Hello hello!

Again we find the country in varying stages of lockdown in an attempt to battle the spread of Covid-19.

As we enter the coldest part of winter, we somewhat thankful for the wearing of facemasks in Melbourne as they keep our noses warm. But we do spare a thought for those doing it tough, those who have had to adapt their business to keep in line with government restrictions. There is light at the end of the tunnel (we hope)!

Turning our attention to global matters has been a distraction from our local issues the past few weeks, and we will update you on the situation in Brazil and Colombia below, as well as some good news from our Northerly friends in East Timor….
 

MARKET REPORT

Well then, wasn’t THAT quite the bit of excitement? In the short space of a month, we saw the price of Arabica Coffee Futures (affectionately known as the ‘C’) skyrocket from a base of 160 US cents/lb to just over 215 US cents/lb, its highest level since October 2014.

             

Last time around, the spike was due to an extended drought in Brazil, which negatively affected the critical period in which fruit needs good rainfall in order to set properly. This time it was the dreaded frost which, after many years of mild winters, finally did happen during the wee hours of the 20^th of July (when precisely no one expected it). Crucially, this happened right smack in the middle of Brazil’s coffee heartland across the regions of South Minas, Sao Paulo, Cerrado and Parana.

In case you missed it (which is fair enough, given everything that is going on), the damage caused to coffee plantations by the recent frost was the worst since 1994, which on that occasion sent the price soaring north of 250 US cents/lb. Early indications all seem to point to a reduction in potential production of between 5 and 6 million 60kg sacks as a result of this latest frost. Put into perspective, this will amount to anywhere between 10 and 15% of Brazil’s 2021/22 arabica harvest. This also equates to over three times Australia’s annual coffee bean imports. It’s a big number any way you look at it.

The severity of damage caused to coffee trees by a frost can vary, depending on the intensity and duration of the event. In the first instance it can “burn” leaves, causing them to wither and drop, thus reducing the photosynthetic ability of the tree and therefore its capacity to produce the sugars needed to fill the coffee cherry during its development.
Secondly, and arguably more importantly, a severe-enough frost can damage the buds that are developing under a thin layer of bark on the branches. This ultimately means that a severe frost can reduce the number of flowers a tree will produce during the flowering, resulting in a reduced potential output for the following harvest.

Fortunately for practically everyone in the industry, a second cold front came and went through Brazil with hardly any additional damage, and took the air out of the speculative bubble (at least for the time being). This has seen prices settle within the 170-180 US cent/lb range while the dust settles and the damage can be assessed properly.

For now though, there appear to be no more severe cold fronts expected to cross the Brazilian coffee belt. However, we do expect speculative dry weather talk to start gathering momentum as we approach the next critical moment in the coffee cycle (September to November), in which there needs to be good rainfall in order for fruit to set properly on trees post-flowering. We should expect here to be more price volatility as a result.
Never a dull moment, eh?

             

 
COLOMBIA UPDATE
 
Much has changed in the month that has passed since our July newsletter. We have been advised that the Colombian port system of both the west coast at Buenaventura and the northern ports of Cartagena and Santa Mata are now working at full capacity. Shipment delays and scheduling have returned to normal. Many shippers are advising that the accumulated volumes of the delayed outstanding shipments from the unrest period of May/June will be shipped and cleared by the end of August.

In “The Axis Triangle” for coffee, our supply partners are reporting that some disruptions and sporadic road closures are still taking place. Concern is still evident in recent supply partners’ communications. Travel and security within the region are still unpredictable and looking like they will last well into the rest of the calendar year.

It has also come to light that the Colombian President has had several attempts on his life in the last month. This issue does raise a high level of concern in view of Colombia’s forthcoming national elections early next year.
Over the last month, Colombia has seen good news as a result of their hard lockdowns across the country. The Colombian Medical system has seen easing of pressure points in their infrastructure and services. ICUs across the country are now at 60% capacity (down from 100%) as the system is now dealing with some 7,000 cases a day (down from 28,000 a month ago). Many restrictions have either been lifted or lightened allowing the economy to get moving again.

The weather is currently as expected and the trade is looking at a similar volume of coffee to be available to the world market with the upcoming crop. Parchment flows are continuing and a reasonable stream of coffee is making its way to mills for export processing.
 

A WORD FROM THE CUPPING ROOM

This week we had the absolute pleasure of cupping some of the most interesting Ethiopian microlots we’ve ever stocked. Sourced from Tracon Trading we have a range of Natural, Washed, Anaerobic, Long Fermentation and Slowly Dried Microlots. We were so happy with the coffees we ordered a second round, touching down in Melbourne soon, so there’s plenty to go around. 

Coffee is the most important commodity in Ethiopia and Tracon recognises this and has specialised the company to produce the finest export-grade coffees for the global mainstream and specialty markets.  Tracon owns fifteen of their own washing stations throughout the regions of Limou, Gera, Yirgacheffe, Guji, Kochere and Sidamo. Their facilities include modern processing lines equipped with colour sorters, and as of last year, steel fermentation tanks and vacuum pumps for anaerobic processing.

Along with owning their own facilities, Tracon offers ‘Vertical Integration’ in some regions of Ethiopia. This is essentially a partnership or commercial agreement with other privately owned washing stations, where Tracon commits to buying all grades (grades 1-4) from the collection point and processes the green coffee in their own mill in Addis. The benefit of vertical integration is that the growers receive advance payment for their cherry, free transport of the cherry to the facilities, a five percent increase on average market prices and free agronomical and processing training.

