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. 

Red Fox Coffee Merchants Origin & Shipment Update: Q3 2021

Hello friends, coming to you as we enter the third 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. With the supply and shipping disruptions we’ve seen over the last year and which we know will echo into the future, we want to help keep your finger on the pulse of global coffee traffic 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

This quarter, we’re seeing many disruptions and complexities borne out of civil unrest, with the two most notable for our upcoming harvest and shipping season being Peru and Colombia. The other component that’s affecting global shipping operations on an extremely broad scale is the confluence of the global container shortage and widespread port and trucking slowdowns due to Covid-19. Much more on all of that below. 

Logistics, Port, & Warehouse Updates

We continue to see widespread disruptions in our supply chains as we enter the second half of 2021. Globally, ocean freight rates have skyrocketed. Routes between East Asia and the US West Coast have been the most impacted. Efforts to combat a Covid outbreak in Shenzhen, China in June caused the port of Yantian to vastly reduce its operating capacity for nearly a month, resulting in a huge backlog of shipments waiting to berth, soaring freight rates, and a further reduction in the supply of available containers for all shipping routes. There is ongoing uncertainty in bookings and volatility in transit times across the industry, and little indication that this will ease before 2022.

 Congestion at US ports has seen some mixed improvement, mostly on the East Coast where cargo is moving a little more fluidly through the NY/NJ ports. West Coast ports, which have seen a huge surge in imports this year, are still over capacity, with ongoing labor and equipment shortages contributing to congestion. The port of Oakland continues to see major delays, with boats sitting on the water waiting for a berth for up to 2-3 weeks after arrival. 

There is also a general state of congestion across the domestic trucking industry. LTL freight carriers (shipping services for relatively small loads) are dealing with massive shipping volumes alongside continuing shortages of drivers and equipment, and their networks are strained. Transit times and costs are increasing across the board. Carriers are capping the number of warehouse pickups and cutting locations out of their service maps to cope. Warehouses are struggling with inconsistent pickups, last minute cancellations, and a general backlog of shipments. We recommend that roasters plan ahead for longer transit times and higher freight costs, and encourage everyone to get their orders in the pipeline with time to spare.

On the warehouse front, we do have some positive news to share: Continental Terminals, Annex (formerly The Annex) has completed their move to a new facility in Alameda, CA. With the move complete, they are now returning to their 24 hour notice to process and ship orders, meaning pickups from the warehouse can happen a full day earlier than under their previous 48-hour turnaround. 

Supply, Demand, & The C Market 

Supply and demand have hit their most volatile moment in close to a decade, with dwindling stocks in the Global North, container shortages, reduced route availability by container carriers themselves, and a 2+ month long trade disruption in Colombia at the core of the issue.  The C market has risen sharply in the past 60 days, coming in just above $1.50/lb for the past couple weeks. While we don’t expect another rise in the immediate future, many in the trade suspect another spike later in the year around Q4. The situation is developing and no one here has a crystal ball, so we will take this as it comes (or doesn’t) down the line.

The immediate impact of the four aforementioned market dynamics has significantly affected parchment buying across South America, Colombia & Peru most acutely. The FNC, Nespresso, and other large buyers have entered producing regions with extremely high prices for ‘clean’ (sound, nondescript) coffee leading to the most competitive buying market we’ve entered ourselves in our 7+ years in business.  As the first semester harvest now enters its peak season we expect to be paying upwards of 50c/lb FOB for our offerings from Inzá & Nariño. Port closures in Buenaventura/Cartagena have trickled down to Peru in that the Colombian supply shortage has created chaotic buying across the country with prices for ‘rubbish’ (wet, unselected) parchment almost doubling from last year. At least one of the major Peruvian exporters has received US $2.6M in loans from the government helping them to incapacitate competition in certain areas of Cajamarca, San Martin, Cusco, and select other departments.  Red Fox expects to pay 20-30c/lb FOB more for certain relationships and maintain a level of price stability with others. More to come on the Peruvian state of the trade below as well as in our early August supplement.  

Peru 

On the political front, the country had a disputed presidential election, where two candidates with very different political positions clashed in June. Socialist candidate Pedro Castillo won the presidential election after clinging on to a narrow lead. On the other side, his rival Keiko Fujimori, who refused to concede, has challenged the results, claiming electoral fraud. The political situation has revealed deep gaps between voters, along economic and racial lines, as well as ideological ones. Because of the political instability and speculation regarding the new leftist government, the price of the dollar rose against the national currency during June. This only aggravated extant concerns about the country’s financial stability.

On the coffee front, harvest has already started. The price of coffee is up an estimated 85% over last year, regardless of quality and physical standards. According to comments from cooperative managers we work with, there’s an overall concern regarding what this means for coffee quality this year. The price rise stems from a combination of factors including the increase of the dollar against the national currency, the uncertainty generated by the lack of mobility of Colombian exports, the increase of the commodity price, and the instability of the political future of the country. 

Hugo Cahuapaza of Coopbam in Amazonas, Northern Peru, reports that the harvest in the lowest altitudes is already at 100%, while the middle sector has reached almost 80% and the highest zones are just getting started. The rainy season has been unusually prolonged, but producers are taking steps to achieve preset standards in coffee drying. Hugo also told us that the political and financial instability aren’t currently affecting the producers, who continue to carry out their daily activities, since they’re not used to depending on state support anyway.

Cajamarca-based Santuario manager Ismael Alarcon expects a higher production volume this season, approximately a 20% increase over last year. As in all of Peru, Cajamarca has also seen coffee prices rise, which, combined with the greater competition in the market, has led to an increase in labor costs. 

Albino Nuñez of Pangoa in Selva Central reports that business continues as usual and that harvest is at its peak right now. He and other members view the season with optimism since they’ve noticed an improvement in quality and expect an increase in the volume produced this year.  

Stay tuned for a Peru supplement in the coming months going into more detail as we get into the field and start the actual purchasing process—the situation here is developing and we’ll keep you on top of it. 

Available Lots: 

While Peru spot coffee continues to make its way into roasters and mugs, we do still have a number of solid lots from community to producer ID available on both coasts and in DuPuy Houston. We’re cupping all lots regularly and they’re still at the top of their game.

Colombia 

The political chaos surrounding tax reform that has mired the country for the past two months appears to be nearing its end, at least for the moment. Ports have reopened as of late June, though diminished availability/routes with container carriers and the ensuing backlog of coffee in dry mills across Colombia creates an outlook of slow shipments and deliveries into fall.  

COVID-19 appears to be hitting it’s peak in Colombia at the moment recently passing 100,000 deaths due to the virus.  A dearth of vaccine availability keeps the outlook bleak for the immediate future.  

From our dry mill/export partners in Popayan: 

“Things are getting back to a certain normality and coffee flow/purchases are decent. There is congestion at the ports which will take weeks to sort and freight rates are increasing. May shipments were 0.5m bags and June has shipped 0.2million bags so far (June 14th). Differentials [countries’ standard differentiated price for clean coffee in relation to the C market] are continuing to increase due to rains having an impact on the next mid crop. We might need to reduce our production expectations to around 12m bags.

Despite the strikes having ended and the road corridors to ports being reactivated, the situation has not improved much. Ports are facing high congestion due to the increased volume now coming through from different areas. 

  • Buenaventura has been operating since mid-June, but the main problem is low availability of vessels. During May, only two vessels were available in Buenaventura and as the operation just started to normalize, the combination of limited vessels, limited trucking routes, and the backlog of coffee in the dry mills means continued delays. 
  • Cartagena’s been highly congested since the end of May because of space limitations, low storage capacity, and lack of containers. Until mid-June, the trucks were taking eight days to enter port (literally waiting in a nearby parking slot, waiting to enter the port’s installation), which caused the loss of the vessels. It also led to carriers refusing to travel to this port unless a daily stand-by rate is set to include waiting times.
  • Santa Marta is facing the same situation as Cartagena with the difference that until this week (June 21st), entry to the port is taking 12 days.
  • For all ports, the main concern now is truck availability due to the increase of inland freights and because the preference goes to transportation of imported goods (often paying four times more than usual freight), followed by lack of space in the vessels.
  • As a final comment for the logistic side, we are 85% confident that the situation will smooth out for August.”

