STiR coffee and tea magazine

STiR coffee and tea 19 As Russia is a leader in the global potash trade, Brazilian coffee farmers struggled to secure enough fertilizer at the right time to support their crops. The cost of fertilizers rose significantly, chipping away at their already-tight margins. With reduced fer- tilizer use came reduced yields and quality outcomes for that year's harvest, which in turn impacted prices globally—since Brazil sets the scene for the global supply-demand continuum. Prices rose for imports around the world, in every country. In some instances, such as for specialized coffee importer Cata- lyst Trade (now defunct due to these challenges), the impact of increased inputs forced prices upward so steeply that demand ta- pered off and impacted the sustainability of their organizations. For example, when the price for nails in Ethiopia tripled overnight in 2022 due to pandemic-related supply chain chal- lenges, it was part of a broader problem. Wire mesh, commonly used to build raised drying beds (and necessary to replace regu- larly) also soared in price, along with fuel to transport it. Count- less other steep inflationary increases forced FOB prices for green Ethiopian coffee sky-high. Although the market is cur- rently in the process of correcting itself, this gap between cost and price for coffee roasters in consuming countries was a key factor in driving multiple importers out of business or forced mergers and acquisitions, such as when Sucafina acquired Sus- tainable Harvest. Currency Fluctuations Impact the Trade Usually, currency fluctuations harm producing countries more than consuming countries, but that's not a given. Take for ex- ample Ethiopia, whose birr is pinned to the US Dollar and the economy of which runs on foreign currency. In 2017 in an ef- fort to boost flagging export volumes, the National Bank of Ethiopia devalued the birr by 15%. The World Bank reported that "Recent empirical analyses conducted by the World Bank, the IMF and others all conclude that the Ethiopian economy has been suffering from an overvalued exchange rate." The scarcity of wire mesh during the pandemic made it difficult for coffee farmers in Yirgacheffe, Ethiopia to repair and maintain their raised drying beds. The Russian invasion of Ukraine in 2022 affected fertilizer availability and prices which in turn caused global coffee yields to decrease and import prices to soar. The effects were mixed: increased exports but also inflation, which had a negative effect on coffee producers on the ground. There were other issues at stake in the coffee trade in Ethiopia at the time, including significant turbulence in the critical Gedeo Zone and the liberalization of the coffee sector. Coffee prices did indeed rise strongly as did exports, but during the pandemic they faltered again. Then in 2024, the National Bank of Ethiopia floated the currency in an attempt to eliminate the black market for forex while attracting more foreign investment. Certainly the effect on coffee producers will be negative in the long term, as inflation spikes, but for those exporters which had purchased and sold products at the former prices but were still awaiting payment in foreign currency, the result was a massive windfall. All of these fluctuations have a "trickle-up" effect and im- pact the entire supply chain, start to finish. The Interconnectedness of All Things As humans, we often unintentionally operate within a vacuum. We focus entirely upon the task at hand and on the challenges and opportunities directly in front of us. To do business bet- ter, we've got to grow our perspectives and listen to how we impact the rest of the supply chain from which we so proudly benefit.

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