Market Crash - Volatility is Violence
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Time to read 29 min
Coffee traders, Brazilian dominance, smallholder vulnerability, and one very real question: what do you do when fairness makes you uncompetitive?
Table of contents
1. The Question
Ok, so we’re not an “ethical” company. Nobody selling coffee really is. You can forget your B-Corp status, 1% for the planet, and bullshit tag lines about how happy somebody you’ll never get to ask is. The fact is that if you believe in global equality, then enjoying a product that benefits from cheap labour relative to your own GDP, is by definition un-ethical. If to change this was simple, and history hadn’t already put a rock on our end of the scales, then things would be different. But it’s not, so we can either live off what we can grow in our window boxes, or we can just try and balance things tiny pebble by tiny pebble. Our company does that, or at least tries harder to do it than most of our competitors.
We try to redress this imbalance by buying the bulk of our coffee on a cost of production + margin basis. This means we ask our producer partners what they need to make, then we pay the price they set. We make this equitable for all parties by making long term commitments, buying volume, and getting people paid when they need it most (often before the coffee has been harvested). This as a strategy has worked well for us so far, giving us access to fantastic coffees at prices our customers accept as reasonable - if not always competitive.
Building strong relationships with producers, and committing to pay a mutually equitable price has somewhat insulated us from recent market volatility. But frustratingly, it’s not quite as simple as I’ve implied… of course there’s a capitalist instrument that basically dictates the price of coffee irrespective of livelihoods or quality; and while, as above, we’re not directly affected by the market, sometimes the indirect effects of its volatility are severe enough to impact our decision making. So let’s look at it, through the lens of this month’s issue - a market crash - and to make it engaging and personal, let me give you a TOTALLY hypothetical ethical quandary to chew over.
We have contracted 17,250 kilos of Costa Rican coffee. When we had the contracts drawn up the market rate for coffee was at around $3.50p/lb. This month the market has crashed and we need to sign the contract, but the contract is at $3.95p/lb Farmgate (money paid directly to producer, before fees and shipping). We want to sign this contract and support our producer partner, but we’ve gone from paying around 15% above the market rate, to more like 40%, and that difference is enough to make us dangerously uncompetitive when we come to sell the product.
Do we renegotiate? What does that do to our relationship? Will our customers understand that it’s for the greater good and pay the premium? To answer these questions we must first understand the players and games that have caused them to arise… let’s get into it.
The Coffee Futures Market
2. Understanding The Instrument
I am not an economist, nor am I a historian, so a lot of this is news to me. I’m gonna try and explain the C market in a way that I can understand it, either you’ll think I'm dumb or you’ll get to grips with it too.
So when we say “market” we are referring to the C-Market for coffee futures (1). This is a marketplace where arabica is traded for future delivery… or not, a lot of the trading goes on without any coffee changing hands (2). Ok, imagine a green grocer is buying fruit from a farm, only they aren’t, they’re calling their guy who’s at the farm and he’s gonna pick up the fruit to bring it back. Then before the fruit gets back to the green grocer, he’s already sold it off for a profit to another grocer down the street; he never even wanted the fruit, he just knew that it’d be worth more than his guy paid for it by the time it was delivered. That’s market trading commodities.
All this trading is facilitated by the Intercontinental Exchange, a massive American Fortune 500 company that owns the New York Stock Exchange (3). They are such a big player that they don’t even need to play, they get just a teeny tiny cut of nearly everything that’s traded in the world (4). Now picture a movie scene of those wall street guys all shouting and slamming phones while you have a look at this chart… that’s basically what’s going on with coffee all the time.
Yeah, it’s pretty tech. Took me some serious brain work to understand the point of it. Here’s a super basic example of this trading in action:
You have 4 main players on the market:
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Phil = Exporter (This guy actually wants to sell coffee)
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Lisa = Trader
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George = Speculator
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ICE = Intercontinental Exchange
Phil: Hey! I am a coffee exporter. You can call me Phil. I’m buying 1000lb’s of coffee from a group of farmers. I’m gonna sort out finance and logistics, get it all ready for export, and try to get it sold. I’ve paid the producers $2.90p/lb - so like $2,900 total, but I’m worried that the price of coffee might drop before I’m ready to sell it, that would fuck me over.
Lisa: Hey, I’m Lisa. I bet your coffee will be worth at least $3.00 when you need to sell it, so tell you what, I’ll take the risk. If the market drops I’ll cover the lost margin, and if it peaks I’ll make a profit. I’m really smart, kind of a power nerd, and I’ve got bank to play games like this all day.
Phil: Ok Lisa, sounds like I can’t lose. You’re on, how’s this gonna work?
ICE: Look guys, let’s not get too wild… the price probably won’t change that much, why don’t you both chuck $500 at it and let me oversee the margin fluctuation as the market moves. If it goes up then you’re laughing Lisa, I’ll give you Phil’s money, and if it goes down then Phil you can have some of Lisa’s money. If it goes crazy, I’ll give you a call and see if you wanna play double or quits. This is totally legit and nothing like Betfred.