As far as the first semester harvest itself is concerned we are hearing consistent reports of heavy competition for parchment across the country. Whereas Red Fox leveled up farmgate pricing to producers from $1.35mill pesos/carga in 2020, the FNC (National Federation of Coffee Growers of Colombia) is opening at $1.6mill pesos/carga for clean coffee now. Expect a significant increase in your Colombian coffee costs this year regardless of your source.  

Inzá, Cauca has been pummeled by late season rains as peak harvest begins at altitude. Volume expectations for the fly crop are plummeting on a weekly basis. 

From Geovanny Liscano, Producer and Asorcafe President: 

“I can tell you that internal prices are very high at the moment. Nespresso is at 1.6mill pesos per carga.”

From Danilson Oidor, Producer and Asorcafe Member: 

“It’s a strange year, we’re harvesting very little. There are a lot of rains which has led to a lack of cherry maturation.”

From Raquel Lasso, Producer and President FUDAM

“Narino is now approaching its peak season harvest at altitude. The parchment market across the department is also at a competitive high. Climate change seems to be rearing its head in ways that are clear to anyone looking. While the flowering was solid, heavy rains during the fruits’ maturation cycle caused a lot of fruit to drop from the trees prematurely. There will be immediate repercussions in the season’s yield due to this.”  

From Gildardo Chincunque, Producer and Parchment Collector, Tablon de Gomez:

“The harvest has begun but the baseline price in the region is 13,000/kilo or 1.650.000 pesos/carga [for clean coffee*].” 

*This is compared to the 1.3mill pesos/carga we opened at last year for 85+ scoring coffee.  

Rwanda 

Harvest in Rwanda is coming to an end, with high-elevation Kanzu wrapping up about a month later than washing stations at lower elevations. Rainfall and conditions were favorable for quality and volume this year, with total production in the coffee sector expected to be up 10-15% over the prior season. Competition for coffee cherry was intense, and internal prices paid to farmers increased to almost double what they were last year. 

Logistics are expected to be challenging this season. Empty containers for export are scarce and difficult to secure. Landlocked Rwanda moves all cargo by truck to the ports in Mombasa, Kenya or Dar Es Salaam, Tanzania. Travel restrictions and Covid testing requirements for truck drivers crossing the borders are slowing down the movement of coffee to port, such that what might be a five day drive under normal circumstances can now take up to three weeks.

With outbreaks surging in neighboring Uganda and DR Congo, new cases of Covid-19 in Rwanda have risen exponentially in the past weeks. The country is now recording its highest number of daily cases since the beginning of the pandemic. Access to vaccines remains low, with just under 2% of the population fully vaccinated, and there are concerns that the highly contagious delta variant will soon be widespread in the region. The Rwandan government announced new restrictions for the capital Kigali and eight other districts that go into effect July 1st, including a 6pm curfew, and the closure of schools and universities, non-essential offices, and restaurants. Travel between districts is restricted to essential services.

Available Lots:

We are currently evaluating offer samples from the first Kanzu outturns and will push to get containers moving as early as possible, in light of the expected shipping challenges. We aim to have coffee on the water in July/August for Sept/Oct availability.

Ethiopia 

Civil unrest continues to be the central theme in Ethiopia with the Tigray conflict at its core.  Restrictions against the press have made honest, relevant news hard to come by. In the midst of all of this Ethiopia held its elections for Prime Minister with many challenging the election’s fitness. Final results have yet to be announced.

As shipping season is now on its backend the trade is scrambling and struggling to find empty containers and available vessel departures for remaining shipments. Exporters scramble to allocate their final washed G1 lots which often get sold as G2 in the twilight of the shipping season. We also hear chatter on the export side of major internal market disruption due to larger exporters hiking prices to meet their contractual obligations. Akrabis (coffee traders/wet mill owners/parchment collectors) have ignored certain agreements to sell at higher market levels.

Both Kedir Jebril and the Kata Muduga Union are completely finished for the season with stock shipments and look ahead to the coming crop.  

Available Lots:

We’re well stocked with fresh washed lots from Agaro and Guji on all three coasts as well as including DuPuy Houston. Naturals from Nansebo and Bensa arrive to both California and New Jersey later this month.  

Mexico 

With the harvest completed across Mexico, almost all volume has been sold or contracted with milling being finalized on remaining parchment and final shipments moving to port by early July. Limited direct shipping routes, container/ship space availability, and frequent rollovers from most or all shipping lines have continued to slow the export and import processes, but we’ve been working with shippers to get coffees out with more fluidity and success. Rainy season has settled in across the southern growing region. After a contentious and highly anticipated election season, the country continues to struggle with containing Covid and getting the population vaccinated in a timely manner. However, most businesses are operating at full capacity and the economically important tourism sector has picked up in recent months.  

Available Lots:

Mexico arrivals continue to fly off the shelves almost as fast as we can bring them in, but we do have an array of lots in Continental NJ, and DuPuy Houston. Newly arrived at Continental, we have Familia Garcia Lopez, from Casimiro and family in the Loxicha area of the Pluma region in Southern Oaxaca, with 29 bags available. We also have a new offering this year which just arrived with 18 bags available. Coming to us from a producer group in a remote part of the Mixteca region, Garra de Jaguar is dynamic and sweet with tons of dried fruit notes.

Ecuador

Due to excessive rainfall at the beginning of the year, producers we work with are expecting a decrease in production this year in Ecuador, and particularly the Pichincha region. Arnaud Causse of Las Tolas and Terrazas del Pisque in Pichincha tells us he’s expecting a 20% decrease in production this year and a delayed peak in production as well. He also said he’ll be focusing less on natural processed coffees this year due to the lack of sun and excess humidity. In other areas of the country, such as Napo, where high amounts of rainfall are normal, there are high expectations for a great year for production and processing. 

According to media sources, about 11% of the population are vaccinated. The country still requires masking and recommends residents to stay home as much as possible. There are mobility restrictions across the country which producers expect to impact this year’s harvest.

Kenya 

From our friend Kennedy Keya at C. Dorman:

“Kenya main crop sales in the auction market ended in April. About 420,000 bags (60kg) were traded. Farmers were a happy lot with many factories paying on average equivalent of $0.70 per kg of cherry. We have been on recess for two months. Auctions resume tomorrow with only 8,000 bags on offer. It has been chilly resulting in slow parchment drying. We estimate about 160,000 bags from the fly crop this year. Auctions will be held every two weeks until volumes stabilize. The next main crop to be harvested from October is expanding well. If weather patterns don’t cause any damage we expect decent volume of the main crop, about 25,000 metric tons. 

The Covid situation is stable with new infection rates ranging from 5% to 10% daily. But again, numbers of those tested are too low. Life is picking up though many sectors of the economy are struggling, for example the tourism and hotel industries.

The port is operating at a slow pace. A big challenge is getting empty containers. Imports have been low. However, we are able to meet the shipment schedule by placing vessel bookings in advance. Some shipping lines, for example Hapag, are not accepting bookings for nearby shipments. They say their vessels are fully booked.”

Available Lots:

We have a small handful of truly superb Kenyas available on both coasts. 

Guatemala

Guatemala continues to struggle with over 1500 new Covid-19 cases reported daily. Like many countries, the majority of cases are not reported due to lack of testing, especially in rural areas. Our source in Guatemala City tells us “Covid is pretty much the same here, not getting any better.” 

Harvest has wrapped up in Guatemala. Like just about everywhere we are sourcing, there have been shipping delays, mostly due to lack of available containers.

Available Lots:

We contracted two containers this year with one going to each coast. The east coast bound container had an ETA into NJ 6/28, and has just a few bags from Santa Barbara, Huehuetenango available plus a larger lot from San Jose Poaquil in Chimaltenango. We expect to see this stripping into Continental around the second week of July.

The west coast Guatemala container has an ETA to CA of 7/6. We are continuing to see delays with containers getting picked up and stripped into The Annex, so best guess is end of July availability for these coffees including a 20 bag single producer lot from Los Arroyos in Huehuetenango. 

Yemen 

Both the ongoing Civil War and Covid issues have decimated the coffee industry. Moving coffee to port internally, loading onto passing vessels, and the larger global shipment situation have led to shipment periods of upwards of 60 days. Thankfully, the coffees we purchased this year have already landed and we have an extremely limited quantity available. 

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.

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.

