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Kenapa harga kopi jadi mahal sekali? Bincang-bincang dengan Rodney Glick

 In Coffee Conversations

Harga kopi semakin naik. Tidak hanya di Indonesia, namun di seluruh dunia. Tren ini berjalan semenjak pandemi dan diproyeksi akan terus naik. Apa efeknya untuk dunia kopi? 

Dengarkan bincang-bincang lengkapnya di Singalong Coffee Podcast. Interview dalam bahasa Inggris.

Gede:  Hello and welcome to Singalong Coffee Podcast. Today we will be talking about green bean price and why it’s very expensive. Today, we’re with Rodney Glick as our Director of Coffee at Karana Specialis Kopi, Michelle Anindya, Research and Development Manager,  Seniman Coffee and I’m Gede, your host. So Michelle can start for the interview.

 

Brazil dan Sumatra sebagai patokan harga kopi (menit 00:52)

Michelle: So now that we’re in the harvest season, we are hearing that coffee prices are very high. Increasing by 20%, 30% or more.

Rodney : Or more? Yeah. I wish it’s only 20% or 30%. That would be a dream. 

Michelle : So I guess we can start with the current coffee price. How much is it now and how much is the increase compared to last year? 

Rodney : Well, I’m not a trader. So there’s a C contract price to see market price, where Brazil basically [dictates] world coffee price per pound [that’s] traded [in the] futures market. I don’t follow that market [price closely] but it’s higher than it’s been. It was a record high because they predicted not a good harvest in Brazil and, off the back of that, the world coffee price. So people buy and sell and trade off the back of what they perceive to be a good harvest or not, mainly out of Brazil. But Indonesia doesn’t function [in that way], really. I mean, it’s affected in part by that, but it doesn’t trade off the back of that. So we don’t, as a processor, we don’t follow the world coffee price. I wouldn’t know what it was. 

 

But Indonesian pricing and cherries prices often follow Sumatra. [Indonesia’s price] is more closely linked to [Sumatra’s] harvest and what is happening in that harvest. And if that harvest is not particularly good, then the coffee prices also change within Indonesia.

 

Michelle : So what is happening in Brazil? 

Rodney: They had a frost right at a time where the coffee was budding and they thought it was going to wipe out a lot of the crop. So automatically, they panic and think the coffee price is going to go up; there’s going to be a shortage. 

Gede: So this shortage is the thing that made coffee prices increase a little bit. Because they’re scared– 

Rodney: It increased a lot. I think it hit like a 10 or 20 year high.

Gede:  Okay. So this is the highest increase. 

Rodney: But Indonesian pricing and cherries prices often follow Sumatra. [Indonesia’s price] is more closely linked to [Sumatra’s] harvest and what is happening in that harvest. And if that harvest is not particularly good, then the coffee prices also change within Indonesia.

Gede: So basically the coffee price increased because the majority of the [coffee] production in a [certain] region?

Rodney: You know, this year is a lot more complicated because of shipping and the war in the Ukraine and the pandemic. You have a not very good harvest in Brazil, and then you get a lot of logistical problems to move coffee around. Then you have the pandemic. They couldn’t rotate the crews on the ships as quickly as they usually do. Therefore, they limit the ships, therefore, they limit the containers and the space on the ships. And so that causes a big problem. So prices go high. So you’ve got multiple factors. […] And then everyone panics. It’s interconnected. You’ve got that, then you’ve got Sumatra not having a great crop. And then you’ve got shipping pricing and then you’ve got the war and then you’ve got the pandemic. So any other disaster you want to mention. We could have a few. 

Michelle: We have multiple disasters, yeah.

Baca juga; Globa or Local? Exploring The Future of Indonesia Coffee Production 

Rodney: People are hedging. People are thinking ‘okay what is going to happen here?’.

Michelle: It’s because people trade coffee around the world, right? So if there’s a crop failure in one area, they buy from another area. So when people already predict that Brazil’s coffee season is going to fail, then Indonesian farmers or processors assume that buyers will go to Indonesia. Is that what’s happening? 

Rodney: Sumatra’s wasn’t a very good crop. Everyone’s waiting for the real crop to start again. It was not so great in April [2022]. And [the harvest] will start again in October. So there’s space. But you have many people already selling coffee. You know, if you’re a trader, not a processor, you already pre-sell coffee at certain prices. […] So [traders] are guessing what they can get the coffee for, and then they sell, and then they lock in contracts and then they have to fulfill those contracts. So what happens is the drop price changes outside of the time they lock in the contract to the price that they need to buy the coffee. Then there’s a problem. And that’s what’s happening. 

Gede: Okay. So you mean it’s a different perspective between the processor and the trader?

Rodney: Yeah. Traders are already trading multiple volumes. They’re already buying and selling coffee. This is–we’re talking mainly export. Domestic market is fed on demand in general. 

But this year, for the first time, [not making stock] is really the biggest issue that’s going to confront the domestic market. But no one really wants to look at it.

Michelle: But this price increase has actually been happening for many years now, right? Even before the pandemic, it’s already steadily [increasing]. 

Rodney: Well, I think that’s most commodities. Because the domestic market is growing and the world market for drinking coffee is growing, there’s more demand. When more demand happens, there is going to be a steady increase. 

Michelle: So as a processor, you always assume that every year, there will be an increase?