Lisa: Sweet.
Phil: Right on!
George: Oi Phil, looks like your coffee is ready. Lemme buy it for $3.50p/lb.
Phil: Ok wicked, sold. Oh shit, I got that hedge thing going on with Lisa… Lisa, I don’t have the coffee any more, I want out.
Lisa: Haha, you mug, I already got your $500 from ICE. Toodles x
Phil: It’s a bit annoying that Lisa’s had a cut, I only got $3,000 for the lot when you take the hedge out, I guess that’s the price of security. I bet that George geezer’s gonna sell it for heaps now too.
George: I literally do not give a fuck about anyone, I already sold the coffee for a profit, and was ready to get a deal going with one of Lisa’s mates if it felt like a long ting. I don’t even drink the shit why the fuck are you asking me about the producer. I’m off to the Maldives.
So that’s basically it, and it has almost nothing to do with coffee. You usually have at least 3 characters involved in a transaction that don’t have any interest in the production or consumption. As a direct trader we don’t need to interact with any of them really but the moves they make, and the money they move, impact what coffee is worth globally, which in turn impacts its value as a product we can sell. Again this brings us to the ethics and imbalance (5).
Why can these traders make money from a product they have nothing to do with producing? And how did Lisa and George know that the product was going to inflate? And wait, this same system can work for them if it drops too?
This is close to the crux of what’s wrong with the commodity market. Big players have big money and international networks.
These traders are often able to access and interpret information before exporters outside of Brazil, and pretty much always know how it will go before actual producers agree a price. This is one of those money makes money situations, and if there’s money to be made then government aligned institutions will play. The biggest player in the coffee industry is Brazil, so let’s jump out of the finance for a second, to look at how their dominance affects the market price. (6)
The Biggest Player
3. Brazil’s Structural Power
Brazil produces around 40% of all arabica exported globally (7). This is possible because of a few different factors:
Geography/Climate
Brazil is the largest country in the tropics by a country mile - it’s fucking massive! Arabica only grows well between the tropics of cancer and capricorn (a 5000km belt around the globe) (8). Of that 5000km, Brazil has around 3000km in longitude. Its arable landmass is more than double the size of its closest competitor in terms of size (DRC), and it’s not only unique for its size, but also its topography (9). Brazil has more elevated fertile plateaus than the next three major coffee producing countries combined. The soil is amazing, the climate is ideal, and the rolling highlands are endless.(10)(11)
Wealth/Stability
Ok so Brazil’s got its problems, but it’s a pretty developed country in many respects (12). Since the late 1980s it’s held democratic elections, and despite corruption scandals, political violence, and periodic economic crises, has kind of kept its shit together in the agricultural sector. International interest in the resource wealth of the interior has kept investment pouring in irrespective of who's in power, this in turn has acted as a kind of shock absorber when things have gotten crazy. This relative economic stability has allowed Brazilian businesses to amass wealth, making it among the top 15 richest countries in the world by GDP (14). Stability and prosperity allow Brazil to invest in coffee infrastructure, and allow it to store or hide coffee when it wants to affect the market rate (15).
History/Industrialisation
So Brazil was the biggest slave plantation on the planet. It continued to produce coffee through chattel slavery until 1888 - decades after the UK and USA abolished the practice (16). When full on slavery ended there, the systems that had perpetuated it remained largely in place. The government at the time compensated former slavers, and offered no material support to the roughly 700,000 Africans it “freed”. With literacy levels among the formerly enslaved vanishingly low, many of the newly freed ended up coerced right back into indebted labour (16). Though this agrarian system has evolved, the power dynamics embedded in it have largely endured, giving one of the richest countries in the world levels of inequality surpassing much of Sub-Saharan Africa. This disparity, coupled with investment in modern industrial farming equipment, mean that Brazil’s coffee labour costs are among the lowest in the world today. (17)(18)
So that’s Brazil, and how they’re able to dominate the global arabica trade. I feel it’s important here to state that there are many fantastic Brazilian producers, and many businesses operating there with mutually equitable and transparent supply chains. I am by no means saying that all Brazilian coffee directly benefits from all the factors outlined above. What I am saying is that most of the world's arabica is produced in Brazil, and many of their largest estates do directly benefit from most of the above. This makes Brazilian coffee relatively cheap when compared to other exporting countries.(19)(20)
This is the backdrop to our opening question, what do we do with the Costa Rica contract? It’s easy to see why Brazil’s stock would affect the price, and a lot of it isn’t really anyone’s fault right? Is it really on us to try and balance the scales? Like what does it matter if everyone has to play the Brazil game?
I guess it’s time to explore how volatility affects other coffee producing countries.
