C Market Volatility, Complex Logistics & Ethiopia Civil Unrest Spill Over Into Q1 2022

Red Fox Coffee Merchants Origin & Shipment Update: Q1 2022

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As we sail into Q1 of a new year, a lot of the issues we dealt with through the third and fourth quarters of 2021 persist. Logistics are as tangled as ever on a global level and still require extensive planning and constant management, with ever-rising costs at every level of the supply chain. The C market price is ever more volatile and elevated, with new heights reached in the month of December. Civil unrest in Ethiopia has placed us in the region—but not in-country as we would usually be this week—cupping early offers and making commitments and firm plans, and we’re excited for the upcoming season. Despite logistical challenges, Peru’s shipping season saw early containers landing at the onset of Q4 and is now wrapping up. We’re on the ground in Mexico connecting with producers as the season peaks, and in Kenya tasting and approving offerings with first shipment already on the water. Despite the surrounding chaos, we’re managing details, landing coffees within our expected windows, and staying constantly connected with supply chain partners at all levels. More detail on all of this, in general and origin by origin, below. 

Logistics, Port, & Warehouse Updates 

The state of global shipping continues to be extremely challenging as we round the corner into 2022. Securing space on vessels is a daunting task. Even once bookings are secured, departures are repeatedly rolled, delayed, or outright canceled. Rates for all routes continue to increase and shipping lines are adding fees for port congestion on top of the already inflated rates. 

On the import side, trucking capacity is becoming a major issue. Shipments arriving to US ports are frequently sitting at port incurring demurrage fees (fees charged by shipping lines to importers when a full container is not moved out of the port/terminal within the allowed free days offered by the shipping line) and extra days of chassis (a special trailer that allows ocean containers to be moved via truck, required for shipments transitioning from sea to road) because of difficulty securing trucks to unload and move cargo to the warehouses. Costs continue to increase across the board. All services—trucking, rail, warehouses—continue to experience employee shortages (and the knowledge deficits that come with them), increased costs, Covid issues, and delays. Rail services are seeing particularly long delays. 

The port of Oakland, though still experiencing delays and not operating at full capacity, has seen modest improvements in recent weeks. However, we do expect congestion in West Coast ports to persist well into 2022.

Warehouses are reporting a lot of LTL freight shipments to customers still being sorted out from the holidays. Freight carrier holiday closures and winter weather in some states has affected many freight deliveries—some shipments are still stranded at intermediate terminals while carriers sort through the backlog. Freight is moving, but slowly. 

Supply, Demand, & The C Market 

We continued to see a meteoric rise in the ever-volatile C market this past quarter, which spiked past 250 in early December. The days of 2-3 cent moves being considered “volatile” are behind us when 5 or more cent rises have become commonplace (we’ve seen an average daily change of 5.6 cents over the period between 9/21-12/20). Expectations of lower global supplies due to unfavorable weather and supply chain disruptions continue to prop up the price of arabica futures even though the market has settled closer back to around 230 at the time of writing. It’s been quite astonishing to watch the C market price rise to levels higher than what our baseline price for some qualities has been in prior years in Peru (as covered in the last quarterly update, we’ve of course adjusted our purchasing prices this season in Peru—producers deserve the benefit of elevated base prices in low C market years as well as in high C years). Reports anticipate the events of drought and frost in Brazil may curb growth potential for the country’s coffee crop for the next two years. USDA production estimates Brazil coffee exports to drop by over 15 million bags recently, also citing La Nina’s heavy rains in reducing Colombia export estimates. Supply chain disruptions continue to wreak havoc on transit times and port congestion continues. Bloomberg reports shipments out of Brazil are taking as long as 100 days where the old normal was 30. We’re fortunate to have exceeded our expectations on transit time out of Peru so far without much additional transit time from prior harvests.  

What does this mean for you? It certainly feels like the days of sub $2/lb C market are behind us for the foreseeable future and some analysts feel bullish that we could see the market rise closer to $3/lb. We’re thinking about this daily as we begin to enter Mexico acquisition season to ensure we continue to pay the highest prices and quality premiums to our partners. We are well positioned with the communities/producer groups we work with due to strong relationships developed over the years from our base in Oaxaca that we continue to grow year over year.

Mexico 

As Mexico enters peak harvest season, a number of challenges face producers and traders alike. Our team at origin has already been busy for a few months making pre-harvest visits to producing communities across the country and getting a sense of how the harvest will shake out this year. 

Harvest at lower and mid elevations began in mid December and peak harvest of higher altitude coffees will be mid to late January and into February. Late rains have delayed the start of harvest in some regions. In areas of heavy Bourbon and Typica production (like Oaxaca) the bi-annual cyclical nature of these varieties is in a down year, which should bode well for quality but less well for total yield from these already lower-yield varieties. Strong rains and gains in farm renovations in the offseason and past few years appear to have boosted the predicted crops from Veracruz and Chiapas. 

A high C price in the outset of the harvest has created very high local prices for lower elevation coffee in Veracruz and Chiapas and led to strip and underripe picking to get coffees into the mills and sold quickly. Milling and exports of top quality coffee are expected to begin the second half of March/first half of April with first arrivals to the US in late May/early June. As always, we’ll keep you informed of any changes on that front. Port congestion and container availability are expected to be challenges again this year, but we are developing strategies early to thwart significant delays. On the positive side, costs for ocean freight out of Mexico don’t seem to be increasing much over last year. 

Economically, inflation is hitting Mexico very hard and is at its highest level in 20+ years, with gas and other basic goods (mainly food) prices increasing exponentially. Coupled with a rise in the national minimum wage scheduled to go in effect in January, costs of production are necessarily much higher all around compared with the 2021 harvest. Coupled with the rising C market, prices for quality and specialty coffee will be significantly higher this season and we expect to continue to pay substantially higher prices than other buyers for the qualities we’ve been working closely with producers to develop. Pepe Arguello of Finca Santa Cruz and manager of Cafeco is reporting increases of at least around 40%-50% over last year for both labor and parchment prices in Chiapas, where much of the labor for picking cherry has historically come from Guatemalan temporary migrant workers, but the compounding border issues (including refugees coming from Haiti and Honduras, among other countries, being stuck at the Guatemala/Mexico border in Chiapas due to disastrous US policy), and lack of visa permits are preventing many from coming for work.  

On the Covid side, Mexico is experiencing another surge in confirmed cases after a downturn last fall when the vaccine became widely available to adults and young adults across the country (children under 15 have not yet received vaccines, despite increases in pediatric hospitalizations). Only just over half of the population have received their vaccines, although they are widely accepted among adults and haven’t been politicized as in the US (for example, 95% of adults in Mexico City have received their first round of vaccines). The booster campaign just launched for senior citizens, teachers, medical workers, and other essential workers. The government has so far resisted any restrictions on foreign travelers or internal mandates.  

Ethiopia

We are wading into the great unknown this season in Ethiopia. The political situation, and contradictory reporting within the country, keeps us just over the border at the moment. While we would typically be on the ground in Addis by the beginning of January we are currently outside of the country, though in the region, working to execute our first half shipments from Agaro and Guji. As you read this we have our spoons in 15+ containers’ worth of offerings from Nano Challa, Nano Genji, Kolla Bolcha, Duromina and more from the Kata Muduga Union. We also expect to see our first G2 offerings and the first Uraga arrivals to Addis before we leave.  

Fortunately, our Ethiopian supply chain is older than Red Fox itself at this point. We have confidence in our small handful of trusted partners who are still working from the capital. While the global shipping crisis may keep us from our standard Feb/March arrivals in North America, we don’t expect delays past April at this point. More to come on that over the next few months.  

Price-wise, the state of the C market has pushed cherry prices upwards of twice their 2018/19 levels and 30-40% higher than last year. We are being quoted roughly 40-50c/lb FOB from last season’s levels. Top Ethiopia will be pricey in 2022.

From our trade partner in London, Scarlett Fishburn:

“In terms of updates, cherry prices continue to rise (now looking at 53/55 etb/kg) due to the higher NY and farmers’ speculation on the extent of the damage of extreme weather in Brazil last year. With little cash/tight liquidity, this is preventing big players coming to the market aggressively and so only really small guys are buying at these levels (which probably elevates the price outlook more than if the big players were factored in).

The National Bank announced last week that they are using their reserves to loan 12 billion birr to players in the coffee industry in an attempt to increase the amount of finance available during the harvest period.

Security seems to have improved since we last spoke. You will have seen that the US removed Ethiopia (and Mali and Guinea) from the AGOA program.”

In addition to Scarlett’s note, we are hearing that cherry in coveted producing areas of the south, specifically Uraga, are now upwards of 56 birr/kg as we head down the home stretch of the harvest. While the harvest is delayed in the south this season we do expect the first G1 stocklots to hit Addis by end January.  

Kenya 

As we wade into some unknowns with the Ethiopia season, things are off to a quicker start than ever in Kenya. Our first containers have left Mombasa and are now en route to New Jersey. We’ll be cupping through swaths of samples on the ground in Nairobi over the course of January to add reinforcements to our offerings.  

From our partner Kennedy Keya in Nairobi:

“Main crop cherry picking started earlier than usual. This was due to the early flowering that started in January 2021. Cherry picking usually starts at the end of October in areas near Nairobi (Kiambu and Thika)—but this season cherry picking for the main crop started at end of September and continued into December. Grade retention is fantastic and quality is great. We are seeing more bold beans with AA and AB grade making up 80 to 85% of outturns. We attribute this to proper use of farm inputs by farmers leading to well-fed trees and good weather conditions throughout from flowering to final fruit maturation.  

Prices have remained high and the high NY market is resulting in high historical prices for farmers.

Logistics remain slow. Shipping lines are constrained. Connecting vessels are full so bookings for nearby shipments are declined in most cases. Another struggle is getting empty containers. It takes a lot of advance planning to reduce the struggle to get empty containers.”

Guatemala 

The Guatemala harvest is underway in the lower elevations with picking of higher grown coffees just beginning. Overall, ANACAFE reported an expected 3% higher yield over last harvest, with regions such as Huehuetenango seeing slightly more gains than that. 

An anchor in Red Fox’s Guatemala sourcing for the past three years, Felipe Martinez of Finca Los Arroyos in La Libertad, Huehuetenango confirms early December pickings and expects to continue in earnest as the new year gets underway.

A trusted supply chain partner told us that despite the ongoing pandemic, he is expecting fewer disruptions this harvest and is already seeing an increase in their overall ability to collect and receive coffee, mainly through growth in projects in more remote areas such as Santa Barbara, Huehuetenango. We anticipate continued success in these investments, bringing in more volume from these small holders. 

Look for more updates as we get into the harvest. Currently we anticipate the usual May shipments for peak harvest Guatemalan coffees. 

Peru

The Peru shipping season is wrapping up with 17 containers currently en route to the US and the final handful of containers being milled to ship later this month. We will have warehouses in NJ, CA, and TX flush with fresh coffees soon and through spring.  

Peruvian ports, specifically Callao and Lima, have been some of the most affected during this global shipping crisis with general lack of container availability paired with shipments rolled on a weekly or monthly basis.  

Despite challenges with parchment competition in the early months of the harvest, container availability and the shipping crisis, we managed to increase our purchase volume almost 30% from 2019 and 2020. Our relationships across the country, though most specifically Cusco and Amazonas, continue to grow and be the backbone of Red Fox Sourcing Company Peru.   

Colombia 

Colombia has been the heart of the coffee sourcing struggle since entering the first semester harvest late spring 2021. Early pandemic lockdowns, violent political protests, prolonged port closures, the volatile C market, and intensive rains brought on by La Niña all equaled a massively decreased specialty coffee production. We brought in four containers from the peak summer season at FOB price levels near 50% above 2020 levels. As local prices continued to increase into the second semester harvest, producers across the country rushed to strip pick green fruit in order to deliver unselected parchment at exorbitant prices. Predictions for the coming summer crop also call for more intense rains as the ‘22 La Niña season peaks in the next 6-8 weeks. Availability for top quality Colombia may suffer until Q3 2022, but we’ll have a better assessment in our Q2 report come April.  

From our dry mill and export partner Frederic Boppe in Popayan:

“Production has decreased from last year, mostly due to excessive rains during the last semester. This affected flowering and maturation of the cherries, thus affecting quality and yields in certain areas. Drastic increase in price of fertilizers has also caused a serious impact in production, as producers tend to apply less. The harvest period was shorter than usual and production is over. Parchment is tight, with very few offerings from this area at this time.

This has been a very unusual year. Due to the drastic price increase of over 100%, several producers defaulted in their previous commitments on their deliveries to cooperatives and exporters. The spot market has ruled the trade, and most of the coffee which came out in the last semester was immediately purchased by companies who were short, driving the internal market even higher. All parchment was purchased for immediate delivery and paid to producers upon delivery at the mill. Future commitments are no longer being accepted and cash advances have become very unusual. Today, there is still very high demand with base prices around 2,250,000/carga for standard coffee, but exporters must pay a premium of at least 100,000/carga to secure decent quality. In the internal market, no transactions for future deliveries are taking place and all coffee is sold at the spot market. Longer-term offerings from exporters are very limited. The recent ICE market levels (reaching 2.50/lb) and record US/COL peso level transactions (breaching the 4,000 level), have undoubtedly generated a higher income for coffee producers, strengthening the coffee producing sector.

Logistics: Currently we expect that everything will be back to normal by Q3 2022. Shipping lines are calling off vessels and the lack of containers is dramatic. In general we expect an average delay of 45 days for upcoming contracts. The flow is normal for almost all destinations. In November, the US was the main destination for Colombian green coffee exports with a participation of 42%. Finally, we estimate freight costs have increased by 60% over the last year to the US.

Rwanda 

We’re eagerly awaiting the arrival of our Kanzu lots from Rwanda. Ocean freight routes from East Africa continue to be beset by delays in transhipment ports and lack of space on vessels, resulting in very long transit times. We currently expect US East Coast warehouse availability for Kanzu in the second half of February. 

Looking ahead to the upcoming harvest, the crop is developing well and weather conditions have been favorable. Cherry picking in lower altitudes is expected to begin in late January/early February with higher elevations ripening later in the season. Last season’s good prices are motivating farmers and the outlook for quality and volumes is good. 

Export logistics are expected to be challenging again this year. Landlocked Rwanda relies on its neighbors—Uganda and Kenya—for the transport of all imports and exports to and from ports. Covid testing requirements at border crossings have contributed to long trucking delays, sometimes as long as three weeks between Kigali and Mombasa. Low volumes of imports into the country have also made empty containers scarce. 

Ecuador 

After a few unexpected challenges, we have chosen to air freight all of our Ecuador coffee this year and it should be arriving in the states very soon. We’re expecting great lots from our long-term partners Hernán Zúñiga and Andrés Dávalos, Mateo Patino, and Gilda Carrascal from 1600 Estate. We’ll also have some stunners from newer producer partners Galo Davilos and Yesenia Murillo.  

On the Covid front, like much of the world, Covid cases are on the rise due to new variants. Fortunately, Ecuador has a high vaccination rate with over 77% of the population vaccinated. However, due to the rising case numbers, the government just put out a mandate that all eligible residents over the age of 5 get vaccinated.  

Get in Touch

As always, if you have any questions, concerns, or thoughts, let us know. We’re here to help.

How Logistics Slowdowns are Affecting Roasters, in their Own Words

We’ve talked a lot about how the now-notorious global logistics slowdowns and cost increases are affecting us and our partners throughout producing countries and the green coffee supply side, but we wanted to find out the impacts of these delays and cost increases in roasteries and cafes. To find out, we checked in with a varied slate of roaster partners in different regions and of different sizes to see how the global logistics situation is affecting their business, operations, and costs. 

Flexibility

One impact that’s been felt broadly is the increased need for flexibility, a lack of a “new normal” and more of a sense that agility will continue to be a priority for successful roasters—in other words, plan ahead but expect the plans to shift continuously as needed. 

“It’s been chaotic for absolutely everyone,” says Laura Perry of Canada-based subscription coffee company Luna Coffee. “No matter how small or large of a roaster, importer, exporter or producer you are, this year has shown us how delicate of a dance global shipping really is.”  

As Max Gonzalez, owner of Amaya Coffee in Houston, TX, puts it “operating through the pandemic has been like yoga—it requires flexibility and a lot of deep breaths.” 

