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SRI LANKA

Arabica Coffee Value Chain Analysis


The investment case for specialty coffee in Sri Lanka

        

Market Development Facility (MDF)’s Arabica Coffee Value Chain Analysis is a one-of-a-kind, in-depth analysis into Sri Lanka’s specialty Arabica coffee sector. The study collects information from bean to cup, charting the pathways to scale and identifying the opportunities for growth in the Arabica coffee sub-sector in Sri Lanka. The recommendations of the report can be used by all stakeholders to align their efforts to achieve sustainable growth in this niche industry.

Download the full report | ENGLISH

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Sri Lanka Coffee Exports

Sri Lanka’s coffee exports have increased, growing 84 per cent from 2017 to reach nearly USD 355,000 by 2019 as per Export Development Board (EDB) data.

Sri Lanka Coffee Timeline

1658
1739
1790
1810
1826
1864
1878
1879-1884
1900
1968
1972
1973
1974
1979
1983
1985
1986

1658

1658

Coffee was first introduced to Sri Lanka by the Arabic merchants.
Fun fact: coffee was introduced to Brazil Java, Cuba, Venezuela and Puerto Rico in the 17th century.

1739

1739

Sri Lanka records an export of 140,000 lbs green beans. This boost was contributed by the Robusta coffee promotions by the Dutch rulers (in areas like Galle and Negambo).

1790

1790

Dutch ignored the coffee economy

1810

1810

British took a very strong focus in to creating a coffee based, outward looking export economy. Railroads, plantation expansions were the key areas.

1826

1826

Recorded an export volume of 2 million lbs of green beans. Start of the peak

1864

1864

Hamelia vasterix (rust) hit the country and wiped out most of the plantations

1878

1878

In 1860s, 185,000 acres produced over 1 million lbs of green beans. 275,000 acres in 1878 could only yield 610lbs. (cultivation almost doubled but the production was a fraction)

1879-1884

1879-1884

Global great depression which demobilized the global coffee economy including the bloom in Sri Lankan coffee economy

1900

1900

Coffee sector in survival mode. Tea was introduced in the late 18th century to substitute coffee.

1968

1968

Sri Lanka signed the International Coffee Agreement. This benefitted SL to step up its export volumes
and fetch better prices.

1972

1972

Establishment of the Department
of Export Agriculture

1973

1973

Sri Lanka re-emerges as a coffee exporter.

1974

1974

FOB average price per kilo of coffee – Rs 4.98, which supported the exporters

1979

1979

Reaches the peak of exports before declining again. Recorded an export of 2.6 million kgs and slumps greatly

1983

1983

A significant peak was observed due to improved prices and improved volumes. Export volume was 3.1 million kgs of green bean

1985

1985

Current acreage of cultivation is at 30,000 acres

1986

1986

Robusta home gardens.

Sri Lanka is well positioned geographically and climatically to produce high-quality specialty coffee and take advantage of growing global demand.

Sri Lanka Coffee Imports and Exports

Sri Lanka Coffee Production

Sri Lankan coffee productivity has stagnated. The figure below charts annual performance for Arabica and Robusta coffee combined. Research suggests that the industry is functioning at a sub-optimal level and that there is a sizeable margin for growth. Efforts to increase the supply are underway, with both the government and private sector investing in planting Lakparakum in conducive regions throughout the country. However, given the lag time between planting and harvesting (typically two to three years), it will take some time for the production figures to reflect the expanded area under cultivation.

Opportunities for Arabica Coffee

MDF Interventions

MDF is working with businesses to move into a cherry-purchasing business model versus the traditional green bean model. The market intervention allows farmers – many of whom are women – to sell high-quality coffee cherries, earning better income and also saving on the time previously spent on drying the cherries into green bean.