The coffee price crisis is hitting all parts of the supply chain, from stockpiles in Brazil to grocery shelves in Europe. Plus, unionized Starbucks workers in Chile go on strike and farmers in South Sudan put their hope in alternative coffee variants.
‘Brazil’s Coffee Stockpiles Dwindle as Prices Hit Record Highs’ – via Reuters
The amount of coffee stockpiled in warehouses by Brazilian cooperatives has plummeted following the surge in commodity prices over the past year. As Roberto Samora and Marcelo Teixeira reported for Reuters, farmers have been selling more to take advantage of the record-high prices, leaving little in the way of reserve.
As the world’s biggest coffee producer, Brazil stockpiles coffee to underpin the global coffee markets, ensuring enough coffee is available to cover future contracts. When stockpiles drop, especially when the next harvest has not yet begun, it pushes the price further up.
“We never had such low stocks in February, a period that is still distant from the new crop,” said Willian Cesar Freiria from Cocapec, Brazil’s third-largest coffee co-op. “Until the start of the next harvest we won’t have much coffee to sell. And it is not only us; it is the same everywhere [in Brazil].”
Cooxupe, the world’s largest coffee cooperative, still has coffee sitting in their warehouse, but most has already been sold and are merely waiting to be shipped to roasters. Various experts estimate that farmers have sold around 90% of their 2024 crop: “What they have left is the lowest amount we ever saw in our records,” Cooxupe’s Luiz Fernando dos Reis said.
‘Coffee Supply Crunch Causes Bare Shelves at Some European Stores’ – via Bloomberg
On the back of commodity prices rising, roasters big and small have started raising their retail prices to compensate.
J.M. Smucker Co, which produces Folgers and Cafe Bustelo, JDE Peet’s, Nestlé, and Starbucks have all raised their prices over the past year. In addition, as Charlotte Hughes-Morgan reports for Bloomberg, European grocery stores have stopped stocking some coffee brands as they look to renegotiate supply deals.
“Coffee roasters are trying to increase the prices to the supermarkets, and supermarkets are basically saying ‘No,’” said Cyrille Filott from Rabobank.
Dutch grocery chains Jumbo and Albert Heijn have stopped stocking some JDE Peet’s products. In Germany, local news outlets reported that some JDE products were missing from grocery chains like Edeka and Aldi Nord.
“Most of the retailers understand that coffee is a pass-through model,” JDE Peet’s CEO Rafael Oliveira said on a recent earnings call, referring to the practice of passing cost increases on to the buyer. “The reality is significant price increases are inevitable.”
Read the full story here or via Yahoo! News here.
‘Brazilian Coffee Traders Atlantica and Cafebras File for Bankruptcy’ – via Daily Coffee News
Two Brazilian coffee traders filed for bankruptcy this week, another ripple effect of coffee price surges.
Atlântica Exportação e Importação SA (Atlantica) and Cafebras Comércio de Cafés do Brasil SA (Cafebras) filed for bankruptcy protection, looking to restructure debt of $367 million.
The two companies are part of the Montesanto Tavares Group, one of Brazil’s largest exporters. The group also owns the US-based green coffee importer Ally Coffee, although Ally is not involved in the filing. The impact could be significant: Atlantica has said it accounts for 8% of Brazil’s arabica sales, while Montesanto Tavares has 177 employees and works with a network of 2,000 coffee producers, according to Valor International.
In the Brazilian publication AgriBiz, Luiz Henrique Mendes and Tatiana Freitas report that instability could spread to other traders. The bankruptcy filing “spurred concerns that other industry players may be facing similar financial troubles,” they write. “Smaller and mid-sized trading companies, with less resilience to financial shocks, are seen as particularly at risk.”
In a statement, the companies blamed the high commodity prices, contract defaults, and the real, Brazil’s currency, being devalued against the dollar as reasons for the “economic and financial crisis.” The filing comes after both companies attempted to renegotiate their debt in December—a judge denied that request.