“Our operations and plans have had to evolve continually due to the last year of logistics backups,” says Thomas Warmath of Utah-based La Barba Coffee. “We aim to offer coffees seasonally and have had to shift those seasons back a couple months as containers have all been delayed and then further delayed. I worried that receiving our Central American, Ethiopian, and Kenyan arrivals so late would interfere with booking the coffees we typically expect to be roasting during the winter from places like South America and Rwanda, but we’ve been able to move through our position quickly enough to feel confident about these next bookings.” The key is staying flexible while staying prepared. 

Increased Costs

Almost universally, costs are up. The United States Consumer Price Index rose 6.2 percent over the last year, with .9 percent of those increases in the month of October alone with the largest increase being in energy costs—a cost that affects everyone, but decisively affects the transport of coffee. While it might seem straightforward, the increases in costs hit differently on different roaster needs—while everyone is feeling them, the ways they’re affecting different roasters are complex. 

For Gonzalez of Amaya, this has been the single biggest challenge presented by the global logistics crisis, in addition to delays. “The biggest issues we’ve had with the supply chain have been with increased lead times and increased pricing across all costs of goods sold. Our geographic location near Port of Houston has helped, but we still have to adapt and plan accordingly to future delays, minimized access to volumes, and increased pricing (the current Colombian coffee situation comes to mind).” 

Jose Lepe, Director of Sourcing and Quality Control at Sightglass in San Francisco, CA, brought up the point that as port slowdowns are hitting West Coast ports hardest, “the increase in the cost of transit also makes it cost-prohibitive to move coffees from the East Coast when we do find something that fits our needs.” So to get fresh coffee from less backed-up East Coast ports to SF, they have to spend much more money. 

“We’ve seen significant rises in freight costs paired with major delays at terminals,” says Warmath of La Barba. While these impacts hit cash flow harder than they’d prefer, “it seems to be the world we live in now, and we’re trying to start perceiving those as normal costs rather than short term or temporary interruptions. We’ll definitely be thrilled if or when the logistics strains level out or even settle back down to what they once were.” 

Delays & Unpredictable Supply

For Charlie Gundlach of Color Coffee in Colorado, freight delays have caused them to increase their in-house green inventory, something we’ve heard echoed by a lot of folks we talked to. “Overall, we’ve avoided anything major and crushing—we’ve planned well and with the help and hard work of the Red Fox team, we’ve been spared major obstacles” he told us. “That being said, we learned the hard way this summer when we had to drive out to the freight terminal two hours away in Grand Junction, Colorado.” One of those times, Glenwood Canyon was closed due to mudslides and the team had to take an extra hour managing a dirt road with no guard rails. “It’s kind of like a scaled down version of driving from Calca to the Yanatile Valley in Cusco,” he said. They’re now picking up orders when feasible and otherwise avoiding freight in-state to avoid extra fees and delay risk.  

In Oakland, CA, Timeless Coffee Operations Manager Sam Fugate has seen some unpredictability on the supply side, which he told me about using the example of decaf. “It wasn’t until about six months ago that I started to feel the logistics and supply difficulties at our level, but it ramped up really fast after that. For example, finding decaf has been oddly difficult—once businesses were in survival mode they weren’t spending the money to decaffeinate coffee. We had a decent backstock, but once we ran through that we were pinballing from one decaf to the other, getting whatever was available.” Fugate says supply became so unpredictable he started planning a longer decaf position. “I didn’t get to choose which one I was excited about, it was more like, you have some in stock, cool, how many bags, I’ll take it.” 

Justin Dedini of Roseline Coffee in Portland told us that while long-term flexible planning and great communication from supply partners have taken the worst of the sting out of the situation thus far, the most frustrating delays have been at port. “The lack of transparency around how long it’s going to take to unload and strip in a container has been maddening. I understand these things are taking a long time, but the lack of communication is really challenging.” 

Despite great planning and organization, Lepe of Sightglass called this the year of unreliable ETAs. “Based on how our release schedule works, several coffees have had to be delayed at least eight weeks due to issues along the supply chain. When we’re in a pinch, it’s also been challenging for us to find spot lots that are usually quite abundant.” 

Larger companies who handle a wide segment of the coffee supply chain are no exception, as Coffee Sourcing and Relationship Manager of Blue Bottle Coffee Shaun Puklavetz tells us. “We’ve been impacted pretty significantly by delays. We’ve seen really critical deliveries arrive up to three months after we’d expected. Delays seem to run the length of the entire supply chain. Coffees have struggled to find a shipping container at origin, sat on a boat for weeks upon arrival, struggled to get picked up from the shipyard, and sat in our third-party logistics partners’ spaces for weeks waiting to be stripped and logged into their system.” Like all the companies we spoke with, they’ve adapted and remained agile, rescheduling releases where needed and covering gaps with spot purchases. 

Smaller Selections & Shortages

On top of the decaf example, Fugate of Timeless pointed to the Red Fox offer sheet as a great indicator of the leaner, more curated spot selections green coffee suppliers are favoring—a factor that’s definitely changed the way he thinks of supplying his menu. “I was showing our head roaster Josef what the Red Fox offer sheets look like now compared to a year ago, and that was the most startling moment for me, where I was used to scrolling through pages and pages of offerings and now seeing ten coffees.” He contrasted to 2017 where he would come into the Red Fox office and cup a table full of options, choosing his favorite. “There’s been moments when I reached out and said ‘hey I need something in this range’, my rep suggested something, and I said ‘great, I’ll take it’. No samples, no tasting, just committed to it.” For Fugate, trust is key to this arrangement. 

While Lepe of Sightglass noted the same spot coffee supply limitations, he sees them as a positive sign overall, even though they’re hard to navigate. “It seems that many other roasters and importers brought in less coffee this past year and demand has outpaced projections. I’ve never seen spot positions so depleted across the board,” says Lepe. “Overall, I think this is a positive sign of the specialty industry weathering the challenges of the past year and folks returning to some of the routines that we put on hold.”

Operations Adjustments

I asked each roaster partner what adjustments they’d had to make to their operations to accommodate the changes in the outside world, and a lot of answers involved carrying longer positions, making faster commitments on offerings, and pulling from different warehouses. And, of course, the aforementioned flexibility. 

As Dr Lee Knuttila of Ontario-based Quietly Coffee told us, “the timetable and cost of things has certainly changed over the last year. I like to partner with the same coffee producers year-to-year and harvest-to-harvest but due to labor shortages, port delays, shipping interruptions and numerous other logistical disruptions, my calendar has certainly shifted.” To stay ahead, he’s casting a wide net and bringing in coffees early from multiple regions. “It means sitting on my stock at headquarters but I don’t want to try to add additional levels of stress and strain all my already tense producer network.”

Gundlach of Color highlighted forward booking, warehouse flexibility, and a host of other operational adaptations. They usually pull from West Coast warehouses whose partner ports are now notoriously backlogged, so “as a precautionary move, this fall we’re bringing in more coffee from the early Peruvian arrivals from Continental on the East Coast.” He also contracted more Mexico bulk lots than usual to help tide them over to the end of the year when Peru makes it to Colorado and stocked up on Ethiopia to make sure they have enough to get through to when we land the fresh crop in the spring. Generally, they’re stocking as much green on hand as their space allows, which has forced them to get creative with how they use their space, and production-wise, they’ve added more Sunday roast days to compensate for the slower UPS/Fedex shipping times. “If we can’t get our coffee to the rest of our state (due to Fedex/UPS slowdows) in one business day, then we’ve got to bump the ship day up to compensate for it.” 

Roseline’s Dedini has adjusted by increasing forward booked volume and focusing on communication. “We currently forward book about 90% of our green coffee needs for the year. Under normal circumstances I would try to book enough to have one to two months worth of green coffee on hand by the time my forward contract is set to arrive.” Given the current climate, he’s adjusted projections to have four to six months in the green room by the time contracts are due to arrive. To do this right, he says utilizing reporting in Cropster and Quickbooks has been crucial to making accurate projections. “We’ve also been initiating more communication with our importing and shipping partners to receive the most up to date timelines. Communication is key.” 

For Warmath and La Barba, the main operational change aside from holding a longer inventory in their warehouse is “to pay for time-critical freight in order to give our pallets the best chance at making it from the consolidation warehouses to us in a reasonable amount of time,” he told us. “Where we used to aim for a one month inventory turn over, we’re now keeping two to three months of green coffee on hand in order to be able to cope with freight delays, particularly with the holidays coming up.” They’re also thinking further ahead since they don’t know what container delays will look like into 2022. 

On the other side of the spectrum, some customers have had to move away from forward booking due to unpredictability, even though forward booking is more in line with their values and generally more cost effective. “We leaned a little heavier into landed spots than in years past,” says Perry of Luna. “I’m not used to doing this, but it was important to stay honest with the realities of logistics this year and not have too long of a position for forwards, while balancing the reality that we still want folks we buy from annually to know they can count on us despite all the volatility.”

Silver Linings & Takeaways

One thing roasters listed as a silver lining was quality, both of coffee and of relationships. 

“From a quality standpoint, we’ve had a lot to celebrate this year,” Puklavetz told us. “Coffees are often hitting our menu almost immediately upon arrival.” He added that “while it’s never fun chasing down coffees to fill gaps, we’ve had the opportunity to bring in coffees from producers we really admire and hope to continue working with. Having trusted import partners like Red Fox has really allowed us not to compromise, even when we’re in a pinch.”

Gundlach was also bullish on quality. “Other than the logistical headaches, I’m proud to say the coffee is tasting better than ever on the whole. So stoked on our green coffee quality and our roasting. There’s a lot of great coffee to share with our customers and I’m proud of it.”

Another silver lining was the lessons learned. Lots of roasters we talked to shared takeaways that have helped them keep planning and maximizing flexibility. 

“We’ve learned a lot about managing risk over the last two years,” says Puklavetz. “We experienced huge shifts in demand in 2020 due to cafe closures and spiking online sales. This year we’re dealing with major slowdowns on the supply side. There’s no new golden rule in terms of how we’re looking at our sourcing strategy, but it’s brought a lot of little things to the surface. We’ve learned a lot about how we schedule our logistics, where we can use coffees interchangeably, and when it’s important to take a ‘just in case’ vs. a ‘just in time’ strategy.”

“Green coffee is your most important asset as a roaster,” Dedini advises. “New buildouts, machines and packaging are cool, but having coffee to sell is even cooler.” He added that forward booking is a roaster’s best friend. “Get in tune with your harvest calendars. Take a look at your consumption rates for the past two weeks and three months to determine how much coffee to book forward. If you can, book enough to cover a four to six month delay, at least until these logistical challenges simmer down. Forward booking also gives you the first pick of the best quality lots.” Lastly, he says, roasters are all facing the same challenges and can learn a lot with open lines of communication. “We’ve had a great time the past year swapping coffees, sharing information, selling green to others roasters when they are in a pinch and buying green from other roasters when we are in a pinch. Most people love to help out if you just ask!”

The Main Takeaway: Roasters are Amazing

What we’re sure of is this: roasters are doing a fantastic job handling a truly unprecedented collection of challenges. Their coffees are tasting better than ever, and they’re agile, adapting to the changing conditions and creating positive communal experiences for their customers no matter how complex it gets to do so. Within the delicate balance of planning and flexibility, there are a lot of lessons we’re learning as an industry and a community that will continue to make us all stronger no matter how things change.

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.

Red Fox Coffee Merchants Origin & Shipment Update: Q4 2021

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Hello friends, coming to you with our final quarterly origin and shipment update of the year as we enter the home stretch of 2021. This report will cover some broad strokes and some details in all the origins in which we work, whether their coffee is on the water, heading to the mill, in harvest, or still looking towards its next flowering.  

To summarize, a key factor we’re continuing to see broad and escalating effects from this quarter is the global shipping crisis, which has continued to compound as the holiday season approaches and is not expected to resolve until Q1 2022 at the very soonest. On top of that, the C market has been driven up to levels not seen in a decade since frosts in Brazil drove down harvest estimates. Adding to reduced harvest outlooks in Brazil, Colombia suffered the dual factors of civil unrest and heavy rains leading to a much-reduced harvest, with those shortages putting added upward pressure on prices in Peru as large sourcing groups struggle to cover their contracts. The C market’s meteoric rise, while beneficial to producers, has created sourcing and quality challenges at the cooperative and producer association level across South America. At the nexus of the C market rise and the global shipping crisis we’ve seen another supply and demand issue heat up: labor shortages and space shortages leading to rising costs of doing business in the logistics sector, from ports to trucking to warehousing and beyond. More detail on all of this, in general and origin by origin, below. 

Logistics, Port, & Warehouse Updates 

We’re in constant conversation with logistics partners domestically and globally, and from what we and they are seeing, the global shipping logistics crisis is still deepening (and further jams expected as the holiday season approaches) with resolution not anticipated until at least Q1 of 2022. Capacity is still down on ships, at ports, and on trucks, labor shortages are a huge issue, and all costs are up. By all accounts, moving coffee from place to place in a timely fashion is as hard as it’s ever been. Below are some comments from some of our logistics and warehousing partners.

From Unishippers:

The most important domestic USA shipping news is that capacity is still very tight and carriers are struggling with staffing and moving all the cargo they are asked to. As a result, rates are climbing and carriers are being very assertive in charging for all the services they perform. This is expected to continue at least through the first quarter of 2022.

From Continental NJ Warehouse:

The amount of pallets that we ship out on a given day has doubled and we also see the carriers having a hard time keeping up with capacity. No matter how we plan it just seems like there is not enough time to complete everything, and when we do the carriers don’t show because of capacity issues, which leaves us in a bind because now we have a glut of pallets sitting on the floor taking up space, which limits our ability to prepare new pallets to complete orders. Warehouses and carriers are both having labor capacity issues—can’t hire enough people to get all the work done.

From DuPuy Houston Warehouse:

The ports have been extremely congested these past few weeks and it has caused delays on the containers being delivered. Standard freight shipping is the same, the carriers have been good about coming for their daily pickups.

From Continental Annex Warehouse:

  • Nearly 200,000 drivers did not come back in to the industry following the lifting of some pandemic and quarantine regulations. The shortage of drivers has created a major logjam at many terminals—the carriers do not have staff in the terminals and are short drivers so this will lead to (and we’ve already seen) increased transit times, damages and freight rates for some lanes have already tripled.
  • Some carriers have instituted embargoes and no longer accept freight into some of their own terminals while they attempt to clear the backup.
  • The driver situation goes all the way from the port down to local bus drivers—carriers are taking any driver with a clean record but we have seen that there is minimal training, they just throw them out there, often our check-in desk has to instruct them how to properly sign paperwork and handle the pro stickers, etc.
  • As for the Port, most ports are working about 3+ weeks behind at this point, so vessels are being held outside the port until the port can schedule the boats in for unloading. As a result of that backup, many goods are not being shipped since there are no empty vessels to go back out.
  • The same goes for rail—we have had rail shipments be rescheduled over 7 times because no driver to haul it, so since it doesn’t get brought to our location to unload, there are minimal empties available for new loads. Every delay compounds another aspect of the moving of freight and even though the delays have no real culprit and there is little we can do about it, the detention and demurrage structure of fees is still adhered to—so even though the port cannot give you an appointment to pick up your container for say 6 days, they still begin the count on the free time allowed.  
  • Ultimately every single company or service involved will have no choice but to review and hike their prices to survive and it is very likely that there will be multiple increases before this all clears out, then for the roaster-buyers, they must pay attention to the increase in transit time, particularly as the holiday seasons begin. If they have room, it would be very wise to get stock in their locations so delays create minimal disruptions and of course, they will have to increase their pricing structure.
  • We are directly across from the “receiving” end of the port and the boats keep coming, so we do not expect this to clear for several months.
  • SO longer transit times, much higher costs, longer delays for new inbound inventory, more damages/freight mistakes by carriers with unskilled employees… that’s where it is right now. I have been in this business a while and have never seen anything like this before.

From Volcafe: 

If anything, since the last couple of months, the situation has worsened. Domestic trucking rates are through the roof and capacity issues are becoming the norm. We have some warehouses that will email us a couple of days before containers are supposed to arrive at port saying they won’t be able to pick up before the last free day occurs. They are blaming this on slow turnaround times at the port, and fewer drivers on the road. The demand is high, but the supply of truckers and workers is low.

On the west coast vessels are sitting off the pier of Los Angeles/Long Beach and Oakland for as long as 2 weeks. They are taxiing on the water waiting for the longshoremen and the port to clear prior vessels. This is causing a dramatic increase on transit times going to the US West Coast.