 

Jean Bosco & Longin of Dormans Rwanda on Kanzu Coffee, 2020, & Covid-19

We were able to connect with Jean Bosco Seminega and Longin Muhizi of C. Dormans Rwanda in the Foxhole and talk all things Rwanda, Covid, and the 2020 and 2021 harvest and shipping seasons. Host and Red Fox founder Aleco Chigounis has known both Jean Bosco and Longin for over a decade, well before Red Fox was formed and before the 2 of them joined Dormans. He is joined by co-host and co-founder and director of business operations Julia Fariss, who among many other things has managed our Rwanda operations since the beginning. Both Jean Bosco and Longin bring with them incredible histories and insight on Rwanda coffee production past and present.

Aleco Chigounis: Hello everyone, welcome back to the Foxhole. We have another special episode today. I am joined by my co-host Julia Faris. Julia has been helping me run the business since day one as our director of business operations but also as our coffee buyer in Rwanda. We also have 2 very special guests from Rwanda, from C. Dormans in Rwanda, Jean Bosco Seminega and Longin Muhizi. Welcome to the show, both of you! It’s great to have you here.

Jean Bosco: Thank you Aleco. We are happy to be here with you tonight.

Aleco Chigounis: I’m very happy to see you both. It’s been far too long. Both of these fine gentlemen here are our representatives of C. Dormans Rwanda, particularly the Kanzu washing station which is the one and only coffee that Red Fox procures from Rwanda. It’s one of my all-time favorite coffees and possibly our most popular coffee of all. Most of our clients, top to bottom, are buying Kanzu in some capacity because it really is a jewel of Nyamasheke. 

Quick background: Nyamasheke is the growing region where Kanzu’s coffee comes from on South Central Lake Kivu. It’s high up in the mountains around 2000 meters and has really green, lush, forested mountainside. Kanzu was built in the mid-aughts by Alphonce Kayijuka, who eventually sold the washing station to C. Dormans. I’ve been involved with Kanzu since 2007 when the Cup Of Excellence did a precursor event in Rwanda called The Golden Cup. Kanzu took third place, and at the time I was at Stumptown and split that lot with Geoff Watts of Intelligentsia coffee. I really fell in love with the profile and started to buy the coffee year after year from there. With that out of the way, I’d like to turn this over to Julia and we’ll get started with the interview and hear from these two guys. Enough from me!

Julia Fariss: Thanks, Aleco. Jean Bosco and Longin—if you would introduce yourself and start by telling us a little bit about your coffee career?

Jean Bosco: Thank you, Julia. My name is Jean Bosco Seminega and I’m the country
manager for C. Dormans Rwanda. I joined C. Dormans Rwanda in 2015 but I’ve been in coffee for the last 20 years. I started as a consultant, became a coffee business owner, then later I joined C. Dormans in 2015 as a country manager. 

Longin Muhizi: My name is Longin Muhizi, I have 13 years’ experience in the coffee industry here in Rwanda. I started my coffee career in 2007 in a USA project called Spread, where we were helping producers initiate and develop cooperatives, get financing, and connect with overseas buyers. After Spread I continued working with a number of cooperatives as a quality controller and cooperative development officer.  In 2010, I joined Technoserve, which was a project funded by the Bill and the Melinda Gates Foundation in order to provide a solution for poverty. After Technoserve, I joined C. Dormans Rwanda in 2012 as operation manager and logistics coordinator, where I work now. 

Aleco Chigounis: Great history Longin. That’s where I first met you, working for the Spread project. Really amazing project, for any of the listeners who aren’t fully aware. There was actually a project prior to Spread called Pearl, which morphed into Spread after different financing came in through USAID. It was a recovery project for the coffee sector post-genocide, and really boosted the ability to produce and differentiate specialty coffee in the international marketplace. Coffee producers’ prices have risen exponentially since the advent of that project. 

Jean Bosco: That was actually in the earlier 2000s, when the Pearl project started. There was another project supporting private companies called ADR that I was a consultant on for 4 years. I remember, we met in 2010, I don’t know if you remember.

Aleco Chigounis: I remember—you were working with Alphonce directly.

Jean Bosco: Yes, I showed you some coffees from Kanzu. So much time has passed since then!

Aleco Chigounis: Now we’re veterans in the coffee industry.

Jean Bosco: I’m thinking about retiring someday.

Aleco Chigounis: I’m not. I can’t even fathom yet but maybe, maybe.

Jean Bosco: Some people never retire from coffee, you know? It’s very hard to leave the coffee industry.

Aleco Chigounis: I’ve seen people try to leave before and they always come back. It bounces back into you and doesn’t let you go.

Julia Fariss: Jean Bosco, can you tell us a little more about C. Dorman’s history in Rwanda, when Dormans bought Kanzu, and what other washing stations Dormans operates now in the country?

Jean Bosco: C. Dormans Rwanda started operations in Rwanda in 2012. We started leasing washing stations, 5 washing stations in the western province. We were leasing at that time and in 2013 we started buying washing stations that we had been leasing. Our operations were concentrated in the western province, mainly in Nyamasheke district where we really feel that the best coffee from Rwanda is coming from. 

Since 2015 we continued buying washing stations and now, we own 9 washing stations. Aside from what we own, we also sometimes work with some small outside washing stations owned by small local companies where we pre-finance and help market that coffee. We currently have around 6,000 farmers registered that are linked to those different washing stations where we provide some services from farming to training, support, certification process, and more.

Julia Fariss: Longin, could you tell us a little about what makes Nyamasheke a special growing region for coffee and a little bit about Kanzu washing station?

Longin Muhizi: As Dormans Rwanda, we have chosen to be present in Nyamasheke district alone, because of the quality of coffee in that particular area. Bordering Congo in the west, it has a range of altitudes from 1495 all the way up to 2200 and above. It also has the natural forest called Nyungwe, with rainfall in that particular area ranging between 1300 to 1400 millimeters per year. The soil is volcanic as well. The quality coming from those factors was what pushed Dormans to buy the Kanzu washing station in the Nyamasheke area.

As Jean Bosco mentioned, we bought and started operating in Kanzu in 2012. Kanzu washing station is located at 1836 meters above sea level with great access to the hills covered with coffee and excellent agricultural practices. It is highly visible. Kanzu is able to produce 4 to 6 containers of exportable grade high quality. Because of the quality produced in that particular region, we always face competition from other trading companies. Our advantage depends on our relationships with farmers, so we build really strong partnerships, which makes Kanzu the best washing station to work with. To date, Kanzu is working with 535 farmers and those farmers are also registered under certification programs like Rainforest Alliance and trained in best practices to help them continue producing the best possible coffee. If you look at Kanzu’s last season, we were able to produce 4 containers of exportable grade coffee, and because of competition for cherry the price was very high. 

Aleco Chigounis: I’m very curious about the competition there and how it works. I’m sure it’s a battle for the coffee as it is every year. That is such a special area. You told us a little bit about how the harvest shook out in terms of competition and volume. How did you see it quality-wise compared to years past?

Jean Bosco: Kanzu has special quality all the time, so we always deal with competition. That means we always have to pay the highest price, and we know the quality is worth it. We thank you for the price you have been paying us so that we can pay a good price to the farmers we work with in Kanzu. We also keep close track of small lots of coffee for quality control because we know, when we focus on quality we need to really, on a daily basis, track the coffee we are getting. We are very grateful for the support to manage the quality down to a lot by lot scale for our top clients.

Aleco Chigounis: I have to say I regret not buying more coffee this year. The coffee was so good. We were as buyers, maybe you’ve seen this from other buyers as well, a little timid with the Covid-19 situation. Unsure of how things would shake out economically here in North America with our own clients and how they would be living through this situation, but in retrospect we should have bought another container. Next year we’ll be back strong with the full volumes again. When do you see the next harvest starting and how do you think it will shake out in terms of volume and quality?

Jean Bosco: In Kanzu, because of the higher altitude, we’ll see the next season start a bit late compared to others. Around the end of February, early March. This year, we’ll still be getting cherries into July, which is great. The late maturation gives time for concentration and the quality gets better over the course of the harvest. We expect a good crop, because the rain is what we want to see so far. We applied fertilizer already, and we’re expecting at least the same volume or more than what we bought in 2020. We’ll definitely have the volume you want, especially since you make such fast decisions. 