Volatility Is Violence
4. Exploring The Impact For Producers
Brazil plays the market and sets the price. We’ll look into that a bit more later, for now just take it as oath. No other country compares in terms of market share, so they have little to no impact on the market, but the market impacts them, because it directly affects what they can sell their coffee for (21). When the price is high it’s a level(ish) playing field, when it’s low it can be catastrophic. A deluge of cheap Brazilian coffee means that market interest in other origins wanes, creating surplus stocks, further diminishing the price. Race to the bottom shit. (22)
Ok let’s do a little livelihood comparison to explain the catastrophe.
Brazil 2025:
GDP (IMF): 2.56 Trillion Dollars
GDP Per Person (IMF): $10,500
Minimum Wage Per Month: $300
Government Mandated Cherry Price: $0+ (23)
Insight:
Brazil’s minimum wage is relatively low compared to its GDP, meaning that full time farm labourers are likely to earn around 30% of the country’s average wage. Labour costs p/lb of exported coffee are typically around 3-5% of export value, most of this labour is carried out by farm employees. While required labour may fluctuate with production levels, this wage does not change dramatically when the market moves. (24)(25)(26)
Costa Rica 2025:
GDP (IMF): 102.6 Billion Dollars
GDP Per Person (IMF): $19,100
Minimum Wage Per Month: $738
Government Mandated Cherry Price: $0+ (27)
Insight:
Costa Rica’s minimum wage is 49% of yearly GDP, this is really high for a Latin American country - it’s in line with Spain. This means that Costa Rican farm employees are likely to be better off than Brazilians in their local economy. Labour costs p/lb of exported coffee are typically around 12-18% of export value, most of this labour is carried out by farm employees. While employees are somewhat insulated from market fluctuations, the higher percentage of labour costs make farms and estates vulnerable. This vulnerability can lead to closure and dismissal of the workforce (29). Much of the labour force in Costa Rica is made up of seasonal migrants from neighbouring countries, travelling for the wage, but not benefitting from government support (30). Contraction of the coffee market here has a spreading effect across Central America, compounding the negative effects in Nicaragua and Panama. (31)(32)
Rwanda 2025:
GDP (IMF): 14.7 Billion Dollars
GDP Per Person (IMF): $10,040
Minimum Wage Per Month: $0+
Government Mandated Cherry Price: $0.19p/lb (roughly $1.00p/lb of beans)
(33)(34)(35)
Insight:
There is no Rwandan minimum wage, most of its growers are smallholder farmers. It’s really hard to work out how the output of a smallholder farm directly equates to wage as a percentage of GDP, but it’s possible to make a rough estimate based on the government mandated cherry price, a typical household size for a 1 hectare farm, and an assumed percentage of smallholding planted with coffee. We’re going to say that 70% of a hectare is planted with coffee. The average percentage of a smallholding actually dedicated to coffee cultivation is typically below 50%, but it’s impossible to approximate financial welfare without somewhat overlooking variable household subsistence crop reliance. (36)(37)
If we say that farm labour is carried out by 2.2 working adults, with family and seasonal harvest support, then we can roughly estimate earnings after costs are around 30% of yearly GDP (38). This puts Rwandan farmers close to being in line with Brazilian employees, but with a massive caveat. While the government mandated price offers some protection from market volatility, it can also prevent growers from experiencing the upside. In the case of a market crash, many local buyers will withdraw rather than paying the mandated price, making it hard for smallholders to sell their product (39). In a country with a low average GDP, dropping below 30% can be catastrophic. There is little opportunity for employment or crop diversification in most of Rwanda’s coffee districts. In actual terms, smallholder coffee income per hectare is typically lower, but is balanced with unquantifiable subsistence crops. (40)(41)
We’ve chosen to use countries from different ends of the scale, and different parts of the world for comparison. Costa Rica is above the median for global GDP per capita, while Rwanda is well below (42). What they have in common (apart from amazing coffee) is levels of producer vulnerability that greatly surpass that of Brazil. In the context of a market crash both countries will struggle to export their coffee for above the cost of production, but in the smallholder system this often equates to loss of the primary household income (43).
We can say with absolute certainty that price volatility dramatically increases poverty levels in smallholder based systems, and leads to market contraction and loss of livelihood in the estate/large farm system. This is strongly evidenced to be the case for everywhere apart from Brazil. (44)(45)
It’s hard to revisit our contract question with all the above considered. It’s pretty obvious that the cost of production won’t have dropped with the market. I’m definitely happier we’re having these conversations regarding Costa Rica rather than Rwanda right now, but either way it doesn’t feel good to consider renegotiating. I wonder if there’s someone we can blame to ease our conscience?
Brazil's Journey To Market
5. How It Works And Who's The Winner?
Ok I’m going to lay off Brazil for a bit, well not really. To get to the meat of who actually benefits from market instability we have to look at Brazil, and through it. So let’s trace the behaviour from production indicators to market and see where the money’s made.
