Welcome to another edition of the DRW Origin Focus. Last week, team DRW flew out to Portland to attend the inaugural SCA Expo 2023. The festival was packed full of exciting, informative, and overdue meetings with suppliers and partners from across the world.
For our origin focus this week, we touch upon conversations had with producer partners from Peru, Ethiopia and Indonesia. Enjoy!
Coffee Origin Focus
It was great to see two of our Peruvian partners, Perunor and Cecanor. Both suggested that quality has improved from a difficult 2021/22. However, the primary talking point surrounded the new FT regulations and minimum pricings. There is a lot of uncertainty around these new structures. For those of you who haven’t explored these changes already, we strongly recommend reading this short article Henry put together with the basics. On the weather front, rains over the last two weeks have slowed the early harvest flow. However, the weather looks like it will improve and therefore crop flow is expected to pick up. Crop size and quality look promising. Prices remain on the higher side as cooperatives continue to monitor new FLO pricing structure.
We were excited to catch up with Oromia, Kerchanshe and Shochoch in Portland having recently met with Daye Bensa back in London. The consensus seems to be that the conflict in Ethiopia is stabilsing with regional governments slowly being disarmed. An interim government has been set up in the northern region of Tigray. Currency problems still cause major problems, with some coffee exporters operating at up to a 40% loss just to bring USD into Ethiopia. This solution is not exclusive to coffee. In more exciting news, the Shochock Sweet Berry project has been extremely well received at origin and in Europe. For Oromia and Kerchanshe, the focus is carbon. Kerchanshe are in the process of calculating their footprint whilst Oromia are working with Addis University exploring carbon credits. Container problems persist for all. This has become the norm in Ethiopia over the last few years. This shortage looks set to persist in the coming months and is not aided by the forex issue.
We met with two of our key Indonesia suppliers whilst in Portland, Permata Gayo and Ketiara. The spring crop in Aceh is 60% complete and around Lake Toba is 50% complete. The Eid holiday has now finished. Following on from our update last month, both partners had more to add on the price of Indonesian coffee. The recent trend has only been going one way, with prices continuing to increase across Indonesia. The market is so volatile that prices can jump in the short time between agreeing contracts and collecting cherry. This causes obvious obstacles. Both partners also suggest that prices should continue to rise through to the end of year before levelling out as the harvest completes. Despite these conditions, quality remains good and relationships strong. We are working extremely closely with Permata Gayo and Ketiara to ensure consistent supply and prevent risk of defaults or deficient quality. The wonderful Hutan project continues to grow.