angel barrera | 2020-04-10
The port of Santos continues to operate, even if at reduced schedules. Road transportation of merchandises continues to be normal. It could be that the harvest would have less troubles to occurred, than in countries like Colombia & Peru which seem facing more challenges. Big Fazendas would of course make use of mechanization, and for smaller Fazendas and Sitios, it looks like the way to reduce risks would be to only use very own local laboring.
Uptrend in the Colombian differential after the extension of the mandatory isolation, the harvest season starts in April and the labor will be restricted by the measure. Labor, travel and cash flow are the main concerns of the coffee producers to face the coming crop in between April to July. Health issues are not hitting the coffee producer towns yet, but in the harvest time can move the curve up since many people are flowing of different places of the country up to the farms. Is expected 135.000 people to pick 6.5 million bags of coffee between April to July in the country. The price of a high percentage of the production of the farms has been fixed in these days to deliver in the future, this is very dangerous because the speculation is high and many people won't comply the compromises if the price moves up in the coming days.
More generally, 992 cases in Bogota (capital city) and 314 in Valle del Cauca department are the most affected regions. National Government issued a new decree to extend the mandatory isolation state up to 26th Apr, 2020. National Institutions and Central Government have adopted many measures to make flexible the budgets and invest public funds in food and medicines. Control Entities and some political sectors are alarming the bad use of the public funds in the public programs to manage the pandemic and the delivery of food to the poor people. Treasury Ministry requested to the President to apply for a IMF loan for USD 11 billion to have funds to manage the negative effects of the COVID-19 on the economy. National Government evaluates if the holidays in the second semester can be changed to work days to contribute to the recovery of the economy.
A concerning situation for the coffee producers because the harvest season is just starting and the flow of people and transportation is very restricted in the country. The coffee regions have very low rate of COVID-19 cases and this is the main concern because the health care services are very poor and an increase in the cases in these regions can be catastrophic. Up to now, the situation for coffee sector is unchanged and even more restricted after the high increase of the cases in the country.
More generally, the number growth dramatically in the last week with more than 1000 cases in one day. Lima (capital city) is the most affected city with 2822 cases and 82 deaths. Mr. Martin Vizcarra, President of Peru, announced the mandatory isolation on 15th March and extended it up to 13th April. People can go out to get basic goods to the homes by gender (male / female) and Sunday the measure of isolation is for both genders. In the Holy week the National Government ordered the mandatory isolation the entire day on 9th and 10th April.
Harvest hasn’t yet started, but it looks really complicated how the country would face it, knowing all the current situation the country is living. As it is said, is the first health system collapsing in Latin America due to COVID-19.
This website has been launched by national authorities, institutions & private companies, in order to help the people facing troubles to cover their basic needs. If you can, don’t hesitate to donate.
In general there are quarantines, and a people working from home, in addition to a lack of containers, delays in shipments can be expected. Panama is one of the countries with more cases of COVID-19, it is said that the canal might be restricted on the functioning, which might affect a lot of traffics. Countries like Honduras are more drastic on their quarantines, leaving not possibility to companies to operate and even some coffee from the highest altitudes won’t be picked.
Each country is managing the situation very different: some with a very professional health system such as Costa Rica, others like Nicaragua, in a transparently poor way with the image of hiding information to their population, others like Guatemala, with a very efficient approach building Hospitals, and others with a more drastic quarantine & lock down, such as El Salvador & Honduras.
The corridor Ethiopia – Djibouti remains open. Exporters are active & running, their biggest concern is to be lockdown if a case of COVID-19 occurs on their mills.
Urgency Estate decreed for 5 months. Approval of 82.6 USD M by the World Bank to support the country on their quest against COVID-19. Elections would be postponed.
No exports of coffee neither milling are happening.
The country continues on lockdown and the port remains closed.
Price of cherry at farmer level has been drop 20-30% since early march. Next peak harvest will be in End of April/ Early May. Likely farmer will have difficulty to sell since Medan exporters have stop purchasing. Our partner in the island of Sumatra, Ketiara, already inform to all collectors and member that they commit to purchase form farmers since they need cash for their daily subsistence.
No report on disruption on logistic for Sumatra: Belawan port is still open and operate, although reduce in capacity due to movement limit. They operate until 8 p.m. only.
Geunha Park, is the founder of Fritz Coffee Company, a specialty coffee roastery based in South Korea. After visiting us in Ethiopia, he was the first roaster talking to us about the challenges had to face due to the COVID-19 explosion, back then, we barely understood how big this could be and what his fears were…
What is the name of your roastery and where is it located?
Fritz Coffee Company, we launched the business in 2014 and now we have 3 cafés in Seoul and a roastery in Incheon. We focus on the product of coffee and bakery.
What is the main segment of your clients (cafés, hotels, restaurants, etc)?
Our clients are mostly mid-sized franchise coffee shops and there are around 500 small coffee shops.
How did affect the COVID-19 your business and how is it doing now?
The corona virus disease outbreak gave an impact to the industry in Korea since January this year. Started with a minor impact, however, it was a start when the coffee industry trembled not to mention the Specialty coffee industry where the root wasn't firm enough in Korea.
Late February the situation got worse that the virus steeply spread over from Daegu city and in March most of all the shops had lost their capacity to run the business. We’ve provided the coffees of no charge to the clients in Daegu, although it was unfortunate that the majority of the shops had to lay off. It is ongoing and is a pain to say that the specialty coffee companies often don't have enough capital and small shops have less economic power to endure it. I’m afraid that there will be a number of companies that wipes out due to the COVID-19. Even if they survive, it's likely that they won’t have a chance to purchase the coffee with higher price.
