Green Coffee Price
The ICO Composite Indicator Price (I-CIP) averaged 175.73 US cents/lb in December, an 8.8% increase from November 2023. The I-CIP posted a median value of 177.64 US cents/lb, having fluctuated between 163.92 and 186.04 US cents/lb. The December 2023 I-CIP is above the December 2022 I-CIP by 11.8%, with the 12-month rolling average at 165.23 US cents/lb. The I-CIP grew steadily in December 2023, reaching a nine-month high. The rise in tensions in the Red Sea has prompted some shipping lines to re-route their coffee-carrying vessels. Thus, for South-East Asian and East African coffee en route to Europe, unintended consequences include a rise in freight costs as some shipping companies have introduced surcharges to account for the now-extended transit times.

The Colombian Milds and Other Milds increased by 7.6% and 6.9%, to 210.68 and 210.76 US cents/lb, respectively, in December 2023. The Brazilian Naturals presented a growth of 9.4%, reaching an average of 185.23 US cents/lb. However, the Robustas grew the most by 10.5% to 135.47 US cents/lb, the highest level since May 1995, when they were valued at 140.90 US cents/lb. ICE’s New York market was a strong driver of the positive growth, having increased by 9.6% to 186.67 US cents/lb, whilst the London Futures market expanded by 12.2%, to 123.91 US cents/lb, also the highest level since May 1995.

Arbitrage, as measured between the London and New York Futures markets, widened by 5.0% to 62.77 US cents/lb in December 2023.

Intra-day volatility of the I-CIP expanded to 10.2% between November and December 2023. The Colombian Milds’ and Other Milds’ volatility also increased to 10.8% and 10.9%, respectively. Meanwhile, the Brazilian Naturals’ volatility rose by 2.9 percentage points to 12.6% from November to December 2023. The Robustas presented the smallest volatility increase, with a 0.9 percentage point gain, averaging 9.2% for the month of December. The London Futures market’s volatility increased by 2.7 percentage points to 9.1%. Lastly, the New York futures market’s volatility moved in tandem to that of London, expanding by 2.4 percentage points and reaching 10.5%.

The New York certified stocks continued on their downward trajectory, retracting by 15.0% to 0.28 million 60-kg bags, one of the lowest figures ever recorded. Certified stocks of Robusta coffee reached 0.57 million 60-kg bags, a 68.4% increase since November 2023.

Exports by Coffee Groups — Green Beans
Global green bean exports in November 2023 totalled 9.79 million bags, as compared with 9.1 million bags in the same month of the previous year, up 7.6%. As a result, the cumulative total for coffee year 2023/24 to November is 18.39 million bags, as compared with 17.7 million bags over the same period a year ago, up 3.9%.

Shipments of the Other Milds increased by 17.9% in November 2023 to 1.31 million bags from 1.11 million bags in the same period last year. Peru was the main driver of the double-digit growth of this group of coffee, with the origin’s exports of the Other Milds increasing by 60.1% to 0.57 million bags in November 2023 from 0.35 million bags in November 2022, following a 28.9% increase in October 2023. The resurgence of Peru’s exports of the Other Milds is due to the return to normality of local production conditions in coffee year 2023/24 as compared with those seen in coffee year 2022/23. Irregular weather patterns negatively affected the local supply of coffee beans in 2022/23, especially in the first three months of the coffee year, when 1.15 million bags were exported. This was the lowest first three months of exports since the 0.93 million bags shipped in coffee year 2014/15, representing a 26.7% fall in the average volume of exports in coffee years 2015/16–2021/22, which was 1.57 million bags. As a result, the cumulative volume of total exports of the Other Milds also increased, jumping by 9.2% in the first two months of coffee year 2023/24 to 2.74 million bags, versus 2.51 million bags over the same period in 2022/23.

Green bean exports of the Brazilian Naturals increased in November 2023, rising by 1.6% to 3.63 million bags. For the first two months of coffee year 2023/24, green bean exports of the Brazilian Naturals amounted to 7.35 million bags, up 4.0% from 7.07 million bags over the same period a year ago. The relatively shallow positive growth rate reflects the 2.6% increase in exports of the Brazilian Naturals from Brazil, the biggest producer and exporter of this group of coffee, which rose to 3.2 million bags in November 2023 from 3.12 million bags November 2022.

Exports of the Colombian Milds increased by 34.0% to 1.15 million bags in November 2023 from 0.85 million bags in November 2022, driven primarily by Colombia, the main origin of this group of coffee, whose exports of green beans were up 35.6% in November 2023. As a result, exports of the Colombian Milds for the first two months of coffee year 2023/24 are up 18.7% at 2.1 million bags, as compared with 1.77 million bags in the first two months of coffee year 2022/23.

Green bean exports of the Robustas amounted to 3.7 million bags in November 2023, as compared with 3.56 million bags in November 2022, up 4.0%. In volume terms, these constitute the biggest November exports on record, surpassing the level set in November 2022. However, the rise was not sufficient to offset the 10.9% decrease observed in October 2023, when the 2.49 million bags exported represented the lowest quantity for the month since the 1.91 million bags in October 2011. As a result, the cumulative total for the first two months of coffee year 2023/24 is down 2.5%, at 6.2 million bags, as compared with 6.36 million bags in the first two months of coffee year 2022/23. The main driver of November’s Robustas increase was Brazil, shipping 0.86 million bags, a jump of 850.2%.

Exports by Regions — All Forms of Coffee
In November 2023, South America’s exports of all forms of coffee increased by 24.7% to 6.07 million bags. The source of the strong positive growth is mainly Brazil, which saw its exports increase by 21.1% to 4.34 million bags from 3.58 million bags in November 2022. More specifically, it was the Robustas from the origin, which in November increased by 850.2% to 0.86 million bags from 0.09 million bags, which drove the region’s positive growth. The November 2023 exports are Brazil’s highest on record for Robusta coffee, beating the 698,856 bags exported in August 2023. Brazil is one of the largest producers and exporters of the Robustas, having accounted for an 8.1% share of the group’s total exports in coffee year 2021/22, i.e. 3.94 million bags. That said, in July–October 2023, Brazil’s share of the Robustas more than doubled, increasing to 22.3%, with the country exporting 3.09 million bags in just four months. This surge was in response to the reduced volume of Robustas coming out of Vietnam, whose Robusta exports fell by 27.5% in July–October 2023 to 4.92 million bags from 6.78 million bags over the same period a year ago. The continued rampant expansion of Brazil’s Robusta exports despite Vietnam’s recovery in November 2023 suggests that its strong foray into this market may continue.

Robusta exports fell by 27.5% in July–October 2023 to 4.92 million bags from 6.78 million bags over the same period a year ago. The continued rampant expansion of Brazil’s Robusta exports despite Vietnam’s recovery in November 2023 suggests that its strong foray into this market may continue.

Exports of all forms of coffee from Africa decreased by 13.5% to 1.01 million bags in November 2023 from 1.16 million bags in November 2022. For the first two months of coffee year 2023/24, exports totalled 2.06 million bags as compared with 2.24 million bags in coffee year 2022/23, down 8.1%. This is the third consecutive month of negative growth for the region and it affected most origins, including all the major producers whose combined exports decreased by 11.4% to 0.93 million bags from 1.05 million bags in November 2022. It is speculated that the surge in Brazil’s Robusta exports is crowding out traditional exporters of the group from the market, thus broadly affecting Africa as a whole, which is a largely Robusta-producing region. Uganda, the largest producer and exporter of Robusta coffee in Africa, was also affected by a delayed harvest season which negatively impacted the supply availability.

In November 2023, exports of all forms of coffee from Mexico & Central America were up 15.7% to 0.41 million bags, as compared with 0.35 million in November 2022. As a result, total exports are up 11.0% for October 2023 to November 2023 at 0.9 million bags, as compared with 0.81 million bags for the same period a year ago. Guatemala, Honduras and Mexico are the three main origins behind the region’s double-digit growth in November, with their respective exports up 114.0%, 29.7% and 11.8%. These robust growth rates do not, however, herald the beginning of a record-breaking year for the three origins or for the region, but rather are indications that export volumes are returning to the levels of the recent past, following a sharp fall in coffee year 2022/23. Accordingly, the average October–November export volume for coffee years 2017/18–2021/22 was 0.7 million bags for the three countries as compared with 0.6 million bags in coffee year 2022/23, a 14.6% fall. This has now increased to 0.68 million bags in coffee year 2023/24.

Exports of all forms of coffee from Asia & Oceania decreased by 18.0% to 3.12 million bags in November 2023. November’s downturn was mainly due to Indonesia, with exports down 45.2% to 0.49 million bags from 0.89 million bags in November 2022. These are the lowest November exports since the 0.2 million bags shipped in 2018. The decrease can be attributed to a reduced harvest in coffee year 2023/24, which is estimated to have fallen by 16.6% to 10.0 million bags from 11.98 million bags in coffee year 2022/23 on the back of excessive rains that damaged cherries in April–May 2023. Vietnam’s exports fell by 7.7% in November, a vast improvement from the steep declines of 23.6%, 45.0% and 44.7% seen in August, September and October 2023. This may indicate that its supply issues have now started to resolve after very low in-origin stock levels were reported in Q4 of coffee year 2022/23, when the start of the harvest still remained three to four months away.

Exports of Coffee by Forms
Total exports of soluble coffee decreased by 25.4% in November 2023 to 0.77 million bags from 1.03 million bags in November 2022. In the first two months of coffee year 2023/24, a total of 1.75 million bags of soluble coffee were exported, representing a decrease of 3.0% from the 1.8 million bags exported in the same period during the previous coffee year.

Soluble coffee’s share in the total exports of all forms of coffee for the year to date was 8.6% in November 2023, down from 9.2% in the same period a year ago. Brazil is the largest exporter of soluble coffee, having shipped 0.24 million bags in November 2023.

Exports of roasted beans were down 15.5% in November 2023 to 54,379 bags, as compared with 64,324 bags in November 2022. The cumulative total for coffee year 2023/24 to November 2023 was 0.1 million bags, as compared with 0.13 million bags in same period a year ago.

Production and Consumption
World coffee production increased by 0.1% to 168.2 million bags in coffee year 2022/23. The stagnant growth rate belies the tremendous changes at the regional level, with the coffee world neatly split between the expanding Americas and the shrinking rest of the world.

Asia & Oceania and Africa’s 4.7% and 7.2% decreases in production to 49.84 million bags and 17.9 million bags, respectively, can be attributed to adverse weather conditions negatively affecting key producers in the regions, particularly Vietnam, Côte d’Ivoire and Uganda. The magnitude of the fall in outputs of the two regions was entirely mitigated by the Americas, especially by South America’s 4.8% increase, which in turn was driven mainly by the biennial production-affected 8.4% increase in Brazil. The combined output of the Americas was 100.5 million bags.

The Americas versus the rest of the world split was also reflected in the production split between the Arabicas and Robustas, with the former’s output increasing by 1.8% to 94.0 million bags as compared with the 2.0% decrease of the latter to 74.2 million bags.

Looking ahead, the output for coffee year 2023/24 is expected to increase by 5.8% to 178.0 million bags, with the Arabicas’ output rising to 102.2 million bags and the Robustas’ increasing to 75.8 million bags.

The biennial production effect will play a large role in the outlook, especially for Brazil and the Arabicas, as the impact of the July 2021 frost continues to be resolved. Coffee year 2023/24 is anticipated to be an exceptional off-biennial year, feeling more like a good on-biennial following an average on-biennial year. Adverse weather conditions, first noted in 2022 and continuing into 2023, will have a negative impact on the outlook for coffee year 2023/24. The anticipated El Niño phenomenon is set to dampen the outlook in Asia, especially for origins like Indonesia. Meanwhile, Vietnam is expected to benefit from the drier/hotter weather as irrigation mitigates the reduced precipitation.

World coffee consumption is continuing to resolve through the issues brought about by the COVID-19 pandemic, with the consumption trend following an established patten in response to an external shock. The expectation for coffee year 2022/23 was for a smaller positive growth rate; however, world coffee consumption actually recorded a decrease of 2.0% to 173.1 million bags.

Consumption in coffee year 2022/23 did not faithfully follow the established pattern due to the impact of the high cost of living, falling disposable incomes and a long stocks drawdown. Despite coffee being relatively inelastic, the challenging global economic environment would have had a negative impact on its consumption. The world inflation rate was at its highest in 2021 at 9.4%, while the benchmark interest rate averaged 4.9% at the end of September 2023 in the European Union, UK and USA, the highest level since an average of 5.8% in 2000. At the same time, there was a large drawdown of stocks, where combined stocks reported by the European Coffee Federation and those held at the Intercontinental Exchange’s warehouses in the USA fell by 4.8 million bags from 14.5 million to 9.8 million. This drawdown would have reduced the need for purchases on the international market, seemingly reflected as lower and anomalous global consumption rates for coffee year 2022/23.

The world coffee consumption outlook for coffee year 2023/24 is broadly framed by the assumption that the global economy will continue to grow at above 3.0%, and that the industry will respond to the large drawdown of stocks, which will be positively reflected in apparent consumption. As a result, world coffee consumption is expected to grow by 2.2% to 177.0 million bags, with non-producing countries making the biggest contribution to the overall increase. Coffee consumption in this group of countries should expand by 2.1%.

As a result, the world coffee market is expected to run a surplus of 1.0 million bags in coffee year 2023/24.

The outlook is taken from the newest publication of the Statistics Section of the Secretariat of the International Coffee Organization (ICO), the Coffee Report and Outlook (CRO). For the full CRO or for more information, visit the ICO website: icocoffee.org.

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This phenomenon occurs when carbon sequestration from the soil and plants is greater than emissions, and by analysing the farms’ GHG emission estimates, Imaflora arrived at an absolute value of 15,400 tCO2e.year-1, which is considered low.

The use of organic fertilisers (chicken litter, cattle manure, etc.) and vegetable waste (from pruning, straw and grasses) used on the analysed farms was a positive factor in mitigating greenhouse gases, to the detriment of adding chemical nitrogen. The addition of these inputs can also increase the amount of carbon stored and improve soil quality, which in the medium and long terms increase nutrient cycling, porosity and water retention in the soil.

“Expocacer’s members are always at the forefront of technology, innovation and sustainability. The carbon balance carried out in partnership with Imaflora showcases the sustainable work that our members have been doing for over ten years. We’re moving forward together, towards an increasingly sustainable, low-emission coffee plantation,” said Farlla Gomes, Expocaccer’s technical coordinator for sustainability.

Also according to the survey, other relevant aspects to be considered are increased energy efficiency in the use of machinery, which can be achieved with improved process traceability and georeferenced technology, contributing to the reduction of diesel, man/machine ratio and soil compaction.

“The Carbon on Track platform carries out a series of studies on agriculture on demand. In the coffee sector, the emphasis remains: farms with more sustainable agricultural techniques are not only able to reduce their emissions, but also contribute to carbon sequestration. This carbon-negative grain gains added value and shows that sustainability is good business,” believes Alessandro Rodrigues, projects and services coordinator for Imaflora’s Climate and Emissions area.

