Speaker 1: Bloomberg Audio Studios, podcasts, radio news, Coffee Taste.
Speaker 2: Every flavor, Old Coffee, buy Experts for experts. It's the
Speaker 2: world's most popular drink, but it's not getting any cheaper.
Speaker 2: Coffee Buyers are paying record prices for the Crown coffee
Speaker 2: prices and Robusta hiasins the nineteen seventies.
Speaker 3: We are going to still consuming a cup of coffee
Speaker 3: every morning, almost no matter what the price is.
Speaker 2: In Uganda, farmers received a record seven thousand shillings per
Speaker 2: kilo of robusta beans. That's around one dollar and eighty
Speaker 2: nine cents. But it's not all good news. This windfall
Speaker 2: comes at a time of a cost of living crisis
Speaker 2: and has made the farms an obvious target for criminals.
Speaker 2: They're using dogs to guard plantations, they're using bees.
Speaker 4: This is two stop thieves from snatching those unharvested beans
Speaker 4: straight from the trees under the cover of darkness.
Speaker 2: On today's Next Africa Podcast, we'll look at the impact
Speaker 2: the rising cost of coffee is having and whether this
Speaker 2: unprecedented crime wave is actually here to stay. I'm Jennifer
Speaker 2: Zabasajob and this is the Next Africa Podcast.
Speaker 4: Bringing you one story each week from.
Speaker 2: The continent, driving the future of global growth with the
Speaker 2: context only Bloomberg can provide. So joining us on the
Speaker 2: podcast this week is Mumby Guitao. She is a soft
Speaker 2: commodities reporter covering all things commodities globally.
Speaker 4: Mumby, how are you? Thanks for joining us.
Speaker 1: I'm very well. Thank you for having me.
Speaker 2: Yeah, it's been a busy year for you, I think,
Speaker 2: to say the least, we were just talking about how
Speaker 2: it started off with coco for you. Now it's coffee
Speaker 2: maybe pink the picture for us right now, about what
Speaker 2: exactly is going on and what we should focus on
Speaker 2: when it comes to coffee right now.
Speaker 1: It's been an interesting market for me. As you said,
Speaker 1: we started off with the cocoradi and then we've moved
Speaker 1: on to the coffee market. And it's important to know
Speaker 1: that these are all the luxurious things that everyone of
Speaker 1: us likes to have. Every once in a while, the
Speaker 1: coffee market has seen significant weather challenges, particularly in Vietnam.
Speaker 1: So we have two types of coffee. We have the
Speaker 1: robusta and we also have the Arabica beans. The Arabica
Speaker 1: beans are what we consider the premium, smooth, flavored beans
Speaker 1: that are favored by the likes of Starbucks or probably
Speaker 1: your favorite coffee chain. And then we have the likes
Speaker 1: of robusta beans, which is considered cheaper and considered a
Speaker 1: little more acidic, but has a higher caffeine content. Now
Speaker 1: the shock that we've seen in supply is in robusta beans.
Speaker 1: Vietnam is the largest producer of these beans, and earlier
Speaker 1: this year they had bad weather, so we've seen production
Speaker 1: in that country go down.
Speaker 4: This year.
Speaker 1: We started with robusta beans at about two seven hundred
Speaker 1: dollars and right now we are looking at five three
Speaker 1: hundred dollars, so that has been about an eight two
Speaker 1: percent increase introbusta beans. That has made coffee very expensive,
Speaker 1: especially the instant type or your blends that are used
Speaker 1: in espressos. So that's why you think probably the cost
Speaker 1: of your coffee go up this year.
Speaker 2: And maybe not to put you on the spot, but
Speaker 2: I do remember when we talked about cocoa. You don't
Speaker 2: necessarily consume coco too much when it comes to coffee.
Speaker 2: I mean, is this a mumby favorite or are you
Speaker 2: just very interested in covering it?
Speaker 1: I hate to say, but I'm more of a tea drinker.
Speaker 1: I'm trying to get into coffee just so that I
Speaker 1: know how to taste and identify good coffee. But I
Speaker 1: like my tea, But I'm now starting to get into coffee.