Stage 1: Flowering | Sep-Oct
Before any fruit has appeared on the bush, climactic indicators and levels of flower intensity give producers an idea of projected yield, this information begins to circulate out to the market via Brazilian institutional data. (46)(47)
At this point exporters start hedging through ICE, committing their first chunks of projected turnover to minimise risk and gain access to pre-harvest credit. This has a visible effect on the futures market, giving traders the first concrete insight to how the market might move over the coming harvest. (48)(49)
Stage 2: Fruit Development and Commitment | Nov-Feb
Once green fruit has started to appear on the bush, producers start to lock in volume commitments. Actual price is rarely locked in at this stage, but minimums in relation to market rates may be asserted. These commitments and discussions open up options for pre-payment, and credit lines. (50)
Exporters increase or decrease their hedge coverage depending on expected volume. In a bumper year, you might see an exporter having already hedged 40% of their expected stock - using their early access to information to make an informed decision about how much coffee they will have, and mitigate price exposure over the period of production.
Large scale hedging causes a visible reaction on the futures market, combining with indicators such as climate reports and currency fluctuation to reinforce a narrative traders can follow. The realisation of a coming surplus turbo charges trading, increasing selling pressure for exporters. Here is where we see price crash or spike accordingly. (51)(52)(53)
Stage 3: Ripening and Harvest | May-Sep
So now the coffee is coffee, but the majority of the financial fuckery has already predicted what will be produced. Everyone’s already borrowed from the bank, and hedged a lot of what they’re set to make. It’s like me when payday comes, I’ve already spent the money.
Here we get the first solid quality indicators, and some exporters may lock in price, but for the most part the quality doesn’t matter, coffee futures are all about volume. Typically the market will hold, trade will occur but the price won’t change dramatically. (54)(55)
Stage 4: Price Confirmation and Logistical Execution | Jul-Dec
Once the coffee is ready for export, final prices are locked in. The farms will get their money, but mostly they’ve already had it in credit and pre-payment. Whether it was a good year or a bad year has little to no impact on the labour force that produced it. (56)(57)(58)
So now the process gets long, it can take months before coffee actually ships. This makes no sense! Brazil has a modern road and rail network, and a number of ports capable of moving large shipments. Its primary coffee port is a behemoth, with high tech container tracking, coffee only loading bays, and giant bonded warehouses for storage.(59)(60)
This is where exporters and Brazilian institutions can start to manipulate the market. They can control the flow of the coffee that’s being traded, delaying shipment through logistical bottlenecks, or hiding it in private warehouses.(61)(62)(63)
So now the process gets long, it can take months before coffee actually ships. This makes no sense! Brazil has a modern road and rail network, and a number of ports capable of moving large shipments. Its primary coffee port is a behemoth, with high tech container tracking, coffee only loading bays, and giant bonded warehouses for storage.(59)(60)
This is where exporters and Brazilian institutions can start to manipulate the market. They can control the flow of the coffee that’s being traded, delaying shipment through logistical bottlenecks, or hiding it in private warehouses.(61)(62)(63)
Stage 5: Financial Amplification | All Year
While all the above stages are occurring, traders and speculators are buying and selling futures stocks. This crescendos around stage 4, when expectation of delivery is at its peak and speculation on volumes is at its highest.(68)
Major financial institutions and independent brokers are all scrambling to buy low and sell high, or hedge margins in the opposite direction. Sometimes at the same time. Companies with vast capital play this game over multiple years, looking to extract percentiles rather than quick bulk wins. This behaviour amplifies value, or diminishes it to make converse returns.(69)
It’s hard to concretely say how much all the trading actually adds to the price of landed coffee, by nature it’s completely variable. Trading futures or hedging the potential value adds a layer of distortion to the supply chain; and that abstract layer of financial blur makes it almost impossible to quantify its true effect on coffee’s value. All that said, I’m gonna guess it at around a 10-15% markup (70). Trading houses are typically happy with a double digit return on a futures contract, and a lot changes hands for single digit differences. Yes, futures can be traded multiple times before a commodity is delivered, but it looks like non exporter trading rarely adds more than 20% to the landed cost of a container. (71)(72)
With only around 5-15% to be made, we can’t really call the traders and hedgers winners. They win sometimes, and sure they can win big, but if you average it out they don’t massively inflate or deflate the price. They just play conservative poker with peoples livelihoods and a massive bank roll.
We certainly can’t call the labour force producing the coffee winners either, they rarely see the upside of inflated prices. Perhaps they win by getting more work when the harvest is good, but that work will often be intense and low paid.
The producers do alright in Brazil, typically receiving around 50% of coffees landed value. It’s not all sunny there though, over 70% of large estates are owned by people of colonial descent, and even on the smaller side the percentage of black or indigenous heritage owned farms is far from representative of the country’s ethnic make up.
I guess the big exporters can win big. By controlling the flow and market they have the ability to earn inflated returns when the climate is right, and by actively participating in trading and hedging they can mitigate a large portion of the risk. But no, in the most part they are just trying to shift the product and make a buck, I get it.