For Expocacer, the trend towards reducing greenhouse gases is something that should be followed by other farms around the world. Every farm has the potential to contribute, for example, by applying organo-mineral fertilisers and organic compounds instead of chemical ones. If it is necessary to use chemical fertilisers because the cost is lower, they should be used via fertigation (aquammonia), avoiding the spraying of pure urea or formulated fertilisers. Straw and bark waste can also be reused in the form of organic compost to reduce the potential mineralisation of nitrogen in the soil, there are many ways to achieve sustainable production.

The cooperative was recently named the first coffee cooperative in the world to be awarded the Regenerative Certification by Regenagri, a global organisation that aims to guarantee the health and preservation of the soil, with certification from the British Control Union. This seal confirms the integrity of the cooperative’s processes in receiving and processing certified regenerative coffees, highlighting the sustainable practices that are carried out, such as renewable energy, selective collection and the traceability of stored coffees, following the product’s journey from its entry into warehouses, to distribution centers and to consumers.

The study also points out that the use of sustainable practices helps to reduce greenhouse gas emissions in the long term, as they tend to improve soil quality and reduce the use of external inputs such as nitrogen, phosphorus and glyphosate.

Scope of the study – Expocacer’s cooperative farms, that took part in this project are located in the region of Patrocínio, Minas Gerais, in the Cerrado biome. The average coffee production area of these farms is 192.4 ha, ranging from 40 to 371 ha with very dense areas, with an average stand of 4,370 plants.ha-1. This farms are generally fertirrigated and highly mechanised (planting, fertilising and harvesting are mechanised in most areas). The average yield was 30.6 bags.ha-1, considered above the Brazilian average (21 bags.ha-1).

“Our intention is to promote real sustainability, in line with our purpose of inspiring, fostering and nurturing cutting-edge coffee growing linked to impact. We understand that the market is increasingly demanding and that we have to meet and accompany the movement towards a healthy environment. To this end, we have an exclusive department for sustainability issues, where we also guide and encourage good practices among our members,” said Simão Pedro de Lima, managing director of Expocacer.

Carbon on Track – This is an Imaflora programme designed to raise the profile of low-carbon Brazilian agriculture and forest restoration on the climate agenda. Through the programme, agricultural enterprises can contract the calculation of the carbon balance that shows the estimated emission and removal of greenhouse gases from their activities, based on internationally recognised methodologies.

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The ICO Composite Indicator Price (I-CIP) averaged 161.53 US cents/lb in November, a 6.3% increase from October 2023. The I-CIP posted a median value of 161.63 US cents/lb, having fluctuated between 153.32 and 169.99 US cents/lb. The November 2023 I-CIP is above the November 2022 I-CIP by 3.1%, with the 12-month rolling average at 163.69 US cents/lb, having ranged in between 151.94 in October 2023 and 178.57 US cents/lb in April 2022. The I-CIP has remained stable around the 160 US cents/lb mark, with daily price variation declining on average for the October 2022 to November 2023 range, only 0.04%.

The Colombian Milds and Other Milds increased by 5.3% and 7.2%, to 195.85 and 197.18 US cents/lb, respectively, in November 2023. The Brazilian Naturals presented the strongest growth of 8.8%, reaching an average of 169.25 US cents/lb. However, the Robustas also grew by 3.2% to 122.63 US cents/lb. The International Coffee Exchanges’s (ICE) New York market was a strong driver of the positive growth, growing by 9.2% to 170.25 US cents/lb whilst the London Futures market expanded by 4.8%, to 110.45 US cents/lb.

The Colombian Milds–Other Milds differential contracted from 2.02 to 1.33 US cents/lb. The Colombian Milds–Brazilian Naturals differential shrank 12.6% % to 26.60 US cents/lb, whilst the Colombian Milds–Robustas differential also expanded 9.1% from October to November 2023, averaging 73.22 US cents/lb. Meanwhile, the Other Milds–Brazilian Naturals differential contracted 1.8%, reaching 27.93 US cents/lb. However, the Other Milds–Robustas and the Brazilian Naturals–Robustas differentials expanded 14.5% and 27.1%, averaging 74.55 and 46.62 US cents/lb, respectively, in November 2023.

Arbitrage, as measured between the London and New York Futures markets, widened by 18.4% to 59.81 US cents/lb in November 2023. Intra-day volatility of the I-CIP was raised to 8.0% between October and November 2023. The Colombian Milds’ and Other Milds’ volatility also increased to 8.7% and 8.8%. Meanwhile, the Brazilian Naturals’ volatility rose by 1.1 percentage points to 9.7% from October to November 2023. The Robustas presented the smallest volatility increase, with a 0.8 percentage point gain, averaging 8.3% for the month of November. The London Futures market’s volatility decreased by 2.4 percentage points to 9.1%. Lastly, the New York futures market’s volatility moved in tandem to that of London, expanding by 2.4 percentage points and reaching 10.5%.

The New York and London certified stocks continued on their downward trajectory, where London retracted by 49.2% to 0.34 million 60-kg bags, the lowest figure recorded since March 2014. Certified stocks of Arabica coffee reached 0.32 million 60-kg bags, a 24.5% decrease.

Exports by Coffee Groups – Green Beans
Global exports of green beans in October 2023 totalled 8.57 million bags, compared with 8.61 million bags in the same month of the previous year, down 0.4%. The downturn was driven by the Robustas, the only one of the four groups to start coffee year 2023/24 with negative growth.

The Brazilian Naturals made a strong start to the new coffee year, with exports increasing by 10.0% to 4.02 million bags from 3.66 million bags in October 2022. This is the second-highest volume exported in the month of October on record, just behind the 3.9 million bags shipped in 2020. Brazil was the main driver of this strong start, with the origin’s total green bean exports up 23.0% to 4.08 million bags in October 2023, which is also the country’s second-highest volume of exports in the month of October to be documented.

Exports of the Colombian Milds increased by 0.2% to 1.031 million bags in October 2023 from 1.03 million bags in October 2022. The near-stagnant start to the new coffee year was due to the conflation of the continued downturn in Colombia, the largest producer and export of the Colombian Milds, and the strong start made by Kenya and Tanzania, the two other origins that make up this coffee group.

Shipments of the Other Milds decreased by 1.8% in October 2023 to 1.59 million bags from 1.62 million bags in the same period last year. The main negative contributions came from Brazil (down 66.2% and 78,719 bags) and Papua New Guinea (down 34.3% and 53,737 bags), while Honduras provided the largest positive contribution (up 28.9% and 138,993 bags).

Of the four coffee groups, the Robustas have recorded the highest contraction in the new coffee year to date, with exports falling by 8.0% to 2.88 million bags from 3.14 million bags. Vietnam, the largest Robusta producer in the world, was the driver of the sharp downturn, with exports of Robusta green beans down 45.2% to 0.69 million bags in October 2023 from 1.26 million bags in October 2022.

Exports by Regions – All Forms of Coffee
In October 2023, South America’s exports of all forms of coffee increased by 16.4% to 5.95 million bags. Brazil was the main driving force of the double-digit growth of the region, having shipped 4.37 million bags in October 2023, a jump of 21.7%. Peru provided added support, with its exports increasing by 28.9% to 0.62 million bags from 0.48 million bags in October 2022.

Exports of all forms of coffee from Asia & Oceania totalled 2.05 million bags in October 2023, decreasing by 26.7%. Vietnam, the world’s second-largest producer and exporter of coffee, was the main driver of the region’s sharp downturn, with total exports down 44.7% to 0.75 million bags in October 2023 from 1.36 million bags in October 2022. This was the lowest volume of exports since the 0.7 million bags shipped in October 2008. A shortage of exportable materials within Vietnam, due to the lower-than-expected harvest in coffee year 2022/23, a delay in supply from the current coffee year’s harvest and a very strong export performance in the first nine months of the previous coffee year, explain the sharp downturn.

Exports of all forms of coffee from Africa decreased by 1.0% to 1.07 million bags in October 2023 from 1.08 million bags in October 2022. Ethiopia (–13.5%), Rwanda (–34.8%) and Cameroon (–57.4%) were the three main origins making a negative contribution to the region’s exports, in absolute terms, while Burundi (200.0%), Côte d’Ivoire (40.9%), Kenya (31.4%) and Uganda (2.8%) were the main origins making positive contributions. According to the Uganda Coffee Development Authority, the promising export performance in October 2023 was due to adequate supply from a good crop harvest in the South-Western region and the prevailing good prices on the global scene which prompted exporters to release their stocks. In Ethiopia, contract disputes arising out of a mismatch between local purchasing prices and the global market prices, first reported in the middle of coffee year 2022/23, continue to negatively impact export volume in the new coffee year.

In October 2023, exports of all forms of coffee from Mexico & Central America were up 0.4% to 0.459 million bags as compared with 0.457 million in October 2022. The performances of individual origins belied the less-than-dynamic growth of the region, with very strong negative and positive growth rates registered in October: Costa Rica (212.7%), El Salvador (69.6%), Guatemala (18.0%) and Nicaragua (15.6%) on the expansion side against the decreasing Dominican Republic (–80.1%), Honduras (–39.2%) and Mexico (–11.1%).

Exports of Coffee by Forms
Total exports of soluble coffee increased by 16.9% in October 2023 to 0.91 million bags from 0.78 million bags in October 2022. Soluble coffee’s share in the total exports of all forms of coffee for the year to date was 10.6% in October 2023, up from 9.0% for the same period a year ago. Brazil is the largest exporter of soluble coffee, having shipped 0.28 million bags in October 2023. Exports of roasted beans were down 20.4% in October 2023 to 49,185 bags, as compared with 61,781 bags in October 2022.

Production and Consumption
World coffee production increased by 0.1% to 168.2 million bags in coffee year 2022/23. The stagnant growth rate belies the tremendous changes at the regional level, with the coffee world neatly split between the expanding Americas and the shrinking rest of the world.

Asia & Oceania and Africa’s 4.7% and 7.2% decreases in production to 49.84 million bags and 17.9 million bags, respectively, can be attributed to adverse weather conditions negatively affecting key producers in the regions, particularly Vietnam, Côte d’Ivoire and Uganda. The magnitude of the fall in outputs of the two regions was entirely mitigated by the Americas, especially by South America’s 4.8% increase, which in turn was driven mainly by the biennial production-affected 8.4% increase in Brazil.

The combined output of the Americas was 100.5 million bags. The Americas versus the rest of the world split was also reflected in the production split between the Arabicas and Robustas, with the former’s output increasing by 1.8% to 94.0 million bags as compared with the 2.0% decrease of the latter to 74.2 million bags.

Looking ahead, the output for coffee year 2023/24 is expected to increase by 5.8% to 178.0 million bags, with the Arabicas’ output rising to 102.2 million bags and the Robustas’ increasing to 75.8 million bags.

The biennial production effect will play a large role in the outlook, especially for Brazil and the Arabicas, as the impact of the July 2021 frost continues to be resolved. Coffee year 2023/24 is anticipated to be an exceptional off-biennial year, feeling more like a good on-biennial following an average on-biennial year. Adverse weather conditions, first noted in 2022 and continuing into 2023, will have a negative impact on the outlook for coffee year 2023/24. The anticipated El Niño phenomenon is set to dampen the outlook in Asia, especially for origins like Indonesia. Meanwhile, Vietnam is expected to benefit from the drier/hotter weather as irrigation mitigates the reduced precipitation.

World coffee consumption is continuing to resolve through the issues brought about by the Covid-19 pandemic, with the consumption trend following an established patten in response to an external shock. The expectation for coffee year 2022/23 was for a smaller positive growth rate; however, world coffee consumption actually recorded a decrease of 2.0% to 173.1 million bags.

Consumption in coffee year 2022/23 did not faithfully follow the established pattern due to the impact of the high cost of living, falling disposable incomes and a long stocks drawdown. Despite coffee being relatively inelastic, the challenging global economic environment would have had a negative impact on its consumption. The world inflation rate was at its highest in 2021 at 9.4%, while the benchmark interest rate averaged 4.9% at the end of September 2023 in the European Union, UK and USA, the highest level since an average of 5.8% in 2000. At the same time, there was a large drawdown of stocks, where combined stocks reported by the European Coffee Federation and those held at the Intercontinental Exchange’s warehouses in the USA fell by 4.8 million bags from 14.5 million to 9.8 million. This drawdown would have reduced the need for purchases on the international market, seemingly reflected as lower and anomalous global consumption rates for coffee year 2022/23.

The world coffee consumption outlook for coffee year 2023/24 is broadly framed by the assumption that the global economy will continue to grow at above 3.0%, and that the industry will respond to the large drawdown of stocks, which will be positively reflected in apparent consumption. As a result, world coffee consumption is expected to grow by 2.2% to 177.0 million bags, with non-producing countries making the biggest contribution to the overall increase. Coffee consumption in this group of countries should expand by 2.1%.

Balance. As a result, the world coffee market is expected to run a surplus of 1.0 million bags in coffee year 2023/24.

The outlook is taken from the newest publication of the Statistics Section of the Secretariat of the International Coffee Organization (ICO), the Coffee Report and Outlook (CRO). To download the full report or for more information, visit: icocoffee.org.

The post <strong>Coffee prices remain stable averaging above 160 US cents/lb in November 2023</strong> appeared first on Tea & Coffee Trade Journal.

The event was solidified at an inaugural signing in Panama City, attended by the SCA board members and chief executive officer, Yannis Apostolopoulos with SCA board president, Konstantinos Konstantinopoulos, alongside The Specialty Coffee Association of Panama (SCAP) board members and president, James Hunter Tedman, and The Chamber of Commerce, Industries and Agriculture of Panama president, Adolfo Fabrega.

World of Coffee Panama will take place at the Panama Convention Center in October 2026. This inaugural World of Coffee in Central America will run in addition to the SCA’s annual World of Coffee trade shows in Asia, the Middle East and Europe.

World of Coffee Panama 2026 marks the first World of Coffee trade show in Central America and focuses on a deep-rooted connection to coffee producing regions. This growth highlights the thriving specialty coffee industry in Central America and establishes Panama as an easy-to-reach hub for coffee producers and traders alike. Renowned for its excellence in coffee varietals, agriculture, specialty coffee trade and consumption, Central America stands as an ideal host for World of Coffee, showcasing the region’s significant role in the global coffee landscape.

On the expansion of World of Coffee into Central America in 2026, SCA CEO Yannis Apostolopoulos said, “We are thrilled to bring World of Coffee, our premier coffee trade show, to Central America for the very first time. World of Coffee Panama 2026 is our first-ever trade show in a coffee-producing country and this marks a significant step in our commitment to promoting coffee consumption within producing countries, a key element for the sustainability of coffee and in alignment with the Specialty Coffee Association’s sustainability agenda.

