EDITO - Les Primeurs Café 2022
Angel Barrera, Sourcing Director
We have reached a new edition of Coffee in Primeurs, looking back upon almost a decade of holding this event in which we seek to tell you Roasters our story of Coffee Sourcing during the year, using the tasting to materialise all the work done to get us to these cups.
The work of our teams, but mainly of our producers, our dear partners with whom more than a decade ago, we set out on an odyssey to improve the cups served on the old continent (and beyond our European borders).
The frost situation in Brazil had warmed up the market to make it double the level of last year. Faced with a rise in the international market price, many questions arose, the first of which we all asked our-selves: are our partners producers going to respect the prices we used to pay and have maintained for years, even though a good part of them were already above the current market?
I think we all started the season with that interrogation in mind, but little by little other realities brought up more questions. A high price in the face of a low market (extremely low during more than five years) is always attractive for any producer, and on the contrary, it will always be less so when the market grows.
It will be less attractive because asking for quality implies more effort, yet this is not the reason why a producer will not respect long-standing relationships like the ones we shared with them.
Production costs in producing countries have risen, just as the cost of living has increased globally in European countries.
Fertilizers, for example, have tripled in cost compared to a year ago, and these are likely to continue to rise in view of the Russian invasion of Ukraine, which seems far from over.
Some Central American countries have raised the minimum wage in the countryside due to a lack of labor force: there is a massive exodus of people in Latin America to their big northern neighbor, which means that less labor force is available and the labor force that is available has to be better paid (which is not bad news, by the way).
Civil strife has flared up and created difficult conditions for the coffee sector, like in Ethiopia for example. difficiles pour le secteur du café, comme en Éthiopie.
WHY IS THERE A PRICE INCREASE THEN?
In addition to these reasons, it never hurts to be able to analyze other factors that influence a producer's decision-making when negotiating with us.
Many producers, for example, have openly told us the percentage increase in their production costs (between 20-30% according to them), using the rise in the international price to ask us to increase the prices we paid beforehand. Would they have had the courage to ask us for an increase if the market had remained as low as USD cents 130/lb while we were paying almost twice as much? I’d like to think so.
To give another example, in other countries such as Ethiopia, the national authorities themselves have prompted exporters to renegotiate older contracts in the face of escalation, leaving us in many cases without any jurisdiction to appeal to contractual respect rather than renegotiation. In our case, we can rely on long-standing relationships, which have allowed us to get our contracts shipped as negotiated.
On the other hand, throughout Central America, a fungus has caused a kernel necrosis, which entails cherries to go from green to rotten without going through the intermediate stage of optimal ripening. This is forcing producers to cut the cherries when they are green, so as to save at least one product and sell it on the local market, but obviously without the specialty coffee standards for export. Depending on the farm and the countries, we have noticed losses ranging from 20% to 80% of the estimated production.
A question arises: will the prices of specialty coffee return to the levels we once knew?
As a company, we prefer to approach this question in a different way to find an answer.
Were the prices we once agreed to each of our partners fair to their reality?
How can we answer this question? Well, by analyzing our sector both individually and locally: we started in Central Ame-rica, analyzing the cost of production of very diverse producers, and seeking to homogenize it so that we can also use this developed tool in South America, Africa, and wherever we buy coffee.
In addition, we are convinced that the future of specialty coffee also lies in the fact that we value its production as a whole, rather than just the cup we bring to you. It lies in the impact made to obtain this cup.
This is the reason why we embark on the journey of natural coffees in Kenya, or why we back the production of organic coffees on traditionally conventional farms, or talk about agroforestry even with the trees, just to mention a few. All these production efforts should be remunerated at their fair value for what they represent in a cup, for the producers’ work and their community environment, but also for the environment in which they grow.