Aleco Chigounis: Thank you. That’s the mantra for us, to make quick decisions and move quickly. Be a strong partner.

Jean Bosco: That quick decision helps us so much.

Julia Fariss: And I wanted to say, regarding quality, all our work this year was done from our lab in Berkeley. No one was traveling and it’s always such a pleasure to cup those Kanzu offers, they’re so good. This year, they were just the highlight of cupping for me personally. I haven’t been cupping as much because I’m mostly working from home, so it’s just such a beautiful coffee and this year was definitely no exception.

Aleco Chigounis: So beautiful. It also seems like, and correct me if I’m wrong, that the potato issue obviously still exists but it’s much better controlled than it used to be. To give a very brief synopsis on what potato defect is to anyone who might not know, a specific kind of insect bores into the beans, leaving bacteria that create a raw potato flavor in the coffee. Really interesting, and unfortunately undesirable—it’s a problem that has hurt Rwandan coffee producers, which is why folks like Jean Bosco and Longin have taken great measures to try to eliminate it as much as possible. Thinking about the Kanzu coffees and the amount of times we’ve kept them this year across the different lots that we’re buying, we have a very low incidence of finding potato cups. Is there a special program or a special way that you approach the quality control of that now at Dorman?

Jean Bosco: There’s a lot of strict control and tracking of small lots. We cup every small bunch of coffee on a regular basis and whatever we get any potato taste, we keep it aside, we recup until we get all lots potato-free. We do a lot of hand-picking and we have very good cuppers at our office. We have 2 Q graders now and we work hard really on getting the best quality we can. Especially for regular buyers and committed buyers. The potato taste is still there we can’t say a hundred percent, you know? It’s very hard to control these potato tastes, but we try to track as much as we can to get the potato-free reloads.

Aleco Chigounis: I think you’ve done a very good job, thank you for that.

Longin Muhizi: Also going back to the farms’ practices, a lot has been done. We have a program designed for farmers. We deliver training on good agricultural practices and with those practices, you see there is really an improvement on how farmers are treating their coffee crops. That’s had an impact on reducing the potato. Pruning is really very important. The bugs that cause potato taste like to hide in coffee farms where the foliage is bushy, but when you clear the farm and carefully apply fertilizer, some pesticides when possible, and be consistent at pruning, the severity of the potato is really reduced. 

At the washing station where we sort the cherries, we also make sure that anything that has been bitten by any insect is removed during flotation. When you put coffee or in water, cherries that have been damaged by insects float and can be removed. Then, after coffee is pulped, we also do sorting in the pre-drying area. We call that phase skin drying, where we pre-dry the skin of coffee so that when you put the coffee under natural sun it cannot be cracked by the sun, allowing other issues to arise. During skin drying you can also easily pick out any defective coffee beans. Just to highlight that we do a lot of controls at every stage to be sure that the coffee we are going to produce is of quality desired by the client.

Aleco Chigounis: It’s great to hear about all the steps you’re taking. 

Julia Fariss: Could you two tell us a little about what the year has been like in Rwanda, what the impacts of Covid 19 have been both on operations for Dorman, for farmers, and also just on a human level?

Jean Bosco: 2020 has been very hard for everyone worldwide, and Rwanda was no exception. We had our first positive case on February 14th, and from then on positive cases kept increasing and Rwanda took major serious measures, starting in early March. We went into complete lockdown. By the time we started harvesting, the whole country was on lockdown. Farmers and the agricultural sector were allowed to continue operations, but with little movement allowed. Everything slowed down, it was very hard for us to keep the same level and speed of work in the field.

For example, in order to leave Kigali we needed a special authorization to leave. Fortunately we have washing station supervision at the regional level—our washing station managers were living at the washing station during harvest. We managed to get there ourselves during the harvest, but it was not easy to get in and out. 

Otherwise, Rwanda took serious measures. Now it’s mandatory to wear masks everywhere. Anyone in Rwanda leaving their home needs to wear a mask; social distancing is controlled as is testing. We, Rwanda, started testing in March because we were not prepared. The pandemic came as a surprise to everyone but over time Rwanda got more equipment to do testing. Now we have 5500 positive cases tested since that time with more than 90% recovered, fortunately and around 50 deaths. In June, the country started reopening slowly. Now schools are back. 

The country is slowly recovering, but we are still under serious control. We need to keep social distancing, some pubs are still closed, hotels are opening and all travelers need to get tested. Whoever enters Rwanda needs to be quarantined for 24 hours and tested. We took serious measures, and we are lucky now we can say it’s a bit under control, when you compare with the other countries. 

During the farming season, the risk was a bit high for us to keep financing, sending money to the field when we couldn’t go there on a regular basis, but we managed to anyway. We were lucky to have a good team and then we managed to get production and pay farmers and in the end it went well. 

One of the biggest negative impacts is still with us: the cost of living is becoming very high. Rwanda is a country that imports a lot of things including food and imports prices are very high due to transport issues at the borders. It’s really not easy; there’s a very negative impact on everyone including our farmers. Their cost of living is rising, and buying anything they need is more expensive. 

Julia Fariss: Yeah, in the US right now having a really big surge of cases and, it’s been a hard year here too. I’m glad that the measures in Rwanda have been successful at controlling Covid and that schools are back. Are you able to travel to the field now? Do you still need to get special authorization?

Jean Bosco: Now we can travel in the field. The western province was under lockdown for a longer period than the rest of the country because it’s at the border of DRC, but now it’s reopened so we can travel within the country without any problem for the moment. Only people going out of the country need to be tested first and when they come back.

Julia Fariss: How do you see things looking forward to the upcoming season? What are the plans in place for next year for coping with any more Covid-related obstacles?

Jean Bosco: We have hope that the vaccine will help and that Rwanda would probably be included in the first countries to get the vaccine. The pandemic was taken very seriously here in Rwanda because our country relies on tourism and has a service-based economy. So, that’s why in Rwanda this problem was taken seriously from the beginning. Now we have hope because worldwide if the pandemic can get under control with the help of vaccination then things will be much better next year.

On the farming level we are as ready as possible. We have applied fertilizer, but it wasn’t ideal. We used to have fertilizer from expert contributions and the government gave us additional support. Now the government wasn’t able to get that support so we probably won’t have enough, and this this year will be already reduced to what we have, but whatever we had was already applied on time. The rainfall has been good, so we hope that the production will be good. Farmers are in a hard situation, but we are in touch with the farmers, we are trying to work with them. Some of them are looking for some small loan for their production, and we try to help them to access some finance to pay their family expenses. 

We’re also struggling with training. With social distancing measures in place, we can’t gather people for trainings. It’s a bitter challenge but we hope to be able to do training as we can in respect of the committed measures.

Longon Muhizi: To add to that, we are working to increase the involvement of women in coffee farming, so we’re planning for when things get back to normal. We’re planning to create 4 groups of women in Kanzu, where we will be able to train them on different topics aside from coffee practices like basic business skills and financial literacy, so that in the off season they can have some activities that can generate income to support the household. After the training we help them to develop their business ideas, and also spread them to the other women surrounding the Kanzu region. 

We also plan to maintain certification which is good for farmers and helps them get higher premiums. And, we’re planning to contribute to production by raising seedlings which will be given to farmers for free—our plan is to distribute in 40,000 new seedlings in 2021 which will help us assure that in 3-4 years the productivity won’t drop off. That is also an assurance to Red Fox, that any volume they will have in the future as the company is growing, we will be able to supply.

Aleco Chigounis: That’s great news! Which varieties are you giving them as seedlings?

Longin Muhazi: There’s a new released variety called Rap C15; it was tested by Randall Clutch and released in 2015. It’s resistant to coffee bean disease and the quality and productivity are good.

Julia Fariss: It’s such a pleasure to see you and to hear how the year has gone for you. We so appreciate working with you and all the work that you do. We love that coffee from Kanzu and the work that Dormans does so, thank you so much for being with us.

Aleco Chigounis: Thank you both. It’s great to see both of you. Two of my oldest friends in
Rwanda.

Longin Muhizi: Thank you, thank you, Aleco.

Jean Bosco: It was a pleasure meeting you here. It has been a long time since we’ve seen each other. We hope you guys will continue buying Kanzu and it will be really a pleasure to work with you.

Aleco Chigounis: We’ll always be there—as long as Kanzu is producing coffee, we will be there. 