Peru, Brazil and Indonesia are the 3 biggest problem areas right now. Container allocations and sea shipping lines not having a regular schedule is making it almost impossible to even ship out of those countries.

Supply, Demand, & The C Market 

Even as we’ve covered several aspects of how the global shipping crisis is affecting logistics, these complex dynamics have created interlinked supply and demand issues that we expect to see for months to come. Working backwards, diminished manpower in ports (specifically on the West Coast) has left vessels anchored off the docks for upwards of multiple months. This has led to decreased vessel availability from port of origin to certains destination ports as the vessel carrier lines themselves refuse to have their ships unavailable for months on end. Adding to the mess is a general lack of container availability in ports of origin as well, causing a huge cost increase as exporters battle with each other to get their coffees afloat. We are paying upwards of 50% more per container than we have in year’s past with the vessel carrier lines now holding all of the cards.  

Starting in July, we began seeing reports of poor weather in Brazil, the largest producing country of Arabica in the world. Crop estimates came out suggesting the total crop would only be 35 million bags, down from 50 million bags the year prior. During the same period, the Brazilian Real (currency) strengthened against the US dollar, increasing local production costs and adding even more upward pressure on coffee futures. The C market responded with a massive increase against the December 2021 trading month from 159.35 on 7/19 to 196.60 on 7/22. US green coffee stocks are also running low due to port congestion and supply chain disruptions, exacerbating the situation. The C Market held under $2.00/lb through September though immediately broke through that barrier on Friday, 10/1 closing at 204.05.  

The C Market has hit near 10 year highs, forcing us to ask how long it will last and to make necessary preparations. Are cost increases across the supply chain here to stay? As we’ve talked about extensively elsewhere, no one works outside the C market entirely, even as our focus has always been on paying prices that are consistent, based on clearly communicated standards, and typically do fall far above the C market especially during its long plunge over the last several years. With that said, when the price skyrockets for undifferentiated coffee, we still need to adjust our pricing to make sure those who benefit from our pricing during low C market years benefit equally during this spike. Considering all that, our acquisitions team made the decision to increase our base price across Peru entering the 2021 harvest. With Colombia in disarray, parchment prices in Peru soared to record levels beginning in June and continuing now as the harvest hits its downward slope.  Fortunately, we are well positioned with the coops/producer groups due to strong relationships developed over the years from our base in Lima. 

Aside from all the other logistics havoc Covid is causing, it also continues to cause crippling labor shortages at every step of the supply chain. We notice this most acutely at the mills and ports, but even from farmers directly where harvesting with smallholder farmers is often an extended familial procedure.

We’re seeing costs on the supply side increase across the board, which will equate to all roasters, including the largest ones, dealing with their own increased set of costs. While large companies like Starbucks that lock in contracts far in advance haven’t yet been hit by the price rises that smaller and leaner companies are already seeing, even they will eventually be affected by the increase in C market and coffee prices as a cost of goods. Looking at them as a case study, Starbucks’s share price is still sitting more than double where it was in March of 2020 and the company continues to exceed earnings forecasts. Once they reach the point where they need to pass on their increase in cost of goods to the consumer, earnings reports will show us how elastic their customers are, but one way or another, we expect that coffee consumers will see these costs increase even in the large specialty/high-end commodity tier through at least Q1 of 2022 with an impact on consumer prices through 2022. We’re hearing from buyers at larger-midsize companies we work with as well that price rises are either imminent or already happening. So while it may not be an ideal situation, we’re all in it together.  

Peru

Political instability was one of the hallmarks of Q3 in Peru, but Q4 is looking smoother. In July, the newly elected president, Pedro Castillo, was sworn in. The transition of the new government began with some early turbulence as it faced challenges to consolidate a cabinet of ministers. Due to political instability, the dollar rose against the national currency. Since the first presidential runoff in April 2021, the exchange rate increased by 13%. During this last month, it’s stabilized somewhat. As far as Covid, the vaccination plan has been successful with massive vaccination campaigns in the capital and other cities. Current estimates show over 9.3 million inhabitants fully vaccinated, about 28% of the population. 

Coffee season in Peru is at its peak. The harvest is wrapping up in the north, the Selva Central, and parts of the south of the country, while the highest altitude farms in Cusco and Puno are at peak harvest. Our QC and logistics teams are in full swing. The lab crew in Lima cupped through 689 offer samples representing 6,800 bags of exportable coffee thus far, with new samples arriving in the lab each week. We milled our first lots in August, and our first container has already arrived. There are another 12 containers shipping or booked to ship in October.

We were unsure of what to expect on both the volume and the quality fronts as we headed into the 2021 season. Coffee prices in Peru have been on the rise since May, with producers accessing record high upfront prices for wet, unselected parchment. This purchasing system is very different from that of the producer organizations Red Fox works with, where coffees undergo a physical evaluation to make sure they are adequately dried and meet minimum yield requirements, and pricing is based on preset cup quality standards. Also, member producers receive a base payment upfront and receive a second payment at the end of the season once the coffee is sold. With such a competitive local market, we were unsure that producers would have the needed incentive to do all of the work that is required, from selective harvesting through to drying and storing coffee properly, to deliver quality coffee.

Heading into the season, we raised our base price across Peru so that producers would receive more than the local market even in this elevated year, but there was still a risk of producer attrition considering our expectations on the quality front and the fact that not all the payment would be upfront. The sourcing team spent the month of July on the road and we were able to visit nearly all of our supplier partners. During meetings with leadership and members, we reinforced our long-term commitment to these relationships and to ensuring a stable market year after year. For the most part, it felt like we were collectively on the same page, and the quality of the offer samples in the lab confirms that: 79% of the samples we’ve received thus far have been approved. There are certainly a small percentage of producers who are selling their coffee to the local market, but the overall volume delivered and quality of the coffee speaks to the commitment of the producers and groups we work with as well as the strength of the sourcing model. 

The ports in Peru have been among the hardest hit by the container shortages. In addition to the exorbitant increase in the cost of a shipping container, it is incredibly difficult to get bookings because the demand is so high: coffee is Peru’s number one agricultural export, and every exporter is trying to move their coffee at the same time. We have worked with our logistics partners to leverage their relationships with the shipping companies and are requesting bookings early and often (we made 59 separate booking requests to obtain bookings for our first 15 containers). While coffee is not moving as quickly or as smoothly as in previous years, it is moving, and our first container has already arrived.

As always our producer relationships are at the front of our minds. These middle-supply-chain challenges have an immediate impact on their lives; delayed shipments directly equate to delayed payments from us to the exporter and thus the producers themselves. On top of that, financing costs multiply for both producer groups and producers themselves as these late payments hang in limbo waiting for shipments to leave Ports of Callao and Paita. We use very strict physical protocols like water activity, GrainPro storage for parchment, physical location for parchment storage, and more, though needless to say delayed shipments are a risk on the quality front as well. We’re doing everything we possibly can to minimize these potential impacts on producers, associations, and quality. 

Colombia 

It’s been an arduous calendar year in Colombia, to say the least. Between the pandemic hitting new peaks, political decisions leading to nation-wide protests, 90+ day long port closures, and intense peak harvest season rains, almost everything has gone wrong. The FNC (Colombian Coffee Growers Federation) has entered all producing zones with astronomical prices for both wet, unselected parchment and dry parchment. Because of these high prices for any quality of coffee, strip picking has become the norm across the country, creating a very literal lack of supply of high quality coffee.  

After an early August field visit with Aleco, Red Fox quality analyst Fabian moved between Inzá and Nariño for the following seven weeks to complete selection on three full container loads that are now headed to port for shipment to Houston and New Jersey.  Our offerings will be in extremely limited supply through the season and sold at a premium dictated by the scenario noted above.

From our dry mill partner in Popayan, Frederic Boppe:

Supply: There is little coffee around, so we can’t yet confirm our estimates regarding the upcoming crop. Nevertheless, here is what we can highlight:

  • For the 21/22 crop, we need dry weather, but rains might directly affect the mid-crop (4/22 – 6/22) more than the main crop.
  • Our crop size estimate remains 12.55m bags, which is about 5% lower than the 20/21 crop. But, we’ve heard from producers that they expect reductions of about 15% in the southern regions of the country.
  • We’ve noticed that due to the high prices and producers’ need for liquidity, producers are picking coffee cherries earlier, which brings quality issues such as inconsistency in the cup, primarily a raw astringency.
  • The flow of coffee is relatively normal [with coffee moving from the producing regions into the dry mills at a regular pace—effectively, everyone is desperate to deliver ASAP with prices so high.]
  • In Nariño, harvest is finishing and we estimate a reduction of 35% of the production compared to last year. Quality has been affected by the high prices (less care in picking and post-harvest processes). Our work in the field with the producing communities is key, directly with producers, to train and share good practices. We’ll wait to estimate the forecast for the next crop until we see the flowering that will happen in October (delayed compared to 2020/2021).
  • In Huila, harvest is starting in the southern area and because of last month’s climate conditions, the harvest is not expected to be concentrated as usual and we will have a constant flow of deliveries up to January/February.

Weather: It has been one of the wettest and cloudiest Augusts in the last 10 years. This is not favorable for next year’s mid crop and is delaying the start of the main crop. As a continuation of last month, we are expecting an increase in rainfall between 10% and 60% during September. This is not expected to be favorable for crop potential as it makes the trees more vulnerable to pests and diseases.

Logistics: The logistics situation keeps worsening: lack of food grade containers, few spaces, cancellation of vessels, increases in freight costs, and more. We estimate that the shipment delay is between one and two months. We expect that things will go back to normal in the early months of 2022. Shipping lines don’t have enough containers to cover the needed bookings, which is causing late cancellations. Shipping lines are not adequately communicating the situation of low availability of containers, so pushing to get accurate information is becoming the heart of the work of our logistic team; we are obtaining bookings but they must be requested well in advance, and sometimes encounter changes in programming even when planned well in advance. Buenaventura, Cartagena and Santa Marta are all facing the same issues.

So far so good with Asorcafé in Inzá and your producers of El Tablon de Gomez in Nariño, the operation is running smoothly.

As we said, the above all comes directly from Popayan-based dry mill partner Frederic Boppe. 

Rwanda 

Harvest in Rwanda is all but finished with most of the country’s coffee having passed through dry milling by now. Overall, volume from this year’s harvest was down about 20% from last year, and prices were high. NAEB, Rwanda’s National Agricultural Export Development Board, set the minimum price for cherry at 243 FRw (Rwandese Franks, the local currency), but competition among washing stations and traders drove prices over 360 FRw, a new record. 

Next year’s crop is off to a promising start with the rainy season having begun in early September, triggering flowering for the next harvest. If current weather patterns continue and flowering can be sustained to full fruit, we can look forward to a good 2022 harvest.

While Rwanda saw a surge in Covid cases through the summer along with the re-introduction of restrictions and curfews in Kigali and other departments, cases have been dropping and restrictions have eased. In September, the country hit the target of fully vaccinating 10% of its population, with over 1 million people fully vaccinated, and was recently commended by the WHO for its vaccine rollout.

Moving coffee out of Rwanda this season has been beyond challenging. Containers are extremely limited and shipping lines are cancelling bookings left and right. In the past, relatively quick routes from Mombasa to the US east coast were widely available, but this year all ocean carriers are routing even East Coast-bound shipments through ports in Asia, due to the high demand for moving cargo in and out of Asian ports. This means longer routes with multiple transshipments and greater chances for cancelled bookings and missed connections in over-capacity ports. Certain shipping lines are holding all US-bound containers without any prior notice, others are instituting “no sail weeks” where all vessel departures for a given route are being cancelled for multiple weeks in a row. 

We are pushing tirelessly to get our beautiful Kanzu lots afloat in spite of these conditions, but the arrival and availability in the US for these lots is still unpredictable and will be later than in prior years.

Ecuador 

Much like what we saw last year in Ecuador, steady rains, overcast days, and increased humidity over the past nine months have considerably decreased expected volume. 

In Northwest Pichincha, this means that the harvest is a few weeks from its usual time period for our long-term partners Arnaud Causse, Hernán Zúñiga, and Andrés Dávalos, Mateo Patino, and Gilda Carrascal at 1600 Estate. Despite these environmental setbacks, we hope to start cupping offer samples soon and get coffees moving from Ecuador to the states during the next quarter.

On the Covid front, in late May President Guillermo Lasso announced a plan to vaccinate 9 million people in 100 days. The country successfully accomplished this goal of 9 million vaccinated people on July 31. With an adult population of nearly 12 million people, Ecuador is currently ahead of the US in percent of population vaccinated. Despite the high vaccination rate, masks are still required in all public spaces, outside and inside. Residents have even been asked to wear masks when driving alone in a car. New cases of Covid-19 are at their lowest since March 2020. 

From the current crop, we still have two 50kgs bags of washed Typica from Rocio Zamudio at Continental that arrived in early 2021. This lot is a great option for an East Coast customer looking to fill a small espresso slot.

Mexico 

The rainy season across Mexico the past few months has brought stronger rainfall than the last few years—nothing that will have a negative impact, but rather an indication for a stronger harvest overall, especially in Veracruz. Harvest will begin in early December at lower altitudes. 

Ernesto Perez from APG coffees in Veracruz is seeing interest and competition already heating up from multinational traders and expecting prices to be significantly higher than last year, since many large buyers who got lower volumes out of Brazil and expect those conditions to persist through next year will look to Veracruz to secure coffees. 

Another condition he’s seeing is a national spot deficit for Mexican commercial roasters who recovered after pandemic slowdowns and see increased demand. They’re now trying to import from other countries to fill the gap and finding that challenging for the same shipping and importing challenges facing the world, so that demand will put a lot of pressure on local supply in the coming harvest. Balancing that, he does expect the harvest to be very good due to the biannual cycle, renovations coming to fruition, and the aforementioned strong rains.

Pepe Arguello from Finca Santa Cruz and Cafeco cooperative in Chiapas (who was going for his second dose of vaccine as he updated us) has also noted that the very strong rains this summer will produce a larger crop this year. One challenge he’s expecting is potential labor shortages in the harvest.  

In Mexico Covid news, the Delta variant has swept through Mexico as in the US. Just under 96.8 million vaccine doses have been administered in an almost nine-month-long vaccination rollout after more than 712,000 were given as of Sept. 21, health authorities reported. Almost 62.5 million adults—70% of the eligible population—have received at least one dose. Of that number, 42.2 million are fully vaccinated.

Ethiopia 

A very significant portion of our internal conversation turns to Ethiopia at this time of year as we begin preparations for the season just out on the horizon. Gathering accurate information is never easy this time of year as cards are often kept close to the chest on the supply side. Pricing has yet to be set with posturing a recurring theme.  

As we’re sure many of you are aware, the political situation continues to be tragically messy. Prime Minister Abiy appears to be bent on keeping peacekeepers out of the country, expelling a handful of top U.N. officials at the end of September. Aid trucks are not allowed into the Tigray region either. Violence has been triggered in producing regions, most specifically Jimma and Guji. Hopes of resolution may be nearer in Jimma than Guji. We wait for word from our contacts as to how this will play out as harvest kicks off in the next 5-6 weeks. There is also news of coffee trucks being hijacked en route to the Port of Djibouti.

From our trade partner Eden Kassahun in Addis Ababa:

For the general update, logistics issues continue to be a factor and security is another concern. I hope it will improve when the harvest is closer as many of them would be focused on collecting cherries—especially in Guji and Uraga areas.

While yields are up in Jimma we expect cherry prices to rise as well. Cyclically speaking, we expect a downturn in the southern harvests of Guji and Yirgacheffe. Cherry prices should soar in the more coveted regions as well. We await word from our strategic partners in Uraga, Haro Welabu, Hambela Wamena and Worka in the coming weeks as to what exactly to expect.  

Though we’ll be more diligent than ever in moving quickly in regards to selection, shipping, and logistics, we expect this may be the most difficult Ethiopia season on our record when it comes to shipping coffee. Our logistical strategy is now nearly in place and we are ready to push containers out to port as soon as possible come Q1 2022. We’ll have a strong Ethiopia update in place come January to help guide your expectations if not a supplement altogether prior to year end.  

In the meantime we currently (as of 9/30/21) have the following uncommitted Ethiopia SPOT positions:

The Annex, CA: 171 bags 

Dupuy Houston, TX: 143 bags 

Continental Terminals, NJ: 490 bags 

These coffees are in excellent condition. We recommend taking a second Ethiopian position if you’re looking to ensure Ethiopian stock through Q1 into early Q2.

