A supply shock is an unexpected event that suddenly changes the supply of a product or raw material, resulting in an unforeseen change in price. Supply shocks can be negative, resulting in a decrease in supply; or positive, which produces an increase in supply; however, they are often negative. Assuming that aggregate demand does not change, a negative supply shock causes the price of a product to rise, while a positive supply shock reduces it.
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.
Not long ago I was listening on a podcast, to a "celebrity" of the specialty coffee industry, saying that the most difficult country where to work was Kenya. This seemed nonsense to me, because without a doubt, for anyone who has worked in Africa for a sufficient period of time, will say that the most difficult origin to work is undoubtedly Ethiopia, with light years of difference. And with this I am not saying that Kenya is all peaches and cream, because is not, but what I mean is that Ethiopia is too complex.
It should be noted that with this article, I do not intend to establish a cultural superiority on the part of the West to the detriment of the third world, as it is commonly called. I firmly believe that there is no culture superior to another, however they are all different, each with its positive side and its flaws. I do not agree with the kind of superiority that some feel when they come to Africa "advising" how to live, what is the best solution to problems, and even how to grow and process coffee. Africa must find its own solutions!
Just a few days ago, I walked into a coffee shop and bought a 250gr bag of Kenyan coffee for €20 approx. While I'm happy to pay that kind of money for a very good Kenya in a bag full of tasty promises, when I got home I found only disappointment.
It is an open secret within the specialty industry, that Kenyan coffees have been in a low the last couple of years, and probably it is one of the most controversial topics right now. As you may know, Kenya is one of the most prized origins within the specialty coffee world, it is sought by importers and roasters from all over the world as an origin of outstanding quality, intense sweetness, citrus/winey acidities and velvety bodies.
We would normally cup 500+ samples from Kenya each season, between origin and lab cuppings. Maybe the right number is something closer to 1,000 samples, between February and March each year since 2016. This year the quantity was lower for obvious reasons. And while it's common knowledge among coffee connoisseurs from around the world, that there has been a disruption in the quality of this great origin, we can discuss on the causes or how much it has been affected, but I don’t think anybody that understand well the Kenyan coffee industry, can deny there is a problem.
We pride in being very good connoisseurs of the coffee industry in Kenya and the country in general. Since 2013 we are constantly going at least twice a year (during main harvest and then at cupping/selection time); We have visited a large number of cooperatives in various regions; We know the reality, dreams and problems of coffee farmers; And it is without doubts, our favorite origin!
But as in all areas of life, nothing is perfect, and the Kenyan coffee industry is no exception. It is no mystery to anyone that agriculture is the cornerstone of the Kenyan economy, and the cooperative movement has a solid footprint that can be traced until just after independence in 1963.
“In the middle of difficulty lies opportunity" - Albert Einstein
In August of the year 2018, the price of coffee reached levels considered alarming by the majority of those who work in the coffee industry. For the first time in 12 years, the "C" price in New York fell below 100cts/lb. While it is true, the average price of the last 12 years is not much higher than 120cts/lb, this decline generated unprecedented reactions in the specialty coffee world, which we think is positive.
Every coffee farm in the world, even the most reputable one, will produce good and bad quality beans. Therefore, separating the bigger, heavier and denser beans from those lighter and defective ones, is key to maximize the benefit of the farmer.
In Kenya, after a certain lot has been processed, it will be delivered to the Marketing Agent (MA) in parchment by the farmer or cooperative. The MA will then mill and grade the lot by shape and size, and give this particular lot an unique "Outturn Number" (ON), before delivering it to the Nairobi Coffee Exchange. This ON system will be crucial to provide transparency and traceability to the system.
We live in a world of constant change, everything happens quickly and technological advances make us live in a permanent pursuit of new knowledge.
Certainly, the specialty coffee industry has grown exponentially in the last five years. The progress we have seen and experienced in farming, processing, logistics, roasting and brewing are undeniable and certainly admirable. But is this level of growth sustainable in the long term? Are we neglecting quality to privilege the quantity?
SAFARI: is probably the most well-known word in the Swahili language, and it means "journey". SAFARI NJEMA: is an expression used since time immemorial throughout East Africa, and it's used to wish the best to the traveler (s).
After crossing three oceans, the Suez and Panama Canal and also the Red and Mediterranean Sea, we finally have totally available in Barcelona and Santiago our new Tanzanian lots and microlots.