Unquestionably stock market commodities have been affected the world-over and none more important to the Australian coffee roaster as the green bean commodities, which have been volatile to say the least. Driven by fear and uncertainty by this global pandemic, not to mention environmental challenges.
A lack of confidence has seen the market fluctuate!
As well as the prices’ volatile nature; there have been genuine challenges with shipping and now a growing concern for the farmer’s themselves in the harvesting of the fruit, with a shortage of the number of pickers due to pandemic restrictions, not to mention fire & rain.
Bloomberg reports ‘the world is overflowing with coffee beans, sending futures of the Arabica variety to the worst weekly slump since 1998. Brazil, the biggest grower and exporter, are said to be overflowing causing a glut from a record crop. Prices in New York, the global benchmark, are down 14% this week’.
The Arabica collapse comes after prices rose in the previous three months. Dry weather in Brazil had sparked concerns over the next harvest, but since then the coffee belt has seen some showers, alleviating the threat.
“Prices fell owing to forecasts of rain in key growing regions in the South American nation, which should boost yields” Caroline Bain, chief commodities economist at Capital Economics in London, said in a report. On Friday, Arabica futures for December delivery dropped 3.8% to $1.135 a pound in New York. Prices fell for a fifth day straight.
Recognising this as a Global pandemic, I think we can safely say that Australian roasters have been dodging bullets in facing its many challenges, whereby other more populated coffee drinking countries have not.
I speak regularly to our Australian coffee roasters and particularly those in the regional areas report of positivity and prosperity! I have been impressed by how they have adapted and even more so by the speed they have adapted. Where they have lost revenue in one space they have picked up the slack elsewhere, by improving their online offering here, a new café account there or starting up a new wholesale arm.
I reached out to a friend in coffee, whose knowledge and insight into the industry is extremely well respected, MD of Coffee Commune, Raihaan Esat. He echoes my story about the resilience of coffee roasters and with regards to green beans, tells me “Contracts are being honoured although sometime later than anticipated, but under the circumstances that is a great result”. Raihaan also acknowledges that our established relationships and strong communication with our international coffee farmers has allowed us to continue to operate, with some compromises. “The challenge can be with the bankers and financers, who can be somewhat less flexible”.
I spoke to Marcelo Brussi, CEO – Minas Hill Coffee, who generously gives me the low down from the Brazilian perspective. Minas Hill works with several well-established Brazilian farmers; they are the only members of the Brazilian Specialty Coffee Association in Australia. Marcelo breaks the pandemic down into different parts; the first wave from March to June was the ‘unknown’! Marcelo sees it as his job to protect the Australian market by sharing the fear of the farmers, instilling as much confidence with Australian roasters, that he can deliver on his promises. And due to his strong relationships, which he describes like a marriage, he does just that!
Marcelo believes none of this would have been possible if he was working with co-ops not individual farmers, who were able to offer facilities and benefits to Minas Hill, who then could protect the roaster by passing on the same terms and quality they need, so they can keep trading without the pressure. By doing this they were not only helping their businesses but also fundamentally protecting the Australian market by keeping prices fair and not demanding early payments.
After the first wave and some complications with shipping lines, we were faced with the second wave where sales were hit hard. Normally, a large percentage of business was done with Victorians.
Again, it was the farmers who came to the Australian roasters rescue. An example of this is Sao Silvestre Farm who, on hearing the news of further restrictions and wanting to protect the market, would reduce the revenue margin of green bean, offering better terms and competitive prices to the roaster, for great quality green bean. Ismael Andrade from Sao Silvestre also sponsored the cause by shipping containers to each Australian state, instead of a centralised warehouse, to reduce costs and support the logistics.
During these periods of time Marcelo tells me of important social projects to support less fortunate communities suffering due to the pandemic. An example of this was the Bom Jesus Farm owned by Gabriel Oliveira, who supports nearly 1,000 children every year with pushbikes, donated by Australian roasters. As the program suffered, Minas Hill were able to help donate 126 tablets with 6 months internet provision for each, for the most vulnerable children in those surrounding areas of Bom Jesus Farm. This was an important message to the farmers.
I have been working in the Australian coffee industry for 10 years and reported on origin tours around the world, to source the best coffee that man can buy, from crop to cup.
Throughout all this time relationships have been built, ethical platforms have been created and investment has been made into the people who make coffee special. I believe now in our time of need, we the coffee community are being repaid by our farmer colleagues around the world, who are repaying us in a quasi-karma way, for Australia’s strong social and environmental projects.
Has the industry been affected? Yes! Will we come out the other side stronger and better? Yes!
Article by Rob Marlowe, Cafe Culture International