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

Tibed Yujra of Puno, Peru on Puno History & Launching An Association During Covid

We were lucky to get a chance to sit down with Tibed Yujra, a long-time partner in Puno, Peru, in the Foxhole for a conversation about his work in organizing a new producer association, Puno’s recent harvest, and the challenges posed to both by the Covid-19 pandemic. For more background on Puno’s history and Tibed’s role, click here.  

 

Aleco Chigounis: Hello everyone, welcome back to the Foxhole! We have a very special episode for everyone today. I am joined by my talented co-host Ali Newcomb. Ali is the managing director of our export and sourcing operations in Lima, Peru and Oaxaca, Mexico. Welcome Ali! How is the weather in Lima?

Ali Newcomb:  Good, very good.

Aleco: We also have a very special guest today, Tibed Yujra. Tibed is a former Red Fox employee, who left to start his own producer association and sourcing operation in Puno. Tibed has been a very close friend of mine personally for well over a decade and has a really amazing professional career history, and he’ll tell us all about everything he’s done back then and what he’s doing now. Welcome Tibed! 

Tibed Yujra: Thank you so much Aleco for the invitation.

Aleco: It is a pleasure, my friend. It has been a long time. How is everything in Putina?

Tibed: Always good, we are all good, very good here.

Aleco: It is important to know by the way folks, that Tibed is joining us from Putina Punco, deep in the Sandia Valley way out in the producer area just above town, in a little hamlet called Chorrillos. Tibed, can you tell us a little bit about your family, where you are from? I know you have gone from the plateau to the jungle and everywhere.

Tibed: My family came from the mountain range of Puno, and the majority of the people who settled in the jungle of Tambopata where I live, they are also from the mountain range. My parents settled there years ago. I was raised there and have lived there since. Then and now, my family has always been in the coffee world, and that’s why it so much.

Aleco: That’s good, and Tambopata is the jungle where you find all the coffee of the Sandia Valley, or no?

Tibed: Not only in Tambopata. We have two valleys: Tambopata, and the other one is called Inambari. 

Aleco: And that is where your family is from and where the famous area of Tunquimayo is, no?

Tibed: Exactly.

Aleco: That is good. Can you tell us a little bit about your professional story? How did you start in the coffee industry? And how did you get from there to here in the present?

Tibed: Yes, it’s a long story. Basically, it started with my parents. They started producing coffee in this jungle and I started working with them, to see how the coffee grew, how the production works, how the export companies work—the ones that existed here during those times like Cecovasa and other cooperatives. Now that my parents are older, they moved to the mountain range, to be more comfortable and take care of their health. And so, that is how I started. I then started working in Cecovasa almost 11 years ago. Sometimes I worked in the warehouses and sometimes quality control in the laboratories. After I left Cecovasa, I went to work for a nonprofit in Haiti called Veterinarians Without Borders. I helped a lot of Haitian producers to improve their coffee quality during those times. After that, I started working at Red Fox alongside Aleco, and with everyone in the team that are still working there.

Aleco: That is so good! A question, how long were you working for the group of the vets in Haiti?

Tibed: About two years.

Aleco: I remember when you and I met the first time in Putina, sampling something like 200 coffees in only two days. 48 hours cupping like crazy, and we became very close friends over there. But after, you left to go to Haiti, and to go work at other levels as more of a consultant. Then we met again in Incahuasi, right?

Tibed: Exactly! Yes, I worked at a cooperative in Incahuasi for a term as a consultant, and we saw each other then too, when I was finishing the consulting work there. 

Aleco: It made me really happy seeing you again. From there, we went together to the future, no?

Tibed: Yes, exactly!

Ali: Tibed, I wanted to ask you—we are very excited, with everything that you have initiated this year, your new project in Puno. I wanted to know if you could tell us a little bit about this project, and how it has been?

Tibed: Yes. The fact is that there are many producers, and despite all the effort that they put in at the farm level, they don’t receive the appreciation or money they deserve, and that is the reason why we have started to build an association to help the producers. So they can receive a fair price for the quality of their coffee. It’s a huge endeavor to cultivate the coffee, it’s not an easy task. I also have a farm, and it’s very complicated to produce specialty coffees. It is intense, the reality of a producer, and I think that work needs to be rewarded. That’s why we started this project: to put together a group of producers, organize them into an association, and allow them to export their own coffees, and so they can receive a fair price for the quality of their coffees and their work. 

Ali: And how has it been? Because, you started this in full pandemic, and even though you’ve known a lot of these producers for years, you’ve started from zero this year. All the social parts, talking to folks about all the work that you were going to do, the logistics of it, tell us a little bit about how you’ve been working this year?

Tibed: Well, for me, it has been very complicated basically because of the pandemic, because it was really difficult to travel or even communicate with the producers. The producers themselves were afraid, so they didn’t want to receive visitors. In general, it’s helped me a lot to know many of the producers of the area of Sandia. Both valleys, in Tambopata and Inambari, and this is the reason why they have trusted me so much. I think it’s fundamental. Definitely there have been a lot of roadblocks, but I think we’ve achieved something.

Ali: Yes, we are trying the samples of the first container and they are spectacular. 

Tibed: It makes me really happy to hear this.

Aleco: You have done an excellent job getting the best producers. Better than ever before. The coffees of the producers that we have been buying for the last 10 years or so. Good job!

Ali: Can you tell us more about the challenges that come from your specific location? Because you are working in a place that is very remote, where there aren’t any banks. What challenges have you had in that area, with financials and logistics?

Tibed: Yes, indeed, it is very difficult. The financial area especially, because it’s so fundamental to try to cushion the finances of the producer. They don’t have the luxury to be able to simply give you their coffees and trust that you’ll pay them later. They need some upfront payment. So, this part has been very complicated. As you know well, this area is very far away from the city, the trip is very long, and since there aren’t banks there, we have to try to transport the money safely and avoid theft and other obstacles.

Aleco: Coffee production in Puno has a very interesting history, all the trading and commerce of the coffee, doesn’t it?

Tibed: Yes, it’s very different. I have been in various countries, and I know, like for example in Honduras, the production and transport from the farm to the port is so close that it doesn’t take more than 4 or 5 hours of travel. But this area is so remote. Imagine it, from Putina Puno to the production zone of many producers, and we are not talking about its total, some producers are 6 hours away, some others 8 hours, and then from there to the port or to the processing plant that is located in Lima. It is very far, and we are talking near 40 hours of travel for the coffee, and that is very far, I think is the most isolated part in the world of coffee, if I am not mistaken. 

Aleco: I always tell the story of one time that you and I were in Pilcopata. It was many years ago but, many years ago. We were visiting someone, and we happened to see Mr. Ciriaco Quispe taking his coffee down bag by bag in a wooden wheelbarrow. His farm is almost a whole hour of walking straight up. It is difficult. And I can’t even imagine how to bring down 100lb bags in one of those wheelbarrows. Bag by bag, it has to take hours. Even days, no? It is insane. So, it’s not just a matter of where the production is, but how to get to the town as well. It’s incredible, I’ve never seen something like that in my life. 

Tibed: Yes, the topography is rugged. And making a wrong move while carrying the wheelbarrows, one can get injured or worse. 

Ali: How do you do it Tibed, this year? Did you go and pick up? Did you have a meeting point where the producers would come and deliver to you? 

Tibed: This year we had a temporary meeting point where Silvia has helped us a lot. She is a long time friend who’s also a coffee taster. So, that is the agreement that we made in the production area. But we also had a warehouse that we rented in the city of Juliaca. 

Ali: And from your warehouse to Juliaca, how many hours are in between?

Tibed: Well, by truck, it is about 14 hours.

Ali: That means just one way, no?

Tibed: Exactly, one way only.

Aleco: Can you tell us about your famous wife? Delia, winner of a great place in the Cup of Excellence competition last year and a renowned producer of the highest quality coffee? 

Tibed: Yes, my wife Delia and I started this growing project because we wanted to know the true effort of producing high quality coffee and be able to experience it with our own hands. You can see it in a book, or you can see it in biographies, whatever is written can say something, and something different is what you truly go through and work on. It is very difficult growing specialty coffee and at the same time, it’s a passion, and this is the reason why we started with the farm so we could experience all this. And to explain what truly happens in the farms and how we can actually improve the quality of the coffee for other producers in the community. That’s why we entered Cup of Excellence. Delia’s coffee, our coffee, ended in 11th place. We hope to be able to compete again in the upcoming years and see what happens. To see if we can win, that is also the goal, no? 

