Coffee market crash

The market price of coffee is at an all-time low. News headlines are suggesting that our morning flat white could become a thing of the past, while the implications for coffee-growing communities are dire. What’s going on? Kathryn Lewis extracts some pertinent points and asks if speciality coffee could be the solution

Most latte lovers are used to seeing smiling images of coffee farmers on the walls of the big chain coffee shops. It suggests a straight line from crop to cup which supports those ‘poor farmers’ in underdeveloped parts of the world. Yet how many of us have any real understanding of how the coffee market works?

Crisis alert

Earlier this year, it was brought to the attention of the masses when headlines announced the ‘2019 coffee crisis’. Anxiety-stricken coffee fans took to social media to retweet the impending coffee shortage and look for answers. However, all that became clear was that the coffee market is a lot more complex than those coffee shop posters would suggest.

So should we be stockpiling beans for a coffee apocalypse? Apparently not. ‘It’s actually the production of too much coffee that has caused the market price to crash to an all-time low,’ explains speciality green bean importer Phil Schluter of Liverpool’s Olam Specialty.

‘Next year, Brazilian farmers will produce their biggest ever crop. They’re flooding the market and therefore driving down the price. The devaluation of the Brazilian currency and their move to mechanical farming techniques (more machines, less paid workers) means they are one of the few countries that still sells profitably to the New York market at current levels, albeit only just,’ says Phil.

The volume of coffee in the market is putting a huge amount of pressure on other coffee-growing regions and farmers are being paid less for their beans as a result of the over-supply. Margins are already eye-wateringly tight for growers and now some are moving away from coffee in order to farm more lucrative crops such as macadamia nuts and avocados. That’s the best-case scenario: others are simply going hungry.

‘We’re seeing serious malnourishment and a drop in the number of children going to school in coffee-growing regions due to the fall of the market,’ says Phil.

Solutions in speciality?

Most of the large coffee chains serve commodity coffee, yet there’s a thriving speciality sector built on ethical principles which has long championed paying a fair price to farmers. So where does this fit in?

‘We pay around two to three times the futures coffee market price when buying speciality coffee,’ explains Phil. ‘So one of the ways struggling farmers can survive is to aim for a higher cup profile and, therefore, a higher price for their greens.

‘Roasters, cafes and consumers need to understand that buying speciality grade coffee is the difference between children eating or going hungry – we can quickly forget that low coffee prices have a real life-changing effect on farmers around the world.’

Frequenting cafes that source beans from indie specialist roasteries (which are transparent about the prices they pay for beans) is one way coffee lovers can support struggling growers. It’s a win-win as the higher grade product is also seriously delicious and offers far more complex flavours than darkroasted commodity beans. You could liken it to the difference between a fine wine and a bottle of mid-priced plonk.

New roasteries crop up every month and others greenwash their products to imbue them with positive associations, so it’s not easy or straightforward to discover exactly how ethical the coffee you’re drinking might be.

‘There are a lot of commodity roasteries using the speciality stance to gain mileage,’ agrees Paul Meikle-Janney, co-founder of Dark Woods Coffee near Huddersfield.

‘At Dark Woods we try to avoid any posturing and are always very careful in how we refer to the farmers we work with. When businesses refer to “our farmers”, there’s an uncomfortable neo-colonialism. We’re not “saving” them, we’re buying beans from them because they’re skilled producers of quality ingredients that rightly deserve a higher price.’

Live and direct

In recent years, ‘direct trade’ has become a buzzword in the roasting community. Referring to the process where roasters buy beans direct from the farmers or mill owners rather than using an importer (such as Olam), it’s often seen as a way of paying more to farmers and strengthening the relationship between them and the roastery.

‘There are a lot of roasteries that use the term “direct trade” incorrectly,’ says Paul. ‘It’s amazing how many you see shouting about how their coffees are directly traded who then go on to mention the importer they use as a middleman.

‘Farmers don’t necessarily want to trade directly either,’ continues Paul. ‘Logistically, farmers want to sell coffee in volume which they can do via an importer who will then sell smaller amounts to a number of roasteries. If you’re buying direct trade, you need to buy an awful lot to make it sustainable.

‘If a coffee isn’t direct trade, it’s certainly not a bad thing. When we use an importer, we still select the farms and work with people at origin to get the balance of varietals we’re looking for. It doesn’t have to be direct trade to be a direct relationship.’

What the fallout of the next big Brazilian harvest will be is impossible to tell. Yet consumers can help support the farmers by buying speciality grade coffee from ethical roasteries and choosing cafes that support them (as featured in this guide).

Asking about the beans and where they come from is important and any cafe or roastery worth their salt will be happy to explain their bean sourcing.

The fact that most of the speciality indies are also small (and often family-run) businesses, which like the speciality coffee growers focus on crafting a top quality product, provides a pleasing parallel with what’s going on at source. And when supporting them results in delicious coffee, it’s not only our responsibility – it’s also easy to do.

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