Venezuela Coffee: Poor Fundamentals Could Increase Smuggling

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Recently released coffee industry figures show that the Venezuelan coffee sector suffered a particularly nightmarish year in FY09, resulting in an output of 846,000 bags, representing a year on year (y-o-y) contraction of 15% from the previous year's figure. A series of factors - including poor macroeconomic fundamentals, bad weather and government control of prices - contributed to the poor yield, although after two years of y-o-y production growth a downturn was on the cards anyway, such is the general production cycle of coffee.