Kenya

With the fly crop now concluded, our partners in Kenya are looking ahead to the imminent main crop. As always, we will look to act quickly on the earlier side of the season and move 2-3 full container loads in Q1 2022. 

From our trade partner Kennedy Keya in Nairobi:

Survival is the word! Covid, chaotic logistics, we don’t know what’s next, but we are fine in Nairobi.

The fly crop is coming to an end. It took longer for cherry to ripen and parchment to dry because it has been cold since May—this is our winter. Now, warm weather is returning with some light showers around Nairobi and coffee growing regions. We’re estimating a normal main crop of about 30,000 metric tons. We also expect good quality. Cherry picking will start towards the end of October in areas around Nairobi like Kiambu, Thika, and Muranga. Areas close to the mountain at higher elevation—Nyeri, Kirinyaga, and Embu—will start to pick cherry in November. We will have samples available in January for February shipment.

Logistics continue to be a challenge. It is becoming more difficult to find containers. When you find a vessel, space is an issue. Vessel sailing schedules are far apart. Some shipping lines that had weekly sailings out of Mombasa and Dar es salaam have cut down to only one sailing per month. And at times they decline to load exports citing lack of connecting vessels in Asia or the Middle East. We are adopting a wait and see attitude hoping to see normalcy return.

As we said, the above all comes directly from Nairobe-based trade partner Kennedy Keya.

Guatemala 

With good steady rains, our partners in Guatemala are looking forward to a larger harvest for the 2022 crop, but they’re also already expressing fears of another year with migrant labor shortages. “The problem will be when harvest comes along if there will be enough pickers and people to work at the farms,” said an exporter we work with closely. Last harvest, labor shortages were driven by travel restrictions put in place to help stop the spread of Covid while many migrant workers are staying home or seeking opportunities elsewhere. 

On that front, Guatemala, Central America’s biggest country with about 18 million residents, has posted nearly 480,000 coronavirus infections and more than 12,000 deaths, according to official data. As of early September, 1.3 million or about 7% of Guatemalans have been fully vaccinated. Although President Alejandro Giammattei proposed a series of measures including more restrictive sheltering in place and curfews to help stop the spread of Covid on September 2, their Congreso de la República refused to pass them. 

From the current crop, we currently have two Guatemala lots available: 16 bags from Felipe Martinez’s farm Los Arroyos in Huehuetenango warehoused in CA, and 20 bags from smallholders in the San Jose Poaquil community in Chimaltenango warehoused in NJ. 

Get in Touch

As always, if you have any questions, concerns, or thoughts, let us know. We’re here to help. 

Higher Base Rates, Flatter Pay Structures: How Pangoa & Ocumal Are Doing Things Different

Tailoring Payment Structures to the Needs of a Group

As we’ve discussed in pretty much every one of our previous pieces about paying for coffee, different groups negotiate their pricing structures with different needs and priorities in mind, and our job is to work with them to create a pricing structure tailored to those needs. Two great examples of groups whose needs are taking our pricing structures in new directions are Pangoa in Peru’s Selva Central and Ocumal in Northern Peru’s Amazonas region. 

Since the beginning, a core of our focus has been that the prices we pay based on cupping scores are transparent from the outset, and the premise of those structures has always been that as scores go up, the price rises, with the base price for the lowest-scoring tier being a sound price that won’t leave behind producers whose crops are clean, sweet, and bright, but maybe not as nuanced in their flavors. While that’s still the main locus we move from, growing our work with Pangoa and Ocumal has led us into a flatter structure with a higher base price and, in Pangoa’s case, only one tier. 

How We Got There

Pangoa  

Of all the groups we work with, perhaps none embodies the values of cooperativism better than Pangoa, so it’s no surprise they were the ones to lead us into exploring flatter pay structures as a way to increase pay for the group as a whole. 

Some background on this group: led by first-ever woman coop leader in Peru Esperanza Dionisio, we’ve worked together since 2017. Although the group has been around and beautifully managed since 1977, they went through major upheaval through the 80s as a guerilla group called the Shining Path caused massive socio-political upheaval for over a decade, cutting membership by half as families fled to bigger cities. When the political situation stabilized after Shining Path leader Abimael Guzman’s capture in 1992, coop membership also stabilized, now ranging from 680-700 active members registered per year and representing a tightly woven community of farmers. Their core focus on cooperativism helped them protect membership throughout the Covid-19 pandemic, delivering groceries to producers during the lockdown months and continuing to make sure members are safe. Various programs have helped members practice biodynamic farming, grow their own food and medicine, and skill-share. Specific programs help women develop alternate revenue streams and valuable skills. The group also has Education and Health Funds for member families. 

Understanding Pangoa’s core focus on cooperativism, it’s easy to see how this group was the one to lead us to a flatter pay structure of one tier only for all coffee that meets our base quality standard. The idea came up in conversations with Pangoa leadership in 2019. We love the coffee we get from them, and the producers who meet the Red Fox quality standards love the higher prices they receive from us, but because Pangoa has other core buyers who pay decent prices for coffees scoring in the low 80s, we weren’t able to catch as much of their volume as we would have liked. Leadership also wanted to encourage more producers to make the Red Fox price and quality jump so they could increase their earnings, and we decided together to increase the base price for all producers meeting our minimum quality standard (which represents the bulk of the coffee we buy from Pangoa anyway) and eliminate higher pricing tiers for higher scores, except in the case of truly exceptional coffees. 

Because we only implemented this new system just before Covid hit, it’s not yet possible for us to know how it’s worked out. Last year’s harvest was complicated by Covid restrictions (the coop couldn’t offer their typical service of agronomists who go farm to farm supporting producer needs, detailing prices, and encouraging delivery) so we received less volume, and this year we don’t yet know what final volumes look like, but the elevated C market and increased competition for green coffee across South America will likely mean we don’t net substantially more volume from Pangoa this year either. We do feel confident that it’ll go up in the future, but regardless we’ve seen that exploring a flatter pay structure with this group who so deeply believes in the cooperative as a value system rather than just a way of doing business has been an enriching lesson. 

Ocumal

Ocumal’s situation was completely different: rather than coming from a place of relative stability and desired growth, they really needed a shift in how incentives were structured to get through the year. Some background on Ocumal: they’ve been around since 2016 and we’ve been working together since 2019, before which they sold all their coffee for much lower prices to a larger cooperative. Home to about 150 members high up in the Luya district of Peru’s densely forested Amazonas region, Ocumal was founded by Faimer Villar and Freddy Zuta Chavez with the goal of working communally to increase quality and build access to financially sound markets to help the community thrive. They offer dynamic support to members including training and technical assistance on organic production, Fair Trade criteria, harvest and post-harvest best practices, and marketing services. 

For Ocumal as a newer and less well-resourced group, they had sold their coffee at much lower prices before we started working together, so they were super happy with the two-tiered structure we had set out before this year. What changed this year was the incredible competitiveness of the green coffee landscape in Peru and the rest of South America with the C market jump and supply disruptions in Colombia and Brazil. In order to make it feasible for members to sell their coffee to Ocumal rather than to passing intermediaries representing multinationals (who arrive with cash in hand paying dramatically elevated prices compared to a normal year) Ocumal had to have extra incentive to offer members in order to make it possible for them to wait. Our goal with Ocumal wasn’t to reward or incentivize a particular type of differentiation, but just to help the group stay solvent through this tough year by raising their base price to a price on par with the high premiums for top scores in previous years and making sure that anyone who makes it to that base tier can stay loyal to the group through this year. While producers win when they can get a high price everywhere they turn, it’s still important to help cooperatives and associations remain solvent so that they can be there to support producers in years when the C market and local market prices are much lower, as we saw in the years leading up to 2020. 

The reason we place so much emphasis on high base prices no matter the surrounding circumstances is that in the case of every group, that’s the bulk of what they produce. Ocumal is no exception. Raising the base price and flattening out pricing nets the group more money as a whole. Next year if Ocumal wants to go back to a more tiered system, we will do that, and if this still works best for them, we can plan to do that. 

Pros & Cons on Both Sides

For producers, the obvious pro is that when base prices go up and premiums mostly go away for higher scoring tiers, the group makes more because most coffee producers, even in the specialty realm, produce the majority of their coffee in the 84/85 tier. Even if fewer dollars go toward premiums over this base, more money goes to more members, period. This is a pro for us too from an equity standpoint—we want to see more money go to producers.

Another pro for both us and associations is ease. Even though flatter pricing doesn’t change that we cup every individual lot rather than relying on type samples, it still allows us to focus on a simple pass/fail scoring system during the purchasing process. Those results are also easier for producer leaders to communicate outward within their organization and community and eases the confusion or resentment that can occur when a producer nets a premium one year but not the next based on quality (and often unrelated to how hard they worked in production). On our end, it also simplifies lot construction.    

On the one hand we have all those pros, but on the other hand, we have the question of whether one flat price for all Red Fox coffee levels would lead to producers not making the extra effort to get past the 84/85 point level, or to resentment from those who do work extra hard to produce higher scoring coffees. Coffees at 86+ level are a staple of specialty coffee, and we love them and want to incentivize their production where we can. 

While those pros and cons exist and factor into our thought processes, the main thing to acknowledge is that some groups want a flatter pricing structure, but some have no interest in one. In Oaxaca where we mostly work with small decentralized groups (often extended families or neighborhoods) without formal leadership structures, we’ve seen that as long as base prices are high enough to make coffee production a valuable trade, some love the friendly competition of getting premiums for higher cup scores, while some prefer for everyone in the group to make the same amount if their coffee meets our base quality standard. In these cases, our shared goals with Pangoa and Ocumal’s specific needs this year led us to a shift in how we pay for coffee with those groups. The key isn’t any one structure, it’s letting groups’ needs lead the way to an incentive structure they like and benefit from. 

Producer Groups’ Needs Should Lead the Way on Pricing Structures 

As pricing and competition dynamics shift and change from year to year, it’s important to approach producer groups with the energy of carrying over the dedication and investment from prior years but being sensitive to their changing needs. Just like we as people have different needs for the incentives that motivate us, and just like our working relationships work best when we have a say in how our needs are met, sourcing relationships should also be built and maintained in acknowledgement of producers’ and associations’ changing needs over time. As we continue to grow and develop relationships with a diverse array of producer associations and cooperatives, our work is to let their needs inform the shared incentives we create together. 

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.

Colombia & Peru Update, August 2021

As promised, we’re coming to you today with another origin and shipment update with specific focus on the current and anticipated situation in Colombia and Peru, typically our two largest and most critical sources from the Southern Hemisphere. The C Market has been a rollercoaster ride for the past 60 days, the South American harvest is as volatile as we’ve seen it with the Brazilian frosts and competition for parchment in both Colombia and Peru, and the global shipping situation showing no signs of improvement as the 2021 finish line appears on the horizon.  

Fret not. We will be flush with Peruvian coffee on all three coasts come fall as well as preparing shipments for Korea, Japan, Australia, and Europe. Colombia, Ecuador, and Rwanda will follow suit from the Southern Hemisphere harvests. Our primary objective is to get fresh coffee into your roasteries as quickly as ever.

With that said, you may have noticed that the time we would usually have opened forward booking for Colombia has passed. As we’ll delve into below, the current harvest and shipment situation in Colombia will leave all green coffee sources competing at higher prices for much smaller volumes of quality Colombia coffee. Because of that, we strongly recommend forward booking the majority of your South America volume in Peru, rather than Colombia. We will not be able to offer a substantial amount of Colombia coffee to forward book this year and the quality we’re seeing out of Peru will absolutely meet the full scope of your menu needs. In order to give you the time to outfit your single origin and blend menu accordingly, we’re extending forward book pricing through September 15. To talk through your menu with us or make a commitment, get in touch. 

Supply, Demand & the C Market

The C Market price surged 30+% in July before backing off to the $1.80/lb zone. Three frosts in Brazil have been the driving force in conjunction with dwindling green coffee stocks across both the global north and the Brazilian reserves themselves. The current Brazil crop could be down as much as 10% (roughly four million bags). Long term damage assessment is still in process, though experts forecast even heavier losses in the 2022/23 season due to these three frosts and the horrible drought situation in 2020. The extent of the damage won’t be fully known until after the first rains trigger flowering in the months ahead. It is highly likely that another market spike is tethered to those fall reports.  

Colombia 

Along with a C Market in flux, the Colombia harvest outlook also appears bleak for the upper end specialty segment. Due to an overly wet harvest season and aggressive internal competition for parchment, clean, sweet, complex 85+ coffee is incredibly difficult to come by. We expect our own purchases to be down somewhere in the neighborhood of 50% from this first semester’s harvest versus 2020. Fabian is currently vetting weekly deliveries to the Asorcafe warehouse in Inzá, Cauca and will soon move on to cup through Nariño warehouse deliveries. Our supply will be extremely limited through year-end 2021. Expect pricing in excess of $4.50/lb ex-warehouse on all of our offerings this season.  

Peru 

We are knee deep in the Peru buying season with our first eight containers headed to dry mills in Piura and Lima. Coffees from across the north—Amazonas and Cajamarca—were first-in first-out of our Lima lab this year and will therefore hit the water first, along with Cusco coffees from our primary partners at Valle Inca. With vessels scheduled for September departure, we expect our first arrivals to land in October in both New Jersey and Houston, TX. Our first Incahuasi containers hit the water in September as well.

Our strongest cooperative partners remain competitive in their respective regions, both in quality and quantity. Due to Valle Inca’s location in Yanatile and Lares, they’ve faced the most competition for parchment, but Prudencio’s history with his producer members has proven stalwart. 

Shipping & Logistics

Transporting coffee remains the specialty segment’s most critical 2021 impasse. Container availability is bleak. Vessel availability is a crap shoot and tremendously expensive. Routes have been cut down, equating to longer transship times. Covid-related port restrictions have led to container ships sitting off the coasts of their destinations for potentially multiple months.  

We elected to address the worst situation, Port of Oakland, by landing a healthy dose of our South American offerings in Houston. We will store more coffee at Dupuy Houston than prior years and will also move coffee from Port of Houston directly into The Annex. All East African offerings will land in Port of New Jersey and be railed across the country. Ensuring fresh delivery is critical to us and we’re constantly evaluating and adjusting plans to get coffees to their destination as quickly as possible.

As always, as in all things, we’re here for you—so get in touch to ask us questions, talk, or anything else you need. 

Carina & Fabian of Red Fox Sourcing Talk History & the Future in Peru, Colombia, & Mexico

As we continue working to spotlight voices from producing countries, we were excited to interview Red Fox’s own Carina Barreda and Fabian Viveros Léon in the Foxhole. Fabian and Carina are linchpins of our sourcing program, helping with on-the-ground quality analysis, producer support, and relationship development, among many other things (more in their own words below). Both come from key coffee producing countries in which we’ve worked since the beginning (Fabian from Colombia and Carina from Peru) and have a ton of insight to offer into the current situation and long-term developments both within coffee production and the larger political situations that affect and underpin it. In this Q&A, Red Fox co-founder Aleco Chigounis and head of Red Fox Sourcing Co Ali Newcomb interview Carina and Fabian in Spanish; the interview has been translated and edited for clarity. 

Aleco: It is a great pleasure to have you both here. We want to talk about your work, your perspectives on the coffee industry, and your thoughts on the future. But let’s start with your roles. Fabian, can you share what you do with Red Fox?

Fabian: We do a little bit of everything. Here in Oaxaca, we meet and organize bringing on new coffee producers and relationships. I’m also in charge of quality control, all of the follow-up from the production through to the final shipment, managing the whole chain so that the entire relationship from the coffee producers to the final client becomes one and is fully transparent in our business.

Aleco: Nice, thank you! And Carina? 

Carina: I do similar work to Fabian. I am in charge of managing the labs, first in Peru and now also in Mexico this season. That means handling the logistics for the samples we receive, organizing the cupping sessions, organizing communication with certain cooperatives regarding their results, and most of all, quality control of the offer and preshipment samples we receive, making sure that the lots we buy meet the quality standards that we need them to meet in the dry mills. I also play a role in marketing. 

Ali: In all of our operations both in Peru and in Mexico, there are a really wide range of activities and responsibilities and you two are definitely do-it-all kind of people and you get involved in everything.

Aleco: With all the experience that you both have, in Mexico, in Peru, and also in Colombia (Fabian is Colombian for those who don’t know), how do you see the future of coffee production in those countries? Because a lot is changing fast. What is your perspective? 