“World of Coffee Panama is the ideal platform for coffee professionals, producers, and traders worldwide to connect, network, and foster innovation in the specialty coffee sector. We are proud to collaborate with The Specialty Coffee Association of Panama and The Chamber of Commerce, Industries and Agriculture of Panama on this project. As our official licensed partners, we are excited for them to produce a World of Coffee tailored to the unique coffee culture in this region, highlighting Central America’s important role in the global coffee industry.”

Adolfo Fábrega, president of the Chamber of Commerce, Industries and Agriculture of Panama (CCIAP), stated, “This is an excellent opportunity, our country has been selected for the first edition of the World of Coffee in Latin America. Panamanians will be able to show the world the great potential of the exportable offer that we have and promote our high-altitude coffee, which is a source of pride, particularly in recent years, when it has had positive behaviour with the Geisha,” he added.

In addition, he thanked the Specialty Coffee Association, as well as the Specialty Coffee Association of Panama for the “trust placed in the CCIAP that for 40 years has organised international great events such as the famous Expocomer, Expo Logistica Panama and Expo Turismo Internacional, among others.”

James Hunter Tedman, president of the Specialty Coffee Association of Panama added, “In SCAP we are very proud that the Specialty Coffee Association has chosen our country for the first Latin American World of Coffee. We see it as a recognition of the hard work Panama has done positioning our coffees as one of the best in the world, as the best expression of ‘Specialty Coffee’. The World of Coffee Panama will highly impact many industries in our country, tourism, commerce and the service sectors will benefit tremendously. Our partnership with the Chamber of Commerce, Industry and Agriculture of Panama will strengthen our Association and secure the success of this project.”

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Last week I visited Indonesia with a group of international journalists, organised by ofi (formerly Olam) to learn about the green coffee supplier’s regenerative practices and decarbonisation strategies in Aceh (12 hours by car from Medan). ofi is one of the top three suppliers of green coffee globally and operates in 18 growing origins across Africa, Asia, Central and South America. ofi has been in Indonesia since 1996, and today buys coffee, cocoa, nutmeg, and black and white pepper from more than 400,000 farmers, collectors and suppliers throughout the archipelago. Presently, ofi exports Arabica and Robusta, and has a combined market share of approximately 15%.

ofi’s Coffee LENS 2022 impact report (published in November) noted that in 2022, the company introduced regenerative land practices to an area equivalent to 47,000 football (soccer) fields, increased the share of renewable energy in its processing facilities to more than 50%, and achieved over 81% traceability to farmer/farmer group/regional level. ofi’s availability of sustainable coffee stands at more than 40% (directly sourced).

On the coffee farms throughout Aceh, we observed farmer training sessions on agroforestry, composting, and other regenerative practices in action (including fertiliser made from fruit that is safe for human consumption). We also participated in a mock polygon mapping, which ofi has been doing as part of its sustainability practices but this also meets EU requirements for traceability and environmental due diligence. We then had the opportunity to learn about post-harvest processing at wet and dry mills, and cup a variety of coffees (some were truly amazing, at least according to my limited palate).

The trip fell amid the peak of the second harvest period, when farm activities, post-harvest practices and processing were in full swing. During this time, ofi hosts its annual Farmers’ Day celebration, which, designed by its Indonesia team, acknowledges and rewards the efforts and engagement of the farmers in ofi’s supply chain in Aceh. Activities will include games, cultural displays, and distribution of premiums to the farmers. One of the more interesting awards was given to farmers in the cooperative who have downloaded – and are using – a banking app, in order to encourage more farmers to do so.

It is always beneficial to be able to interact with the farmers and politely pepper them with questions about being a coffee farmer – the rewards and challenges – what it is like working with new technologies and learning new coffee-growing methods and techniques, and of course, implementing the growing number of sustainability strategies, as well as to see how they operate and often, where and how they live (unlike many coffee-growing regions, in Indonesia, the farmers do not live on their coffee farms). And while speaking with the farmers, their children are most often not far behind, eyes wide open with curiosity. Some of the brave will come up – always in a group, never alone – and ask questions in the English they are learning. Then they giggle and run away, which is adorable.

On the occasion of ofi’s third Farmers’ Day, our group was treated to a special performance by the children, choreographed just for us. It was beautiful, fun and heartwarming.

When we visited Aceh, the prolonged and heavy rains had delayed the bulk of the harvest (some coffee had been picked), and while stressful for the farmers, on this special day celebrating them, the joy on their faces was evident, knowing that they were being appreciated for their efforts.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal

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The award, named after the visionary leader of illycaffè and the son of the company’s founder, celebrates the work that the Trieste, Italy-based company has been doing every day for the last 30 years, side-by-side with coffee farmers, to offer the best possible sustainable coffee. The award was presented to the winner by illycaffè chairman Andrea Illy during an event held at the New York Public Library in New York.

EIICA celebrates the finest Arabica coffees sourced from all over the world. This event aims to recognize growers for the quality coffee they tirelessly work to produce. The award was assigned by an independent panel of nine experts who examined the best batches from the 2022-2023 harvest through a blind tasting of nine coffees from the nine finalist countries: Brazil, Costa Rica, El Salvador, Ethiopia, Guatemala, Honduras, India, Nicaragua, and Rwanda. Prior to being evaluated by the panel, each batch of coffee was analysed by illycaffè’s quality control labs and rated in terms of richness and aromatic complexity, the elegance and balance of its flavour and intensity of its aroma.

Guatemala’s Finca Danilandia di Luis Arimany Mondonico won the Coffee Lovers’ Choice Award, assigned by a panel of consumers who, in the weeks prior to the event, carried out blind taste tests of the coffee samples in illy cafés in Trieste, Milan, Paris, London, Sao Paolo and New York and ranked their preferences.

“The absolute victory of the Brazilian coffee coming from regenerative agriculture – chosen blindly among the nine best coffees in the world – fills me with joy. Indeed, the history of the Ernesto Illy Award began in Brazil in 1991 and this confirms that the rewards received, by illycaffè for having transformed Brazil from a leader in quantity to a leader in quality are well-deserved,” said Andrea Illy. “After more than 25 years of neverending and tireless work by our team of agronomists and the University of Coffee, the leap has finally happened thanks to regenerative agriculture, which we decided to develop in 2018 for the benefits it brings to the environment and everyone’s health.”

The panel that voted for the Best of the Best award included Guatemala’s professional taster Silvia Escobar; the President of Federação dos Cafeicultores do Cerrado, Brasilian Glaucio De Castro; the director of the CoffeeLab quality laboratory, Indian Sunalini Narayan Menon; chef Ricard Camarena, who has been awarded two Michelin stars and a green star for his dedication to sustainability at his Ricard Camarena Restaurant in Valencia; American chefs Carrie and Rupert Blease, who manage the Michelin-starred Lord Stanley restaurant in San Francisco; Andrea Aprea, a Michelin-starred chef with a restaurant bearing his name in Milan; French writer and journalist Adelaide de Clermont-Tonnere, editor-in-chief of Point de Vue magazine; Inga Griese, founder and editor-in-chief of ICON, the style supplement of the German newspaper Welt Am Sonntag; Angelina Villa Clarke, a journalist contributing to prestigious English-language publications including Forbes.

Commenting on the winning coffee, the jury said, “This year’s Ernesto Illy International Coffee Award winner is a rounded, wholesome, and fully bodied cup, with rich yet mellow flavors of a balance of chocolate, caramel, brown sugar, and toasted almonds on a bed of refined brightness, with a lingering finish of mild, gentle, yet harmonious sweetness. It truly represents the finest taste characteristics of its origin.”

Martha Stewart, Matilda De Angelis, Pat Cleveland, Coco Rocha, Candela Pelizza, Tamu Mc Pherson, Carlo Sestini, Simon and Marina Ksandr, Nick Lowry, Tesa Pesic are some of the celebrities who attended the gala event at the New York Public Library, hosted by chef and TV star Marcus Samuelsson, to celebrate the best coffee producers who work behind the unique illy blend.

The Ernesto Illy International Coffee Award is also an unmissable networking opportunity for all those involved in the coffee industry, from producers to exporters, from traders to institutional representatives. In the morning they all met at the United Nations Headquarters to attend a panel discussion on protecting the future of coffee. Alongside illycaffè chairman Andrea Illy, speakers included Vanusia Nogueira, executive director, International Coffee Organization; Jeffrey Sachs, professor of economy at Columbia University and co-chair at the Regenerative Society Foundation; Oscar Schaps, president of the Latin American division of Stone X Financial Inc; and Glaucio de Castro, president of the Federação dos Cafeicultores do Cerrado Mineiro. (For a full recap of the event at the UN, see the Editor’s Blog: “The time is now” to invest in regenerative agriculture (teaandcoffee.net).

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With corporations beginning to grasp that sustainability and corporate social responsibility (CSR) are important to customers and for the long term future of businesses, company claims of achievements and action plans are everywhere, alongside, of course, accusations of greenwashing. Which is why it is increasingly important for businesses to have certifications against their claims, to enlist consumer and stakeholder trust. Whether it be Fairtrade, Rainforest Alliance, organic, B Corp, non-GMO or vegan, consumers and company partners are looking for the certification labels, especially within the tea and coffee industry.

Certifications are notably prolific in the tea and coffee value chains. With 17 percent of tea, globally, certified Fairtrade, organic or Rainforest Alliance, and 25 percent of global coffee certified by these or similar schemes, according to Ethical Consumer (ethicalconsumer.org). This may be due to the fact that many tea- and coffee-producing areas are in developing countries, as well as the way in which both products are marketed to consumers; the origin of the tea and coffee is often one of its main selling points and helps the consumers build a narrative of the product before deciding to make the purchase. By instilling this focus and painting a picture of where the tea or coffee grew and was farmed, it is natural for consumers to want to imagine it with fair working conditions, nature friendly processes and beneficial to its local area, socially and environmentally. Amanda Archila, executive director, Fairtrade America, explained, “Coffee and tea are two critical commodities for Fairtrade. Globally in 2021, Fairtrade worked with 872,916 coffee farmers, and 400,402 tea farmers and workers. Premiums earned across coffee and tea amounted to over USD $102 million. We partner with traders, roasters, brands, and retailers around the world to ensure Fairtrade is easily accessible to consumers.”

As one of the biggest players in the tea and coffee certification field, Fairtrade as an organisation facilitates equitable and sustainable trading for producers in developing countries, working with co-operatives, businesses and governments. It does this by enforcing a Fairtrade Minimum Price for when the market price drops, as a safety net for producers, as well as an additional fixed Premium payment to be paid on top of the market price, to be invested in producers’ local communities.

It is an organisation and certification that is seeing a lot of growth; “The number of certified tea farmers in the Fairtrade system has been gradually increasing over the past few years: up to 347,000 in 2021 compared with 319,500 in 2019, in diverse origins,” commented Amy Collis, senior sustainable sourcing manager, Fairtrade Foundation.

Archila added that recognition among consumers has also increased: “Since 2019, recognition of the Fairtrade label has jumped by 118 percent among US shoppers,” demonstrating the building consumer interest in certified products. Archila continued, “Gen-Z shoppers showed the highest increase in recognition of the Fairtrade label among all age groups: 18-24 year olds who recognised the mark jumped by 121 percent, from 33 percent in 2021 to 73 percent in 2023. And millennial shoppers (25-34) are the most frequent purchasers of Fairtrade products.”

Archila agreed that “in the broader world of sustainability products, consumer awareness is definitely in the mainstream. Eighty-six percent of shoppers recalled seeing a sustainability or ethical label on a product while shopping. We also see this consumer connection to sustainable and ethical products growing stronger in the future.”

While the Fairtrade certification is seeing growth worldwide, Collis explained that the UK is currently the biggest market for Fairtrade tea, holding a share of 62 percent of Fairtrade tea sold globally. Collis said this was due to strong commitments from retail partners, “with Marks & Spencer, Waitrose and Co-op all having a 100 percent Fairtrade commitment on tea and coffee.”

Image: Kloth & Köhnken

Duncan Gray, head roaster and managing director, Bay Coffee Roasters, a west Wales, UK -based roastery, explained why the Fairtrade certification is important to his company: “Fairtrade is often far more than paying a good price to the farmer and also their workers, many of the Fairtrade cooperatives that we have worked with have community initiatives providing training and education for the families, health care and often other improvements to the local area.”

Consumers embrace organic

Bay Coffee Roasters’ other major certification that it champions, is organic, which often goes hand in hand with Fairtrade, with “over 50 percent of Fairtrade farmers [choosing] to go organic: tea, coffee, chocolate, bananas and cotton are among the products carrying dual Fairtrade and organic certification,” said Collis, as they both call for sustainable farming practices. “The nature of organic farming where farmers cannot rely on chemicals means that they generally have to care for their land, respecting its bio diversity and farming in a more sustainable way. Organic certification means that the farmers have to keep to their word,” said Gray. With organic farming, the emphasis is on techniques such as crop rotation, biological crop protection, green manuring and composting, and different regions have their own organic certifications, such as the EU and USDA Organic.

As discussed in ‘The Balance of Organic’ feature in the Tea & Coffee Trade Journal October 2023 issue, the organic market is seeing growth, with the tea market holding a value of USD $1.24 billion as of 2023, with a CAGR of 8 percent through 2033, while the organic coffee market estimates are even higher with a CAGR of 12.5 percent until 2028, according to market research companies FMI and Mordor Intelligence. Organic products are not only perceived as better for the environment and for the producers by the consumer, but they are also believed to be healthier, with less chemicals needed to grow and process them.

Gray added that they even have some customers who will buy only organic coffee, and whether that be for sustainability, ethical or health reasons, it is clear it is something that is important to many customers, or at a minimum regarded highly and as a bonus to their purchases.

Organic tea is something that it is ingrained in Kloth & Köhnken’s (K&K) identity, explained Sandra Nikolei, tea department/corporate social responsibility at K&K; “Organic farming can result in a better taste of a product as the plant grows slowly compared to most conventional products.”

Nikolei added that they are seeing much interest from their customers for organic products, but also for Rainforest Alliance-certified products. Rainforest Alliance, an even bigger scheme than Fairtrade and which now includes the UTZ label, is another non-profit organisation that promotes responsible business practices and strives to improve producer livelihoods and communities, especially in the face of the climate crisis. It does not do this with fixed pricing structures, but rather through policing production.

Image: Rainforest Alliance

“As we approach 2030 – a year experts mark as the potential point of no return – we must respond with unparalleled speed and scale to shift the course of sustainability transformation,” said Rainforest Alliance CEO, Santiago Gowland, “The hard truth is that the old sustainability models are good but not good enough.” The Rainforest Alliance certification has been going for 35 years, and, as of December 2022, has since achieved sustainability projects and certified farmers in 58 countries, worked with over 6,000 companies, and made Rainforest Alliance certified products available in 190 countries.

B Corp on the rise

Another major certification that is rising to the forefront of the tea and coffee industry, indeed most consumer industries as a whole, is B Corp. For a company to achieve B Corp certification, it must be verified by the ‘B Lab’ organisation, to “meet high standards of social and environmental performance, transparency and accountability,” B Lab explained. There are B Labs across the world, including UK Australia, East Africa, Europe, and North and South America, with 6,800 B Corp certified companies across 89 countries and 161 industries.

