Naomi Mapstone visits farmers in Colombia who are learning about brewing coffee from baristas as part of a plan to ensure Colombia retains its edge over Peru and Guatemala in the quality coffee market.

General Assembly of the United Nations

Hector Gallón is looking down at the perfect heart etched into the foam of his coffee with a trace of bemusement. With his embroidered black and white poncho slung over one shoulder, the grizzled coffee farmer is the embodiment of Juan Valdez, the fictional frontman for Colombia’s coffee industry advertisements since 1959.

Yet here he is, at “coffee school” in the state of Quindio, the centre of Colombia’s coffee-growing belt, studying the finer points of quality: aroma, acidity, body and finish.

“This is very good,” he says, after a deep sniff, a swirl and a sip.

Thousands of kilometres away from the country’s coffee belt, quality is high on the minds of traders right now as supplies of Colombia’s prized, hand-picked Arabica beans dwindle, sending prices to a 12-year high. While the country remains the world’s biggest supplier of quality coffee, it has slipped from second to fourth in terms of overall production, behind Brazil, Vietnam and Indonesia. Production last year plunged to a 33-year low of 7.8m bags, each of 60kg, down nearly a third from 11.1m bags in 2008, tightening global markets.

In New York, Arabica coffee jumped last week above 175 cents a pound, the highest since 1998. The cost of 100 per cent Colombian coffee is even higher.

“At the moment the price is great but we have no coffee to sell,” says Mr Gallón, highlighting the tightness of the market, which is forcing roasters to replace the prized Colombian beans with others from Central American countries.

The price outlook for the 2010-11 coffee harvesting season, about to start, is very much in the hands of small holders such as Mr Gallón. They are the backbone of Colombia’s industry, harvesting crops by hand from the steep inclines of the Andes that run north to south through the centre of the country. For the past two years, they have battled a range of setbacks, including heavy rains brought on by the El Niño weather effect, a spike in fertiliser prices, an ongoing replanting programme and rising problems with insects and disease.

Jaime Duque, of the National Coffee Federation of Colombia, says the sector had a “lot of problems” last year: “Too much rain, and the prices were low so the growers couldn’t get good income, so they cut back on fertiliser.”

Bogota hopes to turn the page this year. And coffee traders and analysts in New York are betting that supplies from Colombia will rebound in 2010-11 – and in other key producers, including Brazil – replenishing stocks and pushing prices down.

Hussein Allidina, head of commodities research at Morgan Stanley, forecasts Colombia will produce about 10.5m bags in 2010-11, closer to the country’s recent average of 11-12m bags. “Production is poised to improve year on year?.?.?. owing to favourable weather and increased fertiliser use,” he says.

Mr Allidina is telling investors to bet on lower prices, potentially falling to about 150 cents by December, down nearly 15 per cent from last week’s 12-year high. Other traders are, nonetheless, a bit more cautious due to low inventories of Colombian coffee.

On the ground, farmers are banking on higher production.

Barner Ramirez saw production on his remote seven hectares property drop 75 per cent in 2009-10 due to “the kind of weather you might see once in 30 years”. But for the upcoming season, he says: “This year the weather is much better and we have good expectations for our principal crop in October and November.”

In the neighbouring state of Risaralda, Carlos Campuzano is looking with satisfaction at coffee tree branches laden with green berries. Harvest here is still four months away, but he says: “This is the year of hope.”