Carina: I have more of a relationship with Peru because I spend more time working here, am from here, and I have been working in the coffee industry here for years. I think we need to look at the future of coffee production in Peru through an optimistic lens. We are in a very complicated political situation, coming out of a very unstable political situation. In one way or another that is going to affect the coffee production chain. We will probably see some effects this current harvest. But aside from this political panorama, I feel there’s still plenty of room to grow in terms of how much coffee is being produced, not only at the specialty coffee level, but at the commercial level as well. And in terms of quality, I feel like there has been tons of improvement if we look at the past, especially since the period of coffee leaf rust. Domestic consumption has also increased, which almost automatically leads to higher production and incentivizes it at a national level. So even though this season and coming years might be a little bit unstable because of the political situation, I think it’s worth it to see it with optimism. What do you think about Colombia?

Fabian: Colombia as you all know is a very developed country when it comes to coffee. They have progressed in many areas like quality control, transparency in production, and every day they are innovating in production and processing. They are very far ahead.

In regards to Peru, it reminds me of Colombia years back, in its massive production, and I see huge potential in Peru to develop great coffees, great volumes and great quality. More microlots, new regions. There is still much to explore in Peru. 

In Mexico, we are developing and searching for new regions and producers to work with, in all the areas in Veracruz, Chiapas, and Oaxaca, each one of them still has a lot hidden. There’s so much quality to continue to grow and develop, and we are searching for all this. The expectation in Mexico is growing a lot, because they are small producers, and very dedicated to coffee.

Carina: Yes, to add to what Fabian is saying, I had the opportunity to come to Mexico for the first time and to get to know coffee production in Mexico, and I agree that there is so much potential. There is still so much more to do and help grow and be a part of. Another way of putting it is that I think that Mexico has the ability to become a country that is recognized worldwide for its coffee quality. With a bit of organization.

Fabian: With a bit of organization.

Carina: And a bit of government support, which is something that all of Latin America is lacking.

Ali: It is very interesting not only to hear your perspectives but also your comparisons of the different countries. On the same subject, how do you see the transformation of commerce in these three countries?

Carina: Well, I honestly don’t have an experience as broad as you all have in terms of trading and coffee commerce. The experience I have is basically thanks to Red Fox and the 3 years I have been working with you, so I don’t have a comparative way to see the transformation of commerce in Peru. What I do think is prudent is to always stay up to date with the new trends of consumption in the market. To know what our clients want, what our clients are looking for. And, on the other hand, what the producers are able to produce. 

Fabian: In Colombia the transformation of the market has been enormous. The market conditions for the producer make it very easy to take their product and sell it on any corner and obtain good prices, and it’s very convenient. Everything is ready for the producer to decide where they want to sell their coffee. It is very easy in Colombia to find that kind of market. It is quick and safe. Peru is in the process of getting there. Their volume is huge, and it’s not that easy to find a market for that kind of volume so, the development is going very steadily with the cooperatives looking for markets and presenting the palette of their profiles and the good coffees that you can find in their respective areas.

Here in Mexico, the market is developing faster, because the national coffee shops go looking for their coffee at origin and that helps the producer know their market, know who they are selling their product to in what shops it is going to be sold. So you find a different mix here compared to the other countries, because the national market in Mexico consumes a lot of this coffee, and prices are very competitive with the national companies, and it’s highly coveted coffee inside the country and outside. For all the producers in a lot of areas, there’s a high and constant competition for their product.

Carina: I think it is interesting what Fabian is saying about the consumption culture in Mexico. It’s not as old in terms of specialty coffee as Peru, but I think it has taken off with a lot of force. One of the things that surprised me the most about coming to Oaxaca was to find this fervent culture of third wave coffee shops that want to get into the specialty market. And even though Peru started a few years back, before Mexico, you can’t find as many coffee shops in other regions outside of the capital. I think that’s another remarkable thing about the internal consumption in Mexico. 

Ali: I’m with you, the coffee culture impressed me a lot, and they are so proud of Mexican coffees, and that people are willing to pay a very good price that competes with the international markets. That’s something we don’t see in Peru, people are not willing to pay those prices. And the coffee is not as valued in the same way we have seen in Mexico.

Changing the subject, and I think this is a really broad question because we are in the middle of the protests in Colombia, we just came out of the elections in Peru, but I wanted to know your opinions. What can you tell us about the political situation in Peru?

Carina: How much time do you have? The political situation in the country is in a very complicated moment, as you said. We haven’t finished with the presidential election yet, an election that should have been finalized a few days ago that has gotten complicated due to fraud accusations.

On top of that we’re coming from 5 years of exhausting political instability. In the last 5 years, we’ve had 4 elected presidents, which has damaged a population that also had to deal with the pandemic. Through all of this political instability, aside from the emotional stress that the population has already been through, it has considerably affected the financial health of the country. The Sol (Peruvian currency) has devalued in comparison with the dollar, which has raised a lot of concern within the population as well. The scenario we are facing right now is a possible very conservative left socialist government. There is a general fear in the population, which Fabian and I were just talking about, which is the fear that the entire Latin American population has right now of falling into a socialist model of a dictatorship like the one in Venezuela.

It’s not a very pleasant scenario, but it is what we are facing, so we are trying to keep calm as much as possible, to avoid creating more panic, to avoid creating price hikes, to avoid creating more instability, no? It’s going to be interesting, to see how all this develops in the next 5 years. We have to pay attention as a company and see how this will affect the agronomic sector and what kind of policies in the agronomic sector will be implemented by this new government.

I would like to think optimistically that we are going to maintain the level of production, not only of coffee, but in our work specifically. That coffee production will be maintained, that the internal consumption will continue to be incentivized. I would like to think that the rights of the agronomic sector are going to be protected. But we still have a lot to see, because there is no clarity about what this government’s policies are going to be in regard to the economy and the agronomic sector. That’s a short summary.

Fabian: As far as Colombia, the Colombian people have been enduring the issues that are coming to a head now for a long time, and they’ve felt very vulnerable with the decisions that the current government has made. With the abandonment of the people’s needs and everything that the government has done, the Colombian people have reacted. Unfortunately, now with Covid, the resentment has been much more brutal.

Ali: Going back to your idea, these are issues that have been present for many years, and now everything is coming to light. These are not new issues, but rather years and years of resentment.

Aleco: It is like boiling water passing its limit, no?

Fabian: Yes! Yes, as Ali was saying, people’s resentment has exploded now, and because of the pandemic everything has gotten more complicated. The government has also been unwilling to listen to the people. There are many industries that have been left unprotected by the government. Now, during these times, they have gotten together to unify their voice, unify their shout, against the president, the government, because of their bad decisions. Commerce has been affected. In many instances they have cut gas, energy, water, access to food has been blocked for people who are far away, it has been very complicated. It’s the dissent of an entire population, everyone who has been mistreated by the system, and it’s affecting us all. The entire production chain, the health chain, and the entire system in Colombia has been … well, it has collapsed.

Carina: Do you have presidential elections soon?

Fabian: Yes, same, we have presidential elections soon, and that increases the internal conflict even more, and the conflict of interests. The instability.

Aleco: Thank you for this, we know that everything is changing daily in the two countries, and we are in front of the television, the radio, the internet, looking for any kind of news that we can find. Your perspectives are invaluable. 

Carina: I want to thank you for the space, for me and Fabian. I feel like we have to be paying very close attention to all changes, how they can possibly affect the coffee industry, and the possibilities of the producers.

Aleco: Thank you very much for your time, you are two of the most powerful ingredients in our recipe, our company. I thank you all for everything. And I will see you soon in Peru, or Colombia, Fabian.

Fabian: Thank you Aleco, see you! See you soon!

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.

Casimiro García López of Pluma on Community Origins & Modern Challenges

We were excited to be able to interview Casimiro García López of Pluma de Oaxaca, as well as his son Omar, face-to-face in Oaxaca. A second generation coffee farmer, Casimiro and his wife Reyna Petronila Luna farm 20 hectares (an unusually large farm for the Pluma region) just outside San Agustin Loxicha en Aguacate, a community growing both coffee famous for its malic character and avocados. Casimiro’s older children support in both farm work and marketing, contributing agronomic knowledge learned in local courses. In the off-season, the family works as blacksmiths. He’s been one of the most consistent parts of our Oaxaca coffee community year over year. In this interview, translated from Spanish, Casimiro and Omar talk to us about the history of their family in Pluma, the origins of the unique Pluma Hidalgo variety, and the biggest challenges they face in the present. 

Adam: Mr Casimiro, thank you for coming. I would love for you to tell us a little bit about the story of how your grandfather started to produce coffee in Loxicha and how he managed the fields. I think this story is very interesting.

Casimiro: The origin of our coffee and our work here started about 70 to 80 years ago.The plants came from the community Pluma Hidalgo. We got them because the community here in Loxicha, where I am from, was very poor. The people didn’t have good quality of life, the most they had was two or three heads of cattle.

What happened was that a community member suggested that the community switch from cattle farming, which was very cost intensive and unprofitable, to coffee farming, from which they could make more money and improve their quality of life. That’s what led the grandparents of our community to go and bring coffee plants back from the community of Pluma Hidalgo. Back then, there was no transportation, there were no paved roads, there was no way to transport the plants, so they had to bring the plants on mules, however they could, even just carrying them in their hands; and that is how they started to sow.

From there, my father continued working, and so did my generation, and my children. Now, we are very thankful to be working with Red Fox.

Adam: And how many days did it take to bring the coffee from Pluma Hidalgo to Loxicha en Aguacate by mule?

Casimiro: Well, it was two days going there, and two days coming back.

Adam: Walking?

Casimiro: Yes, walking, cars didn’t exist. The big road from Miahuatlan to Pochutla had cars, but not like the cars we have today. We were ranchers, we couldn’t go by car, so the mules were the only transportation we had.

Adam: And this is the same variety that you still produce up to date?

Casimiro: That’s right, exactly. That is the variety “Pluma” that we have.

Adam: Can you explain to me how your communal system works? How many family members do you have around? Do they bring you cherry? How do you coordinate and work with your relatives and neighbors?

Casimiro: In our area, the vast majority of our relatives are coffee producers. Some neighbors too, they are a bit further away. Each person has their own plot, each plot has its own coffee. The harvest starts in December, around the 15th, the 20th, people start collecting their coffee. 

Our method is letting the coffee ripen well so the coffee can turn out well after processing. I saw that people in other communities would start collecting the coffee when the fruit was still yellow, and the coffee isn’t good like that, it has to be ripe. Then we harvest, and in the afternoon, we depulp together and leave the coffee to rest all night long and for part of the next day. Between 15 to 20 hours, give or take. Then we wash the coffee and take it to the drying patio, for six to seven days. We manage watch over the drying. And that’s it. 

Adam: What is the biggest challenge you face in producing high quality coffee, like the cost, finding employees, etc?

Casimiro: Well, in times of harvest, first of all, we need people. If we don’t have people, then we can’t work. So, for this, the most difficult part is to have money to be able to pay the pickers.  

Adam: But you have work all year round, no? Like now, it started raining, so you told me the coffee was starting to flower, so what happens in the season when there is no harvest? What is the work then?

Casimiro: After the harvest, the work that we have is to grow seedlings and prepare the farm. To plow the trees, to get coffee, and prepare the starts. And then in June, we start sowing, it is time to plant new seedlings. After that, we start cleaning (weeding and pruning),then cleaning. We start harvest after that. So, during all that time we spend, we manage money to invest. 

Adam: Omar, I am not sure if you want to comment, since you are Mr. Casimiro’s son, and you also have your own kids. What is your vision to keep producing coffee? What do you need to keep producing coffee and to make it profitable? To have a good life?

Omar: To continue in the coffee industry, I believe that the most important thing is to have passion for coffee, to keep moving forward, because today, we have many obstacles, mainly with the coffee leaf rust. But I believe the coffee industry is something beautiful. On a personal note, I would like to own my own farm in the near future so that I can continue working, continue innovating, and with time maybe adapting new processes to improve the quality of the coffee. When we improve the quality, there’s a bilateral benefit for both parties, it’s good for the consumer and for us as well. 

I would also like for my kids to continue with the beauty of being coffee producers, and for them to have their own plots, their own methods, for them to continue innovating, and to continue this beautiful life, and to continue well.

Adam: Do you drink your own coffee? Do you roast and drink your own coffee from the one you produce?

Omar: We do consume it, but in a very traditional way, I mean, in our case, my mother, when she prepares coffee, we have a manual coffee grinder. The way we roast it is in our traditional way, we have our clay pot, our stove, and my mother roasts the coffee there. The moment when she sees the coffee is ready, she grinds it in the manual grinder, then she brews it, it is a very traditional method. 

Adam: It is very interesting to be able to taste it in different roasting and brewing methods, right? To be able to understand the results based on the changes in the processes, in the harvests, and the effect that it has in the cup, no?

Omar: Yes, exactly, the different results would teach us things, to see the difference of a long drying time as opposed to a short drying time. In that aspect, it would be really interesting to do it.

Adam: Is it important for you that, the variety Pluma, that your great-grandfather brought, that it still has the recognition in the market? Is that something that motivates you? Or is it just what you have and what you continue producing?

Omar: Well, I would tell you that for the coffee Pluma, or even more so, before knowing you, the recognition was practically zero. Before, we only delivered the coffee, we got our payment, and no one would tell us anything. Throughout the years we met Red Fox, we met you, and you let us know that the quality of the coffee is very good. The Typica variety, and you have let us know that you found very nice notes in our coffee. Like chocolate notes, hazelnuts, and all notes that can be found in the Pluma coffee. And it is a huge satisfaction that this coffee is well known, not only in our state, but also in the USA where you are, if not the world. And that people recognize the quality of our product—it fills us with pride and satisfaction, and it motivates us to continue to work, to continue improving and to continue producing quality coffee.

Adam: That’s so great, it makes me really happy. Because we have clients that were buying specialty coffee in the ‘80s and ‘90s, and they always speak about Pluma Hidalgo, I believe it had a name back then and it had gotten lost in the last 20 years. So, for us, it is something interesting and also important for the new generation of roasters in the market that they can also know a very special coffee. Because Pluma Hidalgo, the Pluma variety, is different from the Typicas of other regions. It has a very unique flavor.

For us being able to meet you, and be able to build a relationship, and to know that this variety works for you is wonderful. We’ve seen your farm several times and the plants are very healthy, it is productive, it is well kept, To us, it is important to reflect that profile and carry it on in the market. It is interesting to be able to continue and recover a little bit of the history. To know that your great grandfather brought it from back in the day, and that it continues producing, for me it is an important part of the specialty coffee and to maintain the story. This is the link to the ancestors.

Is there anything that you want the consumers or the roasters to know about your work, or about the relationship we built between Red Fox and your family?

Omar: Yes. Four years ago, we met the company Red Fox, I believe before we met you all, the recognition that our coffee got before you was practically zero. Sometimes we received only the payment and that’s it. We wouldn’t hear from them until the next harvest. Then we met Red Fox. You recognize the work we do on the farm, all the coffee processes, the drying, the fermenting, the washing, and I think that you have recognized our work, I think you leave satisfied with all the processes we all do. And that relationship, in all areas, administrative and coffee production-related and financial, it is a good relationship, and to carry that on that is my father’s wish. Our wish and the wish for the farm. To continue working, to maintain the relationship, and to keep it for as many years as possible.

Adam: Thank you so much for coming, for talking to us and for always investing more and strengthening the commercial relationship that we have. We’re looking to come back again with the new harvest to be able to visit your ranch, and you know we have a house here; you are welcome whenever you would like to come.

Omar: Thank you! Thank you very much Mr Adam, you know you and everyone at Red Fox have a home at San Agustin Loxicha and in the community of El Aguacate. In San Agustin, in Pochutla, whenever you decide to visit us, it will be a pleasure, our honor to have you with us, you are all invited to our house, and we would love to have you all there next year. And during the harvest so you all can really see the work we do there.

Adam: Yes, thank you so much. It was very gratifying to take my kids, for them to get to know the farm, so they can also know a little bit about our work and have the experience of getting to know you. They are always talking about your son, and the time they spent there on the farm.

Omar: Yes, it is gratifying year after year, when you go, and not only the same people, but new people come over. Sometimes a roaster comes, sometimes another person that works for Red Fox comes, or families. During this harvest you brought your wife and your kids, and my son got really excited to have new friends. Now he says that he has friends from the USA, so we are all very happy, and we hope the relationship continues for a long time. And whenever you want, you have a home there.