Aleco: Yes, I would say we know a lot of the stories of the coffees of well-known Puno producers like Ciriaco and Raul Mamani, Benjamin Peralta, and Wilson Sucaticona of course. And Abdon and Juan Quilla, but Delia’s coffee has added a higher level of quality. That amazing coffee. It is one of the best coffees in the entire continent of South America.

Tibed: Wow! Thank you for your appreciation for our coffee, it makes me really happy, and believe me, my wife is really happy for this as well.

Aleco: Yes, well we thank you so much Tibed, and say hello to her from us please.

Tibed: Of course, that I will do.

Aleco: Ali, what else?

Ali: Well, I’m just thinking you’ve had so many experiences, Tibed

Tibed: Yes. It will take me a life to tell you all of them.

Ali: What has been your favorite part of the farming project that you have with Delia? It seems like you started it primarily to learn from the experience, no? What did you get out of it and what have you enjoyed from it?

Tibed: Yes. In the farm we have many varieties, so that we can see the behavior of the different varieties. There are varieties that are very demanding in the fertilization, there are varieties that are strong and resilient. That is essential to know because, as a producer, if I want to produce specialty coffees, I have to manage my geographic location, I have to look for a good variety, so that knowledge is essential. The farm has taught me all that. What I like most is seeing the differences between all these varieties. I like it a lot because we’re also the ones who apply the fermentation in wet milling, and being able to experience the fermentation to see how it helps us. It’s complicated to use this method. It is very delicate, and just one mistake can damage the entire harvest of the day. 

Aleco: A question about the varieties: what variety does best in the microclimate of Tunqui and Putina Punco and all the area of Tambopata?

Tibed: The bourbons. 

Aleco: The bourbons, yeah. It is a very popular one in the area, no? It is something so special. It has floral flavors like the ones from Ethiopia. 

Ali: Tibed, I wanted to ask you, you have 3 kids, right?

Tibed: Yes, exactly!

Ali: And they have grown there in the ranch cultivating coffee with you all.

Tibed: Yes, during the pandemic yes. They have been here together with us.

Ali: And would you like for them, when they are grown, to be coffee producers? Or for them to do something else?

Tibed: It is a little bit difficult for me to say that because, I can imagine, each of my kids may have other likes, so for me personally, I think it would be good that they would be involved in the coffee world, but I think each of them will decide their own destiny, their own likes. Maybe one wants to be a doctor, or maybe another profession, I don’t know, they might not be involved with the coffee. Maybe they don’t like the world of the coffees but at the end of the day, they will walk their own way. But for me, personally, I would really like that.

Ali: Beautiful outcome.

Aleco: Well, then, is there anything you want to ask us or say to us?

Tibed: Yes, I am very happy to be part of the coffee world. It is my passion, and what I am doing is what I love. The world of coffee doesn’t have borders or a limit, and I think that, beyond borders, we find the world of the coffee growers, of the entire world. I think that we have to communicate with producers, and help the producers to get the best prices for their coffees, and for me, personally, I would be really happy with this. 

Thanks to Aleco for helping me during the 5 years in Red Fox and for knowing so much about the world of the coffee. When I left Cecovasa, I thought I knew it all. Then, I realized that that wasn’t the case, and that there was much more. I think the world of the coffees is very ample and there is a lot to learn. And thank you very much.

Aleco: Beautiful Tibed, thank you very much. You will always be part of the Red Fox family. And you will always be my brother as well. Thank you very much for your time, and for sharing the stories with us. Ali, I don’t know if you have anything else.

Ali: No, thank you so much Tibed, I hope you have a beautiful afternoon.

Tibed: Ok, thank you so much to you too.

Aleco: Thank you! Bye!

 

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

 

FUDAM’s Raquel Lasso Talks Differentiation, Ecoforestry, & Covid-19

After over 12 years working with FUDAM leader Raquel Lasso to source coffee from Nariño, Colombia, we wanted to open the floor for Raquel to speak directly to the specialty coffee market. Some background on Raquel: she’s an innovative leader who inspires the best work from her community and gives it in return. In conjunction with her work in FUDAM, she formed a group called Manos de Mujeres that focuses on the empowerment of women growers within her community. Coffee growing can be a macho, male-dominated field, and a group that’s women-led and hyperinclusive adds a huge amount of value to the larger community. Their projects include getting the group FTO certified to increase income (especially for producers on the lower end of the quality spectrum) and opening an organic fertilizer facility so that organic production doesn’t come at the expense of productivity or conservation. To read more about the smallholder communities of FUDAM and Manos de Mujeres, click here.  

What follows is an interview with Raquel, first aired via the Foxhole on August 14th, 2020, edited for length and clarity, and translated from Spanish to English by Red Fox’s Ali Newcomb. Raquel has a lot to say to the specialty market, and we’re happy to help her build the space for producers to talk directly to consumers.  

Aleco: Raquel, can you start by telling us a bit about yourself and your family? How did you get your start producing coffee in Nariño?

Raquel: I was born into a coffee producing family. As long as I can remember, I remember waking up to the sound of the coffee depulper. The most beautiful memories of my childhood are of being alongside the harvest, the wet milling, the selling of coffee, and enjoying the result of that sale. Coffee production has been the engine of development in our area. Because of coffee, many families have been able to get ahead. 

My family was big, and of the nine only two of us were able to study to become professionals. For me, and later for my brother Jeremias, my father’s vision was that we could acquire more knowledge, so that we could lead a happier, more beautiful life, a life where things were done with clarity. When I entered university, my father said to me, “I’m not sending you to university so that later you can look after me. I need you to go to university so that you do something for people like us: humble, without knowledge, and many have taken advantage of that lack of information to harm us, to not give us what is fair, to ignore us.” At that moment I understood his logic: I need you to work so that people don’t treat other people the way they treated me. And that has been our endeavor in life. 

We have to make it so that others live better, so that others have better prospects in life, and that’s what we’re doing. Jeremias and I, and I say this not with pride, but with truth, we have spent our lives trying to make it so that the history of our people, of our neighbors and our friends is written beautifully, and that all of us can have an abundant life. They raised my father under the logic that you had to be poor to go to heaven. Our logic is the opposite, it’s to live well, to have an abundant life, to have what you need. And do what we can so that others have a beautiful and abundant life. I think we came here to build heaven together with everyone else.

Aleco: To go deeper with that, what led you to start FUDAM?

Raquel: When we started FUDAM in 2000, we were clear on several ideas and one of those is that we, the producers, have a lot to do with degrading the environment because of poor agricultural practices, not just in coffee but in all crops. FUDAM was born with the idea of starting, among the producers, to improve and change those agricultural practices to minimize negative influence on the environment.

We realized we needed to continue with that ancestral tradition of helping our neighbors, of helping those who live close to you, of making those regular visits that families make. I remember when I was young lots of people dropped by my house. Nowadays those visits are more limited, and with the pandemic even more. We knew that as an organization we had to continue with those traditions of social interconnectivity among families. 

On the economic front, we were aware that the problem for coffee producers is that they are the ones who work hardest, assume the greatest risk, but earn the least. On the other hand, the trader assumes the least risk, works the least, and earns the most. If I send a load of coffee, and something happens to that coffee along the way, the one who loses is the producer. The trader isn’t going to say, “listen, there was a problem and I’ll pay for it.” No. 

We experimented with trading beans, trading vegetables, trading fruit, but it was very complicated, because of unfair competition, lack of working capital, and also logistical challenges, especially transport because transporting fruit is very complicated. We realized that coffee, unlike fruits and vegetables, had greater potential because it has a guaranteed market. We could have a more effective impact on coffee producing families, not only from an environmental perspective, but also from an economic perspective and familial perspective. In that endeavor we realized that coffee was a product with the potential to develop a commercial process using the logic that everything should be shared. You share the profits, you share the workload, and you have to share some of the risks. 