Duncan Gray that becoming a B-Corp is next on Bay Coffee’s agenda to achieve, joining the many tea and coffee companies certified as B Corps, such as Nespresso, Pact Coffee, English Tea Shop, Bigelow, and Pukka Herbs to name a few.

The cost of certifications

Many companies, including Bay Coffee and K&K, hold multiple certifications, particularly if they have a strong international presence as different certifications are more popular in different regions. K&K for one, lists Fairtrade, Fair Trade USA, Bio EU (organic), Bio Suisse organic, USDA Organic, Rainforest Alliance, FairBioTea, and kosher, among theirs.

Different certifications cover different areas and demand different requirements from companies, so perhaps the more the better, it could be argued. There is such a variety of certifications available, many much smaller than the ones listed here, and it comes down to a company’s specific operational practices, locations, and community needs as to what certifications will have the largest impact on its environmental and social undertakings. However, it is the big names such as Fairtrade, Rainforest Alliance, organic, and B Corp that seem to be major drivers of consumer and customer interest and purchases.

Image: Bay Coffee Roasters

But there are also a lot of conversations around certifications in relation to pricing and verification. Consumers realise that they will likely pay more for certified products than they do for those without certifications. “For a pound bag of coffee, shoppers said they were willing to pay a price premium of up to 35 percent more for certified coffee over uncertified. Nearly four in five consumers said they were willing to pay more for a product to ensure that producers received a fair price,” explained Archila.

While it is understandable that there must be additional costs to ensure the producer is receiving a fair price, it does mean the more price sensitive consumer may struggle to choose the ethical option when making their purchasing decisions. This allows the mass produced and possibly unethically sourced tea and coffee companies to keep a sizeable share of the market. Collis detailed that “Fairtrade-certified organisations sell only around 4 percent of their tea on Fairtrade terms – this means they don’t benefit from being certified to the extent that they could. When shoppers choose Fairtrade tea, tea producers can sell more of their product on Fairtrade terms.”

So, while there is growing demand for certified products, and a certain amount of consumer willingness to pay extra for them, there may not be enough for producers to justify the additional expense if it is not being bought from them at the certified price.

Certifications are costly for the producer as well as sometimes for the consumer. “Significant commitment is needed from producers to achieve and maintain compliance with the Fairtrade Standards: but it isn’t always feasible for producers who are facing other challenges, such as rising costs of inputs, low market prices and the effects of climate change,” said Collis. Likewise with organic, there is a conversion phase where anything grown cannot be sold under the organic title with the benefits that come with it, until the transition is complete, and no compensation is offered for the expense or yield loss.

K&K is proud of its certifications and recognises their value, but also their limitations; “Certifications are necessary to help to make the world a better place. But often they are too cost intensive and too difficult to implement, for farmers, small businesses and for start-ups. They should be less complicated and should focus on an easy way to make changes. Imposing the same requirements on everyone in this world and origin is, from our point of view, unfortunately very European and unidimensional. It should be more individually adaptable. Many certificates are too bureaucratic and rigid,” explained Nikolei.

Therefore, while they are an important mark of credibility and of good intentions to inform consumers, having certifications is not the only nor final step to sustainability and ethical business practices. “Certification can only ever form part of a company’s sustainability efforts,” articulated Collis, they do not “replace the duties of state or business actors with respect to human rights or sustainability.”

• Kathryn Brand is an associate editor on T&CTJ, while still writing for several of Bell’s other magazines. She joined Bell Publishing as an editorial assistant at the beginning of 2022 after graduating from the University of East Anglia with a degree in English Literature and Creative Writing. She may be reached at: kathryn@bellpublishing.com.

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The Fairtrade-Satelligence partnership and expansion plan will also support producer organisations – representing more than one million coffee and cocoa farmers cultivating 2.5 million hectares – to meet the European Union Deforestation Regulation requirements so they can maintain access to important markets in Europe and beyond.

“This partnership focuses on an increasingly important area of trade: access to risk management data, which defines what cocoa and coffee can enter the EU market,” said Jon Walker, senior advisor for Cocoa at Fairtrade International. “Whoever has the data has the key to market access. Many large buyers have their own monitoring systems that cover the cooperatives they buy from, but they don’t necessarily share what they see with the cooperatives themselves. Inequalities in trading relationships will only widen if producer organisations are reliant on their trade partners for access to this important data. This partnership enables producer organisations and their smallholder members to have access to the data and act on risks identified.”

Producer organisations are key partners in gathering this information, and contributing to risk assessments and mitigation and prevention efforts. By equipping cooperatives with data about the farms where their cocoa and coffee is produced, they can make informed business decisions as well as offer this value to their trade partners.

Building on a set of cocoa cooperatives that tested geolocation and monitoring functionality in Côte d’Ivoire and Ghana last year, the new three-year partnership aims to include all Fairtrade certified cocoa and coffee producer organisations by 2025.

“Our collective goal is that farmers have the data they need to move forward in a changing regulatory environment, which ultimately contributes to their sustainability as businesses and communities,” said Arisbe Mendoza, director of global impact for Fairtrade International. “The partnership provides a proven satellite monitoring system combined with technical support from Fairtrade to interpret and manage the data on an ongoing basis. This is an important step in our journey to bring more transparency to supply chains.”

Producer organisations provide geolocation data for each of their members’ farm plots. Satelligence’s platform verifies this geolocation data to ensure data quality. Second, the system detects any deforestation activity within members’ boundaries, and whether or not farms are located in protected areas. It also flags deforestation near the farm, an important piece of information that contributes to cooperatives’ risk assessments. Finally, the system generates reports that cooperatives can use themselves, and provide to their customers or potential customers.

“We strive for a more inclusive and sustainable future by giving smallholders the most advanced tools to empower and encourage them,” said Niels Wielaard, CEO at Satelligence. “We are proud to partner with Fairtrade, making sure we help prevent further marginalisation of farmers by unlocking access to markets with proof that their goods are deforestation-free. Many companies are still unprepared for EU Deforestation Regulation, but Fairtrade cooperatives will be ahead of the curve. It is a big task but it can be done. We hope the world will invest more in smallholders, in particular in supporting those doing the right thing in vulnerable, high deforestation-risk regions.”

The Fairtrade Cocoa Standard aligns with the EU Deforestation Regulation requirements, including that farms above four hectares in size or in high-risk areas must use polygon mapping, while smaller farms and farms in low-risk areas can use single geolocation points. Importantly, Fairtrade also requires traders to support producer organisations from which they buy in their deforestation monitoring and prevention efforts, whether through material or financial support. The Fairtrade Coffee Standard is being reviewed to include similar requirements, scheduled to be decided on by the Fairtrade Standards Committee in late 2023.

The scale-up of deforestation monitoring capacity is part of Fairtrade’s efforts to raise awareness about the importance of farmers and workers having more power as trade partners and in negotiations about regulations that affect their livelihoods.

Losing access to core markets, such as the European Union, would be devastating to smallholder coffee and cocoa farmers who mostly rely on these products for their livelihoods. If the economic realities of smallholder farmers are not taken into account, the legislation could lead to unintended consequences, such as a rise in illegal land use by farmers forced to find other sources of income. This would ultimately undermine sustainability, forest preservation, and the very intention of deforestation regulations.

“Deforestation legislation is an essential step, but the effects on smallholders are still unknown,” explained Walker. “The European Commission urgently needs to step up coordinated efforts to assess country-by-country readiness and impacts on covered sectors, in close collaboration with local stakeholders. It is worth noting that while technology such as satellite imaging continues to improve monitoring, the causes of deforestation are multi-dimensional, including poor legislation and governance, limited available economic opportunities, and poverty. Improving farmers’ livelihoods on the way to living incomes must be part of the approach to ensuring healthy forests and sustainable communities.”

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Uganda is the largest coffee exporter in Africa and the eighth largest exporter of coffee by volume in the world, yet when it comes to coffee-producing countries in Africa, Uganda is not the first one to come to mind. But the ‘Pearl of Africa’ is working diligently to change that. 

Uganda is focusing on doubling its total agricultural exports from USD $6.629 billion to USD $12 billion by 2027. Odrek Rwabwogo, chairman of the Presidential Advisory Committee on Exports and Industrial Development (PACEID), in a presentation to an international group of journalists on a government-sponsored media tour of Uganda earlier this year, said that coffee is a top target for growth. PACEID advises President Yoweri Museveni on ways to improve and increase Uganda’s export potential in a variety of sectors. 

Historically, Uganda coffee has been used for blending and not identified, but the country wants to change that by improving quality. Within coffee, Uganda’s current exports are around $627 million annually, with the goal in five years being $1.5 billion — a 28 percent increase. Rwabwogo said that further goals include growing annual coffee production from approximately seven million bags to 20 million bags by 2030.

Currently, Uganda’s major coffee export is robusta. In August, its exports rose by 48.4 percent to 0.74 million bags from 0.5 million bags in August 2022, per the International Coffee Organization. This represents the second largest monthly exports on record, just behind the 0.79 million bags exported in March 1973. Although robusta is the largest export, Ugandan officials believe there is opportunity in premium coffee (arabica), roasted coffee and soluble/instant coffee. 

Uganda’s Ministry of Agriculture, Animal Industry and Fisheries has stated that coffee is a “strategic commodity in the agro-industrialisation programme under the National Development Plan III (NDP III)’. It has been prioritised for the country’s march towards middle-income status and poverty eradication programme.” The Ministry reported that coffee provides the needed foreign exchange and is a source of income for 1.8 million households in the country that are involved in its cultivation. 

The Uganda Coffee Development Authority (UCDA), which was established in 1991, monitors and regulates the country’s coffee industry, and advises the Ugandan government on policy issues. In addition to having the responsibility of increasing quality coffee production and productivity, the UCDA is also charged with growing domestic coffee consumption. Given that coffee has been identified as the leading commodity for growth, the UCDA has devised an aggressive roadmap –it includes nine initiatives (see chart below) – to elevate Uganda’s reputation in coffee and transform its coffee sector to achieve the stated growth goals. UCDA managing director, Dr Iyamulemye Emmanuel, said that the government is undertaking a number of measures to ensure that farmers are producing coffee that meets international market standards and requirements. He noted that Uganda is looking to export to emerging markets as well as developed markets. 

Challenges to achieving growth 

The goal to raise Uganda’s coffee reputation on the global stage is ambitious and the impediments to growth in most agricultural sectors are vast: overcoming long-held stereotypes, perceived low quality because of low-standard inputs (seeds, pesticides, chemicals, banned substances still being used, etc), lack of investment, no economies of scale, minimal understanding and sharing of information relating to regulations, weak cooperatives, high transportation costs (handling fees, limited infrastructure when receiving), and most commodities go to the low end of the market and take cost-cutting measure. 

Within coffee, the biggest challenges – aside from the average age of a coffee farmer being 63 – are the lack of branding (coffee is rarely identified as being from Uganda versus origins that are highlighted such as Ethiopia, Kenya, Colombia, Brazil, etc), changing the mindset of the producers who view coffee as just a cash crop (most producers don’t even sample their own coffee), and the perception of the global coffee industry, which views Ugandan coffee overall as low quality — but the potential is there. 

Mountain Harvest, an exporter, producer and provider of farmer services based in Mbale, aims to ‘challenge the status quo of coffee production in Uganda for the sake of smallholder farmers’ as its company mission asserts. “We want to show the market that Uganda has great coffee and that we can consistently deliver it,” said managing director, Kenneth Barigye. 

Mountain Harvest produces, processes and exports organic, Fair Trade and Rainforest Alliance-certified coffee. It maintains eight processing facilities throughout Uganda, where it employs washed, natural and honey processing techniques. The Mt Elgon facilities are overseen by processing manager, Ibra Kiganda, who is also the 2023 African Fine Coffees Association barista champion. Kiganda is passionate about coffee processing and likes to experiment with anaerobic fermentation, carbonic maceration and other new techniques (using microlots grown at elevations between 1,600 and 2,200 meters above sea level). 

The majority of coffee producers in Uganda grow coffee on farms that average one acre at best, typically they are smaller. Mountain Harvest teaches producers, especially women – who do the bulk of the labour on smallholder farms in Uganda – better farming methods and techniques (such as stumping, pruning, irrigation, fertilising, using organic pesticides/weedicides, etc), and is working to change their mindsets when it comes to selling their coffee. The farmers are also taught the importance of intercropping with bananas, avocados and other trees that provide shade for the coffee as well as incremental revenue. 

Better livelihoods through better pricing 

Mountain Harvest provides micro-financing that educates producers on savings and loans, in addition to covering expenses in the off-season. The financial training builds their capacity to manage money while creating a transaction history the future lenders will require. “We are not an NGO — we do not give handouts,” asserted Barigye, noting the 2 percent interest loans the company offers to producers. “Our hope is that after three years, the farmers can go to a commercial bank that has more money.” 

The loans are ‘kick-starter financing’ for the farmers, but said Barigye, they also help build trust with the farmers so they will sell Mountain Harvest their cherries rather than process and accumulate coffee at their homes. 

Farmers receive more money for their coffee – about 20 percent more – if they sell Mountain Harvest the cherries rather than the parchment but are not always willing to do so. Company COO, Nico Herr, said that many farmers will think about when they will need money for the family (school clothes, books, etc) so they will hold onto the coffee and ‘play the market’ to see if someone else will offer them a higher price. “It is degrading the crop, but you have to consider that this is the traditional way of processing coffee in Uganda,” she explained, “we’re introducing a new way to do coffee.” 

Herr, a certified Q grader, shared that Mountain Harvest is also working to shed Uganda’s reputation for ‘fast fading’ coffees. Coffees that ‘tasted great’ on cupping tables in Mbale deteriorated during transportation oversees. They discovered that it was a warehousing issue. 

Mountain Harvest now has one of the few climate-controlled warehouses in the country and has grown over the past few years from filling three containers of coffee annually to 11. 

Recruiting youths is critical 

Instrumental to the growth of Uganda’s coffee industry is ensuring that younger generations remain interested in coffee farming and not all flee to urban areas for higher paying jobs. One factor in Uganda’s favour is that although the average age of a coffee farmer is 63, more than half the population is under the age of 18. 

“For us to have sustainable coffee production, we have to attract young people while their parents are still there to train them,” stressed Barigye. 

The government has extension programmes but it is overwhelmed so individual companies provide these services. Companies like Mountain Harvest, Endiro Coffee and Masha Coffee, with the support of the UCDA, are teaching Ugandans – both young and old – on all facets of the coffee industry: from proper farming techniques to elevate quality and improved processing and storage methods, to better record keeping, microfinancing, quality control, and how to cup, as well as training young men and women to be baristas. 

