Centam Coffee-Mexico eyes new planting to boost coffee output

By Mica Rosenberg

TAPACHULA, Mexico, March 3 (Reuters) - Mexico aims to plant millions of new coffee trees in a bid to catch up to its Latin American neighbors after slipping down the ranks of major world coffee exporters.

Mexico, once the world's No. 6 coffee exporter, dropped to 12th place in 2004 as the country suffered a coffee crisis due to a combination of natural disasters and a global collapse in coffee prices.

The government now plans to launch a five-year program of subsidies to farmers who add trees to sparsely planted plots or replace aging trees whose productivity has declined.

The program, promoted by the newly reconstituted National Coffee Organization, hopes to reach a third of Mexican coffee farmers -- a group with about 200,000 hectares (500,000 acres) under cultivation.

In southern Mexico, where most coffee is grown, rolling hills are covered with shaded coffee farms -- some more than a century old -- that produce fewer cherries each year.

Hurricane Stan washed away entire mountainsides and nutrient-filled topsoil in 2005, the most recent natural disaster to batter the region.

"The land is very tired, it has faced hurricanes, winds, natural deterioration. Everyone here has a smaller harvest, less maintenance, less investment," said Ingrid Hoffman, a coffee farmer in Tapachula, Chiapas near the Guatemalan border.

Mexico harvested 4.2 million 60-kg bags of coffee in the 2007/08 season and sees between 4.5 and 4.8 million bags of output in the upcoming harvest. That will be a far cry from the nearly 6 million bags the country grew before the coffee crisis, said Rodolfo Trampe, head of the national coffee organization Amecafe.

In 2000, Mexico was the world's sixth-largest coffee exporter. The country dropped to 12th place in 2004 and now ranks eighth behind much smaller countries like Honduras and Guatemala, according to International Coffee Organization data.

Mexico on average produces about six 60-kg bags per hectare (2.5 acres), while other Latin American countries yield more than double that, Trampe said in an interview.

"There are states ... with a very traditional concept of coffee production from the 1950s or 60s," Trampe said. Some farms only have 700 or 800 trees in an area that could support up to 3,000, he said.

EXCHANGE RATE BOOST

Farmers, many with families who have worked the plantations for generations, also are struggling to recover from a collapse in coffee prices at end of the 1990s and early in this decade.

"The decline began with the crisis. There has been some recovery but not enough to make us economically viable," Hoffman, a descendant of some of the German settlers who bought large swaths of land to grow coffee in Mexico and Guatemala.

The renovation program aims for all voluntarily enrolled farmers to plant at least 1,600 new plants on each hectare over five years.

Specialized technicians will help certify the new coffee as high-quality, in an effort to boost the reputation of Mexican beans, which have fallen behind gourmet Central American varieties.

The renovation plan comes as farmers, long hit by high input costs, are benefiting from lower fertilizer prices and a depreciating Mexican peso, which makes exports more attractive.

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"We sell all over Europe and the United states so obviously the exchange rate will help," said Hoffman, whose series of plantations are producing 75 percent less coffee than they did 20 years ago.

"I think one day we will be able to recover," she said. (Editing by David Gregorio)