Aleco, I remember that you came many years ago with a man named George. You were really young. We realized that there was a good market for quality coffee, that it was possible to produce quality coffee, coffee that could be differentiated, and that it was possible to have a traceability system in coffee. Those are all of the things we at FUDAM had always wished for. We discovered that for us, as smallholder producers, producing high-quality coffee was the viable option. For the large scale producer, because they have a lot of coffee, the little they earn per kilo adds up. For us smallholder producers, if we don’t earn much on our small quantities, we are left with nothing. 

We started to do that work of quality, of differentiation, of traceability. Now there are other groups that work similarly, but back then we were the only ones who worked that way.

Aleco: How has the power disparity between traders and producers informed the way FUDAM operates?

Raquel: When I receive the coffee from our members, sell that coffee, and receive premiums for the better quality of that coffee, the majority of that additional payment has to go to the producer because the producer is the one who does the majority of the work, that puts in the majority of the effort and who takes on the majority of the risk. 

For us, that focus on ethics was easy. Why? Because we are coffee producers, we know what it is to wake up early, we know the whole coffee production process. So, if we know the production process, what is our philosophy? I treat my fellow coffee producers the same way I would like to be treated, with honesty and with transparency. I like things to be transparent, to be just, and to be clear and that’s how we work at FUDAM. We take that price premium and we transfer it to the producers. We only take what is necessary to cover the costs for the process of commercializing that coffee, the logistical costs. 

Aleco: Can you talk about some of the biggest challenges FUDAM faces in general? 

Raquel: As an organization of smallholder producers, our biggest bottleneck is working capital. Because of producing families’ economic circumstances, they need to bring their coffee to the FUDAM warehouse and be paid immediately. For the moment to get this capital, we not only take out bank loans, we also take out personal loans, and personal loans are very expensive and very complicated. Now, in these times with the pandemic, I started to think about a lot of things. I have a personal loan, and if something happens to me, what happens to my family? What happens to my daughter? My children? But if I have a bank loan it’s much easier, because with a bank loan there’s insurance, there are possibilities for the person who takes out the loan. 

This year, fortunately, we did have credit from the bank, even though we also had to take out personal loans. But FUDAM’s endeavor is that, to reach the point where we don’t need to, and hopefully there is time in this life and this virus doesn’t knock on our doors. 

Aleco: Can you tell me a little about how you’ve diversified production at FUDAM and what you’re currently working on with respect to ecology?

Raquel: We need to reconvert our coffee production into what we call agroforestry. I produce coffee, but I also have other products on my farm that not only increase my income, that not only feed me, but that also contribute to improving the environment. It’s a beautiful process, and the farms here are very different than the monocrop farms of 20 years ago. These farms have avocado, lemons, bananas, yucca, beans, other products that help to improve the quality of life of the family. We’re in the midst of turning our coffee plots into diversified gardens. I connect vegetable plots to food security, but I think of a garden as something whole, something varied, where you have absolutely everything. Thanks to the support of our buyers and roasters we’re achieving it. It hasn’t been easy, but we’re doing the work, and I know that with everyone’s support we’re going to go far. 

Aleco: You’ve talked a little about power dynamics between traders and producers. Can you say more about how FUDAM fits into that and where roasters fit as well?

Raquel: We all have to do our part. The producer does their part. We as an association and as producers do our part, the buyer does their part, the roaster does their part and the consumer does their part. I think it’s very cool that a roaster, in the US or anywhere, can know about us and we can have them visit and they know that if they drink a cup of coffee and pay a good price for that coffee, part of that good price is to reach the producing family here so that things don’t get stuck along the way. We are a private organization, and as a private company we should show ourselves and everyone that you can work honorably and transparently.

At the public level we have seen, if you do an analysis of the coffee sector in Nariño, it’s received more than 60 billion pesos but if you ask a coffee producing family how much of that they received, they won’t have an answer. If you go to that producer and ask, how much did you receive from FUDAM in premiums? They’ll be able to tell you without a problem, 500 thousand, one million, two million. Last year one producer received 7 million pesos for his coffee. If you ask a group of coffee producers: how has the government modified your quality of life, they’ll be left thinking, and likely won’t have an answer. But if you ask them: how has FUDAM contributed to changes in your quality of life? Without a problem someone will raise their hand and say, for me my life changed in this, in this and in this. And they are real, concrete things. So we do see, in coffee production, very good potential to contribute so that all of us as coffee producers modify and improve our quality of life.

Aleco: Could you tell us how the harvest is going?

Raquel: The harvest is coming to the end, the only coffee left is from the highest areas. This year was really hard, there was very little coffee because there was a lot of renovation. I didn’t think it would have such an impact on the harvest, but it was very hard. The pandemic also didn’t allow for harvest and wet milling to happen at the opportune time. The quality of the coffee declined. 

Aleco: I know that the prices on the local market have also been unusually high due to the pandemic. How did that affect FUDAM? 

Raquel: For the producer it’s excellent. The producer wants to seize the moment and sell their coffee at a higher price. But it has made things difficult for us. For one, because for us as organizations collecting coffee it is difficult because of the lack of working capital. Higher priced coffees mean a lot of upfront investment for us. But for the producers it’s great. 

I also feel bad because there was very little coffee in our area. It would have been a great opportunity for our producers, but unfortunately last year the prices were low and people renovated their farms. Hopefully next year there is more production, and hopefully the prices stay high. 

Aleco: How else has the pandemic affected the producing areas and farmers?

Raquel: For us as farmers, as residents of the countryside, the truth is the pandemic has provided an opportunity for us to spend more time on our farms and be in closer contact with our plants, to be in closer contact with our surroundings. We have been blessed, blessed because to be confined to a house in the countryside where there is coffee, where there are animals, where there is a vegetable plot, where there are things that aren’t confinement, that’s pleasure. 

But it’s worrisome to see the people who live in very small quarters, 50 square meters or 60 square meters must be disastrous. 

Also for us coffee producers, this pandemic has been a moment to look within ourselves and say what have I done and what do I still have left to do? This pandemic taught me that when the time comes of being faced with the end it makes you think, what am I taking away from this, and what I take away is what I did for the rest, and what I leave is the memory people have of me, so one way of not dying is to stay in the hearts of those you leave behind, to do something to remain in the hearts of everyone else. 

Aleco: How else has it affected you economically?

Raquel: From an economic perspective the pandemic has hit us hard. For example, we had to go out to the “corregimientos,” which are a nucleus of producers or of several communities, because a lot of our producers are older. So we loaded up the roaster and lab equipment and went up there to cup and receive the coffees to avoid producer risk.

I would tell my producers, it makes me nervous that the next time we have a meeting we have to ask which of our members are missing. That would be very painful. The idea is that we protect each other, and if you think that by not coming here your odds are better we’ll go to you. It increases our costs and complexity, but we’ve done it and we’re satisfied because our producers are more relaxed. In the warehouse we say “come, leave your coffee, I’ll weigh it, and go. And I’ll call you on the phone to let you know what happened with your coffee so that there aren’t any problems.”

Aleco: Has the pandemic affected your community’s health at this time? 

Raquel: The farms at FUDAM didn’t have too many complications because the farms are integrated: we have bananas, yucca, sugar cane, there isn’t a lack of fruit or vegetables, so it was easier to feed the family. To date none of our members have had any health problems related to COVID, but it has been an effort for everyone to try to come out ahead and try to overcome this. 

This is something where you tell yourself, I have to live and protect myself and do what it takes to get through this moment. I think we’re close to the end of the tunnel.

Aleco: How do you see this affecting the future of coffee production in your community? What types of support do you think are needed to create a viable future?

Raquel: One of the challenges that I see is that we need to start implementing strategies to get our youth to stay in coffee production with us. Sometimes we sit down at the top of our land and we look out and think, who is going to look after this when I am gone? At FUDAM we’ve realized that one of the ways that our youth will stay in the countryside and continue to produce coffee is by making coffee production an activity that is highly profitable. How do I make it so that coffee production is highly profitable? 

By producing coffee that is differentiated, good coffee that meets the needs of the consumer. I told my producers they have to focus on this. If some day a roaster from the US tells you that they want you to send them coffee with square beans we’ll have to find a way to make them square. And that’s where communication is important: for buyers to communicate what they desire so that we can satisfy the needs of consumers and establish long-term relationships. 