Bennetts have been working with Tracon since 2015 and have seen the qualities increase year on year. We hope to continue nurturing this relationship for many more years to come. For expressions of interest in these coffees, please contact your Account Manager or check out our website

            

  
FAIRTRADE FORTNIGHT

Fairtrade Fortnight (running 6^th – 19^th August) is an annual celebration of people, including farmers and families, who are working to make the world fairer. It’s a great time to reflect on the power of our choices to create a better future for the planet and its people. In recognition of the great things Fairtrade are doing, we wanted to share with you the story of Cooperativa Café Timor (CCT), written by Dr. Ross Brandon who heads up the health program in East Timor.
 
In 1994, the U.S. Agency for International Development (USAID) funded an effort by NCBA CLUSA to organize 450 coffee farmers into a co-op called Cooperativa Café Timor (CCT), launching the commercial coffee industry in East Timor. More than 20 years later, coffee is now the small Southeast Asian country’s top agricultural export with a value of about $12 million a year. Today, CCT not only exports coffee, but has also added high-value spices and other crops to its line-up. The co-op also runs a string of health clinics that provide services to its 26,700 small-holder farmer-members, their families and communities. Bennetts have been a major financial supporter of the women’s health clinics in the coffee growing region.
 
For millions of people around the world, the COVID-19 pandemic has wreaked havoc on their businesses, communities and families. This is especially true for small-holder farm families in developing nations around the world where the state of their economic future is directly linked to the exporting of the crops they grow.
 
Cooperativa Café Timor (CCT) is a large agricultural cooperative in Timor Leste. The cooperative is wholly Timorese-owned and managed, created to directly benefit its membership of 26,700 small-holder farmer families. CCT is focused on the export of organic and Fairtrade certified Arabica coffee with an increasing diversification into cocoa, vanilla and other spice exports. 2020 was a challenging year for CCT, but it has successfully navigated its way through the COVID-19 pandemic despite the country of Timor Leste restricting travel and remaining isolated from the rest of the world. As the country was faced with increasing economic hardship and a rise in unemployment due to the COVID-19 pandemic, fortunately (and with a great amount of preventative precautions), CCT was able to fully operate during the 2020 harvest season.
 
To successfully operate in the COVID environment, CCT quickly assessed and mitigated these new risks and developed strict COVID protocols as advised by government and industry experts. By leveraging the expertise and infrastructure of CCT’s existing health services, CCT rapidly implemented these protocols throughout its supply chain and facilities.
As a no-fee benefit to rural farming communities, CCT also offers primary health and social development services from its eight fixed health clinics, three mobile clinic teams and village-level extension services. By late March, using a range of village-level education activities, farmer families were already receiving COVID related information from CCT’s health services. These extension activities include broadcasting messages throughout villages from CCT vehicles using newly acquired roof-mounted loud-speaker systems. Health extension teams on motor bikes travelled to local coffee farmer villages and disseminated basic information to reduce anxiety and offer simple practical prevention techniques. Within clinics, CCT implemented stricter infection control protocols, PPE for staff, and increased the volumes of local medicines and supplies to counter any potential disruption to drug supply chains. CCT’s fixed and mobile clinics remained open for all patients during the entirety of 2020 with an average 11,000 patients treated each month.
 
           
 
CCT’s health service, also assisted through funding from the New Zealand Government and Fair-Trade Premium proceeds, lead the implementation, monitoring and enforcement of COVID-19 protocols for all staff in all CCT factories, mills and facilities. This included staff training, installation of handwashing facilities at the entrance of all CCT facilities, the enforced use of facemasks and social distancing when inside any CCT facilities.
To reduce risk to CCT staff and farmers when buying coffee cherries (unprocessed coffee fruit), the usual practice of direct roadside buying and transportation by CCT staff was reassessed. For the2020 harvest, CCT revised its purchasing methodologies to minimize contact and exposure between farmers and employees. The revised system also resulted in greater efficiency, increased employment opportunities, and lower transmission risk. The individuals involved all received COVID-19 prevention training from CCT and were required to wash their hands and limit personnel numbers when delivering coffee cherries to CCT. Due to its success in prevention and its boost to efficiency, this procurement system for red coffee cherry will continue well into the future for subsequent coffee harvests.

Despite the overwhelming obstacles presented by the pandemic, CCT produced a higher-than-expected volume and quality for its 2020 exported coffee. They insured the harvest by providing direct monetary support to its co-op farmers through the local purchase of their harvests. With the advantage of in-country Timorese management and staff and the early development and implementation of COVID operational protocols, CCT purchased a higher than expected 13,900 tonnes of red coffee cherry from Fairtrade and Organically certified farmers. This coffee was processed in-country into a total of 2,130 tonnes of grade 1 green coffee bean thus far and exported to Canada, USA, Australia, China and New Zealand.
 
Looking forward, CCT will play a critical role in its farmer communities as it joins with the Government of Timor Leste in the expected rollout of COVID-19 vaccinations. CCT’s health service is prepared to fully respond, as it currently delivers and supports the National Children’s Immunisation program and has previously participated in national mass immunization campaigns. Despite economic downturns, adverse climate events, political uncertainty with severe social unrest and violence and now a worldwide pandemic, for more than 20 years, CCT has been in the field buying coffee and supporting their co-op member-owner farmers and their communities. Their farmers are the cooperative, giving them direct control over its policies and practices and a voice that will ensure its resilience for future generations.

If you would like to support and showcase this great cooperative, we have FTO East Timor Maubisse Peaberry in stock now, cupping with notes of chocolate, walnut and black tea, with a subtle apricot acidity that lingers. Contact your Account Manager to place an order.

Happy Roasting,
The Bennetts Team