To be honest, it is fortunate that our government does not force people to lock themselves or hold a tight rein on the movements, nevertheless this whole situation is threatening people and they try to be at home. This is a problematic thing for us as the nature is to consume coffee in cafes. The retail coffee market in Korea has been growing slowly but not enough for people to enjoy their coffee at home in this rare situation. It is so easy to eat out alone and they don’t have to think of making coffees at home or purchasing the tools for it.
One of the solutions made out from this situation is to bring the delivery service. The delivery service in Korea is very well equipped not until now that the coffee delivery service has come to the surface. My company also started doing the service to one of our customers lately.
Is the business recovering as before?
Not much so far. The last two months showed loss for many coffee companies. I wouldn’t jump into the conclusions for this month revenue, but expecting it’ll be better than the last one.
The variable here is Seoul where the infected numbers were less than the population however, the number has been growing lately. The government is looking into this quite thoroughly giving us the warning to keep the social distance.
What would you advise roasters in Europe to do, that you did or could have done during the time the pandemic last in your country?
There is very little that we can do.
My company is not the big one but was capable to help smaller shops. We provided coffees to 500 shops with no charge helping them to survive through this crisis.
It is unlikely that there will be a special trick overcoming this situation. Be strong. This shall pass.
How is the country doing at this day?
The virus is very much taken control of by now. The number that patients thought to have been exposed to the virus have been released from quarantine has exceeded with that of the infected ones. But as said earlier, the number of confirmed patients in Seoul has sharply increased lately and we should be cautious with this.
I suppose most countries are dealing with this in the same manner, to put on hold with the spread of the virus. The Quarantine and Health Care Departments in Korea are very active, open-minded and well-equipped but on the other hand the Ministry of Economy and Finance is taking a poorly conservative action towards this crises. It is unclear what countermeasures can be taken for those who are financially challenged. This might lead to a disastrous shrinkage of the economy.
As a roaster, what did it teach you this situation?
There’s not much to say unfortunately. This coffee community is stronger than anyone can expect. We will survive after all. Stay healthy and take firm stand. No panic.
Luis Rodolfo & Betty, are two organic coffee producers from Marcala, we have had established a partnership with them, which hasn’t but increased, for over 7 years already. They are part of COMSA, a coffee exporting company with cooperative & teen spirit.
« As everywhere, the scariest thing about this unexpected situation is that we are facing an unknown and unpredictable disease. We are scared of the news we see from other countries but most of all, of how vulnerable Honduras and our people would be ; following all biosecurity recommendations has become essential being this the same information that we spread between our farmers for them to take care of themselves and their families », Rodolfo says. While spending these strange times, every day is a constant transition and they are learning, adapting, and searching as much information as possible about this virus and listening to their producers’ and partners’ concerns. They know there are no simple changes and everyone is trying to implement all recommendations at home, at work, the neighborhoods, the municipalities, departments and the country.
In many cases, the instructions given by the authorities have been taken wrong by some people in Marcala and other municipalities, affecting directly some of their employees and the transport of the coffee to the milling facilities and ports, as roads are blocked and riots often happen. With many efforts, COMSA has given a permit to move and work partially. It is unbelievable, but it seems like their main threat is being the same people who do not agree with the authorities and claim the containers and the drivers could transport the virus. Rodolfo and Betty express they understand but this situation will not be sustainable for too long. At COMSA and the closest farms, the harvest is already done but this might be not the case of some few farms located at higher elevations, where probably producers are still picking, being this around 5% out of the coffee that COMSA gathers and processes.
When we asked about any actions implemented to minimize the consequences of this situation Betty mentioned operations are not happening like normal: « We work when we can and with less than half of our staff ». They have stopped collecting coffee temporarily as there is no full staff available at COMSA. For now, they have organized work teams by hours and they have taken the time to quickly train them on biosecurity and personal hygiene (there is someone in charge of verifying the compliance of such measures). Some of them do home office, the reports are presented in videoconferences and the exports expenses are being covered by the current flow cash.
This situation has become COMSA’s short-term scenario even more uncertain. They are surviving on some remaining coffee incomes of last year; maybe some agricultural and processing practices will continue, some maybe will stop. They are not as confident in a productivity growth as coffee prices will go down and production costs will increase, but most of all because of serious health problems due to covid 19 that might affect the communities all coffees come from.
By the way, the first week of April the rate of covid19 cases increased in the region of Puerto Cortés, causing fear and panic in all the population. Even though the exports will not stop, such situation will definitely cause delays in the coffee shipments : The deliveries scheduled on March will happen on April-May, those ones that were supposed to happen on April will be shipped on May-June and so on with the rest of the coffees, hopefully. « For now, we are very busy preparing all the logistics for exports to respect our committed contracts. It is not being easy at all », they said.
What should be the future of specialty coffee?
For over 20 years, we have seen a niche product increase, but remain still, in a niche. A message that passed really well, into what it seems now to be, a circular community. The current COVID-19 pandemic comes to remind us that fact, and to open up a door of curiosity, which should awaken our inventive to find those new channels of distribution, to deliver the beans for which our partners, ourselves and you as roasters, work so hard, but in a larger scale.
We can also see, as a struggling company, that it is difficult to keep all of our contracts in progress with producers, that the specialty coffee scene should find new values, in which words like commitment, solidarity and courage should resonate.
There is a quote from William Blake who says that "if the doors of perception were clear, everything would appear to man as it is, infinite." Hopefully we can start to open up or see these endless possibilities for the specialty coffee industry.
The Belco sourcing team