Issue link: http://read.dmtmag.com/i/491350
24 STiR tea & coffee industry international But is a price crisis on its way? At a macro level, supply is readily available. "There are 3 million bags at risk—that's what we've heard about with roya. There are 120 million bags being produced: Brazil's got 60 million (since revised down to 51 million) and Vietnam's got a record crop of 30 million. So, even if it's worst case, is the 3 million going to cause a blip in the supply chain? I don't think so," reasoned David Griswold, founder and president of Sustainable Harvest. Consumers are not likely to feel the effects of shortfalls in the near term. Retail operators manage price risk at the top of the value chain by using fixed price contracts, some extending for as many as five years. However, if in fact hard-hit growers can no longer earn a living by growing headline-grabbing high elevation coffees, limited sup- ply will trigger isolated price spikes. Phil Beattie, director of coffee for Dillano's Coffee Roasters, validated this assess- ment: "I anticipate that in some way roya is going to show its impact in the price for single origin coffees. At that time, people are going to be much more concerned." Enough for now Traders who sign contracts for a wide range of green bean volumes year after year all reported playing a wait-and-see game for coffee sourced from Central and South America. Many adopted a more flexible approach to working with suppliers, and chose to stay in closer contact with favored farms or cooperatives during the course of the 2013 growing season. Beattie explained what is happening now, "We're projecting what the volume and quality will be and where it needs to be priced so that I can get the quality that I'm looking for at a price point that the farmer is going to be able to make a living wage. It's not an issue of if I'm going to find the quality that I want, it's a question of what is that quality going to cost." Green Mountain Coffee Roasters purchased 216 million pounds of coffee in fis- cal 2013, of which about 68% is from farm-identified sources meaning that it can be traced back to the farm, estate, or cooperative. Having such traceability is very impor- tant when disease rates rise or natural disasters impact available supplies. Ed Canty,fair trade and organic coffee buyer for GMCR, said "Our buying behav- ior doesn't follow country report analysis it follows producer group analysis." Smaller companies applied the same approach to assessing whether their suppliers can deliver. David Griswold, president of Sustainable Harvest with Ed Canty, fair trade and organic coffee buyer for Green Mountain Coffee Roasters at Let's Talk Roya. Photos Courtesy of Mike Russell at mikerussellfoto.com