 tons in the previous year. This decline is actually less severe than initially expected as weather conditions have improved in the main coffee bean growing regions on Sumatra. Meanwhile, output in 2015 is projected at 700,000 tons. Indonesia is currently the world’s third-largest coffee bean producer, after Brazil and Vietnam.

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