Adam: Thank you, thank you very much.

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.

Prudencio of Valle Inca, Peru on Building Trust & Community

Prudencio (Jose Prudencio Saenz Vargas) is the widely respected leader of Valle Inca in Cusco, Peru, one of our largest and most important relationships in the world. A Calca native, Prudencio grew up on a coffee farm, studied agronomy, and then went on to work as a bank loan officer before running Valle Inca—fiscal experience of critical importance to Valle Inca and the surrounding community, most of whom are smallholders averaging just 2-3 hectares each. His extreme quality focus has always been key to the group’s success. He helped Valle Inca producers move from drying coffee on plastic mats to raised beds, worked to improve drying, fermentation, and storage practices, and was the first producing partner of ours to implement GrainPro in storing parchment. He meets farmers where they are in the isolated reaches of Yanatile and Lares and works with them to produce the best coffee they possibly can for the best price they can get. What follows is a conversation with Prudencio, aired originally on the Foxhole and edited for clarity and brevity. 

Aleco: Hello and welcome to the Foxhole. Aleco Chigounis here with Ali Newcomb. Today we have one of our most special guests: our good friend José Prudencio Vargas Sáez, from Calca, Cusco. He is the leader of the Valle Inca group, which, while still being a relatively small and new group, has become the largest Red Fox sourcing partner by volume in the world. We have grown with Prudencio from 40 bags the first year, to almost 12 containers that were made last year and from there they will continue to grow. 

Welcome Prudencio! It’s a pleasure to have you here. 

Prudencio: Thank you.

Aleco: Can you tell us a little bit about how you started the Valle Inca group?

Prudencio: Yes. My name is José Prudencio Vargas Sáez, I am the son of a coffee producer, from the community Laco Llavero in the district of Yanatile, province of Calca, region of Cusco, Peru. I’ve been in the coffee industry my entire life. I was born on a coffee farm named Tomas Huato in Laco Llavero. Later I studied agriculture in a Salesian school. Coffee is my life. It’s my life, it’s my world, it’s what I do, and it makes me feel good. All of my family are coffee producers. There are coffee producers in my community that have really suffered from low prices in the past and been totally abandoned when prices were low. All of that is what inspired me to start Valle Inca.

Aleco: What year did you start the association? 

Prudencio: In the year 2015 and in our first year we sold just 20 quintals of coffee to Red Fox. It’s been six years since Valle Inca started taking form, but four since we had full legal status.

Aleco: How many producers did you start with?

Prudencio: We started with just five producers in the Yanatile Valley. Among them, we have Mr. Agustin Ccasa, Juan Jose, Eddy Robles, and other coffee producers that didn’t really believe in an organization like this at the beginning. Just like any other startup, there’s not much credibility early on. But by 2017, we were working with 50 coffee producers. In 2018, we worked with about 127 producers. And currently we are working with 260 coffee producers.

Aleco: That is incredible, Prudencio—congratulations!

Ali: How was the process for you, because you were a loan officer at Agrobanco (agrarian bank) before that, no?

Prudencio: Yes.

Ali: You were working with the coffee producers then but making agricultural loans. And from there, you went on to start Valle Inca.

Prudencio: Yes, that’s right. The thing is that I have been involved in agriculture my entire life. Beginning with where I was born, where I went to school, and leading up to the moment that I worked with Agrobanco making loans to coffee producers. It’s a different world and very helpful experience, and in parallel I was working with the organization that is now Valle Inca, but with a small amount of coffee. The financial experience has helped a lot. 

Ali: What have been some of the challenges? You started with only 20 quintals your first year and just five coffee producers, and now you have grown to a large organization, exporting a lot of coffee—more than 15 containers per year. What challenges have you faced in that process?

Prudencio: The main challenges are, paying a sustainable price to the coffee producer, obtaining high quality coffee, and being able to reach new coffee producers. And to fstablish equity so the producer, the intermediary, and the consumer are happy: that is the challenge that Valle Inca set out to achieve. 

But the biggest challenge in Peru is always getting fair prices for the producers. The next one, is the quality. That for us, is very important. The quality is very important, to look for, to research more. Find more producers, to understand the altitudes, the varieties, the genetics. Coffee is its own world, a world that millions of families depend on. All of that is the work we do. 

Ali: Regarding quality, I think we all recognize that you have been very successful, and just a moment before this meeting we drank a spectacular coffee from Combapata. 

Prudencio: I am drinking a coffee from Alto de Cedruyoc, from Emilio Gutierrez. It’s early coffee from the 2021 harvest.

Aleco: Very good.

Ali: Prudencio, I know Valle Inca plays a big role in the community, more than just buying coffee. Can you tell us a little bit about that role and how this has played a part in facing the pandemic?

Prudencio: As you said, Valle Inca is not just an organization that buys and sells coffee. Our goal is to find a sustainable future for the community. We work to be calm and coordinated in our decision making, and that was key during the pandemic to maintain trust and support the community. At Valle Inca we keep our word. We fulfilled everything we committed to and focused our resources on producer needs. If someone needs a loan, we have to find a way to do it, whether we have the resources or not to support them in their hardest moments. Now we have to look after health issues, social effects. For example, right now we’re working to get psychologists for the producers, so they can improve their mental health and quality of life. We’re also responsible for finding a good price for them, to offer them that stability. In turn, they do the best work they can offer. 

That all helped us a lot through the pandemic. 2020 was a very difficult year, but as a collective I have to thank Red Fox, and your clients for the donation you made to us. It all adds up. Here in Peru, we were lucky to be able to look for help from the municipalities and NGOs to help all the producers: with staple goods, mainly to cover the food needs. At the moment, we are working full force disseminating information to gain the producers’ trust, and to improve their trust in the clients and the entire chain.

Aleco: What would you say have been the main achievements of the cooperative since you started?

Prudencio: Of course, when we started in 2015, Valle Inca sold 20 quintals, and never in our lives could we have imagined selling 5,000-6,000 quintals of coffee per year. Every year we set a goal, evaluating, analyzing, and measuring production factors and risks. The biggest achievements have been growing and selling more coffee, and selling coffee that was of a high quality, for the consumer, for everyone really. We want coffee we are all happy with. That’s the goal. We’re also proud of working on the social aspects, the collaborative association that we manage. To gain producers’ trust and always keep our word with them. 

Ali: That’s a great answer. Prudencio, I wanted to ask you this, because you are one of the people who does this the best. What is the key to having a good relationship and communication with the producers?

Prudencio: In summary: trust. The trust that exists between us and the producers. At the end of the day, we are a family, we are the Valle Inca family. That the workers at Valle Inca can feel at home, that they can feel that we are siblings, someone they can count on to share their weaknesses or their sad stories, everything: trust. A resounding trust like with Red Fox—just like we can trust Aleco not just to keep his word but to let us know if there’s a mistake we’re making, that’s part of trust with the producers as well, what mistakes are we making, and how we can improve, and all that. In that way we can all build  trust. That is the key to building an association. And of course, to keep our word.

Ali: Well, I love working with you. All of that work shows in how everything flows and you do an incredible job as a team, with the producers as well as with your employees, and with Red Fox, because you are always very direct, you are very transparent, and you make things flow very well.

Aleco: Yes, the communication has always been open and direct with you. That is fundamental, to be able to have a good relationship in this industry.

Prudencio: It’s very important. For example, in the beginning, we are very thankful to Red Fox because if Red Fox didn’t exist, Valle Inca wouldn’t exist either, and if there weren’t coffee producers, Red Fox wouldn’t exist either. Inca Valley is on the producer side, and all of us, we all fill a gap in this supply chain. What we have to do is improve every day, to increase the production area of ​​the producers, and continue to improve the genetics in the coffee in Peru. That is the main goal. We also have the goal of winning international competitions, national competitions, to continue being a transparent company, and to sell quality coffee.

Aleco: Excellent, Prudencio! Do you have any questions for us?

Prudencio: First of all, I want to thank Aleco for the trust, because when I started Valle Inca, we were very young. We were young and we didn’t know exactly what to do at every turn, and maybe we made mistakes, but we learned from that. Thanks to Red Fox for helping us out all these years. And for being an institution that we trust fully, because you’ve helped us grow, and have helped a lot of other businesses grow and organizations and cooperatives in Peru, in Puno, in Cusco, Cajamarca, and other places in the world. I would like to ask you if you are happy working with Valle Inca?

Aleco: Truly Prudencio, it is my pleasure completely … well, ours. We both made mistakes in the beginning. I wasn’t as young as you were. But just like you, learning to manage a business. It has been a great experience. There is a line, where you can see how much Valle Inca has grown, and how much Red Fox has grown. And they are parallel. And truly I feel like you and I, we have grown together in this, but it’s not only Aleco at Red Fox, as you know better than anyone, with Ali, with Carina, managing everything there. We both have very strong teams, and having this partnership has been a great pleasure for me. I am more than happy, let me tell you.

Prudencio: Thank you, thank you Aleco, for all your trust, I want to celebrate your team, it is exceptional, and it is very important, there you have Carina, Ali, Aleco, some others that I know, Jajaira, who helps us so much, with our exports and more. We have to keep going forward, continue supporting the producers. Everyone, keep drinking Valle Inca coffee, Cusco coffee, and Peruvian coffee. Thank you!

Aleco: To you!

Ali: Thank you very much Prudencio. It’s always a pleasure talking to you, and I am very thankful for your trust, and for being here, and being able to share with everyone.

Prudencio: Of course, thank you.

Aleco: Ok Prudencio, I’ll see you soon, in June for sure.

Prudencio: Thank you, thank you!

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.

Global Shipping Challenges & Planning Ahead for the Balance of 2021

Greetings from the cockpit in Oaxaca. As I’m sure many of you are now aware, the world is in the throes of a global shipping quandary. The main culprits are a physical container shortage and congested, understaffed ports across the world leading to containers left sitting at port docks. Fewer ships are running on transit lines as well, and each of these issues is further compounding the others at every step of the transit process. 

In the case of the West Coast we are seeing availability for pick up at The Annex from arrival to port of Oakland up from roughly 10-12 days to closer to 20. Ports of New Jersey, Houston and Charleston are moving at a more efficient pace, though slightly slower than pre-pandemic times. New container construction costs themselves have risen as much as 60%, and containers already in circulation are also moving slower for all the above reasons: delays leaving port, passing through interim ports, and being emptied and sent back. All of that has pushed shipping rates to recent highs—highs that we unfortunately expect to last through the year and beyond. 

We continue to place large emphasis on the work we do in the logistical center of the supply chain. We’re well aware that a tremendous measure of our value to you, our clients, is in delivering fresh coffee in the timeliest manner. We’re only as good as our last arrival into port from each and every producing origin we work in. We want you to know that our logistics crew are constantly exploring the quickest avenues to each of the warehouses we currently allocate coffee to in North America and abroad. In many instances, we are rerouting containers through different ports, or, in the case of Mexico, moving coffee by land to avoid delays and ensure your coffee’s integrity on arrival. These changes are critical for us to deliver the freshest coffee possible. 

Please feel free to reach out to me or your Red Fox rep directly with any questions or for more details—we’re here to support you in any way we can. We’re happy to talk through what this means for you specifically or more generally. 

Cheers,

Aleco

 

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.

Ernesto Perez of Coatepec on Veracruz History & Mexico’s New Generation

We were lucky to get a chance to talk with Coatepec Veracruz-based producer, wet mill manager and community leader Ernesto Perez. A younger farmer who took over the family farm and mill just three years back, he’s working to guide community production into high quality specialty, tweak processing, focus on microlots, and help those around him get the best prices their work. He expanded his own wet mill at Finca Fatima into APG Coffee, a micro wet mill for the community that also offers agronomic consulting for other farmers to help rebuild soils and increase quality. Below is our conversation, lightly edited for clarity.

Aleco: Greetings from Mexico! I’m in Mexico City at the moment, Adam is in Oaxaca, and our good friend Ernesto Perez is in Veracruz.

Ernesto is an amazing coffee producer and also leader of the group APG in Coatepec, Veracruz. He’s delivering some of the most exciting coffees we’ve seen over the last couple of years. 

Joining me in Oaxaca is Adam McClellan, who runs the Mexico operation for us. He’s been down there for a couple of months now with his family and will be through the season, as will I. Lots of good things in store for all of you throughout the season as we get into shipping season. But most importantly, let’s turn it over to Adam and Ernesto and see what’s happening in Veracruz. Welcome, guys.

Ernesto: Thank you.

Adam: Thanks Aleco and thank you Ernesto for joining us. Last year was our first year buying your coffees, Ernesto, and we had a really great response in the marketplace. A lot of roasters are eagerly anticipating more coffees from you this year and asking about them again. 

As you know, Veracruz is a newer region for us—I started traveling there about three years ago and we worked with another coop on the other side of Veracruz. Last year was my first year coming to Coatepec, and I was so impressed with your operation, your vision. To me, Veracruz is really interesting, very different from the other producing regions we work in in Mexico. I’m so excited to taste some of your coffees this year and I know that you’re wrapping up harvests now.

Would you be able to start by telling us a little bit about the history of Veracruz coffee production? 

Ernesto: Thank you, Adam. Let me start by saying what I know about the history of Veracruz coffee. As many people know, no one knows for sure which was the first state where coffee was produced in Mexico. Many say it was in Oaxaca and many say it was in Chiapas and Veracruz. But we’re definitely one of the first states that had coffee in Mexico, and right now we’re one of the three most important states in coffee production in Mexico as a country. I think we produce around 30% of the coffee from Mexico.

Being one of the leading states in coffee production in Mexico, there have been many ups and downs in our history of producing coffee. Lots of big companies have been involved in coffee in Veracruz for many, many years. We’ve always been known for having good coffees, but I think the specialty coffee culture in Veracruz, like the third wave of coffee, never really landed deeply in Veracruz. I think it was because there’s many, many big companies and the culture is not picking coffee correctly. And there’s a lot of things that were really hard for me to change when I started running the family farm and working with the community on quality.

So, that’s kind of an overview of Veracruz. As you know, Veracruz is one of the highest latitudes where coffee is produced on this side of the world. We are located right next to the Gulf of Mexico, so the weather is more humid and cold in Veracruz. I think the latitude and the side of the country where we are located really helps the quality, the weather and the microclimate create the flavor that’s unique to Coatepec. It’s always super cold and misty here during the harvest season, so that’s kind of why we can grow top specialty coffees at 1200 meters above sea level.

I’m really excited to be able to explain more about Veracruz coffee, so people can come, visit, and get engaged in our coffee culture. 

Adam: Can you tell us a little about your farm and your family? I know your family’s farm is Finca Fatima, and then you also run APG Coffee, but did your family start with just farming coffee before they moved into production and things?

Ernesto: So my great grandfather, he was from Spain. He came to Veracruz because he knew how to speak English very well, so he got hired by a company, called Arbuckle Brothers in the US, and he worked as an exporter and a cupper. His history goes back to the 19th century. So, he was in coffee many, many years ago. His name was Antonio Perez Galvan, so that’s why APG is called APG.

He was the first member of our family involved in coffee, so there’s a lot of history. My grandfather didn’t really export coffee, he was dedicated to producing machinery for coffee. He built a wet mill, and that is the wet mill that I’m currently using. It was where he took his clients to show the machinery, like his exhibition room.

Later, my father started exporting coffee in the 1990s. I think it was when SCAA was founded. So Ted Lingle, who was the founder of the SCAA, came to Veracruz a couple of times. My father got awarded first place a couple of times during the 1990s. Despite that, he decided to quit coffee because there was a lot of risk, because he was more into the commodity market. So many bad things happened in those years, and he decided that it was a lot of risk and he didn’t like the business.

So he rented the mill to another company and basically, no one was really using the mill correctly. That’s when I came in and I decided to make major changes. It was not many years ago really. I’ve been working in coffee for three years now. I went to college in the US. I worked in a company in the US for a couple of years, and I decided that my passion was not working in an office. So I decided to get deeply into coffee. I got my Q graders license. I traveled to El Salvador and I got my Q processing license with Emilio Lopez.

Then I traveled here in Mexico to visit Finca Chelin and Victor Lopez in Oaxaca to learn more about coffee processing, like fermentations and things like that. And then I came back to Veracruz with a really good perspective of what specialty coffee production looks like. I made some changes to the mill to modernize it so that I could use it to lead my company to what I saw as an opportunity, which was having full traceability of coffees, truly bringing that flavor of this region and developing the flavors correctly, the sweetness and all the fruit notes that we can find in coffees in Veracruz through processing coffee with longer periods of time, longer fermentations, longer drying times, and keeping everything fully traceable.

