Welcome to this month’s edition of DRWakefield’s Monthly Coffee Origin Focus.
November is already over, where has the year gone! The lead up to Christmas has begun, and we’ve been feeling festive at DRWakefield for a while already. We had our Christmas party at the end of November to avoid any potential Christmas lockdowns, and we certainly enjoyed ourselves!
However, the festive cheer has been slightly overshadowed by the discovery of the newest variant of Covid-19; Omicron. Potentially the most transmissible variant yet, but only time will tell how serious this latest variant will be.
It’s not all bad news though. 27th November was a record-breaking day for women’s rugby. The men’s match was cancelled due to several Covid cases in the Barbarians team, but the women stepped in and the Barbarians beat South Africa 60-5 at Twickenham stadium in front of a crowd of 29,000 fans – the biggest crowd women’s rugby has ever seen!
Sterling peaked in November at 1.358 on the 9th, but steadily declined for the rest of the month, losing value against the US dollar before closing out at 1.325.
In this report we will delve deeper into Rwanda, Papua New Guinea and Guatemala.
Coffee Origin Focus
The coffee harvest is well underway in Rwanda. Farmers are still currently picking their cherries but should be finished in time for Christmas. Due to shortages and inclement weather in other coffee-producing countries, the New York Coffee Market has been on a long-term upwards trajectory. These factors have meant that there has been more demand than ever for Rwandan coffee and that producers are benefitting from higher prices. The farmgate price in Rwanda has increased 40%.
Whilst this is looking very positive for farmers, they still face some challenges. The Rwandan government is trying to move towards an electronic banking system. As most coffee farmers live very rurally, they rarely have bank accounts or even access to set one up and this has thrown up some difficulties. Typically, farmers are paid by washing stations or exporters in cash, so they have had to find new systems to ensure farmers are paid correctly.
Our partners at Kinini Washing Station in Rwanda are continuing to innovate. Their plans for the new year focus on securing funding to build their own dry mill. Currently, they transport their coffee to the capital, Kigali, to be processed in a mill there and then back again to Kinini to be sorted. Having their own dry mill will not only make their coffee 100% traceable, but it’ll also save on costs and significantly lower the carbon footprint of Kinini coffee. If the project remains on track the mill should be ready for the 2022 harvest.
The Rwandan franc has lost some value against the US $, starting November at 1:1020 and ending the month at 1:1035, continuing its long-term trend.
Papua New Guinea
Papua New Guinea’s coffee season has slowed to a steady pace and the wet season rains have arrived on time which will encourage a good flowering for the 2022 harvest.
There are, however, two major issues that may affect next year’s crop. Firstly, the Covid Delta variant is sweeping through the country and with only 3% of the population fully vaccinated the impact is expected to be significant. The bulk of the population live in the rural areas which are affected the most by Covid as health services in these areas are virtually non-existent. This could lead to fewer rural farmers and producers being able to harvest their crops. Secondly, a national election is scheduled for mid-2022 at the height of the coffee harvest period. Elections and politics tend to distract and disrupt peoples’ focus on normal life activities.
Predictions are that next year’s crop will be similar to this year’s at around 800,000 bags. Internal competition for supply by branch offices of all the major global coffee traders ensures the price is at market level and above. Producers are ensuring they harvest every bean and are even planting more coffee trees to make the most of the high prices and to meet the high demand for PNG coffee.
The PNG central bank holds the US$ rate steady at 0.285c to the kina and internal prices have climbed to a current level near PGK14.00/kg DIS which gives a tremendous boost to the cash economy.
Coffee producers in Guatemala are currently facing difficulties in hiring experienced coffee pickers. Worryingly this is happening at the start of the picking season and may worsen throughout December. The National Coffee Association of Guatemala (Anacafe) estimates that 300,000 people are needed to complete the harvest, from picking to processing.
The shortage of experienced pickers has come about for a multitude of reasons. The start of the pandemic lowered coffee prices and so many pickers either left the country in search of more profitable work or now work picking other crops. The president of Anacafe, Juan Luis Barrios, believes this to be more than an anomaly due to the pandemic, and that there is a migratory movement happening. There is strong competition now for hiring workers and other industries such as sugar harvesting, cardamom picking and construction, seem more attractive as they are perceived to be better paid. In 2020 many coffee pickers moved to cardamom as prices were rapidly increasing whilst coffee was on the decline. However, now with higher prices and a larger harvest, these people are needed more than ever.
How serious the lack of pickers is will become clearer throughout December. Farms in regions at higher altitudes will be picking their coffee throughout this month and demand for workers will continue to increase. However, all hope is not lost as the cardamom harvest is now drawing to a close and many workers are expected to move from cardamom to coffee.
Throughout November the Quetzal has largely held up against the US $, opening at 1:7.377 and closing at 1:7.375.
Our thanks to Jackie from Kinini Washing Station and Craig at Coffee Connections Limited.