Coffee traders face risky decision on exports to China
Local coffee traders are facing a hot dilemma over the fulfilment of US$100,000 worth of orders to China.
If the beans are shipped, Customs in China may allow them to be cleared and sent through to customers, but it’s just as likely that the shipments will be confiscated on arrival due to incomplete paperwork.
“It’s a risk that coffee exporters have to evaluate for themselves,” said Jason Sharp, a long-standing member of the Jamaica Coffee Exporters Association, JCEA, and large coffee trader.
The volumes of coffee involved equates to around 10 per cent of the annual coffee exports to China from Jamaica. The orders started accumulating in September, when it was discovered that the export rules had changed.
The JCEA said the General Administration of Chinese Customs, GACC, implemented new registration requirements for exporters who wish to export goods to China. As such, Jamaica Agricultural Commodity Regulatory Authority, JACRA, the state regulator, which handles all shipments of large coffee volumes, should have applied for a renewal of a key export document but hadn’t done so, coffee exporters said.
Due to unresolved issues with JACRA’s registration for GACC, coffee exporters now have supplies piling up and are unable to ship to their clients in China, the JCEA said in a release.
The JCEA and JACRA are in discussion with the Jamaican Embassy in China, the Chinese Embassy in Jamaica and Ministry of Foreign Affairs to resolve the situation.
It emerged this week that JACRA would allow the companies that are GACC-compliant to ship out their own coffee, but at their own risk.
“JACRA will allow shipping, but they cannot guarantee that it would not be held at Customs in China,” Sharp said. “So they have passed it on to the exporters to take the risk.”
Last year, Jamaica exported US$23 million worth of beans to global markets, up from US$18 million a year earlier. Exports to China were valued at US$1 million in 2021, according to data from the International Trade Centre, but figures for 2022 weren’t available.
Japan is the primary consumption market for Jamaica Blue Mountain coffee, JBM, but China’s craving is on the rise. Jamaica’s coffee is among the most expensive in the world but the growing prosperity in that country makes JBM attractive, selling for some US$30 a pound for green beans and US$50 a pound for the finished roasted beans. Those prices are several times the US$1.65 a pound for commodity coffees.
“Members and exporters of the JCEA are facing the threat of reduced coffee exports to China and potential losses resulting therefrom,” said JCEA Chairman Norman Grant in the release.
However, JCEA members will be seeking compensation from the Government for the losses they may incur due to delay in resolving the issues with JACRA’s GACC registration.
“This will have a negative impact on the trade relationship with China, considered by the exporters as the key growth market for Jamaican coffee exports. This will ultimately impact the coffee farmers, as the loss of a significant base of clients will lead to reduced demand, and ultimately a lower price for Jamaican coffee,” JCEA said.