The previous 12 months have been among the most stable and profitable that the Colombian coffee-producing industry has witnessed for more than a decade. The internal buy rate offered to producers by the Federacion Nacional de Cafeteros de Colombia (FNC) reached new highs between Q1 and Q2 in 2020 and has stayed there ever since.
Meanwhile, there were favorable weather conditions in the crucial run-up period prior to last year’s main harvest, which helped to produce strong yields and high-quality beans. The high prices and strong yields created a much-needed windfall for many farmers in 2020, who only six months prior to this were gravely concerned about the potential impacts of COVID.
So as we enter the smaller mid-season harvest, known as the traviesa, I’ve spoken to a number of producers in Colombia to understand the expectations for this harvest and the factors that will shape it.
A Quick Look at Prices
A large proportion of commercial coffee producers, particularly those with small and medium-sized farms, sell their beans either to local cooperatives or to the FNC, rather than on the open market. These trade bodies offer producers an internal buy rate, which is a guaranteed price at which they will buy crops.
The internal buy rates offered to producers can fluctuate daily and are determined by a number of factors – beyond simply what the current open market rate is for coffee in the global commodity markets. While the end price does of course have a big impact, other significant factors include the strength of the dollar against the peso, and the push and pull between supply and demand specifically with regards to the FNC and cooperatives having to fill futures contracts.
April 2020 was the previous peak of the buy rate offered by the FNC – with prices per carga (125kg of parchment coffee) at one point hitting COP 1,315,000(USD $352). And while the price has naturally fluctuated a little since, it’s reached new heights in April 2021, with COP 1,340,000 (USD $359) being the highest ever daily price offered to growers.
As Manuel Londono of Las Brisas told me “the price has been very high [since the beginning of the harvest], with cooperatives and the FNC now offering incentives to growers to sell to them.”
The FNC buy rate also acts as an unofficial peg for prices offered by local cooperatives and private buyers. Sara Marquez of El Deseo explained that “the Cooperativa Los Andes generally pays a little more than the FNC, [and so far during March of this harvest] the price has been good, between COP 1,150,000 and COP 1,200,000, with private buyers paying slightly above this still – depending on the quality.”
A Very Wet Wet-Season
Colombia’s coffee-growing regions have experienced far more rainfall than usual this year. This is due to the effects of La Niña – an irregular climate event that started last September and is forecast to continue until the middle of 2021 – which causes higher than average rainfalls in the region.
This is going to negatively impact yields, as reduced levels of sunlight during prolonged rainy periods limit growth. Sara Marquez of El Deseo explained that, “last year we had a very big harvest in volume and quality, but because of the rain, there has not been a good flowering this year.
But a decrease in sunlight isn’t the only problem that the prolonged rains bring. As Paula Concha of Finca Santa Helena told me “these precipitations also decrease the availability of nutrients since the fertilizers are lost by leaching and runoff and the plants close their absorptive processes and therefore the quality of the bean is also affected.”
However, La Niña does have one silver lining in that the rains have kept the destructive crop beetle la broca at bay, with every grower I spoke to confirming that this has not been an issue during the harvest.
A Hangover From the Last Harvest
Aside from the impact of La Niña, yields during this traviesa are being curtailed for another reason; the impact of last year’s main harvest. This was a bumper harvest for many producers, thanks to favorable weather conditions across the country, with just the right amount of rains, followed by a good dry season.
As Elkin Arcila of ASCAFE explained, “This traviesa is smaller in volume than last year’s – at the end of last year we had a very good harvest so the plants didn’t have the time to recover in time for this harvest.”
This was echoed by Sara Marquez of El Deseo who said “the traviesa production is reduced this year as coffee behaves in a similar way to a bi-annual crop and last year we had a very big harvest in both volume and quality.”
La Niña is no doubt compounding this, with heavy rains and a reduction in sunlight further reducing the growth of plants that haven’t had time to recover from last year’s main harvest. But unlike the impact of La Niña which is being felt across the industry, the impact of the last harvest is only being felt by those producers who had bumper yields. For others, this will not be an issue.
Competition for Workers
A major concern for many smallholders during last year’s traviesa was getting enough workers to complete the harvest, due to COVID-related travel restrictions making it difficult for workers to travel to farms. However, among the producers I spoke with, none of them cited COVID as a major concern this harvest with regards to sourcing workers, as while there are still some travel restrictions and lockdowns or curfews, they are far less onerous than this time last year.
But that’s not to say that labor shortages aren’t causing headaches this year as well. Competition for workers within the wider agricultural industry has been fierce this year. Most notably, the stiffest competition is coming from hass avocado producers, as production is now booming in Colombia, thanks to recent trade deals with the US and China.
As Elkin Arcila of ASCAFE Tamesis explained “the workforce has been limited, with hass avocado harvesting affecting our recruitment.” Inevitably, this is leading to higher wages for workers, but the general consensus is that these wages have dropped slightly from last year, when COVID-restrictions were being felt far more severely and therefore limiting the mobility of labor.
Looking Ahead to the Main End-of-Year Harvest
The traviesa is usually a sign of what’s to come in the main harvest each year, which takes place between November and January. In which case, the outlook is mixed.
On the one hand are prices. The consistently high prices since the beginning of last year have defied expectations. There was a sharp jump in prices at the beginning of the pandemic, in response to the large gains the dollar made against the peso. However, even as the peso has recovered some of its value, prices have remained high and as of the end of April 2021, have reached record highs once again.
It would be impossible to predict with certainty if prices will remain this buoyant by the time the year’s main harvest arrives. However, if the effects of la niña continue well into the second half of the year, then production could be significantly down in Colombia’s neighbor Brazil – the world’s largest coffee exporter. There, they face the opposite problem to Colombia – drought. The Brazilian government’s agricultural agency Conab has said the harvest could shrink by a third in a worst-case scenario. A reduction in output anywhere near this would be bound to keep prices high in Colombia.
But on the other hand, low yields could be a feature of the main Colombian harvest too. The increased rains have stunted plant growth, while continued heavy rains would exacerbate the problems being experienced now with poor flowering and the washing away of nutrients. However, it’s far better to be facing uncertainty when you have near-record prices, which thankfully, the industry still has.
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Written by Jennifer Poole, the co-founder of Colombian specialty coffee supplier Those Coffee People. Based in Medellín, Colombia, Jennifer spends her time traveling to remote towns and villages in search of the best specialty coffee the country has to offer.