So that’s my approach and where I see the future of coffee. That’s the vision that I have currently in APG. I want to keep growing and positioning Veracruz coffee in many places of the world again. 

Adam: Awesome, thank you. I also want to mention for anybody listening that maybe didn’t realize, what I think is interesting and different about the production model in Veracruz compared to other states in Mexico or most of Latin America is that coffee cherries are traded to wet mills rather than coffee in parchment. You drive through the Veracruz coffee country and there’s really, really large cherry processing wet mills that are owned by many different companies. Maybe some of them are cooperatively owned. But, farmers will harvest and bring down their cherry daily. It’s unique to Oaxaca and Chiapas that are two main producing regions in Mexico, where farmers are individually processing on their farms and producing parchment and selling dry parchment to mills or coops, or directly.

Do you think that model helped you make big leaps in quality development pretty quickly, that you’re able to control processing from the point of cherry delivery? And I was also wondering, how do you select which farmers you’re going to be buying from? Do they approach you, or do you seek them out? How does that work?

Ernesto: Well, after all these years, we’re really excited about coffee, because when we started the prices were low and not many people were really investing in the farms. So there’s not many players left in farming here in Veracruz. We decided to invest in our farm, and it was not many years ago. I mean, it was just a property that used to have coffee many years ago, but my father renewed the farm with new varieties, with quality varietals. And that’s when I began to know other farmers, which we’re now more than just friends, we’re kind of like family. Like, for example, [name][13:09] from Finca Las Venturas, he’s a very good friend of my family. We work with other farmers that have that vision of producing high quality coffees. And their farms are located in the highest altitudes possible that have good varietals of coffee, that now don’t just have forgotten farms.

So that’s kind of how I select the farmers that I work with. I don’t call them my farmers, we’re really partners in this deal, because it wouldn’t be possible to do this without them. It’s really teamwork, what we’re doing in Veracruz.

And I think processing coffee from the cherry to the green bean, it really helps you control and standardize the quality of the product. Because many, many things can happen throughout the process that can affect quality.

We begin by knowing where the coffee comes from. We analyze the cherry and assess the quality of what we’re receiving at the mill, what percentage of ripes and unripes we have. We use technology to sort this coffee, to store it correctly, and to mill it and prepare it for export correctly. Our approach allows us to sell coffees that have a longer shelf-life. We’re also extending drying times a lot, more than most of the companies in Mexico do. We simulate drying temperature as if we were drying with the sun or under the shade. And fermentation for us is something that has existed in Veracruz for many years. We didn’t have the machines to remove mucilage before, so it would take 48 hours before to ferment coffees and get rid of the honey, the mucilage. Now, we still do the complete 48 hour fermentations, which I think creates more sweetness and a more balanced and round flavor in the cup. So, those are the factors we can control in the cherries, and I think it’s a good aggregate value for the product.

Adam: Can you talk more about your drying practices? Are you using mechanical dryers or raised beds? I know you mentioned the climate in Veracruz makes the drying one of the more challenging aspects of production there. I’d love to know more about how you’re managing all that. 

Ernesto: Well, one of the good things about Veracruz is that our seasonality is very predictable every year. The months of December, January, and February are usually extremely humid and cold. There’s always rain, and there’s always high humidity levels and high and low temperatures. So it’s really almost impossible to dry coffees with the sunlight during these months and we have to adapt to what we have.

So we use mainly mechanical dryers for the washed coffees that we process from December to February. And we always wait until March and April to process the natural and honey process coffees because we have a lot more sunlight and higher temperatures during those months. We even have to use shade to protect the coffees from the high temperatures in those months. The drastic change between the winter and spring months made us look at what we have and use technology to process all different types of coffees correctly for their needs.

Adam: Awesome, thank you. How many different producers are you working with in the region for your company, APG Coffees?

Ernesto: Of course we work with Finca Fatima, which is a farm. My neighbor, she won Cup of Excellence last year as well from her farm Finca Consolapan. We work with Jose Cienfuegos from Las Trincheras Farm. He won Cup of Excellence too. And we work with three or four other producers that are new, that we’re going to share samples with you this year. I think they have a lot to offer to the market.

So we’re currently a group of seven producers, and our approach for next year is to start growing our relationships with small farmers in higher altitude regions in order to have an economic impact on smallholder farmers. 

Aleco: That’s great. I’m just absolutely intrigued with the Mexican coffee industry right now, and specifically seeing the evolution of the industry, to see the coffee culture in the country. I think the cafe culture in Mexico City, and I’m sure elsewhere, is really bar none in producing countries. It’s really special to see what people are doing with roasting and coffee and just the general hospitality experience that they give to people.

 And there are folks like you, and we have other friends in other parts of producing regions in the country, younger generations that are kind of like the new face of the coffee industry here. Because as you said, the coffee industry was very commoditized for a long time, and also maybe an afterthought for the government in a lot of ways. But to see folks like you is really promising.

But it makes me wonder that there must be a whole new competitive landscape out there, even for you to buy cherry, to process coffees, to trade coffee locally. I’m curious what you’re seeing on that front, and what your take is in general?

Ernesto: Well, this year we had a 40% smaller harvest than last year in general, so coffee prices were super high this year compared to last year. It was much more competitive because there’s many companies that need coffee from Veracruz. But, since we work with committed partners, we didn’t have an issue with buying cherries, because, I mean, it was part of our shared plan. We are growing together, so it’s their investment. It’s not just an opportunity of the moment, we’re trying to truly build partnerships with companies like you, that you can find roasters that really appreciate the quality that we’re offering.

So as far as the cherry and the price, that’s what I don’t like about coffee — that some years we have a lot, some years we don’t have much, but it’s part of the agricultural business. That’s how it is.

Adam: What percentage of those coffees are you selling nationally? I think we’re both really interested in the national market in Mexico, and I think in some ways some of our biggest competitors here are our local roasters, which both of us think is super cool. We don’t see that in other origins. There is this whole young generation of Mexico that’s really excited about coffee because of the local roasters and the coffee bars and things like that all over the country. How does that play into your vision for selling coffee?

Ernesto: Well, that’s kind of the reason why our model has worked to improve the economic activities on the farm, because we provide immediate liquidity to the farmers. There’s a lot of people that are really into specialty coffee in Mexico, like a lot of specialty coffee bars. And there’s a lot of new, trendy things, many people getting into the specialty coffee market. But they all finance their own coffee production. They buy small quantities of coffee, and they don’t buy the inventories that they’re going to use throughout the year. So, basically the farmers have to finance these small coffee shops, and that doesn’t really work for them.

So, I really like that we’re growing, like our culture is growing, but I don’t like that the last priority of the market is to provide the financial liquidity for the farmers, which is where everything comes from. So it’s very delicate. That’s kind of my perspective of the market right now.

Adam: What would you want roasters, especially small ones who are just buying five to 15 bags of APG’s coffees, to know about how you produce coffee and the challenges you face? It must be exciting to see coffees with your name or Cienfuegos’s name on a bag in some of the top roasteries in the country? I mean, you’ve only been in this three years, and you’re already touching the top tier of the market, and we’re super excited to represent your coffees. So what are some things you want to communicate directly?

Ernesto: One thing I really want them to know is that although we don’t have many certifications, one of the things that make Veracruz coffee very special and very hard at the farm level is that we we really focus on conserving the forests that we have, all the ecosystems that we have.

I think this is something super special in Mexico. We, or most of our farms, produce all shade grown coffees. So this is a challenge of having a small production one year and a big production in the next year. But we are really aware of where we’re going in the future, and all this effort is to keep having healthy coffee production in the future, to preserve a stable environment and conserve our microclimates and stable weather. So whenever they buy a bag of coffee from us, I think they should feel that they’re really helping conserve the ecosystems here in Mexico.

Aleco: That’s fantastic. Adam and I were out in Pluma de Oaxaca, so a very different region. But I was really blown away at seeing how forested that area was and how healthy the trees were, too. I was a little surprised. I didn’t think that was necessarily how it was going to be, and really as good of shade as I’ve seen anywhere in Latin America. Very special.

Ernesto: Yeah. Sometimes it seems like you’re in Africa, in the forest. It’s incredible.

Aleco: Yeah, a little bit like Ethiopia.

Adam: Would you be able to talk a little bit about where you’re currently at in the harvest, and where the labor of the harvest comes from? Is it mostly local, or not necessarily?

Ernesto: It’s very interesting. Many people that live in Veracruz or used to live in Veracruz, they go to Mexico City for a part of the year and work in finding jobs in Mexico City. And throughout the harvest season they come back to Veracruz, and they love picking coffee. It’s a whole experience for them to come and pick coffee. But the good part of Mexico is that they have the chance to go work somewhere else throughout the rest of the year. It’s a good side of coffee production in Mexico.

About the harvest, we’re wrapping up the harvest now. I think most of our washed coffees are already done, and we’re working on the natural and special process lots, like all the crazy fermentations and honeys as well as the natural lots right now. I think these coffees that come at the end of the harvest are really special in flavor, because they went through all this time of cold weather. So I think they’re the most interesting coffees that come up.

Adam: We just have one more question. Lot separation and producer transparency is important to higher end roasters—is that something your mill is taking care of? Tell us a little bit more about how you separate lots and maintain traceability?

Ernesto: One of the major changes I’ve made in my mill is that before, producers just delivered the coffee and you would just throw the cherries into a place where everything gets mixed. Now, we’re separating every single entry of coffee by producer. We process, we ferment independently, and we dry independently, and we store the coffee independently. Every single lot has what variety it is, what time of the year it was harvested. And I think we’re doing a tremendous job at keeping traceability fully intact. It’s one of the things that is the most important for me, being traceable, fully traceable.

Adam: Excellent. Thank you so much. We, really, really value your partnership, and, for me, on a personal level, I think your vision and your execution is incredibly inspiring. I’m looking forward to tasting the coffees this year. I know that we have a lot of roasters excited for them. 

Aleco: Thank you, Ernesto. I echo Adam’s sentiments entirely. It’s a pleasure to work with you.

Ernesto: Thank you very much. And thanks to all the roasters that support this operation.

 

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.

Ethiopia Supply Chain Partner Eden Kassahun On Managing Logistics Through Covid 19

 

Eden Kassahun is one of Red Fox’s most integral supply chain partners and has been since we opened in the business in 2014. Eden and Red Fox co-founder Aleco Chigounis’s history together goes back to her days at Technoserve where they first met in 2009. She helps us manage our Ethiopia supply partnerships with Kata Muduga, Kerchanshe, and Kedir Jebril. Her role couldn’t be more critical to our success in executing early shipments; she manages much of the internal transportation and logistics details within Ethiopia. We sat down with Eden in the Foxhole to discuss her history and unique position in the Ethiopian coffee world, her role in our many Ethiopian partnerships, and the impacts of Covid-19 on the past and upcoming harvest and shipping season. 

 

Aleco Chigounis: Hi everybody, welcome back to The Foxhole. We have one of the most special guests we could have, one of our most critical supply chain partners in all of the world. We’re broadcasting live from Addis Ababa, Ethiopia, today. Eden is in her office and I’m back in my hotel room. January is easily the biggest month on our coffee acquisition front in the entire calendar year. Part of what we do, part of the success of Red Fox is moving coffee from Ethiopia extremely quickly, something for which Eden’s work is key. We take pride in our ability to get coffee to market as fast or faster than anyone else in the trade. So in order to make that happen this year, I took all the precautions I could. Red Fox is learning how to travel anew all over again in 2021, and it’s a little bit stressful, I’m not going to lie, there’s a lot of concern—but this is what we do and we need to serve our client community, so we’ll be out here.

Now, for Eden. She and I have known each other for 12 years since her days back at Technoserve and she’s made an absolutely amazing career for herself since then. I often refer to her as the queen of Ethiopia for Red Fox. The role she plays in Red Fox’s supply chain is both behind the scenes and very much in the middle. That’s an important detail because there’s been a lot of talk over the years of middle men needing to be cut out or not playing the right role, and that’s really foolish and harmful. People play a critical role—from the producer all the way through to delivering that green coffee to the roastery and where it goes from there. Eden is a huge part of Red Fox’s success.

Eden Kassahun: Thank you Aleco, I’m happy to be here. 

Aleco: Could you give us a little bit of a background on how you got started in coffee and how your career has progressed? 

Eden: I joined coffee when I first started at Technoserve. My background education is computer science and software engineering, so I was supporting team Technoserve in IT. When I was working there, I was able to visit farms and learn more about growing coffee for the first time. The intention was for me to go and visit the office, which is up in the country, in Jimma. When I was there, I got the chance to see how the coffee farmers live, how they produce coffee, how they sell, which was not something I had imagined before that. I grew up in the city, and that was my first experience in the field. I saw how producers live and how that shaped their characters and the beautiful coffees they produce, and it was very attractive for me, and I wanted to go deeper into that side. I started to study the profiles, the terms, everything to do with coffee. Naturally I met very good people like you, Aleco, and that’s how I got started.

After a couple years getting closer and learning about coffee, including cupping, I started my small company operating in wholesale coffee. That’s how my business started 12 years ago. 

Aleco: I remember in 2009 when our mutual friend Chris Jordan told me about his project with Technoserve and the Gates Foundation in Limu, an area where a lot of us on the buying side were fairly certain that there wasn’t phenomenal coffee. Of course, you proved us to be incredibly wrong. Those coffees from Agaro, specifically the Nano Challas, the Durominas, the Yukros are just some of the most beautiful coffees in the world, undeniably.

I remember meeting you in the office when I would come in and cup and to see where you’ve gone from there is amazing. You’ve started your own company. You have your own crew there now.

How do you see your current role, responsibility, and objectives in the Ethiopian coffee industry now? How do you run the business?

Eden: Our company is responsible for filling the gaps between the supplier and the buyer, helping overcome the many barriers in that area. Technology is a barrier, language is a barrier, and even the culture, the culture of connecting producers and buyers. They very much need a bridge between them. On top of helping identify good coffees, we facilitate communication and shipment so that buyers get that good coffee on time and can deliver to their clients. It is a big role, and stressful sometimes, but it helps promote new coffees and growth for everyone involved.

Since we started working together, we’ve seen a lot of new coffees enter the field and develop better markets for their product. We’re able to identify and get top-quality coffees, which can bring a large amount of currency for us as a national entity. It also helps to get good coffees for good people, good coffee buyers.

Aleco: I think what you said about facilitating coffee moving quickly might be the understatement of the year. You’re a hero in that regard.

As I’ve mentioned before, Red Fox moving Ethiopian coffee quickly is really a big part of our success, and the role that Eden plays for us specifically in that is managing contact with all the producing groups over the course of the year, communicating with all of us. Once I arrive here—which is usually the end of December—she and I get into the warehouses immediately, like literally the day that I arrive in Ethiopia, and we start to bulk lots together and sample coffees. I roast the samples myself in my hotel room on an Ikawa and then cup them in Eden’s lab the next day. We make decisions really, really quickly. We try to get coffees into the mill as soon as possible which is very difficult in January because you have two very major holidays here in January: Ethiopian Christmas, which is usually the second week of January and then Timket, which is an even bigger holiday than Christmas. So to be able to operate in and around those moments is really tricky, and Eden is able to pull that off on a level I literally have yet to see anyone else be able to do here. It’s really a special thing.

Shifting gears a little bit Eden, can you talk to us a little bit about the pandemic and how COVID-19 has affected Ethiopia, how it’s affected the coffee industry over the last year?

Eden: The economic impact of the pandemic was very severe on the coffee trade in Ethiopia. The disease itself is not necessarily as bad as in many other countries, but it has affected a lot in the coffee trade and trade in general, especially during the lockdown when people were not able to move.

It’s now been three or four months where we can easily move without lockdown. But transport was limited—most of our people use public transport, and most of it was not operating or was operating at limited capacity. And there was little work, so it was really difficult for people to survive, especially in the big cities I think. Then when you go to the countryside, especially the coffee growing areas, there wasn’t much interest in the speciality side of the business, which brings relatively good money compared to commodity business. So that was a huge set of financial problems.

But if you ask about the awareness or people’s knowledge about that, I could say most of our people either don’t know or don’t really trust that there is a disease there. It was really rare for us to see people wearing masks properly, right Aleco?