Speaker 1: But I'm not those coffee snobs that won't take a
Speaker 1: particular type of coffee.
Speaker 2: And I think all of us know coffee is very
Speaker 2: precious to people, right and the taste and where it
Speaker 2: comes from. And so maybe you touched a bit there
Speaker 2: on some of the biggest growers globally, maybe you can
Speaker 2: tell us more about that where are these beans coming
Speaker 2: from that people are willing to spend a lot of
Speaker 2: money to get their cup of coffee.
Speaker 1: Initially, as I mentioned, Vietnam is our biggest producer of
Speaker 1: robusta beans, but globally, Brazil is the biggest producer of
Speaker 1: both Arabica and Robusta beans, so cumulatively it's the biggest
Speaker 1: exporter and producer of coffee beans. But we also have
Speaker 1: the likes of Ethiopia, Uganda, Indonesia, India, Columbia, Honduras, which
Speaker 1: are also very important to the supply of coffee in
Speaker 1: the world. But most times we pay a lot of
Speaker 1: attention to what is happening in Brazil and what is
Speaker 1: happening in Vietnam, and.
Speaker 2: So then what was the catalyst to where we are now,
Speaker 2: to where we're seeing prices future prices at levels we
Speaker 2: haven't seen in quite a while, and that's with both
Speaker 2: of these beans.
Speaker 1: Yes, so initially it started with Robusta. That's where we
Speaker 1: saw the first shock. It was not widely anticipated that
Speaker 1: we would have lower production in Vietnam, but they had
Speaker 1: bad weather, they had dropt, and then that obviously led
Speaker 1: to a decline in production, and that's kept the market
Speaker 1: quite heated, and even this year, we're expecting the country
Speaker 1: to get even less production because they had dropped earlier
Speaker 1: in the year. Now the world is now paying so
Speaker 1: much more attention to Brazil, where there's also dry weather
Speaker 1: and the trees that are meant to be flowering, but
Speaker 1: the rain is not coming down yet. So anything that
Speaker 1: is weather related causes the market to be on the edge,
Speaker 1: and the market is very sensitive to dry weather, to frost,
Speaker 1: to lots of rain. So that's why we are seeing
Speaker 1: the market rarely to thirteen year highs for Arabica and Robasta,
Speaker 1: to records that we've not seen since the nineteen seventies.
Speaker 2: Wow, And I wonder, as somebody who's covering this closely,
Speaker 2: what's been your perspective and watching these prices continually tick up?
Speaker 2: It was it inevitable just given a lot of the
Speaker 2: weather related events that we've been seeing.
Speaker 1: Some of it was inevitable because it's hard to predict
Speaker 1: the weather. I think that's one of the things that's
Speaker 1: very hard to predicting this life. So in one week
Speaker 1: we are looking at a frost, the other week we
Speaker 1: are looking at heat waves. The other week we are
Speaker 1: looking at possible typhoons or drought. In one region, the
Speaker 1: weather has been oscillating between two extremes, and that's always
Speaker 1: very hard to predict how a crop will behave if
Speaker 1: it's in every coast and Ghana where we have coco,
Speaker 1: too much rain is bad, but very hot weather is
Speaker 1: also bad. So plants require such a delicate balance of
Speaker 1: just optimum weather, and if that is not available, then
Speaker 1: we have the supply shocks that we are seeing currently.
Speaker 2: And before we go to the break, maybe you can
Speaker 2: explain how you're mentioning how this affects producers.
Speaker 4: How does this then trickle down to the consumer.
Speaker 2: Is it that a lot of these buyers are just
Speaker 2: increasing their prices because the supply is just so limited.
Speaker 1: Yes, it starts with the farmers. So when farmers realize
Speaker 1: that there's competition for their beings, they start to raise
Speaker 1: their prices, and even among traders, they also start to
Speaker 1: bit among each other. So it's the highest builder that
Speaker 1: gets the bins, that helps to fuel prices higher and
Speaker 1: higher every day. And I think that's good for the farmer,
Speaker 1: especially in an era where they've not been getting as
Speaker 1: much money for their beans. But for the consumer that
Speaker 1: just means spending more dollars and more pounds for your
Speaker 1: cup of coffee. In the long run, I think the
Speaker 1: issue has been to ensure that farmers are fairly remunerated
Speaker 1: for their amount of work that they put in the fields.
