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It is a question that we have been asked many times. And the truth is that in many rural regions of Ethiopia, the presence of weapons like the Kalashnikov is understood from the economic fragility of the country and the enormous dependence that exists on coffee as the main community support and source of income for thousands of families who live solely from its harvest and processing. Therefore, when producers face the risk that trucks or organised groups try to take their coffee without paying, they are forced to protect their work with the means available. The Ethiopian economy has seen progress in recent decades, but it remains highly exposed to volatile international prices for agricultural products and limited infrastructure, which makes access to stable markets difficult. The dependence on coffee makes each harvest vital, and any loss represents a direct blow to the survival of the community, which explains why armed protection becomes part of daily life in areas like Guji, where wealth is not measured in money but in bags of coffee ready to be exported.
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President Trump's recent imposition of a 50% tariff on Brazilian coffee, along with threats of similar measures against other BRICS countries, has sent shockwaves through the global coffee industry. This move poses a significant challenge, as the United States is the largest importer of Brazilian coffee, with trade valued at approximately $1.9 billion last year. The sudden disruption in this supply chain could lead to an oversupply of Brazilian coffee searching for new markets, potentially lowering both its price and the global commodity price. With U.S. buyers stepping back, Brazilian exporters will likely turn to alternative destinations—Europe being the most logical next market. This shift could result in greater availability of Brazilian beans at more competitive prices. While this situation presents challenges for some producers, it could translate into significant cost savings for European roasters and buyers. Downward pressure on prices may help offset recent inflationary trends in green coffee supply, enabling roasters to stabilise or even reduce their costs.
We've attended coffee festivals on four continents, and no matter the location, the experience is often the same: a celebration of competitions, machines, and coffee culture that feels very disconnected from those who grow the beans. The industry loves to talk about "origin," but at these festivals, origin is reduced to a booth in the least coveted corner of the fair that no one ever visits. Rather than levelling the playing field, coffee festivals tend to reinforce the industry's most damaging imbalance: those at the top of the supply chain are the protagonists, while those at the bottom are marginalised or completely ignored. We constantly see roasters, baristas, and influencers posting endless selfies, but never the producers themselves. What's missing is not just representation, but respect. Festivals rarely invest in bringing coffee farmers in, offering translation services, or creating spaces for real dialogue about challenges at origin.
The global coffee market is currently experiencing unprecedented volatility, with New York Arabica coffee prices reaching all-time highs. On February 10, 2025, Arabica futures rose to $4.30 per pound, marking the 13th consecutive session of record prices. However, just yesterday, prices fell to $3.86 per pound, breaking the $4 barrier in a single day. This volatility is primarily attributed to adverse weather conditions in Brazil, the world’s leading coffee producer, where dry and hot weather has significantly impacted coffee-growing regions. As a result, Brazilian farmers are hesitant to sell their limited supplies, further exacerbating the global shortage. In response to these global market dynamics, the Ethiopian government has implemented a minimum coffee price directive aimed at protecting local producers and ensuring that as many dollars as possible flow into the economy. This policy requires Ethiopian coffee exporters to sell at or above a predetermined minimum price, which is adjusted weekly based on international market trends and the prevailing exchange rate.
The recent surge in Arabica coffee futures on the New York Stock Exchange, which yesterday reached an all-time high of $3.75 per pound, has complex implications for African coffee producers. While economies such as Ethiopia, Kenya or Rwanda will benefit from higher prices, small farmers, who account for 90% of African coffee producers, often struggle to capitalise on these gains. Factors such as rampant inflation, high input costs and reliance on middlemen reduce their potential profits. In Ethiopia, 6 kg of cherries are needed to produce 1 kg of green coffee, the price per kilogram of cherries is still low compared to the price achieved by coffee futures on international markets. During the 2024-25 harvest that just ended, the average price per kg of cherry on the local market has fluctuated between 80 to 90 birr per kilogram (approximately $0.5 to $0.55 USD), which represents a fraction of the value that coffee futures fetch on the global market. This is partly due to the intermediation structure in the Ethiopian market, where farmers often rely on local cooperatives and traders who buy the cherry at lower prices before it reaches the international market.
Before privatizing the coffee industry in Burundi in 2008, all coffee production was under the control of the state-owned company Sogestal, which is now virtually bankrupt. As a result of this privatization, the situation of small coffee producers has deteriorated. The government, under pressure from the World Bank, transferred most of the washing stations it used to control to foreign or multinational companies, leaving small coffee producers with very little to support themselves. Coffee is very important to Burundi, accounting for 80% of the country's export earnings and supporting the livelihoods of 55% of the population, approximately 750,000 families, the majority of whom are smallholder farmers. In 2007, the president of Burundi at the time declared that coffee belonged to the producers until it was exported. This agreement allowed them to oversee the supply chain and gave them the right to receive 72% of the revenue from international coffee sales. But in reality, little or none of that has happened.
As we enter 2024, we find our purchase planning clouded by uncertainty and doubt. As you may know, the new EU Deforestation Regulation (EUDR) requires companies trading coffee and other commodities such as livestock, cocoa, oil palm, rubber, soy and timber, as well as products derived from these, to carry out extensive due diligence in the value chain to ensure that the goods are not the result of recent deforestation, forest degradation or violations of local environmental laws. European importing companies will need to prepare for the new obligations that will apply from 30 December 2024. From the importer's perspective, the EUDR will require companies to digitally map their supply chains back to the farms where the coffee was grown, which could involve tracking thousands of small farms in remote regions. This is obviously impossible to do, because importers do not directly visit all the smallholders we work with and rely in part on data provided by local exporters, some of whom also do not deal directly with coffee farmers.
Coffee has been traded for commercial purposes for 400 years. From there, it has spread to approximately 70 countries where it is currently grown. The Dutch were the ones who began to establish economies of scale around the production and export of coffee. Later they grew coffee in Java and Ceylon (now Sri Lanka). The first exports from Java to the Netherlands occurred in 1711, and the Dutch East India Company was the first multinational corporation in history and the first to export coffee on a large scale. During these four centuries, a pattern of neo-feudal behaviour has been generated, which has forced small coffee growers to chain themselves into ultra-dependent relationships with large landowners or multinationals, which have caused multimillion-dollar profits for large companies, in addition to the concentration of land, marginalization and slavery. This is how this business model has been perpetuated until today.
Coffee has reached record prices since 2014 this week. But how does this price increase affect coffee farmers and roasters? What is the "C" price of coffee?
The coffee commodities market, also known as the "C" Market, is where brokers at the New York Stock Exchange determine the future price of coffee contracts globally every day. By buying or selling these futures contracts, brokers place bets on the expected future value of a certain commodity. Therefore, projections about the future supply and demand of coffee will make possible multiple variations in its price in the present. Cupping coffees without having any origin info, would be nonsense, right? We can't understand a coffee if we do not know its origin and to really know an origin, we must first try to understand its culture, read its history, listen to its music and observe the state of its political system. There's no other way. It is the same with many other situations in life, everything is a consequence of something anterior, a reaction of a previous action. This "Newtonian" plot is everywhere, and no matter how hard we try to untangle it, hits our unsophisticated sense of perception like an apple falling on one’s head, preventing us from understanding its full scope and impact. |
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