Aleco: Yeah, especially outside of Addis.

Eden: Especially up in the field and the washing stations, people don’t care. Even people who are coughing—they go, it’s okay, I’m fine, I’m fine.

Aleco: It’s interesting to hear that the virus has been politicized in a different way but almost as heavily as it has in the US, that people think it’s more of a political thing and maybe it’s not actually real.

Eden: Initially when the pandemic broke out, people were in the middle of mass protests. Things were not politically stable last year during that time—of course, they aren’t stable most of the time, but this was bigger, so that every place was rallying for protests and gatherings. When they announced this state of emergency and told everyone to stay at home, not to gather and all this stuff, everyone thought that was to stop the protests. 

Aleco: Yeah, early on there was a heavier lockdown, right?

Eden: Yes, much, much heavier. We were all made to stay at home, schools, off the bus, the restaurants were closed. They were doing thousands of tests per day.

Aleco: How did the pandemic and lockdown itself affect the coffee industry? I know the lockdown happened in the middle of shipping season last year, and it affected interest from the global marketplace. Can you tell us a little bit about that?

Eden: It became much harder to manage the coffee. The coffee unions have a lot of management power, and at the time of the lockdown they were operating at just a quarter capacity in terms of labor. And it’s not only the quarter capacity, they also work just half the day. So we really couldn’t get the work done in the same amount of time. It took us more than a month to ship coffees post-processing. The logistics and the quality inspection parts were really terrible. And very little coffee was coming in. The national banks which do permitting were also operating at a quarter capacity, which slowed things down immensely for getting permits to export coffee. All the customs stuff, the truck movements. It’s one of the sectors most highly affected by the pandemic. Because most of the tasks are labor intensive—they require human intervention. 

Aleco: So, along with all of the myriad of issues that you just mentioned, I know that demand in the middle of the shipping season started to fall off. I heard about issues from Japan, from Korea, from North America, from Europe, buyers trying to wash contracts out of fear of what lay ahead for them in their own marketplaces and their own ability to sell coffee, which was a devastating moment here. I know a lot of folks were in trouble last year, and I hope that all of them were able to survive and come back online this year.

But  with that said, I’m curious what your expectations are for the market this year in terms of being able to regain momentum and sell levels of coffee like you had in 2019 in years past. Do you have any thoughts on that?

Eden: I think the impacts will continue affecting especially the high-end coffees, because still, globally we see that demand is still lower. On the other hand, we’ve seen that demand for low grade coffee is higher than it was pre-pandemic. Of course, the season is just starting, but when we see the buyers’ interest and what they ask for, I think the demand will go to the low end coffees instead of the higher side. 

Last year there were a large amount of washouts, especially for high-end coffees, which discouraged most of the people who produce those, especially at the dry mill or washing station level. They ended up having to sell their high-end coffee in the commodity market, even if the coffee had a high value. So it’s discouraged some producers from pursuing high-end coffee, and they’re also dealing with financial constraints as a result. I expect to have less interest from the people who produce special coffee. There’s still that demand for low grade coffee, which shows that a lot of people are drinking coffee at home. That’s how I see it.

Aleco: I can tell you from our perspective, last year we were terrified in March, in April, in May. We’re still a little bit terrified about what lies ahead for us in the marketplace, and concerns about what types of coffee will be of interest to roasters around the globe, and what you said confirmed some of our thinking there.

But I have to say, I feel like we are in a very fortunate industry. I feel like there is a whole lot of resilience in coffee, that people aren’t going to stop drinking coffee anytime soon, and that there’s still a lot of hope and a lot of opportunity for the folks that are able to muster enough moxie to get through this period and come out alive on the other side, alive in the business sense.

So we’re hedging our bets on what we think the market needs. We think that there still is a whole lot of room to sell top caliber coffees at appropriate price levels, at those higher price levels. But I think in general, yes, I agree that there will be a little regression in terms of what people are willing to pay for the moment so that they do get to the other side of this.

I know many farms around the globe are facing a pandemic-induced shortage of coffee pickers. Is this an issue in Ethiopia?

Eden: Not really. Again, you’ve seen that people are not really aware that there is a pandemic, especially at this point post-lockdown. Of course last year there was an issue because of the lockdown shutting down transport, preventing workers from traveling to jobs. But this year, no, it doesn’t really affect us.

Aleco: Eden, thank you so much. We’re going to let you go, unless you have a message or anything you’d like to share before we go. It’s been such a pleasure having you on.

Eden: Yes, thank you very much. Once again, I’m really happy to have met you and been part of this friendship, and I hope it will continue like this. I’m really looking forward to sending over the great coffees. Thank you.

Aleco: I can’t tell you how much we appreciate you and your efforts. Thank you so much. Talk to you tomorrow morning.

Eden: Yes, as usual. On with your roasting, so that you can cup tomorrow.

 

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.

 

Red Fox Coffee Merchants Origin & Shipment Update: Q2 2021

Hello friends, coming to you in the second quarter of 2021. We’ve put together a report on the current state of coffee affairs in the areas of the world in which we work. Buying coffee, while never easy or uncomplicated, has become more complex than ever, and we want you to feel included, supported, and looped in as we navigate that process together. With the supply and shipping disruptions we’ve seen over the last year and which we know will echo into the future, every link in every supply chain needs to be managed more carefully than ever. We want to help keep your finger on that pulse and hopefully make your job a little easier. This report contains some details as well as some broad strokes—if anything here piques your interest or leads to more questions, we’re always here to talk, so get in touch

Logistics & Port Updates 

We continue to feel the impacts of the widespread disruptions in trade and cargo shipping brought on by the pandemic and magnified recently by the container ship the Ever Given blocking traffic through the Suez Canal. For Red Fox, the global shortage of shipping containers has made it challenging to find bookings for the fastest, most direct ocean cargo routes that we prioritize. We’ve seen higher shipping costs, more rolled and cancelled bookings across the board on all shipping lines, and big bottlenecks at US ports, particularly on the west coast, that result in delays in getting our coffees unloaded, through customs, and stocked into warehouses. Ports, warehouses, and trucking companies are facing staffing shortages due to Covid-19, causing further logistical challenges and delays. 

We push to get our Ethiopia shipments afloat as early as possible every year, and are especially glad to report that, with the majority of our containers already on the water or arriving on the east coast, Suez Canal-specific delays have only affected a couple of our later shipments from Ethiopia, some of which we have chosen to hold in Addis until bookings can be confirmed, rather than have them sit at port in Djibouti. We know that long shipping times and warehouse delays are frustrating for everyone and we will continue to bring you as much information as possible regarding ETAs, arrival times, and coffee availability as these challenging conditions continue. 

Supply, Demand, & The C Market 

After a near 2 year high of around $1.40/lb towards the end of February, the C market seems to have settled in the mid-$1.20s/lb at the time of writing (approximate 3 month moving average). As Red Fox does not trade or hedge using the C market, there was little direct effect on our US operations. However, as the C market price continued to rise during Mexico sourcing discussions, we kept that $1.40 price in mind while determining what competitive quality premiums look like right now.  While global shipping lines work to renew vessel schedules across the world’s ports, warehouse stocks of green coffee across the global north continue to dwindle per various market reports. This has led to grumblings around increased C Market volatility though we’ve yet to see any major movement to date.   

Mexico 

About 75%-80% of the harvest is currently processed and collected in the central warehouses for bulking and dry milling. The Pluma/Sierra Sur and Mixteca regions are closer to 90%, while some regions in Northern Oaxaca will continue their final round of picking/processing through the first half of April. Chiapas and Veracruz are almost 100% finished with harvest. Our lab in Oaxaca has seen the heaviest 2 week period in our Mexico sourcing history at the end of March and samples continue to arrive from producers and family clusters from new and established relationships. We’re busy cupping offers as well as early preships, bulking coffees, monitoring the dry mill, and making sure coffees are ready to make their way onto the water. April is the primary month for milling across all three states in Mexico where Red Fox sources. Our first container is milled and expected to go afloat this week and four other containers will be milled this week and next.  First arrivals will be primarily community lots from the Pluma/Sierra Sur region of Oaxaca.

There is more competition for container availability this year due to the global container shortage but the big advantage Mexico has for shipping to other North American ports is the frequency of vessels arriving and sailing (most steamship lines call to port of Veracruz every 3 days). We also plan to continue to use the port of Manzanillo on the Pacific Coast for West Coast shipments where transit time is 5 days on the water port to port. We still expect these coffees to arrive in May through June. 

Covid-19 case counts continue to be a problem across Mexico and while a vaccination program has recently begun by the government, the rollout is slow and disorganized. More wealthy Mexicans with travel visas are going to the US to get vaccinations. The government recently released data showing more accurate cases and death counts than was previously being released and were 30% higher than previously reported. Another surge in cases is expected  after the Semana Santa (Easter) holiday where many people travelled and family gatherings are very common. Most businesses are fully open, and while mask wearing is very widespread in public and on the streets, it’s less common in family social gatherings. 

Smaller, more vulnerable communities continue to publicize information and precautionary measures, but many of these precautions unfortunately aren’t up to date and don’t prevent spread effectively. Where the latest science overwhelmingly points to aerosols in gatherings in poorly ventilated areas without masks as the primary method of spread, the smaller towns still focus on hand sanitizer and spraying down the outside of clothes and cars with bleach as the way to prevent more cases entering. We hope to see better information and  realtime science reach these communities quicker in the future.   

Available Lots: Peñas Negras makes its return to the offerings of community lots out of the Pluma/Sierra Sur region, near Juquila not far from the Pacific coast, just straight up the mountain. This community is one of the first to start and finish harvest in Oaxaca and this year’s lot is very balanced and sweetness driven, showing notes of Honeycrisp apple, chocolate syrup, and fresh butter. This and other Pluma community lots in the first shipment arrive to Continental, NJ the first week of May and 2nd week of May to Annex, CA. We’ll also have coffees available by the end of May in Dupuy, Houston and Seaforth, Vancouver this year.  

Ethiopia

Harvest has officially concluded for the season, Addis warehouses are full of parchment and peak shipping period is now underway. Vertical Integration, which allows for producers to establish a price agreement with an exporter prior to the harvest season, continues to play an emerging role in the specialty sector with more direct business concluded than year’s prior. The ECX continues to receive and trade less coffee.  

The Suez Canal incident and rising fuel costs for trucks making the Addis to Djibouti run have caused massive delays for vessels leaving port.  

Covid-19 cases are increasing at extreme levels according to our network on the ground in Addis, though accurate reporting remains difficult to find. Ethiopia received 2+ million doses of AstraZeneca in March per the WHO’s initiative.  

Available Lots: We were fortunate enough to move our first dozen containers, split between Agaro & Guji, prior to the Suez debacle. Fresh crop has arrived to Port of NJ as of 3/30. We expect availability in Continental Terminals NJ in the coming week or so of both Guji and Agaro coffees. ETA’s for coffees coming into both The Annex CA and Dupuy Houston range from to mid-to-late April.  

Kenya 

Kenya is now also in peak shipping season as the main crop has now concluded. 320,000+ bags have been purchased through the auction system and direct purchases since January 1. The fly crop (Kenya’s second, smaller crop) begins later this month and will conclude late May/early June.  

Shipments are delayed per the Suez debacle with lines still unable to communicate new schedules. Some fear a backlog into or even through May. Food grade containers are also at a premium.  

Nairobi is currently in lockdown as cases are now on the rise. Our trade partners are only in their offices on a rotating, need-to-be basis. The first round of 1,000,000+ AstraZeneca vaccines arrived in Kenya early March. The government expects 3,500,000+ vaccines to be distributed across the 2021 calendar year.  

Available Lots: Our first shipment arrived to Port of NJ late February and has now been sold out.  Our 2nd shipment destined to CA maintains a mid-April ETD from Mombassa.  

Guatemala

We are hearing reports of another month of harvest in Huehuetenango. Early offers have been outstanding and we’ll see more volume this year from producers from the Santa Barbara municipality. Look for Guatemalan coffees clearing on both coasts in mid to late May.

While travel has opened up between departments, public transportation remains extremely limited. This has exacerbated the shortage of migrant pickers and harvesting continues to be a struggle in most regions.

In vaccine news, Guatemala became the third country in Latin America to start vaccinating its population through the COVAX initiative, which uses the AstraZeneca vaccine. Guatemala expects to receive a total 6.6 million doses this year to reach its goal of immunizing 20% of the population.

Available Lots: We’re currently finalizing selections for an initial container to go afloat later this month/early May.

Peru 

Even though in January 2021 the national economy showed a drop of 0.98%, Peru’s agricultural sector remained afloat and growing. For its part, the Junta Nacional de Café (National Coffee Board) hopes that this year will be strong for coffee production. They expect production to rise 18% compared to last season, and the Cajamarca, Cusco, Amazonas, and Pasco regions will benefit from it.

In mid-January, the Peruvian government declared the arrival of the second wave of Covid-19. The government established different risk levels for the country’s regions and implemented restrictions for each level. One measure ensured that people taking domestic flights from extreme risk regions must present a negative Covid test from within 72 hours before the flight, as well as foreigners entering the country. 

Added to the general political instability of 2020 was a national scandal called “vacunagate”, where it was discovered that influential figures including the former president and the health minister had secretly received free vaccines from Sinopharm months before negotiations were finalized and doses were available to the population. The news aggravated the feeling of disappointment with political leaders. Currently, a limited number of vaccines are available and the vaccination process has begun. The Peruvian government presented a National Vaccination Plan that has three phases that extend until the second half of the year. The country is also preparing to face presidential elections during April.

Available Lots: A broad range of all regions and qualities available on all three coasts (Continental NJ, Annex CA, DuPuy Houston). A rep from our team would be happy to walk you through our offerings from Peru and make recommendations.

Colombia 

Heavy rains have stunted both flowering for Colombia’s second semester harvest and maturation for the imminent mitaca fly crop across Southern Colombia. Ports from Cartagena to Buenaventura are dealing with congestion due to limited availability with primary shipping lines. Port Strikes in Brazil and Covid-19 are the main culprits. Container availability is not currently an issue.  

Geovanny Liscano reports that Asorcafe is business as usual with producers focused on maintenance in the current between-crops season.  First picking at altitude in Inzá should begin by the second half of June. 

Covid-19 cases are back on the rise. The government has put in place new travel restrictions for those traveling internally within Colombia. The first vaccines arrived in Colombia mid-February with the government maintaining their plan for 20,000,000 doses to be distributed in the 2021 calendar year.  

Available Lots: Red Fox’s North American stock is dwindling as we prepare for inbound Mexican coffee late spring. Expect fresh crop coffee from the mitaca to begin shipping late summer/early fall.  

Rwanda 

Cherry picking in Rwanda is underway, with peak harvest towards the end of March. Reports of weather and rainfall have been promising, and we are expecting good quality and volume this season. We should see offer samples in our lab in late May/early June.

Rwanda has imposed some of Africa’s toughest anti-coronavirus measures since the pandemic began, including one of the first full lockdowns on the continent in March 2020. More recently, Kigali went back into lockdown for 2 weeks in January 2021, after an increase in the number of Covid cases. Case numbers have since fallen and restrictions have been eased in the capital, though concern about new variants remains high.

Rwanda received its first Covid-19 vaccines in February of this year and has been rolling out a wider vaccination campaign in March, with doses of the Pfizer and AstraZeneca vaccines supplied through the WHO’s COVAX initiative. The government’s goal is to vaccinate 30% of its population of 12 million people this year and 60% by the end of 2022.

Available Lots: Lot selection late May/early June with a container to both East and West Coasts likely to go afloat before the end of June.

Ecuador

Ecuador’s rainfall eclipsed the summer season and there continues to be excess rainfall. It seems that summer weather is finally approaching, which could bring the harvest a bit early. The October-November flowering was abundant, but there was minimal fruit. Producers have let us know that they are optimistic about what is to come this harvest season.

Ecuador received its first Covid-19 vaccines in January 2021, but has been rolling them out slower than anticipated. The country has contracts with Covax, Pfizer, and AstraZeneca. There have been a high number of cases and deaths in the country with a majority near the large coastal city of Guayaquil. The country’s goal is to have phase 1, vaccinating 2 million people completed by the end of April 2021 and begin phase 2. For reference, there are over 17.3 million people total in the country. 

Available Lots: With only a few lingering lots left uncommitted, get in touch with your rep if you have interest in sampling any lots still on the offerlist. Sidra, Typica and Bourbon Tekisic variety separations still available.

 

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.