DUBLIN (Commodity Online): Columbia's coffee exports are set to fall for the second year in a row while fortunes look better for Columbian cocoa and sugar as prices are set to rise.

According to a report by Researchandmarkets.com,in 2008, despite a 2% drop in coffee export volumes to 11.10mn bags, export revenues rose 9.9% to a record US$1.88bn. Production for the year fell by 9.0% year-on-year (y-o-y) to 11.48mn tonnes owing to a combination of poor weather, reduced fertiliser use and rejuvenation of plantations.

The report titled 'Colombia Agribusiness Report for Q2 2009' said that this trick will not be repeated in 2009 as prices are well down from their peak in early 2008 and production is forecasted to fall by a further 4.1% y-o-y to 11.01mn tonnes. Saying that, the fall in revenues will not be too disastrous - the report forecasts coffee to average USc105/lb in 2009, which is still fairly high by historical standards, and to rise to USc115/lb in 2010.

Obviously the risks to this forecast is that the current world recession is longer and deeper than is being expected currently.  If this proves to be the case, demand and prices could fall further putting pressure on living standards for the small-hold farmers who produce around three quarters of Colombia's coffee.

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One commodity that is bucking the trend for falling prices is cocoa. In February 2009 cocoa was trading at record levels above GBP1,900 per tonne. Colombia's cocoa sector, however, has been moribund for some time with production falling throughout this decade. For the past few years, Colombia has been a net cocoa importer and the publisher does not see this changing through the publisher's forecast period. Cocoa production has fallen across Latin America, in large part because of outbreaks of witches' broom, a fungus that destroys cocoa seeds in their pods.

Fortunes look better for the sugar sector and it is expected that production of both sugar and ethanol to increase over the earlier forecast period to 2013 as cane yields and processing technology improve. One problem for the sector though is poor infrastructure increasing the difficulty of transport and driving up costs.

On the whole, despite the falling prices for many soft commodities, compared to historical levels - before the boom in 2007 and 2008 - prices are still reasonably high for most agricultural products and Colombia's agricultural sector could hold up relatively well this year as other sectors struggle. Beyond that, assuming the improvement in the security situation made under President Alvaro Uribe can be maintained, Researchandmarkets report said that the sector is expected to perform strongly as world growth picks up and demand for Colombia's agricultural products increases both at home and abroad.(Courtesy:Businesswire)