A thought leadership piece
- Stephen Leighton
During these crazy times, there is a tendency for us all to think a little closer to home. Isolation makes us look inward and shut out the wider issues of the world. Behaviour patterns are altered as people start focusing more on self – this has been demonstrated in the last few weeks with the phenomenal panic buying in supermarkets, and the severe drop in charitable giving. This is only natural; survival is one of our most primitive of instincts, but we need to break through this, we need to keep looking outside of ourselves and maintain, even strengthen, our altruistic purpose.
I’ve been in isolation a little longer than most. I returned from my Central American buying trip on the 17th March, and have been self-isolating ever since. It’s become my new normal. As the dust begins to settle and I’ve become accustomed to my new world of isolation, I’ve developed a fascination with what’s happening in the rest of the world. And for me, the rest of the world means the coffee producers we work with.
It’s unbelievable to think that just three weeks ago I was in Central America on the farms where we source our green beans, meeting with the people who grow our speciality coffee, and now I can’t even travel further than the supermarket. The world has changed at such pace, and since arriving home I’ve reached out to those people I was in Central America with to understand how much their lives have changed in this very short three-week period.
The government in El Salvador has implemented a nationwide lockdown which will be reviewed on April 21st. Thankfully, the agricultural sector and those industries classified as ‘essential services’ are exempt from these measures - but most coffee pickers have gone home (as picking is a fairly migrant/ transient job), or are isolating at home and scared about the potential threat of COVID-19. To date, there are 32 confirmed cases in El Salvador, with one death. The first case was confirmed on the 18th of March.
The government in Guatemala initially imposed a lockdown for just seven-days from March 22nd (just nine days after the first case was confirmed). This lockdown has now been extended until April 12th, and to date there have been 38 cases confirmed, with one death.
On the 18th of March, Costa Rica called a State of Emergency and have closed all borders to foreigners. With 347 reported cases at the end of March and two deaths, the country is still open to the people within the country and numbers of confirmed cases are relatively stable at the time of writing. Coffee production remains an important part of Costa Rica’s economy and the government has classified it as being one of the ‘key worker’ roles during the pandemic – so farms are still permitted to function. Luckily, most of the picking was completed previous to the State of Emergency being declared and with Costa Rica having smaller farms (in comparison to other coffee producing countries), the impact of the pandemic hasn’t been felt to the same level. The remaining picking can still be carried out by family and friends on the farms.
It is mostly business as usual in Nicaragua, with the first case of COVID-19 being confirmed much later than most countries on the 18th of March. Although this sounds like good news, since that first case was recorded, there have been over 1200 more reported and eight deaths in the past week. These numbers are being strongly controlled by the authoritarian Nicaraguan government.
Amid the lockdown, the Vice President Rosario Murillo (who is also the President’s wife) called for the Nicaraguan people to gather in the streets and march against the virus, dubbed the ‘Love in Times of COVID-19 March’. During the march, Murillo said, ‘we won’t follow other countries in applying restrictions on movement’, and as such, the government have kept their land boarders open.
Life is not normal for us at the present time, nor is it normal for our coffee producers. This pandemic is having broad sweeping effects on the global economy and its ability to operate and function in even the most basic of ways. From our industry perspective, containers to ship coffee are in very short supply, and shipping slots for sailings are becoming harder and harder to obtain, thus delaying shipments by one to two weeks. These delays are not a too much of a problem for us at this moment in time, but the knock-on effects of the delay in cashflow will challenge the sustainability of our producers in the mid to long term.
The single biggest threat to our coffee producers has been the reaction from the consuming nations. With cafes and restaurants closed around the world, the wholesale coffee market has disappeared overnight. Many small roasteries have put themselves into hibernation, ready to wake up and start roasting again on the other side of this devastating pandemic. All the while, other roasters are fighting through, driving online sales and managing reduced staffing levels, strict internal distancing measures and new safety guidelines. While consumers’ purchasing behaviour has been driven online, these sales are much smaller in quantity that that of any wholesale account, and from a commercial point of view, any uptake in online sales is quickly eaten up by the loss of the wholesale volume.
From my own recent experience and from conversations I’ve had with both exporters and importers over the last few weeks, it is becoming extremely commonplace for coffees that are not contracted to be cancelled, as well as pre-orders. Roasters are looking at the cashflow of their businesses disappearing swiftly, and are not financially able to follow through on their commitments to purchase coffee. With the uncertainty of when this pandemic will be over – our Central American producers are going to be the hardest hit. Their harvests are ready to move, right in the throes of a global crisis.
Here at HASBEAN, we’ve had to make some really tough decisions on coffees that we had not yet contracted or early negotiations we were in with producers. We’ve had to either reduce our shipments or completely change our plans – and have worked through this as a team, with a lot of care and thought.
I’ve spent many years traveling to producing countries, trying to work as closely with our producers as possible, trying to build strong relationship, and have worked to understand specific situations and individual needs. Wherever possible, I’ve always tried to buy with exclusivity from farms. I love working with a coffee that no one else has, and having the opportunity to share it with the world. It’s what I love. It’s my passion. But now, these exclusive deals bring risk to these producers. These contracts mean that they haven’t spread their risk by having more than one buyer. We have never deemed this relationship model as being ‘high risk’ before, as we have always grown alongside our partners, and have taken the good times with the tough. But now, more than ever, we have a responsibility to ensure that these relationships and exclusive contracts are honoured.
It has been a priority of mine over the last two years to introduce long-term contracts for our key producers, to give them a sense of security and enable them to plan what price they will get and what volume they can expect from us. We are, of course, honouring these long-term deals, even though we have no firm date of when this global pandemic will end. We made a commitment to these producers, and we will remain committed to them.
Having had conversations with peers in the industry, it is apparent that not everyone is in the position to honour existing contracts. Exporters have reported contracts being ripped up as roasters’ markets dry up - their reduced orders and the panic of how to meet their obligations being too overwhelming. And this in just the first few weeks of the lockdown period! Unfortunately, I can only expect things to get worse before they get better.
This is an issue unique to speciality coffee. Supermarket shelves have been cleared and re-stocked of coffee, and whilst the New York C-Market is low, it has been low for a while now and has seen a small rally in the pandemic. We must protect specialty coffee as we know it. We need to keep drinking specialty coffee - not just to help roasters survive, but to make sure the producers who have created interesting processes, planted exotic varietals and worked hard to create this speciality market are supported by our global coffee community. Whilst governments in the developed world have made grand gestures to furlough and support businesses, we need to recognise and acknowledge that our producing partners around the world do not have this same luxury.
Now is our time to stand up and make sure that the coffee world that we love and enjoy is protected. So, keep drinking speciality coffee, keep safe and wash your hands!