The real winners are the financial institutions. Not because they earn a good percentage, but because they do the least for it. They use immense capital to earn interest at every stage, and earn small transactional fees from every activity we’ve described. They are the ones that have the most interest in keeping coffee volatile, because stability decreases the need for leveraged credit, and allows for more direct trading to occur.
The truth is, the value of coffee is only what it costs to produce in a system where the producers feel well compensated, with the addition of transport and storage. This simplicity is the enemy of the system as described above. As long as there’s a percentile to be made, people’s fates will be in the hands of the ICE and a few major players. This is why, most years, smallholder farming is tantamount to economic slavery, so a billionaire can earn about 00.1%.
Ok cool - so basically we’re all powerless and it’s a stupid capitalist game. Is that a moral get out of jail free card? Should we just lowball Costa Rica and blame the big boys? Is this totally normal?
Historic Volatility
6. This Is Not New
If this was a new phenomenon then the ethical quandary would be understandable. But it’s not; so how have we got to this position, surely we could see it coming? Yes and no is the answer.
The market has always moved with supply, and even before ICE and coffee futures existed, there were financial institutions reaping the benefits of destroying livelihoods. Here are three examples that span 150 years, bringing us back to the spike of last year and hopefully to a place where we can definitely answer the above questions.
1870-1890 | Crash - Brazilian Expansion
This was a colonial-era crash, so most producers and labourers had little agency. At this time coffee was grown across Asia, the Caribbean, and Latin America, mostly through smallholder and village-level coercion; but with major exceptions in Sri Lanka (Ceylon) under British estates, and Brazil where scale and slavery shaped production. (73)
From the 1870s onward, coffee leaf rust devastated Asian coffee. You’d expect prices to rise - instead they collapsed. As plantation slavery elsewhere came under pressure, Portugu… Brazilian producers rapidly expanded output, flooding the market just as Asian supply failed. Volume exploded and prices crashed. (74)
In Ceylon, coffee was abandoned. Estate owners lost land to financiers, while the imported, indebted Indian Tamil workforce couldn’t leave. When production pivoted to tea, labour conditions worsened but returns stabilised. The clear winners were British lenders. (73)
In Indonesia, village autonomy shrank further as the Dutch pushed production into larger plantations and tea estates to preserve margins. Finance adapted faster than farming. Dutch financial institutions shifted from crop risk to export credit and trade finance, emerging stronger from the instability. (75)
Costa Rican farmers were largely independent smallholders, growing food for subsistence and coffee as their main cash crop. When the price crashed many lost their land to the banks, leading to the expansion of monoculture farming, and rural poverty for later generations of landless workers. (76)
1989 | Crash - End of International Coffee Agreement
At the end of the cold war coffee prices plummeted, having remained relatively stable for decades due to the International Coffee Agreement. The ICA was founded in the early 60s to stabilise global commodity prices, it politically managed exports and ensured a level of security in production. Through the 70s and 80s Brazil’s export quotas remained stable, quietly dominating the global trade without boom or bust. By holding the largest export quotas and politically aligning with the US, Brazil was able to influence trade over this time, but it kinda had the gloves on. (77)(78)
In 1989 George Bush Snr. walked away from the ICA, effectively causing it to disintegrate. He stated that this was to better support Latin American producers, but it was really just another cold war influence grab. Unsurprisingly when restrictions were lifted surplus was dumped on the market, causing value to drop below production cost for most of the world. (78)(79)
Believe it or not, Brazil kind of put the nail in the coffin. They had enough surplus to overwhelm the market, upscaling production once again to mitigate the margin losses. Many independent farms were absorbed into larger estates and co-ops, allowing for investment in equipment and intense farming practices to increase output further. (80)(81)(82)
While Costa Rican producers were somewhat insulated by the country's relative wealth, levels of debt dramatically increased in the years that followed. Un-ironically, American financial institutions were major lenders, profiting from the loss, then sometimes profiting again from Costa Rican exports increasing on the futures market. (83)(84)
In Rwanda it was insanely bad. The Rwandan state relied on coffee for much of its foreign currency. Rwandan coffee export prices collapsed, private exporters didn’t have the capital to cover losses and fill the void. Smallholder incomes dropped sharply, deepening food insecurity in a fragile rural economy. This collapse compounded rural poverty, undermined government legitimacy, and further intensified the social pressures that would erupt into a genocide five years later. (85)(86)(87)
2024-2025 | Spike - Post Covid Instability
Coffee prices spiked during the pandemic, reflecting supply chain fears in a time of great uncertainty. Then everyone got vaccinated and they dropped a bit… but then, everyone in the world went mad, and Brazil had a couple of bad harvest years. This caused the price to spike to an unprecedented high of $4.18p/lb - 4 times where it had been pre covid. (88)
In Brazil, this spike had a varied effect. Large estates and exporters were able to benefit due to their initial capital and credit capabilities. Even when yields were down, by controlling export flow and holding stock until the peak many of the big players made exceptional profits. For many smaller producers the spike was less beneficial. Input costs increased and lenders became wary of the instability, meaning that many producers struggled to cover the costs of their diminished harvest, forcing presale before the markets peak. (89)(90)
The spike was mostly good for Costa Rican producers. Because of Costa Rica’s higher labour costs, much of their coffee was already being traded via long standing arrangements, typically priced on a market rate +differential. While there were of course shocks and renegotiations, the banks broadly continued to lend amid this period of uncertainty. Large exporters and estates benefited from inflated prices, and demand remained high as the price gap narrowed. It wasn’t all gravy though, many of the smallest independent producers struggled to capitalise on the upside, and climactic factors diminished the yield for 2024. (91)(92)(93)
The Rwandan main harvest season was already over when the market saw its steepest rise. The smallholder/washing station production model is less able to be reactive than the estate/coop model as described above. The Rwandan government sets the mandated cherry price in January every year, which effectively limits what a smallholder can expect relative to market spikes. Some exporters and station owners were able to increase profits, and in some circumstances these translated to benefits for the farming community; but with less financial and storage capabilities the true upside of a peak rarely lands in Rwandan hands. (94)(95)(96)
You see the pattern is simple, big business rides instability, while smallholders suffer. This has always been the way, and it’s unlikely to change any time soon. So then, how did we let ourselves get into this TOTALLY hypothetical situation?
