The Calm Before The Storm - Is Coffee Crisis On The Way???
Welcome back to another coffee news update from Valeri, its been awhile since I've made one of these coffee news updates but now is as good a time as any.
Before we delve deeper in to this post, I have to admit, I LOVE Good News, don't you?
We, the coffee industry are waiting for some good news with a baited breath right now.
As it stands in the coffee industry currently and the world as a whole we are facing some really unprecedented commodity market conditions and prices of EVERYTHING are going up dramatically with inflation, no matter where you look, everything is going through the roof.
Let's just put it this way, we are in the perfect storm of inflation caused by global unrest, health difficulties, labour shortages and huge costs in shipping and movements of shipping containers, rising prices of oil and gas which is pushing up the costs of fertiliser, which in turn is also pushing up the costs of input to grow and process as well as ship quality coffee.
Weak Aussie Dollar is not helping.
When we buy coffee via our trading partners such as David from FTA we must pay for coffee via USD and if Aussie dollar is weak, the coffee can cost significantly more than expected and that is completely outside of anyone's control. Currently the Aussie is weak and not favourable for coffee purchasing which must be done soon.
The weather has not being favourable for major producing countries such as Brazil and Colombia either.
Colombia has faced some major flooding events which have caused huge setbacks and crop losses.
Brazil has had some unexpected frost in parts of the country right before the harvest season which caused issues with the current crop, it was perceived to be a major problem by the market but it turned out that it wasn't as bad as initially expected.
What about our partner producer Ismael and Romulo from Sao Silvestre Estate ?
I've personally spoken with Romulo and Ismael our main partner producers in Brazil and they have been relatively lucky and unaffected by the frost and their harvest is currently in full swing with good looking, healthy cherries coming off the coffee trees.
We have already organized our next container shipment from Sao Silvestre estate of their fresh harvest coffees which will be inbound for Australia as soon as the coffee is processed and ready, final price that we will pay for this coffee is still to be decided by various factors at play, we expect the price of our coffee shipped from Brazil and with Ismael and Romulo's premium extra fee that we pay to help them maintain great quality and look after their local humanitarian projects we will definitely be paying more this year.
In other words, its all a bit of a shit-storm and there is no other way I can really summarise it as effectively as that.
What's Happening in Ethiopia?
As you already know there has been some civil unrest and war in Ethiopia which has slowed harvests and movements of coffee within the country as well as coffee exports which has inevitably impacted the price of Ethiopian coffees somewhat in addition to the current other market factors discussed above.
The coffees are now flowing freely from Ethiopia and containers are inbound for Australia but here is the problem...
We are expecting to be paying up to 75% to 100% more per KG of raw Natural and Washed process Ethiopian Premium coffees and we are not alone, most of the coffee market is about to be facing this harsh reality.
What are we going to do about this?
To be completely honest with you, we are going to do nothing at all different from the previous years. We will still strive to buy Premium coffees as directly as possible and pay the going rates the farmers need in order to supply quality coffee and maintain their estates and their standards of living.
Will the coffee prices inevitably go up?
Yes, I am not going to lie to you, there is no other way around this problem. With the expected wage increase by possibly more than 5% which we intend to pass on to our team members regardless of the fact that they are not on a minimal award rates with us as well as the 0.5% superannuation guarantee increase which every business must also pass on, things will go up everywhere.
By the time we add all that up we will endeavour to keep our coffee prices as reasonable and accessible for you all as possible and keep the special deals popping up here and there when we are ahead of our projected expenses and can afford to treat you guys to a special deal.
All I can ask of you is this...
Stick with us, we will keep the Premium coffee flowing, we will keep paying our producing coffee partners and our Australian Mikro team properly and we will not stinge out on quality or customer service standard.
Keep an eye out on your emails and push notifications via the App, we have another ripper deal coming for you guys soon to finish off the financial year with a bang and help us blow some coffee out the door and raise capital to finance our next coffee purchases for 2022-23 coffee year.
Thank you for all your amazing support and me and my Mikro team are looking forward to seeing what the rest of this year brings and navigating the challenges the best we can.
All The Best!
Mikro Coffee Roasters