Excuse the tardiness of this month’s origin focus, I was away for a good chunk of January getting the inside scoop from Honduras (and avoiding the cold weather in the UK!). The full report of that trip is due to be published on the website soon, but in the meantime, read on for an abridged version, plus updates from Rwanda and Brazil for this month’s origin focus!
Coffee Origin Focus
On our recent trip to Honduras, we spoke to a lot of exporters, and the general outlook for this crop was positive. Hurricane Iota dealt a lot of damage to farms in Western Honduras in 2020 and was one of the contributing factors to a poor harvest in 2021. High coffee prices meant that farmers often chose to sell for quick cash rather than hand their coffee into the coop. This all combined to lower-than-expected volume for many exporters, which led to a drop in quality.
This year, however, the harvest has been much more fruitful – as well as good growing conditions leading to better overall quality of the crop. Many producers highlighted the increased overhead costs, such as fertiliser and picker’s wages, as well as inflation. Considering all these factors, they mentioned that the coffee market level at the time was unsustainable. Fortunately, the market has bounced back from the lows of mid-January when we were out there.
Although regions of Rwanda can have a specific harvest period, our partners in Kinini harvest all year round, stopping only for Christmas and New Year which gives them time to deep clean the wet mill. The harvest has been better than last year due to good weather and more farmers keeping turning to coffee as it becomes a more lucrative crop. Recognising the importance of coffee as an export, Rwanda is holding its first-ever coffee farmer’s convention starting on Monday 13th of February. Also recognising the potential money involved in the coffee industry, the government have more than doubled the export tax on a container of coffee in the last few years.
We have also heard reports from Rwanda of coffee cherries turning black and falling off the trees sooner than they would naturally. We don’t know enough about this potential disease to give more details but our partners in Kinini are investigating the matter. Thankfully, it seems to be relatively localised and not affecting large numbers of cherries. The effects of climate change are also being felt in Rwanda as the weather is apparently more volatile with higher highs and lower lows in recent years. These sorts of reports are unfortunately becoming increasingly common of late.
Coffee exports in Brazil have been down over the past month. The volume exported in January 2023 was more than 15% lower than in January 2022. This has come about as a result of the low NY Coffee market pushing prices down, which lowers the incentive for producers to sell their coffee, rather they want to hold on to it in the hopes the price will shoot back up. On top of which, differentials in Brazil are higher than ever, for a 2/3 SSGC (Santos) prices are pushing +20 c/lb, when just a few months ago they were level, or even in negative figures. This has compounded the issue, as roasters and importers are holding off buying Brazilian coffee as they are hoping the prices will come back down.
After months of often torrential rains in the coffee belt, the weather seems to have finally dried up, with just lighter, summer showers being experienced in the region. This is good news for the much anticipated 23/24 crop, as the cherries are now on the trees and look to be set to develop well. Although current estimates of the upcoming crop’s volume are quite variable, on the whole, they are reporting bigger volume than the previous crop.