More News
‘Colombia’s Juan Valdez Signs Joint Venture to Accelerate Growth in Spain’ – via World Coffee Portal
‘Sur La Table Acquires Coffee Equipment Specialist Seattle Coffee Gear’ – via Daily Coffee News
‘Coffee Companions—Why Colombian Coffee Farmers are Planting Legumes’ – via Purdue University
‘Is Eurovision Frontrunner “Espresso Macchiato” Offensive To Italians?’ – via Sprudge
‘2025 Cup of Excellence Auction Schedule Includes 11 Countries’– via Daily Coffee News
‘Canada’s Second Cup Café Drops Non-dairy Surcharge’ – via World Coffee Portal
‘Coffee Shop Software Provider Odeko Nears $300 Million in Funding’ – via Daily Coffee News
The Week in Coffee Unionizing
Workers at Highwire Coffee Roasters in California’s Bay Area are unionizing. As reported by Elena Kadvany for the San Francisco Chronicle, employees delivered a letter to Highwire’s owners requesting voluntary recognition of their union, which is supported by a majority of workers.
“We believe that the most expedient and equitable way to help the company become a model institution for high-end coffee roasters is by forming a wall-to-wall union,” the workers wrote.
Highwire was founded in 2011 and has since grown to encompass seven cafes and a roastery in the East Bay. Three locations opened in the last two years, with two more coming soon. Workers say that the pace of growth has led to difficulties such as short staffing and lack of coverage when people call in sick. “If we want cafes to exist, we need workers who are treated well enough to maintain them,” barista and organizer Sydnie Conner told Kadvany.
Highwire’s owners have yet to respond to the letter but told Kadvany in an email that they “respect the rights of our employees and will fully comply with the law.”
Meanwhile, unionized Starbucks workers in Chile are striking. According to social media posts by Starbucks Workers United, the strike is in response to a breakdown in contract negotiations between management and the union. The Chilean Starbucks union formed in 2009 and faced similar difficulties to their American colleagues as workers fought successfully for a collective bargaining agreement.
“Our union siblings in South America are fighting for many of the same things partners in the US are – better staffing, fair wages, and stronger protections for workers in retail stores,” Starbucks Workers United wrote in an Instagram post.
Coffee and the Climate Crisis
Both arabica and robusta coffee are struggling as the world heats due to climate change. Climate-induced harvest disruption in Brazil and Vietnam, the world’s two biggest producers, is a significant factor in the current price surge. With arabica and robusta under threat, farmers and researchers are looking for alternatives, and one of the most likely is liberica and its variant, excelsa.
In South Sudan, which has been rocked by conflict and instability for decades, excelsa could prove hugely beneficial to the country’s farmers. As Sam Mednick reports for the Associated Press, excelsa is native to South Sudan and has been grown for generations, although not in commercial quantities.
Several companies are now experimenting with the plant, while the government is hopeful that excelsia can help rehabilitate abandoned farms. However, investment is hard to come by, and exporting coffee from South Sudan is challenging. “One truck of 30 tons of coffee has to travel some 1,800 miles (3,000 kilometers) to reach the port in Kenya to be shipped,” Mednick writes. “The cost for the first leg of that trip, through Uganda, is more than $7,500, which is up to five times the cost in neighboring countries.”
Farmers told Mednick how excelsa production brings them hope: “Excelsa is an opportunity for the community to become more financially independent, say community leaders. People rely on the government or foreign aid, but when that doesn’t come through they’re not able to take care of their families.”
Beyond the Headlines
‘When Will Coffee Soda Have Its Breakthrough?’ by Chloé Skye Weiser
‘Coffee Conversations: Morgan Eckroth on Judging Coffee Competitions’ by Fionn Pooler
‘The Truly Rad World Of Skateboard Cafes’ by Brianna Fox-Priest