Speaker 1: Tending to a coffee plantation is not easy, picking the
Speaker 1: cherries taking them to the washing station. So farmers have
Speaker 1: always been saying, we need a fair price, and maybe
Speaker 1: the rallying prices helps them get part of that fair price.
Speaker 4: Stick with us Mumbai.
Speaker 2: After the break, we'll talk more about how these rising
Speaker 2: prices are affecting farmers and growers on the ground in Africa.
Speaker 4: We'll be right back and welcome back.
Speaker 2: We still have Mumbaiker tow Bloomberg Soft Commodities reporter joining
Speaker 2: us to talk all things coffee and coffee crops. So
Speaker 2: maybe we were talking a little bit about the global
Speaker 2: producers before the break, but you mentioned some of the
Speaker 2: African producers and in particular how what we're seeing right
Speaker 2: now is affecting them. Can you dig more into that
Speaker 2: and where we're seeing this really have an impact on
Speaker 2: coffee farmers.
Speaker 1: So when we saw earlier in the year that Vietnam
Speaker 1: was not giving as much supply as the world needed,
Speaker 1: a lot of attention started also to shift to Uganda,
Speaker 1: which is also coming up as a powerhouse in terms
Speaker 1: of coffee production. It's coffee production has gone up increasingly
Speaker 1: higher every single year and so it was very helpful
Speaker 1: for it to come and plug the short fall. But
Speaker 1: that did not mean that prices were going to fall
Speaker 1: that much lower. So we saw farmers in Uganda and
Speaker 1: exporters in Uganda shipping a lot more coffee to Europe,
Speaker 1: to the Middle East, to the Americas, and that way
Speaker 1: they helped to ensure that the shortfall so from Vietnam
Speaker 1: was being fulfilled.
Speaker 2: And in New Ganda there's an interesting picture that's being
Speaker 2: painted there. We actually talked to our reporter fred O Jambo,
Speaker 2: who is based in Kampala, and he told us in
Speaker 2: particular what the farmers there are having to resort to
Speaker 2: just as the prices continue to take up.
Speaker 3: Farmers say that their farms are targeted because of the
Speaker 3: high prices and they resorted to guarding their farms to
Speaker 3: avoid being victims to the thefts of cherries from their farms.
Speaker 3: Some of the methods they are using employing logs others
Speaker 3: into a pierae, although this one is meant to enhance
Speaker 3: pollination of the prop but they added that it could
Speaker 3: scare away thieves who use the couple of darkness drop
Speaker 3: their crop, so they say they may fear to antigolize
Speaker 3: the bees.
Speaker 5: Is the coursern. It takes a lot of money higher
Speaker 5: gods to God. But some of them have resorted to
Speaker 5: working up occasionally during the night scout around their farms
Speaker 5: which are at their backyards.
Speaker 1: I think from my days when I was in Kenya,
Speaker 1: I used to see how excited coffee and tea farmers
Speaker 1: used to be when they get their pay, and I
Speaker 1: imagine that's the same case for Uganda farmers, they're seeing
Speaker 1: prices that they've probably not seen in their lifetime. They're
Speaker 1: getting a lot more money for their coffee, and that's
Speaker 1: incentivizing crime. So if you see that your neighbor is
Speaker 1: earning a lot more from coffee, and you probably do
Speaker 1: not own a coffee plantation, then you might be incentivized
Speaker 1: to walking there in the middle of the night. Pluck
Speaker 1: a future is go drive them and then sell them
Speaker 1: to the highest speeder.
Speaker 2: And we know that coffee beans, mambe are not the
Speaker 2: only only craft that's been targeted for food crime, especially globally.
Speaker 2: I mean, is there anything that we know just based
Speaker 2: on your own reporting, that people are doing to prevent
Speaker 2: this from happening.
Speaker 5: You're right.