Coffee cupping at Mountain Harvest Coffee

Mountain Harvest selects the top 20 students from a local university each year to be trained in agronomy and microfinance. After six months of training and work, it offers permanent positions to the top achievers among those students. Another programme is its ‘Professional Pickers’, which hires local youth for assistance during the harvest and to do other tasks the remainder of the year. 

Ugandan officials and private sector companies realise, however, that the key to growing Uganda’s coffee industry, is through women. Women in Uganda, as in many coffee (and tea for that matter) producing countries, have not had a ‘seat at the table’. Women have long been heavily involved in the labour aspect of coffee production (picking and sorting for example) but have not had the opportunities for training and education or been involved with business transactions because of conflicting familial activities. 

Endiro Coffee and Masha Coffee are both female-owned and operated companies and work with women producers — training them in all segments of coffee production, hiring them, and of course, sourcing coffee from them. Mountain Harvest also taps women to be its team leaders (most farms are still owned by men) so they are also involved on the business side. 

“We have found that when the women handle the money, there is more for the children for clothing and school items, for food and savings,” said Millie Drijaru, head of coffee, Endiro Coffee. Both Barigye and Sylvia Achebet, executive director of Masha Coffee echo the sentiment. 

Endiro Coffee was founded in Kampala in 2012 by Gloria Katusiime as a café to provide employment opportunities to Ugandan youths. In 2014, Endiro switched from buying roasted coffee to sourcing green coffee directly from Ugandan farmers, paying them a premium for their high quality beans. It partnered with a roaster in Kampala for its blends. 

Endiro started with 50 farmers that formed the Endiro Growers Bukalasi Women’s Group, which has now grown to a network of more than 500 farmers across four growers groups throughout Uganda. Endiro offers training and support, and in return is receiving higher quality coffee and greater yields, which allows it to offer farmers better prices, thereby improving their livelihoods. Endiro Coffee, which received its B Corp certification in 2019, now operates 14 coffee shops in Uganda, one in Kenya and one in Aurora, Illinois. It plans to open its own roastery in Uganda this year. 

Kween-based Masha Coffee buys coffee cherries from a network of nearly 1,000 female-led farms –ranging in elevation from 1,800 to 2,400 meters above sea level – in the Kween, Kapchorwa and Bukwo districts. Masha sends field officers to train local farmers in best practices multiple times throughout the year. Trainers offer guidance on agronomy methods from planting seedlings to soil management to harvesting, etc, and said technical manager, Eunice Chekaptui, “how to be environmentally friendly,” – all to ensure a consistent supply, which benefits both Masha Coffee and the farmers. Masha Coffee also hires local youths to assist with production and processing in Kween. 

Endiro Coffee’s shop in Sipi Falls at Lacam Lodge

Masha Coffee has begun shipping roasted coffee to wholesale customers internationally and is exploring distribution opportunities in other countries, including the United States. The coffees Masha processes in Kween are carried in parchment to facilities in Mbale for hulling, and then to Kampala for roasting and packaging. Having to haul the coffee to so many different facilities and towns is costing Masha “time, money and security,” said Achebet, noting her dream would be “to have everything done here.” She said that having everything done in one place would reduce risks. First up would be purchasing a huller, with roasting being the final phase of the plan. 

Joining forces to meet demand 

Along with 16 other Uganda companies, Masha Coffee is a member of the Coffee Investment Consortium of Uganda (CICU), a Ugandan trade group that shares resources and connections to meet international demand. 

By collaborating to deliver higher volumes of higher quality Uganda coffee on the global market, the CICU’s mission is to attract investments specifically to cover expenses and the cost of exporting. Nelson Tugume, CEO of Inspire Africa and chairman of the CICU, said there is no export financing, no available or product-oriented credit. “Coffee is different from other commodities like bananas, from a manufacturing and housing [perspective], therefore you need a particular [type] of financing.” 

PACEID is consulting with financial groups and institutions, including lenders, equity funds, foundations and the Uganda Bankers’ Association to develop an export credit fund that will provide affordable financing for producers of coffee and other products. And while many are hopeful such a fund will be established and available soon, the CICU believes time is of the essence. “[International] buyers are saying they want to buy the coffee directly, [but are asking] ‘do you have what it takes?’,” said Tugume. He shared that Uganda needs to create a better environment for investors to bring in the financing. “In terms of production, the farmers can manage it, if you give them a better price. They can manage it at the production level, [but the difficulty] is in the market.” 

The UCDA, along with Mountain Harvest Coffee, Endiro Coffee, Masha Coffee and other CICU members firmly believe that as more companies start producing higher quality, Uganda’s profile will be elevated. “The market is going to know Uganda as an origin,” said Barigye, “and it’s going to appreciate Uganda as an origin because we have great coffees.” 

•  Vanessa L Facenda joined T&CTJ in 2012 as editor. She was previously editor of Retail Merchandiser and has written for a variety of magazines including Consumer Reports, Brandweek, Adweek, Hollywood Reporter, and Specialty Food Magazine, among many others. She may be reached at: vanessa@bellpublishing.com. 

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This label verifies the origin and quality of coffee produced using regenerative practices that are received in the warehouses. To acquire the certification, Expocacer’s environmental, social, and governance responsibility was evaluated, and it received 100% approval in these criteria.

“Projects and initiatives such as ‘Elas no Café,’ ‘Jornada da Qualidade,’ ‘Expocacer Teens,’ and others that work to promote sustainable actions within the coffee community were essential for this achievement, along with our exclusive department dedicated to sustainability-related matters, where we provide guidance to our members,” said Simão Pedro de Lima, executive director of Expocacer.

Regenerative coffee farming adopts practices aimed at preserving soil health, increasing biodiversity, protecting water resources, and enhancing the resilience of agricultural systems. Among the advantages of regenerative practices are the preservation of flora and fauna, cost reduction, decreased pollution, improved coffee quality, increased resilience to climate change, and reduced deforestation. This year, with support from Brazilian Support Service for Micro and Small Businesses (Sebrae), Expocacer has already managed to certify 14 cooperative members, a number that is expected to grow to 24 by the end of 2023.

“We are very proud because this achievement confirms the work that has been carried out for years by Expocacer. This certification strengthens our commitment to ensuring sustainable and high-quality coffee production for our cooperative members, customers, employees, and commercial and institutional partners,” commented Farlla Gomes, sustainability manager of Expocacer.

For the cooperative, the automated traceability that utilises RFID technology (radio-frequency identification) and allows producers to know the exact location of their coffee in the cooperative’s warehouses was also a differentiating factor in obtaining the certification, recognising the care that Expocacer takes with the coffee from its members.

Recently, the world’s first regenerative agriculture-certified coffee has also begun to be distributed globally in retail by the Italian brand Illy Caffè, in partnership with the Cerrado Coffee Growers Federation and Expocacer. With notes of intense caramel, the product is already available in 50 countries, with plans to expand to 140 by 2024.

“Obtaining the regenerative certification for Expocacer represents reaching a higher level of value expansion because this achievement directly influences the core of our business. It’s the conjunction of a set of ideas, strategies, and attitudes that are ecologically correct, economically viable and socially fair, ensuring a supply without compromising the one future generations,” concluded Flávia Nunes, director of operations and logistics at Expocacer.

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Green Coffee Price
The ICO Composite Indicator Price (I-CIP) averaged 151.94 US cents/lb in October, a 0.8% decline from September 2023. The I-CIP posted a median value of 151.58 US cents/lb, having fluctuated between 145.99 and 160.09 US cents/lb.

The Colombian Milds and Other Milds increased by 0.5% and 0.2%, to 185.97 and 183.95 US cents/lb, respectively, in October 2023. The Brazilian Naturals presented the strongest growth of 0.9%, reaching an average of 155.52 US cents/lb. However, Robustas retracted 4.1% to 118.83 US cents/lb. ICE’s New York market grew by 1.5% whilst the London Futures market shrank by 3.4%, to 155.91 and 105.40 US cents/lb, respectively.

The Colombian Milds-Other Milds differential grew 38.5% to 2.02 US cents/lb. The Colombian Milds-Brazilian Naturals differential shrank 1.1% to 30.45 US cents/lb, whilst the Colombian Milds-Robustas differential also expanded 9.9% from September to October 2023, averaging 67.14 US cents/lb. Meanwhile, the Other Milds-Brazilian Naturals differential contracted 3.1%, reaching 28.43 US cents/lb. However, the Other Milds-Robustas and the Brazilian Naturals-Robustas differentials expanded 9.2% and 21.1%, averaging 65.12 and 36.69 US cents/lb, respectively, in October 2023.

Arbitrage, as measured between the London and New York Futures markets, widened by 13.7% to 50.51 US cents/lb in October 2023.

Intra-day volatility of the I-CIP remained stable at 6.3% between September and October 2023. The Colombian Milds’ and Other Milds’ volatility also increased to 6.8% and 7.6%. Meanwhile, the Brazilian Naturals’ volatility rose by 0.5 percentage points to 8.6% from September to October 2023. The Robustas presented the smallest volatility increase, with a 0.1 percentage point gain, averaging 7.5% for the month of October. The London Futures market’s volatility decreased by 0.6 percentage points to 6.7%. Lastly, the New York futures market’s volatility moved in the opposite direction to that of London, expanding by 0.4 percentage points and reaching 8.1%.

The New York and London certified stocks moved in the same downward direction, where London retracted by 7.9% to 0.67 million 60-kg bags, whilst certified stocks of Arabica coffee reached 0.44 million 60-kg bags, a 10.7% decrease and the lowest figure since October 2022.

Exports by Coffee Groups – Green Beans
Global green bean exports in September 2023 totalled 7.8 million bags, as compared with 8.83 million bags in the same month of the previous year, down 11.6%. For coffee year 2022/23, exports of green beans were down 5.5% to 110.81 million bags from 117.28 million bags in coffee year 2021/22. The global macro-economic environment was not conducive to consumer confidence in coffee year 2022/23, with global inflation and interest rates in many of the key advanced economies high and rising, increasing the cost of living and thus reducing disposable income levels for a very large section of the world.

These conditions seemingly support a downturn in the consumption of coffee and consequently in global exports of green beans. Nevertheless, the global economy was not only projected to expand in calendar year 2023, but the outlook was also raised between April–October 2023 by the International Monetary Fund (IMF), which suggests otherwise. The drop in global exports of green beans in coffee year 2022/23 may therefore lie more with logistics/the supply chain than the economy and actual consumption of coffee. Average green bean exports amounted to 118.13 million bags in coffee years 2018/19–2021/22, as compared with an average 109.59 million bags for coffee years 2014/15–2017/18, a jump of 8.54 million bags. This suggests a build-up of stocks in non-producing countries which have been heavily drawn down in the past 12 months.

Shipments of the Other Milds decreased by 13.1% in September 2023 to 1.57 million bags from 1.8 million bags in the same period last year. For coffee year 2022/23, exports of the Other Milds were down 12.1% to 22.11 million bags from 25.16 million bags in coffee year 2021/22. Green bean exports of the Brazilian Naturals decreased in September 2023, falling by 13.4% to 2.69 million bags. For coffee year 2022/23, exports of the Brazilian Naturals were down 8.5% to 34.17 million bags from 37.33 million bags in coffee year 2021/22. Exports of the Colombian Milds increased by 6.7% to 0.87 million bags in September 2023 from 0.82 million bags in September 2022. For coffee year 2022/23, exports of the Colombian Milds were down 11.2% to 10.77 million bags from 12.14 million bags in coffee year 2021/22. For coffee year 2022/23, total green bean exports of the Arabicas were down 10.1% to 67.05 million bags from 74.63 million bags in coffee year 2021/22.

Overall, for the Arabicas, exports were seemingly negatively affected by the drawdown of stocks in consuming countries, with buyers staying away from the markets in coffee year 2022/23. Furthermore, substitution towards the more competitively priced Robustas, induced by the increased cost of living and reduced disposable income, would have also added to the downturn (see Green Coffee Price).

Exports of the Colombian Milds fell below the 11.0 million bags mark for the first time since coffee year 2012/13. These exports were primarily driven by Colombia, the main origin of this group of coffee, and weather-related disruption affected supply throughout most of coffee year 2022/23. Indeed, Colombia’s green bean exports contracted for the first 11 months of coffee year 2022/23, with only September 2023 showing an expansion. Figures for the year show that, overall, the country’s exports declined 13.1% to 9.42 million bags, the first time they have dropped below 10.0 million bags since coffee year 2013/14.

Green bean exports of the Robustas amounted to 2.67 million bags in September 2023, as compared with 3.09 million bags in September 2022, down 13.8%. For coffee year 2022/23, exports of the Robustas were up 2.6% to 43.76 million bags from 42.66 million bags in coffee year 2021/22. Of the four groups of coffee, the Robustas were the only group to experience positive growth in coffee year 2022/23, benefitting from macro-economic-induced substitution away from less competitively priced Arabicas.

The September 2023 exports represent the lowest September volume for the Robustas since the 2.58 million bags shipped in 2012 and were a result of the 43.4% decrease in exports from Vietnam, the world’s largest producer and exporter of the group, which only shipped 0.81 million bags – the lowest September exports since 2008 (0.79 million bags). Vietnam has been struggling with supply since the start of Q4 of coffee year 2022/23, when very low in-origin stock levels were reported at a time when the start of the harvest still remained three to four months away. The low September 2023 export levels appear to be a continuation of the industry’s deepening struggle with supply issues.

Exports by Regions – All Forms of Coffee
In September 2023, South America’s exports of all forms of coffee decreased by 3.4% to 4.74 million bags. For coffee year 2022/23, the region’s exports were down 11.0% to 50.59 million bags from 56.83 million bags in coffee year 2021/22. The region’s two largest producers and exporters, Brazil and Colombia, saw their total exports fall by 7.9% and 12.8%, respectively. South America’s fortunes are closely tied to the fortunes of the Arabicas and many of the same factors that explain the latter’s double-digit fall also explain the former’s. After all, from coffee year 2018/19 to 2022/23, 93.2% of the total green bean exports from South America were Arabicas, on average. The drawdown of stocks in consuming countries and substitution towards the Robustas are the two main factors. Two specific and additional factors are that (i) Brazil’s export performance was poor due to its relatively limited supply following two consecutive years of below-par harvests; and (ii) Colombia struggled with weather-impacted supply conditions that negatively affected the origin’s export volume.

Exports of all forms of coffee from Africa decreased by 1.9% to 1.21 million bags in September 2023 from 1.23 million bags in September 2022. For coffee year 2022/23, the region’s exports were down 1.4% to 13.53 million bags from 13.73 million bags in coffee year 2021/22. The relatively strong global demand for Robustas was the fundamental source of Africa’s positive export growth rate in coffee year 2022/23. Moreover, particularly during Q4 of coffee year 2022/23, the reduced volume of exports from the Asia and Oceania region, and more pointedly from Vietnam, strengthened Africa’s own export performance. Uganda, the largest producer and exporter of Robusta coffee in Africa, took the opportunity to fill the gap in the market left by Vietnam and the Asia and Oceania region as a whole.