The truth is we saw the signs, I think most of the industry did. We knew it was only a matter of time before Brazil crashed the price again, and knew it was likely to happen this quarter. You can’t just make decisions based on fear though, you have to believe that things can get better. Were the price to remain at the highs of 2025 then, in time, most producers would feel the benefit. By continuing to trade at the higher level, increasing our prices, and being happy about it, we were actually being part of the solution, playing Brazil’s game but with origins that could benefit from it. That’s how we got here, and now I’m worrying that it could be the end of us.
Crossing The Picket
1. A Moral Conclusion
You probably think I just know all of this stuff, and have a brain full of statistics to pull out like straws from a Kerplunk tower. You flatter me, but that’s not the case at all. I’ve had to read a bunch, remember a bunch, trawl some really boring PDFs, use Chat GPT enough to drain a swimming pool, and spout some pretty outrageous generalisations to make a point. I’ve learned a shitload in the process, and feel I have a much better understanding of our industrial realities as a result. It’s weird, through learning more about the context I’ve come to the conclusion in my head naturally, is this how people feel at the end of uni?
Anyway, look, it’s all pretty fucked. I want to say lock the price in for the contract and come what may we’ll have done the right thing, but I’ve also made myself feel a bit better about renegotiating by learning more about Costa Rica. I feel confident that if most of our clients were to read this through then they’d back the decision to pay in full, and continue to sell the product when cheap Brazil’s are dangled in front of them again. But I don’t think many, if any of them, will read this… and I completely understand why not. People running cafes are busy, and everything I write is long, detailed, and a bit depressing… it’s not flat white’s and banana bread. So how can I condense it down to a bitesize chunk for easy digestion? Maybe an emotionally charged tenuous metaphor will do it.
In Sheffield we’re never far from the romanticism of manual labour. This steel city was built by its poor, and the surrounding hills were dug by men who had little option to do owt else. Its working class history is what defines its modern attitude. Rebellion, solidarity, and just cracking on are the foundation stones of its modern revival. Were not the financial hub of the North, were not even the financial hub of Yorkshire, so why the fuck would we play the game. I for one am boom or bust, I’d rather lose with my conscience than perpetuate inequality. If we choose to take the easy route then we’re no better than scabs crossing the picket. Fuck Maggie Thatcher, fuck the Fortune 500, and fuck cheap Brazils. We stand with the smallholders, and we stand with the countries that don’t have a say. This is our time to throw a tiny pebble, I hope it hits a scab in the eye.
Whoa… that was a lot. I stand by about 92% of what I said there, and that’s where we’ve signed the contract - 30% above the current market rate, but 8% lower than agreed in December. We’re confident that it’s a good price for the coffee, and our producer was happy enough with the price to lock it in for the next 3 years. I can live with that.
Things are gonna get hard I think, hard for us, and much harder for our producer partners, but then hopefully they’ll get a bit less hard, and we’ll talk about how hard they were.
Buy coffee you think will make a difference, or don’t buy it at all. If you buy a cheap Brazil this winter, then you actually are the problem.
Jasper Dumas
Well I'm pretty far down the coffee rabbit hole, so far that I can see the other side. The other side is the context around coffee, and the shaft of light is a future where I never need to make another Flat White.