Speaker 1: So early in the year we also covered about thefts
Speaker 1: of cocoa in the West Africa region. At the time,
Speaker 1: prices had also rallied to eleven thousand dollars a time,
Speaker 1: and that also incentivized the kind of theft that you're
Speaker 1: seeing in Uganda. I have seen most government as communities
Speaker 1: to form patrols to try and ensure security in their areas.
Speaker 1: There's very little that a government can do apart from
Speaker 1: trying increase policing activities and patrols in the area, because
Speaker 1: remember some of these farms are not fenced, so they're
Speaker 1: very open, so they're open to any trust persons to
Speaker 1: come in and out. But I think community patrols and
Speaker 1: the government giving them access to more patrols that might
Speaker 1: be helpful for them.
Speaker 2: And in Uganda were also seeing bees even getting into
Speaker 2: the next to helping esport thieves. What does all of
Speaker 2: this mean then there's this win fall here today for
Speaker 2: some of these African countries and especially you mentioned that
Speaker 2: you've is trying.
Speaker 4: To be a powerhouse.
Speaker 2: Is it possible considering the situation they're dealt with.
Speaker 1: I think as long as we are still facing whether
Speaker 1: related challenges, farmers may continue to earn a lot more.
Speaker 1: It's hard for these prices to come off the highs
Speaker 1: that they're at without and significant supply rebound. Now we've
Speaker 1: been going from one year of bad weather, one year
Speaker 1: of bad weather, to another year of bad weather. So
Speaker 1: we've had consecutive years of bad weather so much that
Speaker 1: we are not replenishing the stocks that we are slowly
Speaker 1: tapping into. So for the seeable future, prices could stay high,
Speaker 1: will they rarely continue? I think that's all dependent on
Speaker 1: the weather, whether it's favorable or not. But at least
Speaker 1: for now prices are likely to stay high.
Speaker 2: And mumbe, just finally, what's the next commodity to watch for?
Speaker 2: Just considering, I mean, weather is affecting so many different crops.
Speaker 2: I mean, I wonder what you've got your eye on next.
Speaker 1: My eyes are actually on sugar because Brazil is also
Speaker 1: the biggest producer of sugar, and we've seen fires in
Speaker 1: the region, dry weather in the region, and that's impacting
Speaker 1: sugar production. Just yesterday we saw prices go back to
Speaker 1: levels that we last so in April. So road sugar
Speaker 1: is an important one for us to what now. Africa
Speaker 1: is not the biggest producer of roach sugar. Actually it's
Speaker 1: a net importer. So if prices of road sugar sad
Speaker 1: in other parts of the world, then Africa will probably
Speaker 1: have a higher import bill when it comes to importing sugar,
Speaker 1: and they'll have more expensive sugar going.
Speaker 2: Forward, just at a time when they're hoping inflation to ease.
Speaker 2: Mumbig Guitar Bloomberg's oft Commodities reporter leb.
Speaker 4: Be always great to get you on. Thank you so
Speaker 4: much for your reporting.
Speaker 2: Thank you, and you can read all the latest on
Speaker 2: the price of coffee across Bloomberg News platforms. Now we'll
Speaker 2: also put a link to Fred's reporting in the show notes.
Speaker 2: Now here's a few other stories in the region that
Speaker 2: we're watching. Historic rainfall bucket it down in Central Europe, Africa, Hi,
Speaker 2: and the US Carolinas. This week, at least one thousand
Speaker 2: people have died in Africa.
Speaker 4: And millions of people have been displaced.
Speaker 2: Also, the South African Reserve Bank joined the Federal Reserve
Speaker 2: and other central banks globally cutting interest rates for the
Speaker 2: first time in years as inflation eases across their economies.
Speaker 2: And you can follow these stories across Bloomberg, including the
Speaker 2: Next African Newsletter. We'll also put a link to that
Speaker 2: in the show notes. This program was produced by Adrian Bradley.
Speaker 2: Don't forget to follow and review this show wherever you
Speaker 2: usually get your podcasts. I'm Jennifer's Abasaja. Thanks for listening.