What’s happening?
There is a global coffee shortage and coffee prices are really rising.
Within this, there has been a marked and consistent increase specifically in Robusta prices over the last 24 months.
Why is it happening? And why now?
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Climate change.
Vietnam and Brasil are the world’s largest coffee producers. When they sneeze, the rest of us catch the flu! And they have had a bad time with weather patterns, leading to crop failures. This has created a coffee shortage and in turn, has increased demand… and prices.
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Demand for coffee is growing.
Why? Well, for every person cutting down on their coffee intake, there are several people who are discovering it for the first time - and getting quite a taste for it. Plus, we are drinking it in different ways; instant, whole bean, ground, in capsules, in ready-made drinks and protein shakes.
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Demand for Robusta is growing.
Why? Well, there has been some genuine, organic interest in Robusta and the opportunity of developing it for more specialty markets. But the increased demand for Robusta has come as a result of this global coffee shortage, and in other words, out of necessity.
A market rebalancing
We are seeing something of a market rebalancing, as the industry starts to wake up to Robusta's true potential and give it some overdue attention. Previously considered a filler, large coffee producers would be buying and blending high grade Arabica, and using both lower grade Arabica and Robusta as fillers. People are now turning their attention more comprehensively to Robusta. Rather than seeing it simply as a filler, more care is being taken in producing and roasting it, so that it can be used in the place of Arabica in their blends.
Producers are now in a position where they have to think of different solutions to meet demand. And as a result, the conversations on Robusta within the specialty space are starting to ramp up. And Robusta prices are ramping up with them.
Why I am not worried
From a farmer perspective, higher prices is a GOOD thing.
My HOPE is that this recent need to turn to Robusta will turn into a real and lasting appreciation of it, that won’t be short-lived.
For me, this is a rebalancing of how things SHOULD be. Robusta coffee farmers have been subsidising the coffee industry for decades growing Robusta at scale and at the lower end of the quality ladder.
Better prices means more money for farmers to invest in growing better coffee.
It allows farmers to “feed their trees” - to invest in the farm, in fertilsers, in extra hands for pruning, digging and planting complimentary crops.
Better prices = better beans and better livelihoods.
Time to raise the bar
In 2016 when I started Blue Turaco Coffee, I was discussing with fellow smallholder farmers what it would take to make coffee-growing sustainable. I suggested 13-15,000 shillings/kg (this is ~ $3.90 - 4.20/kg).
Everyone gasped!
Because this felt like an impossible price to achieve - the market was offering about half of that at the time. And now, we are there.
The average price for robusta worldwide in the last harvest reached 15,000 shillings. No-one would have believed it.
Although I have been talking to anyone who would listen over the last 10 years about the $5/kg green Robusta price goal, this isn't a time for an “I told you so” sentiment. But it is a great feeling that we are going in the right direction. We are all at the mercy of market and natural fluctuations but this is a key moment for us to come together as an industry, look right across it, across the species and grades, have new conversations and develop better solutions for a better coffee future.
So in summary, why am I not worried about Robusta prices?
It’s because those pieces are exactly where they should have been.
ps - the Blue Turaco Business plan is based on a $5 green robusta target price. You have to put your money where your mouth is. I’m changing my target price to $6-7... Who's with me?!!