In September 2023, exports of all forms of coffee from Mexico and Central America were down 9.2% to 0.74 million bags as compared with 0.81 million bags in September 2022. For coffee year 2022/23, the region’s exports were down 3.1% to 15.3 million bags from 15.78 million bags in coffee year 2021/22. The downturn was primarily driven by Guatemala and Mexico, which suffered 11.5% and 16.5% decreases, respectively. However, the mitigating factor that limited the region’s fall in exports to a low single-digit decrease was Honduras’ 13.5% increase.

Exports of all forms of coffee from Asia and Oceania decreased by 35.7% to 1.91 million bags in September 2023 as compared with 2.98 million bags in September 2022. For coffee year 2022/23, the region’s exports were down 0.9% to 43.56 million bags from 43.95 million bags in coffee year 2021/22. Asia and Oceania’s fortunes are closely tied to the fortunes of the Robustas and many of the same factors that explain the latter’s single-digit increase also explain the former’s. From coffee year 2018/19 to 2022/23, 89.1% of the total green bean exports from Asia & Oceania were Robustas, on average. In coffee year 2022/23, Vietnam’s exports were up 0.4% to 28.29 million bags from 28.19 million bags in coffee year 2021/22.

Exports of Coffee by Forms
Total exports of soluble coffee decreased by 27.3% in September 2023 to 0.75 million bags from 1.03 million bags in September 2022. For coffee year 2022/23, soluble coffee exports were down 5.7% to 11.47 million bags from 12.16 million bags in coffee year 2021/22.

Soluble coffee’s share in the total exports of all forms of coffee for the year to date was 8.7% in September 2023, down from 10.4% for the same period a year ago. For coffee year 2022/23, soluble coffee’s share of the total exports was 9.3%, the same as in coffee year 2021/22. Brazil is the largest exporter of soluble coffee, having shipped 0.27 million bags in September 2023 and 3.77 million bags in coffee year 2022/23.

Exports of roasted beans were down 26.7% in September 2023 to 55,203 bags, as compared with 75,355 bags in September 2022. For coffee year 2022/23, roasted coffee exports were down 16.0% to 0.71 million bags from 0.84 million bags in coffee year 2021/22.

Production and Consumption
Under the current circumstances, the estimates and outlook of production and consumption for coffee years 2021/22 and 2022/23 remain the same.

World coffee production decreased by 1.4% to 168.5 million bags in coffee year 2021/22, hampered by the off-biennial production and negative meteorological conditions in a number of key origins. However, it is expected to bounce back by 1.7% to 171.3 million bags in 2022/23. Increased global fertiliser costs and adverse weather conditions are expected to partially offset the positive impact of biennial production from Brazil, explaining the relatively low rate of growth in coffee year 2022/23.

The impact of biennial production is anticipated to drive the outlook for Arabica, which is projected to increase by 4.6% to 98.6 million bags in coffee year 2022/23, following a 7.2% decrease in the previous coffee year. Reflecting its cyclical output, Arabica’s share of the total coffee production is expected to increase to 57.5% from 55.9% in coffee year 2021/22. South America is and will remain the largest producer of coffee in the world, despite suffering from the largest drop in output for almost 20 years, which fell by 7.6% in coffee year 2021/22. The recovery in coffee year 2022/23, partly driven by biennial production, is expected to push the region’s output to 82.4 million bags, a rise of 6.2%.

World coffee consumption increased by 4.2% to 175.6 million bags in coffee year 2021/22, following a 0.6% rise the previous year. Release of the pent-up demand built up during the Covid-19 years and sharp global economic growth of 6.0% in 2021 explains the sharp bounce back in coffee consumption in coffee year 2021/22. Decelerating world economic growth rates for 2022 and 2023, coupled with the dramatic rise in the cost of living, will have an impact on the coffee consumption for coffee year 2022/23. It is expected to grow, but at a decelerating rate of 1.7% to 178.5 million bags. The global deceleration is expected to come from non-producing countries, with Europe’s coffee consumption predicted to suffer the largest decrease among all regions, with growth rates falling to 0.1% in coffee year 2022/23 from a 6.0% expansion in coffee year 2021/22.

As a result, the world coffee market is expected to run another year of deficit, a shortfall of 7.3 million bags.

The outlook is taken from the newest publication of the Statistics Section of the Secretariat of the International Coffee Organization (ICO), the Coffee Report and Outlook (CRO). To download the full CRO or for more information, visit the ICO website: icocoffee.org.

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With funding from the EU, the “Ending Child Labour in Supply Chains” project will be implemented over the next three years and will benefit from collaboration among UN agencies and supply chain actors at the global, regional, national and local levels. In particular, the ILO, through the Child Labour Platform (CLP) and the Alliance 8.7 Action Group on Supply Chains, will bring together a coalition of governments, workers and employers, companies, and civil society stakeholders to facilitate knowledge sharing, cooperation, and collective action to tackle the root causes of child labour.

Through the ILO CLP, the private sector will play a central role in this project. CLP member companies, many already active in combatting child labour in supply chains, will participate directly in the project’s implementation and activities. These companies include: The Coca-Cola Company, JDE Peet’s, Lavazza Group, Louis Dreyfus Company, Nestlé, Neumann Kaffee Gruppe, ofi (Olam Food Ingredients), Sucafina, Tchibo, and Touton.

“In addition to our efforts through our NKG Bloom and NKG Verified programs to address child labour in supply chains, we welcome the ‘Ending Child Labour in Supply Chains’ project and are grateful to be able to contribute to this important issue”, says Ruben Scholz, NKG Group COO. “We believe that such complex problems need to be addressed on a broad and pre-competitive basis.”

With the private sector, the project will promote sustainable solutions to child labour in the coffee sector in Honduras, Uganda and Vietnam. The project, moreover, will scale up child labour due diligence and responsible sourcing in coffee supply chains at all levels, strengthen social dialogue and small producers’ organizations, and foster synergies between private sector initiatives and those of governments and country-level institutions and actors to address child labour and promote decent work in coffee production.

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While organic tea and coffee has been readily available on the market for some time, the category has seen, and is expected to see, continued growth as more consumers opt for products, they believe to be more sustainable and even healthier for them, and producers seek to improve their sustainability credentials and market positioning.

Nandini Roy Choudhury, client partner of food & beverages at global market research firm, Future Market Insights, writes in a report that the organic tea market holds a value of USD $1.24 billion in 2023, and is expected to reach a value of USD $2.69 billion by 2033, at a CAGR of 8 percent during the forecast period. Meanwhile, the organic coffee market has a projected CAGR even higher, at 12.5 cent for the forecast period 2023 to 2028, according to a report by Mordor Intelligence.

Consumer interest in organic tea and coffee has been gaining especial traction since the pandemic, when wellness became a priority, and organic is often believed to be a cleaner and healthier option over regular products, due to the lack of chemical fertilisers and pesticides. The sustainability benefits are also undeniable and consumers are seeking to make more mindful and conscious purchasing decision. Meanwhile, producers are heeding to this consumer pressure, and wanting to offer tangible sustainability claims to differentiate themselves from their competitors, and perhaps even justify a higher price point of their product.

Image: Equator Coffee

In terms of consumer demand and purchasing of organic tea and coffee, the geographical distribution is similar, with Europe dominating, particularly Germany, France, and the UK, according to FMI, and North America seeing similar figures in both organic tea and coffee. In organic tea specifically, parts of Asia, including China, are witnessing significant growth in consumption, said a spokesperson from Hälssen & Lyon. Whereas in organic coffee, global insights firm, Mordor Intelligence revealed Latin America is seeing the fastest growth.

Notably, the biggest producers of organic tea are similar to the biggest global producers of tea in general, countries such as China and India, however, the case is not the same for organic coffee. Samuel Klein, green coffee buyer, Partners Coffee, explained that, while Brazil produces a third of the world’s coffee, “Only a handful of Brazilian exporters are offering certified organic coffees.”

Ted Stachura, director of coffees, Equator Coffees, concurs; “Although there is some organic coffee cultivation in Brazil, Vietnam, and Colombia, the world’s largest coffee-producing countries are not typically associated with organic production.” This is largely due to growers in such countries producing coffee on a mass scale, and the farming methods necessary to do so. Smallholder farms using semi-forested coffee cultivation, are often organic by default, in countries such as Ethiopia, Peru and Mexico, said Stachura, as well as Honduras, Guatemala, Rwanda, Burundi, and Uganda, added Klein.

Organic farming is broader and more thorough than a lot of consumers realise; it is about more than just limiting or eliminating chemical fertilisers, herbicides and pesticides. “Consumers who support organic farming practices are voting to not support the petrochemical industry. Producing chemical-based fertiliser has a negative environmental impact,” detailed Stachura. “Shipping these fertilisers internationally, as coffee producing countries typically do not produce this kind of fertiliser, incurs added environmental costs. Handling chemicals poses potential health risks to farmers and, in situations where producers lack training, application of too much fertilisation may result in runoff of these chemicals making its way to water sources.” The soil itself benefits from the lack of chemicals in the long term, increasing its biodiversity, structure, fertility, and resilience to environmental influences, leading to healthier eco systems.

“Organic farming also has the potential to sequester carbon dioxide in the soil,” noted Hälssen & Lyon’s spokesperson, “This can contribute to mitigating climate change by reducing greenhouse gas emissions.”

Organic’s financial & health benefits

Choudhury stated that consumption of organic beverages can help to support farmers on a smaller scale, in addition, “Sales of organic tea are projected to have a higher price realisation thereby improving the socio-economic situation of tea producers.” The organic certification encourages and even necessitates fairer, safer and more equitable trading for the producer that supports the tea or coffee growing community.

Further, there are evolving beliefs, especially among consumers, that the lack of chemical agents in the process results in a healthier product. “The reduction in chemical residues in organic food may result on long-term health benefits by lowering the potential risks associated with pesticide exposure,” explained Hälssen & Lyon’s spokesperson.

Image: Partners Coffee

The health claims for organic produce are still evolving, especially within the tea segment, with Choudhury stating that “compared to traditional black tea, organically cultivated tea contains more catechins such as epicatechin gallate, epigallocatechin gallate, and epicatechin.”

Roadblocks to organic production

So, if there are all these benefits to the environment, to the producer, the consumer, then why aren’t more tea and coffee companies producing organic? As with such things, the reason is multifaceted. Broadly, it is more expensive, both for the producer and consequently the consumer. The requirements and inspections for the certification are demanding, and costly, and it is by no means a quick or simple switch.

Partners Coffee’s Klein explained, “It begins with a multiyear period where no prohibited fertilisers, fungicides, or pesticides may be used. During that time the farm must develop and implement a documented plan to fertilise and treat the plants with organic inputs.” Throughout this conversion phase, any coffee (or tea) that is grown and produced must still be sold without the organic title, as the transition is not fully complete, with no compensation for the expense of the process or of lost yields.

Spencer Turer, vice president, Coffee Enterprises, added, “when organically grown coffees are not able receive the premium prices for the certification and are sold as non-organic coffee due to quality issues or reduced demand, the expense of producing the organic certified coffee is changed from an actual return on investment ratio to an outright business expense for meeting the social, environmental, and ethical standards of the producer.”

Lower yields are a common side effect of organic farming, especially in the short term, “as organic practices may not provide the same level of nutrient supply or pest control,” said the spokesperson from Hälssen & Lyon, resulting in additional unit costs of production. However, she also suggested that there have been successes where organic sections of farms have outperformed conventional sections, four-to-one, because the soil was more nutrient-rich and microbiologically diverse. But this is a long-term result that doesn’t offer immediate help to farmers in the short-term making the switch.

The added expense of the initial reduced yield is only the beginning, revealed Klein, “After coffee is picked there are strict handling requirements at virtually every stage of production. Different milling and eventually roasting equipment, or costly purge batches, must be used, followed by meticulous cleaning practices. Coffee must be carefully separated and documented with every movement, then production records must be audited frequently to identify accidental contaminations.

“The outcome of all of this is that, in most situations, producing an organic-certified coffee requires more labour and greater expenses while introducing new risk in terms of yields and pest management.”

The higher risk and expense for the producers, translate to higher prices for the consumer, which serve as a barrier for many, especially the price conscientious, and especially when inflation and the cost of living is soaring in many parts of the world.

“Many consumers and businesses demanding certified organic coffees expect them to be price competitive with the cheapest conventional coffees, which is unrealistic. I think for some customers it’s easy to justify a higher price because the value add is more obvious, but unfortunately, I think it means the quality of organic coffees on the market generally tend to be lower to compensate for price sensitive customers,” argued Klein.

Image: Equator Coffee

However, despite organic teas and coffees generally having a higher price point, they are both growing markets with burgeoning consumer interest. Even if consumers do not fully understand the complexities of the organic certification undertaking, they know it is better environmentally, often in quality, and possibly for their health too, so they know there is additional benefits that they are paying that bit extra for. In Turer’s judgement, “the price barrier [only] exists when the quality of the organically certified coffee, specifically the flavour, does not meet the value expectations of the consumer.” In other words, if a consumer purchases organic coffee or tea, and they experience good quality and taste, as well as the moral and environmental associations, then there is value for the money.

Do the benefits outweigh the challenges?

It could be argued that governing bodies ought to be doing more to support organic farming, to take some of the risk and cost off of producers and subsidise the products for consumers. Stachura believes that “governments in affluent coffee-consuming nations have the capacity to play a significant role in supporting and advancing regenerative organic farming practices,” and, perhaps, have the responsibility to do so if their country is the big consumer of that product in particular.

Klein feels, however, the argument that “economic stability and mobility for smallholder farmers is more urgent. I would like to see the two things promoted and supported in tandem.” He continued, “If organic production can support and increase farmers’ livelihoods, it’s absolutely a win. But if it reinforces an exploitative price structure, or expects farmers to bear unsustainable levels of risk, I think that’s a problem that needs to be confronted.”

While there is no doubt that organic farming is beneficial in so many ways, there must be support and incentives for tea and coffee farmers to make that switch for it to be viable to more than just the larger, commercial producers. But there are ways in which this can be mitigated. “Collaboration and innovation in the entire supply chain is key for helping to make organic tea more accessible and affordable for everyone involved,” explained the spokesperson from Hälssen & Lyon.

Not only can farms share knowledge and best practices, but share the costs of certification, particularly for smaller coffee or tea producers, among nearby farms. Klein also added that this challenge presents the opportunity for agricultural innovations. “People [are] learning new techniques of soil management or crop diversification specific to their farms which can improve yields with no or few synthetic inputs. If that innovation continues and expands, we might see significant improvements in the quality of organically produced coffees.”

There may still be challenges for organic farming, but they are seemingly worth confronting as the market reports demonstrate there is clear consumer demand for organic tea and coffee. Consumers may even be willing to pay that bit more for the certified products as it allows them to have a small part of environmental agency and responsibility over the way in which the products they buy are grown and produced. Stachura concluded, “As the world’s population grows, and the demand for food, including coffee, embracing organic and regenerative farming practices becomes imperative for human survival.” Therefore, we must continue to look for ways in which it can be remunerative, accessible, and equitable.

