Coffee output in Peru could grow by 15 percent this year as farmers boost planting in a bid to cash in on prices that have risen on the back of a historic drought in Brazil, the agriculture ministry said on Friday.
Output in Peru could reach about 300,000 tonnes this year, up from some 260,000 tonnes produced in last year's fungus-hit harvest, said Jorge Figueroa, a coffee specialist with the agriculture ministry.
The ministry previously forecast a 7 percent increase for this year, expecting coffee-growing regions hurt by the roya fungus to start recuperating.
That recovery has sped up since coffee prices rose in recent months on worries that a dry spell in top producer Brazil would squeeze global supply, Figueroa said.
"Since the price has risen, farmers are working hard to renovate and expand their plantations," he said.
The agriculture ministry will release a revised official estimate for 2014 output mid-harvest in June.
Arabica futures have retreated this week on talk that damage to Brazilian crops may not be as bad as feared.
Peru, one of the world's top ten growers and the number one exporter of organic coffee, lags far behind Brazil in output.
Peru's main coffee association also said that tempting prices are setting the stage for a bigger crop than previously expected.
"Producers are going back to the field to try to improve and expand their plantations any way they can," said the group's manager, Lorenzo Castillo.
The association now estimates output will be 4.8 million 46-kilo bags (220,800 tonnes) this year - 15 percent less than production in 2013 but higher than the group's previous estimate of 4.2 million bags.
Last year production fell around 20 percent mainly because of the roya blight, the agriculture ministry said.
The more optimistic forecasts for this year come after coffee exports by volume from Peru rose 51 percent in the first quarter compared to the same period a year earlier, according to data from the coffee association.
Exports from Peru in the first three months of the year tend to be from the previous harvest - suggesting growers may have held off on selling their beans when prices were lower.
Castillo said recent price spikes have fueled speculation in Peru. Some growers are hoping coffee prices will rise even more and not selling, forcing exporters to pay more than the market price in order to meet contract obligations, he said.
"It benefits producers but is distorting the market," Castillo said.