I see coffee production as having a future, but we have to be more precise. We have to standardize the processes because there are producers who produce good coffee this year, and next year, nothing. We don’t have standardized processes—sometimes we don’t have records of our processes. There are very few producers who can tell you this is how many hours I fermented my coffee this year, this is how it turned out. The complication is that our producers are older and sometimes when the years catch up to you and your expectations are not as high, it’s the same to you to produce coffee well or not. That’s why we need our youth to be the coffee producers of the future and make sure that they learn from us, that the way we learned from our parents, our children and grandchildren learn from us. 

If you come to my house and I want to make you a good cup of coffee, I  will put everything into making that good cup of coffee. I put all my effort into my empanadas so that they turn out as well as possible but if I make coffee carelessly, how is it going to come out well? We, as coffee producers, need to put love, care, to put our hearts into it, and that will be reflected in the product. I am very metaphysical and I do believe that love, that hope that one puts into producing coffee remains immersed in that coffee and that’s the good flavor that we all taste.

Aleco: Gracias Raquel, drinking coffee at your house is the best, but we could never talk to you without talking about the empanadas. They’re the best empanadas in the whole world, I’ve never had better. Thank you, Raquel.

 

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

Asorcafe’s Geovanny Liscano On Covid, Why Specialty is The Future, & 2020

After over 12 years working with Asorcafe leader Geovanny Liscano to source amazing coffee from Inzá, Colombia, we wanted to open the floor for Geovanny to speak directly to the specialty coffee market. Some background on Geovanny: he’s been a stalwart partner to us since 2006, back when he farmed just one hectare of land with his wife and father. The coffee was superb and over time Geovanny reinvested profits back into the land, bought surrounding plots, and built up processing infrastructure into a thing of beauty for the whole community. He is the model producer to look at when talking about reinvestment and potential at the farm level. His group Asorcafe is incredibly well-organized with a laser-focus on ethics and he’s a valued leader in the greater Inzá community. He’s now in his second run as Asorcafe President after being the association’s third President from 2007-2008. To read more about the smallholder communities of Asorcafe, click here.  

What follows is an interview with Geovanny, first aired via the Foxhole on August 14th, 2020, edited for length and clarity, and translated from Spanish to English by Red Fox’s Ali Newcomb. Geovanny has a lot to say to the specialty market, and we’re happy to help him build the space for producers to talk directly to consumers.  

Aleco Chigounis: Geovanny, can you start by telling us a bit about yourself and your family? How did you get your start producing coffee in Inzá?

Geovanny Liscano: For me, coffee is all we have; it’s a product that is special to our area. In my family, we’ve produced coffee ever since we were children. Now, we’re proud because we had the vision of forming Asorcafe, the business we have today. Thanks to that producer association we met you, Aleco, who we and the producers are grateful to be working with today. In this moment there are difficulties, but we also know that good things come out of difficult times where we have to learn, to get inventive, and I think from there we will find strategies to come out ahead.

Aleco: Can you tell us a bit about your personal story as a producer, or about your parents and how they started to produce coffee?

Geovanny: Since we were very young, coffee production has always been a part of our lives, but despite that, I didn’t know nearly as much about coffee until we founded the association and started working with you and getting into specialty production. It’s brought a huge change to my family. I’m really grateful to have gotten into specialty coffee; I like it. In the case of my family, we feel good about working in coffee. We feel happy going to the farm, from planting a tree, to harvesting, the whole process. 

I owe everything to coffee and to the program we have with you because today, the price the local green coffee market and other C-based buyers are paying for coffee right now is booming—but Aleco, you know there are times when the prices dropped to 600,000 pesos, 700,000 pesos, and at that price we barely cover our costs. Profits from producing specialty coffee come from knowing you’re going to receive premiums. Thank God we as a family started saving those premiums and investing them into building solar dryers, buying a good depulper, building a good wet mill set-up to make the processing easier. 

Each day we have more love for coffee farming, those of us who depend on that crop. We do the work as a team, as a family. All of that makes us special. There’s a saying, “it isn’t the coffee that’s special, it’s the producer.” I think that’s right, you can have a very good variety, but if you don’t cultivate it well, you’ll never produce a good coffee.

Aleco: It’s always been a pleasure to work with you and your community. Was it your father or your grandfather who initially planted your farm so many years ago?

Geovanny: My father. My grandfathers also, but in the case of my farm specifically it was my father.

Aleco: Can you tell us the history of Asorcafe, how you started it and how you got to where you are today?

Geovanny: Before Asorcafe, we would see traders who paid unfair prices. They would come, meet up, and agree on the prices they would pay at the market. There were some producer leaders who thought about that and said, you go to town to sell your coffee and everyone is buying at the same cheap price. It wasn’t fair, and we could all see that. It led to us thinking about an organization, and we started socializing the idea with Yovany Castillo, who ended up being the founder, and with the other leaders there we started to organize and spread our ideas in all of the communities in the municipality. 

Before, you would put in the effort to produce good coffee, and take it, beautifully selected and when you got to the trader, they paid low prices and mixed it all up with low grade coffee, and that wasn’t ok. With Asorcafe we started to separate the lots, the coffee from the producers who took a lot of care in their production would be separated out. At first, we worked with Virmax Colombia. Once I got into specialty coffee, I liked it, and I see our future there.  

After forming Asorcafe, we learned to prioritize caring for the environment in our work. Before the association, we had learned that monocropping was the way to farm, planting coffee only. At Asorcafe we didn’t agree with that policy, and we started reforesting, planting trees, and switching to integrated crop farming where the farm has everything you need. Thankfully, it has been a model that many in the association have integrated. 

I’ve always told the people here at Asorcafe that Aleco’s program is open, that all of us could sell our coffee there and all of us could benefit from the premiums that we receive from Red Fox. Not all the producers in our community are quality-focused, there are some that don’t do the work that they should, but more than 50% of the members are committed. We set prices according to the coffee quality and those are the prices Aleco pays, and we at Asorcafe calculate the payment, deducting the expenses of the association—but we deduct very little, because Asorcafe always takes into account that the producer is the one who does the most work and puts in the most effort, so the largest amount possible goes to the producer. 

Right now, it’s difficult because of the high prices, the boom. At Asorcafe we have to make an investment to be able to get that coffee because the local price right now is almost as high as what we can pay, but when these booms happen—we’ve seen it before, and right now we’re seeing prices that we haven’t seen in many years—we know from experience that when we least expect it those prices will drop and we at Asorcafe still continue paying high prices. 

There are challenges, the pandemic has been very difficult, but we’re looking at strategies every day to come out ahead with the project of producing coffee.

Aleco: How is the quality of the harvest this year? I know that you are cupping a lot in Pedregal and that the producers are well versed in how to produce good coffee. 

Geovanny: Those of us that produce specialty are doing well. We’re doing things carefully, fertilizing well so that the harvest isn’t harmed, and I think there is good quality. 

Also, right now something very positive that we have as an organization is the cupping. Rivier does a really good job in the lab. We are very aware that he understands what he is doing and it gives us confidence in the organization. 

So yes, I think the end of year harvest will be good, hopefully the prices stabilize because they have been crazy. One day it’s one price, the next it’s another, and it’s been hard. 

Aleco: The prices are going up and down a lot?

Geovanny: More than anything going up, these days. It has been really complicated. The regional prices more than anything.

Aleco: Could you tell us a bit more about how the pandemic has affected you there in Inzá with the people, the logistics, the harvest, all of that—how has it been?

Geovanny: In our case here in Inzá, we’re in the countryside and thankfully we’ve been privileged because it has been uniting for family and community. 

From the perspective of being on the farm, it’s been good, because we’ve been able to work on lots of things that we were behind on. There was more time for each of us to work on our farms and so it hasn’t been so bad. 

On the business front, it has affected us. For Asorcafe economically it has been really difficult because here we have business locations and warehouses that we had to close for days in La Plata. Here in Inzá, we have also closed certain locations because it was impossible for suppliers and clients when people aren’t allowed out into town, everyone has to be in their house. That part has been complicated for us because you’re not allowed out. On the other hand, thankfully it has helped in terms of being able to spend more time with the family and working at home. 

Here in the municipality, just a week ago we had our first positive case. We’re now, once again, confined to our farm, our house, our community. So on the one hand, Aleco, we’ve been doing well, and on the other hand so so.

Aleco: Geovanny, it’s always a treat to talk to you. I think COVID has presented a lot of challenges but one of the advantages is I think all of us are learning to connect virtually.

 

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