• Kathryn Brand is an associate editor on T&CTJ, while still writing for several of Bell’s other magazines. She joined Bell Publishing as an editorial assistant at the beginning of 2022 after graduating from the University of East Anglia with a degree in English Literature and Creative Writing. She may be reached at: kathryn@bellpublishing.com.

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Hosted in Islington’s Business Design Centre, London, it was great to see the coffee and tea industry so well represented at this scale of show compared to the other larger international events taking place at the moment. The show offered a great mix of big names such as Lavazza, Pukka and Sucafina, alongside the smaller-time roasters and newcomer businesses.

Elliot Gard, event director, commented, “One of my favourite things about Caffè Culture is bringing our fantastic industry together to share ideas, build new relationships, learn about the latest trends whilst reacquainting yourselves with old friends and colleagues for two busy days of invaluable networking.”

Alongside the 110 exhibitors, there was a speaker line up of over 40 experts, six of whom attended a panel discussing Supply Chain Sustainability. This included: Emma Haines, UK sales manager, Alegrano; Mandi Caudill, carbon project manager & lead ecologist, Falcon; Sarah Walker, sustainability officer, Origin Coffee; Catalina Gutierrez, co-founder, Cata Export; May Putman Cramer, change manager for sustainability, Sucafina; and Frank Turner, responsible sourcing manager, Taylors of Harrogate.

Catalina and Mandi begun by discussing what their respective companies’ main sustainability focus currently is. Catalina explained that pricing and nurturing connections along their supply chain is important, as stabilsing pricing creates loyalty and trust, and this not only leads to more sustainable relationships, but trust and accountability. Meanwhile Mandi revealed that Falcon currently have 20 different sustainability projects on the go, with lots of data and science driven initiatives. Its main objective is to consolidate how emissions are measured in the coffee industry, and find a common standard to hold companies to, rather than the current individualistic approaches which create a barrier for cross company comparisons and collaborations.

Emma added to this by explaining that access to finance is the main barrier for producer sustainability, alongside a lack of information and education on the issues. Communication at farm level and bringing the producers into the conversation about sustainability strategies is essential for the longevity and equality of the schemes.

Mandi agreed and commented that companies are making sustainability claims and expecting the farms to carry them out, despite the majority of emissions not even coming from the farm level of the supply chain. All of the responsibility cannot be placed solely on the farmer, especially when the vast majority of coffee farmers are living below the poverty line, pointed out Frank. For impactful sustainability practices to be implemented at origin, there needs to be a restructuring on how so much of our coffee is sourced to ensure security of farmer livelihoods.

This perspective of looking more holistically at the coffee supply chain was concurred by Sarah, who argued that we cannot just use technology as the solution, it can only delay or shift problems. She used the example of the development of bio-plastic; while a valuable innovation and substantially improved upon petroleum-based plastic, according to a study by University College London, if we were to replace all plastic we currently use with bio-plastic, in order to meet this demand there wouldn’t be enough land left to grow food. A longer term solution needs to be found. And this is the same with the coffee supply chain.

Frank asserted that we need to face up to the issues of the coffee supply chain and ask the uncomfortable questions if sustainable and long-lasting progress can be made to save the coffee industry for future generations.

• Kathryn Brand, associate editor, Tea & Coffee Trade Journal.
  Keep in touch via email: kathryn@bellpublishing.com Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal

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Oritain’s innovative forensic science provides a guarantee of Brazilian coffee’s provenance and origin no matter where it ends up in the world. Building on existing provenance mapping work in Brazil with Nestlé and the Federation of Coffee Growers of Cerrado Mineiro, this initiative puts Brazil at the forefront of scientific traceability in coffee. Through this work with the BSCA, Oritain will be able to ascertain, at any point in the supply chain, the origin of Brazilian coffee at both a national and regional level, providing a new level of assurance and transparency to buyers and consumers.

Regulation is demanding origin verification. Verification systems put in place by BSCA and Oritain are compliant with recent European Union anti-deforestation regulations, which veto imports that do not comply with environmental requirements.

Consumers too are demanding proof of origin. Research commissioned by Oritain in May 2023 indicated that Brazilian consumers are deeply concerned about the origin of their products, especially coffee. It showed that 96.9% of respondents were positive toward manufacturers that disclose origin; and 78.2% considered that a product is only truly sustainable if its origin is known.  Coffee lovers in markets such as Europe, North America, New Zealand and Australia are also demanding proveable actions from coffee brands with regards to sustainability.

Vincius Estrela, executive director of Brazilian Specialty Coffee Association, shared the announcement; “Putting in place traceability systems is an essential way of walking the walk and avoiding greenwashing accusations. Sanctity of Brazilian origin is essential to our specialty coffee growers, roasters and exporters. Brazilian coffee is exported all over the world. We are looking for a way to provide a guarantee to regulators, investors, buyers and most importantly our valued customers all over the world that our coffee is 100% Brazilian and compliant with international regulations to combat deforestation, environmental harm, unethical labour practices and food fraud.

“Our partnership with Oritain and the ‘Oritain Fingerprint’ gives our customers, investors and partners 100% confidence that the coffee they enjoy every day is ethically sourced, environmentally positive and of Brazil. For BSCA, it supports our claim that Brazilian coffee is true to source, from earth to cup, we have always been able to taste the difference – today we can prove it scientifically, even at regional level.”

Pioneered in New Zealand, Oritain has become the global leader in applying forensic science and data to verify product origin.

Commenting on the partnership Oritain CEO, Grant Cochrane said “Oritain is delighted to be partnering with the Brazilian Specialty Coffee Association to leverage the integrity of forensic science for the benefit of award-winning Brazilian regional coffees. Oritain and Nestlé Brazil launched a partnership that covered three Brazilian regions in June this year. BSCA is building on this work and paving the way for coffee consumers worldwide to benefit from unmatched traceability of Brazilian coffee, which we can scientifically prove at farm, regional and country level. The strategic vision and commitment to the project by BSCA is key to establishing Brazil as a global leader in coffee traceability.”

How does it work?
Wherever you are in the world, the geochemistry of the land differs, even in the case of parcels of land that are only a few metres apart. As coffee grows, it absorbs a unique ratio of elements depending on the mesoclimate, altitude, precipitation, soil type and growing conditions. Using cutting edge forensic science, Oritain can identify this unique ratio in the soil that is ‘imprinted’, creating an unchanging scientific link that runs through the land, the beans and the eventual cup of coffee.

The BSCA partnership with Oritain will map key coffee regions of Brazil based on these geochemical elements, to create origin fingerprints that can be then used to test against.

Gabriela Castro-Fontoura, Oritain regional director for Latin America said, “Coffee lovers around the world demand to know that the coffee in their cup comes from its claimed region, is the genuine article and has not been a part of deforestation or unethical labour practices. Oritain’s partnership with BSCA means the Brazilian coffee industry can now offer buyers, traders, importers and roasters all over the world an enhanced level of traceability – which they can share with consumers, regulators and investors. At any stage of the supply chain, Oritain can verify and guarantee, with forensic science, the origin of the coffee at a regional level, no matter how many transactions are involved or how complex the market is. BSCA has paved the way for Brazilian producers and exporters, but also for importers, roasters and brands worldwide, to work with Oritain to share the outcomes of this origin mapping work with their customers, regulators and investors.”

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Green Coffee Price
The ICO Composite Indicator Price (I-CIP) averaged 153.13 US cents/lb in September, posting a median value of 152.74 US cents/lb and fluctuating between 147.86 and 160.17 US cents/lb.

The Robustas remained at a near-record high in September, staying firmly above the 120.00 US cents/lb mark. The Colombian Milds and Other Milds decreased by 1.4% and 1.7%, to 184.98 and 183.52 US cents/lb, respectively, in September 2023. The Brazilian Naturals and Robustas both contracted by 0.3% and 0.6%, reaching an average of 154.19 and 123.89 US cents/lb, respectively. ICE’s New York market fell by 1.9%, whilst the London Futures market shrank by 2.0%, to 153.55 and 109.14 US cents/lb, respectively.

The Colombian Milds-Other Milds differential grew 79.1% to 1.46 US cents/lb. The Colombian Milds-Brazilian Naturals differential shrank 6.4% to 30.79 US cents/lb, whilst the Colombian Milds-Robustas differential also contracted 2.9% from August to September 2023, averaging 61.09 US cents/lb. Meanwhile, the Other Milds-Brazilian Naturals and the Other Milds-Robustas both contracted 8.6 and 4.0%, reaching 29.33 and 59.63 US cents/lb, respectively. However, the Brazilian Naturals-Robustas differentials expanded 0.9%, averaging 30.30 US cents/lb in September 2023.

In September 2023, the Colombian Milds-Other Milds Arabica differential fluctuated between positive and negative.

Arbitrage, as measured between the London and New York Futures markets, narrowed by 1.8% to 44.41 US cents/lb in September 2023. This marks the lowest point since October 2019, when arbitrage sat at 44.07 US cents/lb.

Intra-day volatility of the I-CIP followed a consistent downtrend, reaching 6.3%, a 0.7 percentage point decrease between August and September 2023. The Robustas presented the strongest volatility decrease, with a 1.3 percentage point drop, averaging 7.4% for the month of September. The Colombian Milds’ and Other Milds’ volatility also contracted to 6.5% and 6.8%. Meanwhile, the Brazilian Naturals’ volatility dropped by 0.7 percentage points to 8.1% from August to September 2023, whilst the London futures market’s volatility also decreased by 2.1 to 7.3%. Lastly, the New York futures market’s volatility moved in the same direction as London, retracting by 0.9 percentage points and reaching 7.7% for New York.

The New York and London certified stocks moved in opposite directions, where London grew 25.7% to 0.73 million 60-kg bags, whilst certified stocks of Arabica coffee reached 0.49 million 60-kg bags, a 13.8% decrease.

The absence of market participants, as evidenced by the falling exports (see Exports by Coffee Groups – Green Beans), continued to prevail over the I-CIP, explaining the overarching trajectory of the I-CIP in September. However, currency movements, market sentiments, dwindling supplies, weather and the fundamentals all played their part in the coffee price movements in September, which saw the I-CIP rally, before falling once again due to foreign exchange movements.

From 22 August to 19 September 2023, the I-CIP recovered, increasing from a low of 148.79 to 160.17 US Cents/lb, ie, an increase of 7.6%. This came on the back of reports of heavy rain in Brazil and a continued fall in the certified stocks held at the New York ICE warehouses. Somar Meteorologia, a Brazilian meteorology company, reported on 5 September that Brazil’s Minas Gerais region, the country’s largest coffee producing region, received 22.8 mm of rain in the past week, or 308% of the historical average, leading to speculation regarding a delay in the completion of Brazil’s coffee harvest. Meanwhile, ICE’s Arabica inventories fell to a low of 0.49 million bags in September. The impact of these positive factors was more profound on the prices of the Arabicas, particularly the Brazilian Naturals which rallied by 5.3% and 81.%, respectively.

Nevertheless, this rally was halted and reversed by the sharp weakening of the real against the US dollar. From 19 to 29 September the real depreciated by 3.2%, from 4.87 to 5.03, while the I-CIP fell by 7.1% over the same period. Once again, the negative impact was felt relatively more by the Arabicas (-8.1%) and particularly the Brazilian Naturals (-9.3%) as compared with Robustas (-5.9%). The price of the Robustas fell at a relatively slower rate due to Vietnam’s current dwindling supply (see Exports by Regions – All Forms of Coffee), with supply from the 2023/24 harvest still at least two months away in November at the earliest.

Exports by Coffee Groups – Green Beans
Global green bean exports in August 2023 totalled 9.36 million bags, as compared with 9.07 million bags in the same month of the previous year, up 3.2%. As a result, the cumulative total for 2022/23 to August is 102.9 million bags, as compared with 108.26 million bags over the same period a year ago, down 5.0%.

Shipments of the Other Milds decreased by 9.7% in August 2023 to 1.99 million bags from 2.2 million bags in the same period last year. As a result, the cumulative volume of exports continued to fall, decreasing by 12.2% in the first 11 months of coffee year 2022/23 to 20.56 million bags, versus 23.42 million bags over the same period in 2021/22.

Green bean exports of the Brazilian Naturals increased in August 2023, rising by 10.2% to 3.06 million bags. For the first 11 months of coffee year 2022/23, green bean exports of the Brazilian Naturals amounted to 31.5 million bags, down 8.0% from 34.22 million bags over the same period a year ago. Changes to the fortunes of the Brazilian Naturals are mainly due to changes in Brazil’s total green bean exports, the biggest producer and exporter of the Brazilian Naturals, which also increased in August 2023 (27.6%) to 3.35 million bags from 2.63 million bags in August 2022.

Exports of the Colombian Milds decreased by 2.1% to 0.84 million bags in August 2023 from 0.86 million bags in August 2022, driven primarily by Colombia, the main origin of this group of coffee, whose exports of green beans were down 5.6% in August 2023. This is the fourteenth consecutive month of negative growth for the Colombian Milds and, as a result, the exports of this group of coffee for October 2022 to August 2023 were down 12.5%, at 9.9 million bags, as compared with 11.32 million bags in the first 11 months of coffee year 2021/22.

Green bean exports of the Robustas amounted to 3.47 million bags in August 2023, as compared with 3.22 million bags in August 2022, up 7.3%. This is the fifth consecutive month of positive growth for the Robustas and, as a result, the exports of this group of coffee for October 2022 to August 2023 were up 4.2%, at 40.94 million bags, as compared with 39.31 million bags in the first 11 months of coffee year 2021/22.

Exports by Regions – All Forms of Coffee
In August 2023, South America’s exports of all forms of coffee increased by 13.0% to 4.98 million bags. This is the first positive growth rate for the region since the 0.3% expansion in June 2022. The source of both the positive and strength of growth is Brazil, which saw its exports increase by 24.4% to 3.67 million bags from 2.95 million bags in August 2022. More specifically, it was the Robustas from the origin, which in August increased by 388.1% to 0.7 million bags from 0.14 million bags, that drove the region’s positive growth. The August 2023 exports are Brazil’s highest on record for Robusta coffee, beating the 696,873 bags exported in December 2014.

Fundamentally, the region’s turnaround is due to the recent downturn in Asia and Oceania, especially in Vietnam, the world’s largest Robusta producer and exporter. Pointedly, Brazil is the largest producer and exporter of Robustas in South America, and it has been taking advantage of the reduced volume of Robustas coming out of Vietnam. It is pertinent to note that Brazil is the fifth biggest exporter of Robustas in the world, having shipped 1.87 million bags in coffee year 2021/22 as compared with the 25.44 million bags exported from Vietnam or the 4.89 million, 4.28 million and 4.03 million bags from Uganda, India and Indonesia, respectively, the second, third and fourth largest exporters. However, in August 2023, Brazilian Robusta exports were second only to Vietnam with 1.34 million bags. To put this into perspective, in August 2023 Brazil exported the equivalent of four-and-half months’ worth of Robustas in a single month (as measured against the total Robusta exports in coffee year 2021/22).