Source List
(1) https://www.ice.com/products/15/Coffee-C-Futures — Landing page
(2) https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/FuturesMarketBasics/index.htm — Futures Market Basics
(3) https://www.ice.com/products/15/Coffee-C-Futures — Landing page
(4) https://d18rn0p25nwr6d.cloudfront.net/CIK-0001571949/b25ddc7e-ef35-483b-a91c-d6fedec76762.pdf — Page 54
(5) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Chapter 6, Page 196
(6) https://www.cftc.gov/sites/default/files/files/dea/cotarchives/2026/futures/ag_lf020326.htm — Coffee search
(7) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Page 80
(8) https://en.wikipedia.org/wiki/Coffea_arabica — Arabica
(9) https://data.worldbank.org/indicator/AG.LND.ARBL.HA?locations=BR — Landing page
(10) https://www.alice.cnptia.embrapa.br/alice/bitstream/doc/950370/1/MappingSoilFertilityatDifferentScalestoSupportSustainableBrazilianAgriculture.pdf — Soil and topography
(11) https://www.britannica.com/place/Brazil/Drainage — Climate of Brazil
(12) https://www.britannica.com/place/Brazil/Drainage — Opening
(13) https://www.researchgate.net/publication/323785781_Agriculture_Productivity_Growth_in_Brazil_Recent_Trends_and_Future_Prospects — Page 2
(14) https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=BR — Landing page(15) https://pmc.ncbi.nlm.nih.gov/articles/PMC6650033/ — Introduction
(16) https://en.wikipedia.org/wiki/Lei_%C3%81urea — Landing page
(17) https://www.ceicdata.com/en/brazil/social-poverty-and-inequality/br-gini-coefficient-gini-index-world-bank-estimate — Graph
(18) https://documents1.worldbank.org/curated/en/099530012022259536/pdf/P17345806e965a0830bf7e048a87b936af8.pdf — Page 5
(19) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Page 42
(20) https://www.gcrmag.com/the-cost-of-coffee-cultivation/ — Paragraph 3
(21) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Page 80
(22) https://www.ico.org/documents/WBexecsumm.pdf — Page 12
(23) https://www.imf.org/external/datamapper/profile/BRA — 2025
(24)https://riskmap.fairtrade.net/salient-issues/living-wage — Brazil section (Minas Gerais coffee)
(25)https://sbicafe.ufv.br/server/api/core/bitstreams/1c19550c-f626-4cd7-8b89-f5a236880dd6/content — Page 14
(26)https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2024/decreto/d12342.htm — Landing page
(27)https://www.imf.org/external/datamapper/profile/CRI — 2025
(28)https://www.coricafe.com/download/4_Cost_of_Production_Coricafe_In_Depth_Coffee_Report.pdf — Average FOB breakdown
(29)https://www.frontiersin.org/articles/10.3389/fsufs.2024.1376051/full — Opening paragraph
(30)https://www.researchgate.net/publication/5344237_Determinants_of_Health_in_Seasonal_Migrants_Coffee_Harvesters_in_Los_Santos_Costa_Rica — Page 1
(31) https://www.icafe.cr/wp-content/uploads/informacion_mercado/costos_actividad/produccion/CPACMedia2425.pdf — Mano-obra
(32) https://www.icafe.cr/wp-content/uploads/informacion_mercado/costos_actividad/produccion/CPACBaja2425.pdf — Mano-obra
(33) https://www.imf.org/external/datamapper/profile/RWA — 2025
(34) https://wageindicator.org/salary/minimum-wage/rwanda — Landing page
(35) https://farmersreviewafrica.com/rwandan-coffee-farmers-to-receive-25-price-increase-per-kilo-of-cherry-as-government-sets-new-rates/ — Landing page
(36) https://icocoffee.org/documents/GKH/Rwanda_.pdf — Page 6
(37) https://statistics.gov.rw/sites/default/files/documents/2025-01/CFSVA%202012.pdf — Page 14
(38) https://documents1.worldbank.org/curated/en/899311468167958765/pdf/283000REVISED0Coffee1Markets01PUBLIC1.pdf — Page 13
(39) https://statistics.gov.rw/sites/default/files/documents/2025-01/CFSVA%202012.pdf — Page 84
(40) https://www.icocoffee.org/wp-content/uploads/2022/11/CDR2020.pdf — Multiple references
(41) https://openknowledge.worldbank.org/server/api/core/bitstreams/499fc08a-ea4d-53c2-ab85-afa5d8108dd3/content — Multiple references
(42) https://data.worldbank.org/indicator/NY.GDP.MKTP.CD — Landing page
(43) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Chapter 8
(44) https://openknowledge.worldbank.org/entities/publication/ba969388-b5eb-5155-b8f2-6d323a6e5a52 — Chapter 4
(45) https://unctad.org/system/files/official-document/ditccom2018d1_en.pdf — Page 15
(46) https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Coffee+Annual_Brasilia_Brazil_BR2025-0013.pdf — Whole PDF
(47) https://www.gcrmag.com/conab-shares-2026-brazilian-coffee-production-estimates/ — Landing page
(48) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Chapter 6, Page 195
(49) https://www.ice.com/products/67445363/Coffee-C-1-Month-Calendar-Spread-Option — Landing page
(50) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Page 284
