Tight supply hurts sales of Guatemala coffee beans

-Country's strict quality certifications normally secure premium prices

--Lofty global prices push buyers to cheaper beans

--Coffee growers not deterred in pursuit of certification

GUATEMALA CITY (MarketWatch) -- Guatemalan coffee producers aren't benefiting this season from quality certifications that normally secure them a premium for their beans, as tight global supplies have made buyers less fussy about the coffee they acquire.

"When there's not a lot of coffee in the world, buyers stop caring if it's good quality or bad quality," said Ricardo Villanueva, president of the country's coffee association Anacafe. "They'll just buy whatever they can find."

Villanueva said major coffee chains have been reducing the amount of certified coffee they are purchasing from Guatemala, including Fair Trade and Rainforest Alliance certified coffees. Guatemala is known for its gourmet, washed arabica beans that are often used in single-origin blends sold by companies such as Starbucks Corp.SBUX +0.15% and Green Mountain Coffee Roasters Inc. GMCR -.00% .

Coffee farmers in Guatemala and elsewhere have significantly increased the number of expensive certifications they seek in recent years, hoping to secure a premium. Certifiers often require producers to follow quality guidelines to ensure a superior taste.

However, prices were unusually high this season, reaching 14-year highs earlier this year on the InterContinental Exchange. Buyers weren't interested in paying extra for Guatemalan coffee, and in February sales came to a near standstill as roasters turned to countries with cheaper, lower-quality beans, industry officials said.

The drive to increase the number of certifications was aimed at protecting growers against a future bear market. Villanueva said that although certifications don't work when prices are as high as they have been, Guatemalans will continue focusing on quality and obtaining more certifications.

Bernardo Santos, a representative for Anacafe who trains coffee farmers to manage their plantations and process their coffee, said Guatemala can't compete on a worldwide level in terms of volume--it produced about 3.5 million 60-kilogram bags this season--so it has to play the quality card.

When prices plummeted in the early 2000s, many large coffee producers were forced out of business and a bulk of the country's production shifted to the highest altitudes, where farmers had little choice but to stick with the crop as coffee was among few commercial options at that height.

That led to improved quality, and Anacafe has been marketing the diversity of its coffee with eight distinct regions producing coffee with different flavors.

Rafael Ventura, a grower in the Fraijanes Plateau region, said he plans to continue working to improve the taste of his coffee.

"We want to take advantage of Anacafe's research and analysis," he said. "Before it was like a kitchen recipe, we just threw some fertilizer at the coffee and got our production, now we analyze to see what exactly is lacking in the soil."

In a laboratory within Anacafe's headquarters in Guatemala City, experts study samples of coffee beans from its producers before exporting them, and professional coffee tasters do "in-cup" evaluations. "If there's one bad bean in the sample, we can detect it in the taste of the cup," said Carlos Munoz, professional coffee taster at Anacafe. "We send the coffee back."

Source: http://www.marketwatch.com/story/tight-supply-hurts-sales-of-guatemala-coffee-beans-2011-06-02