Exports of all forms of coffee from Africa increased by 10.9% to 1.37 million bags in August 2023 from 1.23 million bags in August 2022. For the first 11 months of the current coffee year, exports totalled 10.84 million bags as compared with 12.31 million bags in coffee year 2021/22, down 1.5%. This is the third consecutive month of positive growth rate for the region. The continued global demand for Robustas, as reflected in the latest cumulative positive growth rates for Robusta green bean exports, is the fundamental source of Africa’s positive export growth rate in August. However, like the situation in South America, the reduced volume from the Asia and Pacific region, and more pointedly Vietnam, explains this growth.

Uganda, the largest producer and exporter of Robusta coffee in Africa, took the opportunity to fill the gap in the market left by Vietnam, increasing its exports by 48.4% to 0.74 million bags in August 2023 from 0.5 million bags in August 2022. This represents the second largest monthly exports on record, just behind the 0.79 million bags exported in March 1973.

In August 2023, exports of all forms of coffee from Mexico and Central America were down 2.0% to 1.23 million bags as compared with 1.26 million in August 2022. As a result, total exports are down 2.6% from October 2022 to August 2023 at 14.57 million bags, as compared with 14.96 million bags for the same period a year ago. The relatively shallow negative growth rate of the region masked the dynamic changes at the individual country level.

Two origins experienced strong positive growth rates (Honduras and Nicaragua), with a combined 37.2% increase in August 2023, while three others experienced sharp negative growth rates (Costa Rica, Guatemala and Mexico), with a combined 20.5% decrease. Honduras and Nicaragua outperformed both the region and group of coffee (Other Milds) to which they predominantly belong in August. This may reflect their competitive edge over other origins in Mexico and Central America – the average export unit value of Arabica green beans for Honduras and Nicaragua was 157 US cents/lb for coffee years 2017/18–2021/22, while it was on average 63 US cents/lb higher for the others (excluding Cuba, Haiti and Jamaica) at 220 US cents/lb.

Exports of all forms of coffee from Asia and Oceania decreased by 14.9% to 2.72 million bags in August 2023 and but were up 1.3% to 41.28 million bags in the first 11 months of coffee year 2022/23. August’s downturn was mainly due to Vietnam, with exports down 23.6% to 1.44 million bags from 1.98 million bags. This is the lowest month of August exports since the 1.4 million bags shipped in 2012. The decrease can be attributed to the depletion of available supply, reflecting the strength of its exports in the first 10 month of the current coffee year, where between October 2022 and July 2023 Vietnam shipped 25.98 million bags –3.3% higher than the same period in coffee year 2017/18, a record exporting year when the origin shipped 29.73 million bags over the full year.

Exports of Coffee by Forms
Total exports of soluble coffee decreased by 4.6% in August 2023 to 0.89 million bags from 9.3 million bags in August 2022. In the first 11 months of coffee year 2022/23, a total of 10.46 million bags of soluble coffee were exported, representing a decrease of 5.7% from the 11.09 million bags exported in the same period during the previous coffee year.

Soluble coffee’s share in the total exports of all forms of coffee for the year to date was 8.6% in August 2023, down from 9.2% for the same period a year ago. Brazil is the largest exporter of soluble coffee, having shipped 0.32 million bags in August 2023.

Exports of roasted beans were down 39.9% in August 2023 to 58,226 bags, as compared with 96,937 bags in August 2022. The cumulative total for coffee year 2022/23 to June 2023 was 0.66 million bags, as compared with 0.77 million bags in same period a year ago.

Production and Consumption
Under the current circumstances, the estimates and outlook of production and consumption for coffee years 2021/22 and 2022/23 remain the same.

World coffee production decreased by 1.4% to 168.5 million bags in coffee year 2021/22, hampered by the off-biennial production and negative meteorological conditions in a number of key origins. However, it is expected to bounce back by 1.7% to 171.3 million bags in 2022/23. Increased global fertiliser costs and adverse weather conditions are expected to partially offset the positive impact of biennial production from Brazil, explaining the relatively low rate of growth in coffee year 2022/23. The impact of biennial production is anticipated to drive the outlook for Arabica, which is projected to increase by 4.6% to 98.6 million bags in coffee year 2022/23, following a 7.2% decrease in the previous coffee year.

Reflecting its cyclical output, Arabica’s share of the total coffee production is expected to increase to 57.5% from 55.9% in coffee year 2021/22. South America is and will remain the largest producer of coffee in the world, despite suffering from the largest drop in output for almost 20 years, which fell by 7.6% in coffee year 2021/22. The recovery in coffee year 2022/23, partly driven by biennial production, is expected to push the region’s output to 82.4 million bags, a rise of 6.2%.

World coffee consumption increased by 4.2% to 175.6 million bags in coffee year 2021/22, following a 0.6% rise the previous year. Release of the pent-up demand built up during the Covid-19 years and sharp global economic growth of 6.0% in 2021 explains the sharp bounce back in coffee consumption in coffee year 2021/22. Decelerating world economic growth rates for 2022 and 2023, coupled with the dramatic rise in the cost of living, will have an impact on the coffee consumption for coffee year 2022/23. It is expected to grow, but at a decelerating rate of 1.7% to 178.5 million bags. The global deceleration is expected to come from non-producing countries, with Europe’s coffee consumption predicted to suffer the largest decrease among all regions, with growth rates falling to 0.1% in coffee year 2022/23 from a 6.0% expansion in coffee year 2021/22.

As a result, the world coffee market is expected to run another year of deficit, a shortfall of 7.3 million bags.

The outlook is taken from the newest publication of the Statistics Section of the Secretariat of the International Coffee Organization (ICO), the Coffee Report and Outlook (CRO). The full CRO can be downloaded from the ICO website: icocoffee.org. For further information, contact the Statistics Section at stats@ico.org.

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Production changes

Over the last three months there have not been many changes to production, but significant changes to demand. Rabobank estimates coffee production at 163.7m bags in 2022/23 and at 172.6m bags in 2023/24. The global deficit in 2022/23 is now estimated at -5.7m bags (a reduction of 0.7m bags, mainly due to demand dropping more than production), while a neutral balance is projected for 2023/24, with a surplus in arabicas and a deficit in robustas.

Global coffee balance. Image: Rabobank

Brazil’s export pace has been accelerating, especially in conillons. While green arabica exports were expected to go up in August given that the early harvest was ready to be exported, the strength of green conillon exports was probably more surprising to the market: July exports were up +109 percent vs June, and preliminary August exports remained strong. In our view, this was to be expected given two consecutive large conillon crops and the increased domestic availability of arabicas in the current harvest. The current local arbitrage in Brazil simply does not incentivise maximising the conillon share of demand going forward, freeing up more conillon for the international market. It is a delicate time to make output predictions in Brazil for next year, but an increase in production is expected.

We also expect some production recovery in Colombia 2023/24, but it will probably be gradual. Cost of production has been increasing and farmers are getting half of what they were receiving a year ago (in COP). The weather in 2023 has improved but it has not been ideal, leading to an initial estimate of 12.5m bags in 2023/24 (following around 10.5m bags in 2022/23). Honduran coffee sales are 14 percent higher so far this season YoY, which means that even our previously optimistic prediction of a 10 percent increase in production in the last harvest (2022/23) is proving to be falling short, and we are increasing our estimate slightly. Exports from other countries in Central America are significantly less optimistic. It is very early to make predictions for Central America in 2023/24, but the end of La Niña is usually favourable.

Image: Vanessa L Facenda

The robusta rally was quashed by the collapse in arabica prices since June. However, there are still concerns about the availability of robusta. El Niño-related dryness is becoming more frequent in parts of Southeast Asia, including some areas of Indonesia and Vietnam, Laos, much of Thailand and parts of India. In key producer Vietnam, the main robusta regions still seem to be getting decent rainfall, but the arabica areas in the north look dry. Our expectation for Vietnam 2023/24 has recently been marginally revised lower to 29m bags of total coffee (similar to 2022/23). We have been making small downward adjustments to production estimates across the region.

Coffee demand

Import demand figures were very gloomy throughout 1H 2023. In the second quarter of 2023, net imports into the European Union + United Kingdom collapsed 13.4 percent versus a year ago, while in the United States they were down 9.6 percent. Japan’s coffee disappearance in the quarter was largely unchanged YoY. We can track other 24 non-producing countries, where the drop in net imports in Q2 was 2.9 percent YoY. Globally, the drop for Q2 was 9.4 percent YoY. This is worse than a very poor Q1, and it is in fact, the largest drop we can track in our data going back to 2008. In the 12 months to June 2023, the annual drop in all non-producing countries that we can track was 2.2 percent.

As we have been pointing out for most of last year, the rise in interest rates should have led to a decline in inventories along the pipeline. Roasters and traders also feel more confident that container shipping is working much more normally, so there is no need to keep stocks ‘just in case’. However, these results are worse than expected and lead to a reduction in global demand growth to virtually zero percent in non-producing countries, while producing country demand might still grow at over one percent.

The rather low arbitrage (at around USD $0.40 at the time of writing) should lead to a comeback in arabica demand. This is particularly the case in producing countries (and Brazil in particular), where there is usually a surplus of low quality arabica grades as subproduct of the export business.

Image: Vanessa L Facenda

Price drivers

An expected recovery in both Brazil and Colombia in 2023/24, combined with weak demand, continues to put downward pressure on the market in the absence of more adverse weather or news. This is exacerbated by the prospect of a recession in the EU. Yet we are not far from cost of production in a number of arabica-producing countries. The rainfall pattern in the Brazilian arabica belt will, as usual, be the focus of the market over September and October.

If the idea of a bumper arabica crop in Brazil in the coming year is reinforced not only by good rainfall, but also by good flowering and actual fixing of flowers and pinheads through November, then there is a chance that speculators will start selling arabica futures with more conviction and prices could move lower and closer or even below cost of production, which is roughly estimated at USc 140/lb. But in the short term, any variation in the weather pattern in Brazil (weather hardly ever is perfect) and a very probable improvement in import demand in Q3 are likely to offer support to prices.

Meanwhile, speculators in the robusta market will continue to focus on potential El Niño-related effects. As El Niño is expected to last until at least the end of Q1 2023, speculators will likely stick around for the remainder of the year. Concerns over the EU Deforestation Regulation could also mean that some robusta produced before mid-2023 is carried into 2025 (at a tremendous cost). On the arabica front, this is less likely, as arabicas would lose more value over time.

• Within RaboResearch Global Economics & Markets, Carlos Mera serves as the head of the agri-commodities markets team in London. Previously, Mera worked at Rabobank as a senior commodities analyst with a focus on coffee and cocoa. Prior to joining Rabobank, he worked at Neumann Kaffee Group where he conducted coffee market research for more than seven years. Mera holds a Master of Finance from the London School of Economics and a Bachelor of Economics from the University of Buenos Aires. He may be reached at: carlos.mera@rabobank.com. With over 140 analysts around the globe, RaboResearch covers topics related to economics, global financial markets as well food and agribusiness. For more information on RaboResearch, visit: rabobank.com/en/research.

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In celebration of World Coffee Day, the Yemeni National Coffee Auction organised a unique and distinctive event in the Middle East: a tasting table for Yemeni coffee, which is one of the oldest and finest coffees in the world.

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Climate change is putting coffee-growing areas under pressure. Smallholder coffee farmers are exposed to the risk of irregular weather conditions that can affect their crops.

On the occasion of International Coffee Day, Nestlé announced that it is piloting a weather insurance programme in Indonesia for more than 800 smallholder coffee farmers that supply coffee to its brand, Nescafé. The company is launching the insurance scheme in collaboration with Blue Marble, a specialist in climate insurance. The insurance provides financial protection to help farmers cope with unpredictable weather patterns of rainfall and severe drought.

Marcelo Burity, global head of Nestlé’s green coffee development, said, “This weather insurance helps to establish a support mechanism for smallholder coffee farmers in Indonesia. It allows them to access financial resources to re-establish their crops in the event of irregular weather conditions while building resilience in coffee farms.”

The insurance uses satellite-based climate data to determine when coffee output has been impacted by either too much or not enough rainfall during key phases of the crop cycle. Payments are issued automatically to registered coffee farmers that have been affected, according to the severity of the weather.

“Smallholder coffee farmers in Indonesia are vulnerable to climate risks and need access to insurance to protect against extreme weather events,” said Jaime de Piniés, CEO of Blue Marble. “We are proud to partner with Nestlé and its brand Nescafé to develop innovative ways to support the climate adaptation of smallholder coffee farmers and their families.”

This initiative is an integral part of the Nescafé Plan 2030, the brand’s vision to support the long term sustainability of coffee and to help improve farmers’ livelihoods. Based on the results of the pilot, Nestlé will determine whether to expand the approach to other Nescafé sourcing locations around the world.

Sharing knowledge to accelerate the transition to regenerative agriculture

Changing agricultural practices requires access to knowledge and time to learn and implement. By moving to regenerative agriculture, coffee farmers can help restore soil health, reverse biodiversity loss, and strengthen ecosystems. Doing so also helps reduce the amount of greenhouse gases released into the atmosphere.

Nestlé, has contributed to the ‘Regenerative Agriculture for Low-Carbon and Resilient Coffee Farms – A Practical Guidebook,’ developed by the Alliance of Bioversity International and the International Center for Tropical Agriculture (CIAT). This guidebook provides field agronomists, trainers and professionals working with coffee farmers with a set of best practices that they can use and adapt to different farming contexts, helping farmers transition to regenerative agriculture. These best practices include agroforestry, intercropping, soil conservation and cover crops, integrated weed and pest management, integrated nutrient management, efficient water use, waste valorisation, landscape actions and the rejuvenation of coffee trees with well adapted varieties.

Pascal Chapot, global head of sustainable agriculture development at Nestlé, said, “The guidebook gives coffee farmers a set of field actions they can implement tomorrow to help them become more resilient to climate change and to diversify their sources of income. Knowledge is key, and we hope that this guidebook makes these regenerative agriculture practices more accessible to farmers and supports an accelerated transition towards them. This is essential to tackling the climate challenges ahead.”

Mirjam Pulleman, senior soil ecologist and co-author of the guidebook said, “Creating real impact on the ground requires learning from real experiences with farmers in different origins and providing incentives to support farmers in their journey. The best practices highlighted in the guidebook are a starting point. Each practice will need to be tailored to the specificities of each country of origin, the different farm types, the surrounding landscapes and the resources available.”

From Nestlé’s perspective, the guidebook complements the Nestlé Regenerative Agriculture Framework (pdf, 18Mb). Nestlé considers regenerative agriculture to be a key component of its efforts to reduce greenhouse gas emissions and to reach net zero by 2050. It is also a central pillar of its coffee sustainability programmes, the Nescafé Plan 2030 and the Nespresso AAA Sustainable Quality programme.

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