(51) https://www.reuters.com/business/environment/brazil-arabica-farmers-eye-crop-improvements-conilon-growers-expect-decline-2026-01-23/ — Landing article
(52) https://markets.businessinsider.com/commodities/coffee-price — Graph
(53) https://www.investopedia.com/terms/h/hedge.asp — Landing page
(54) https://www.nasdaq.com/market-activity — Market data
(55) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Page 228
(56) https://ico.org/resources/coffee-market-report-statistics-section/ — Monthly reports
(57) https://perfectdailygrind.com/2023/03/how-does-the-timing-of-capital-affect-coffee-farmers/ — Landing page
(58) https://kavazbrazil.sk/en/the-paths-of-the-money-in-the-brazilian-coffee-chain/ — Landing page
(59) https://greencoffeecollective.com/blogs/learn/brazilian-port-delays-what-s-behind-the-shipping-bottleneck — Landing page
(60) https://www.portodesantos.com.br/en/business/terminals/ — Landing page
(61) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Page 275
(62) https://novatradebrasil.com/en/what-is-bonded-warehouse/ — Landing page
(63) https://www.stonex.com/en/market-intelligence/over-600,000-bags-of-coffee-not-shipped-from-brazil-in-january-due-to-delays-1555111/ — Landing page
(64) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Page 111
(65) https://www.bloomberg.com/news/articles/2025-10-20/coffee-gains-as-brazilian-stocks-in-exchange-warehouses-shrink — Landing article
(66) https://unctad.org/system/files/official-document/c1em24d2_en.pdf — Page 7
(67) https://www.fsb.org/uploads/P200223-2.pdf — Page 7
(68) https://dailycoffeenews.com/2021/07/30/coffee-prices-drop-as-weather-speculation-affect-market/ — Landing article
(69) https://www.reuters.com/markets/commodities/coffees-record-highs-continue-it-approaches-4-per-lb-2025-01-30/ — Landing article
(70) https://www.ldc.com/wp-content/uploads/LDC-Financial-Report-2022_Secured.pdf — Page 12
(71) https://www.ecomtrading.com/media/hbsjfp42/ecom-group-sustainability-report-2024vfinal.pdf — Page 19
(72) https://www.olamgroup.com/content/dam/olamgroup/investor-relations/ir-library/annual-reports/annual-reports-pdfs/2024/olam_annual_report_2024_strategic_report.pdf#page=16 — Page 19
(73) Revolusi — David Van Reybrouk — Chapter 2
(74) https://ohioopen.library.ohio.edu/cgi/viewcontent.cgi?article=1095&context=oupress — Page 39
(75) https://en.wikipedia.org/wiki/Nederlandsche_Handel-Maatschappij — Landing page
(76) https://www.britannica.com/place/Costa-Rica — History
(77) https://www.ico.org/documents/cy2012-13/history-ico-50-years-e.pdf — Page 11
(78) https://www.intracen.org/file/itccoffee4threport20210930webpagespdf — Page 40
(79) https://en.wikipedia.org/wiki/International_Coffee_Agreement — Landing page
(80) https://www.fao.org/faostat/en/#data/QCL — Brazil coffee production data
(81) https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Coffee+Semi-Annual_Brasilia_Brazil_11-16-1999.pdf — Page 4
(82) https://apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfilename?filename=Coffee%20Annual_Sao%20Paulo%20ATO_Brazil_5-13-2013.pdf — Production comparison
(83) https://www.federalreservehistory.org/essays/latin-american-debt-crisis — Landing page
(84) https://www.congress.gov/crs-product/IF10908 — Landing page
(85) We Wish to Inform You That Tomorrow We Will Be Killed With Our Families — Philip Gourevitch
(86) https://www.lse.ac.uk/international-development/Assets/Documents/PDFs/csrc-working-papers-phase-two/wp28.2-collapse-war-and-reconstruction-in-rwanda.pdf — Page 18
(87) https://en.wikipedia.org/wiki/Economy_of_Rwanda — Landing page
(88) https://markets.businessinsider.com/commodities/coffee-price — 5y/max chart
(89) https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Coffee%20Annual_Brasilia_Brazil_BR2024-0012.pdf — Arabica figure
(90) https://www.reuters.com/markets/commodities/rains-may-have-come-too-late-brazils-coffee-2024-10-17/ — Landing article
(91) https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Coffee%20Annual_San%20Jose_Costa%20Rica_CS2024-0009.pdf — Production report
(92) https://algrano.com/learn/costa-rica-coffee-harvest-2024 — Harvest overview
(93) https://sucafina.com/apac/origins/costa-rica — Origin information
(94) https://farmersreviewafrica.com/rwandan-coffee-farmers-to-receive-25-price-increase-per-kilo-of-cherry-as-government-sets-new-rates/ — Landing page
(95) https://www.naeb.gov.rw/1/updates/news-detail/rwanda-coffee-export-revenues-hit-record-150m-in-2025 — Landing page
(96) https://www.cevalogistics.com/en/news-and-media/newsroom/navigating-rwanda-coffee-exports — Export logistics
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