Rodney:  But it doesn’t. And maybe it’ll reach a saturation [point]. That’s what happens in every commodity. It’s no different, right? If there’s an oversupply for some reason, then the market will come down. Brazil has a great crop and Sumatra has a great crop, and within Indonesia–I would assume–that the cherry price, or the process, will come down. But when we’re talking about coffee, we’re talking about finished coffee. When I’m talking about coffee, I’m talking about buying cherries. Buying the raw material. That is where the shift is happening. From the raw material comes the end product, obviously. So the shift happening in Indonesia now is that cherry prices to make the finished coffee. [Cherry price] is changing, that is going crazy. That was increasing gradually. There were increases, but this year is just crazy. More crazy than most [years].

Michelle :  And it’s happening [across] Indonesia, not just in Bali. 

Rodney: No, no higher, like, in Flores. We’ve heard it has really increased a lot. 

Farmers are happy? (menit 09:52)

Michelle: So farmers are happy.

Rodney: Farmers… are happy. Yeah, I’m not complaining. No, no, no,. ‘Farmers are never happy’, remember that? I remember, that’s the motto on the bumper sticker on the back of their truck. Yeah, I remember farmers are never happy. No, I mean, you get multiple issues going on here. If cherry price is high, yes, they’re happy. They’re selling the cherry at a higher price, okay? In the past, what used to happen is that price would be okay, market was okay. They would sell the cherry, they would get [profit]. But at the same time, they would produce stock for the year [ahead]. They would know that, ‘okay, if we sell some and keep some and produce [green beans] ourselves, we will hold some finished, green bean stock. And during the [next] 6 months after harvest finishes, there will be a demand. So we’ll sell [the stock]. Okay, we’ll get income for the whole year.’ Okay, right? Balance out the income. But this year, for the first time, [not making stock] is really the biggest issue that’s going to confront the domestic market. But no one really wants to look at it. Because the cherry price is so good [for farmers]. Farmers are not making stock so they’re just selling…

Michelle : So they’re selling everything.

Rodney: Yeah, selling everything. Not making stock. So now, everyone thinks ‘coffees are high, but okay, we’re going to process and we’re going to sell it. Domestic markets are still okay.’ But the biggest wall crash is going to come six months after harvest finishes. After August, comes February. You’re going to have people screaming because there really isn’t [stock]? There’s no stock and harvest doesn’t come around until May, June, July next year, and there really is no [green beans] stock. But it’s because no one is making. 

Baca juga: Sebuah Doa di Ladang Kopi

But the biggest wall crash is going to come six months after harvest finishes. After August, comes February. You’re going to have people screaming because there really isn’t [stock]? 

Gede: Before this, the [stock] is what makes the prices stable.

Rodney:  Yeah, it keeps the year’s supply [even]. This applies to two types of income. So you have to remember that a lot of these [farms] are multi-cropped, right? So [coffee] is not their only crop in Bali. Usually jeruk or another crop and then you’ve got coffee. So it balanced down the coffee prices. Okay, so they sell some, they make some, they hold it, they get an income. This is completely different, radically different and that’s happening in Flores and that’s happening in Java. No one’s holding stock. 

 [ … ]

Michelle: So from now until February, as a retail consumer, will you feel any changes in price?

Gede: Yeah. At the consumer level. 

Rodney: Maybe a little bit, but roasters are feeling it now, right? Because domestic pricing of green beans has increased. Yeah, not just from us, but generally. In fact we [Karana] are still very reasonable. But if you’re a roaster, it’s hard to pass on… From roasters to retail, it… The flexibility in the market is [in the] harvest, farmers, processors, and roasters. From roasting to retail–it’s very hard to change the pricing quickly. 

[ Apakah akan berdampak ke harga wholesale dan specialty? Dengarkan diskusi selanjutnya di podcast Singalong. ]

Mentalitas ‘panic buying’ (menit 21:34)

Michelle: What will the processor do to manage finances? How did you fundraise?

Rodney: Yeah, it’s difficult. It [becomes] really crazy.  There’s even a perverse logic happening. Even goes more wild, okay? You would think that if you’re a trader, you’re sitting in Europe, or the Middle East, and you’re a trader of coffee from Indonesia. It’s a long way away. Shipping prices are high, right? So you would have thought during the pandemic–and then now–okay, I better not buy, right? ‘I won’t buy because the price of shipping and the coffee price itself is high. Shipping is high. I’m not going to buy.’ Great. But actually what’s happened and what is happening and what does happen in times like this–it’s perverse–they actually buy more. [Traders] buy more because they want to cover the freight cost and the increases. 

Michelle: So they’re buying more stock?

Rodney: Yeah. Buy more stock. Which makes it even more crazy because there’s already a shortage. 

So one is the domestic market in Indonesia is growing. A lot. So that puts pressure on [coffee] supply. And then, of course, the other is export, where people are really worried about [shortage and costs], and they order more. 

Michelle: So, this is actually not the peak of the ‘crazy prices?’

Rodney: No. You would have thought in 2020-2021, that the pandemic would have softened. The market, you know, would have brought the pricing down and it would have brought the exports down a little. But actually it’s the reverse. People are buying more. 

Michelle: Because [they’re] panic; scared?

Rodney: They read the price of the containers gone up. So why would I ship 9-ton when I could ship 18, right? And then I can split the cost over the per kilo. You know, I can break it. Why ship one container when I can ship two. They don’t buy less. They actually increase it. Yeah, one is like panic about their own stock–that’s one thing. But the actual trying to balance  their cost. And the best way they can do that is to split it over more volume to split the cost over so it becomes even. So that’s what’s happened. So one is the domestic market in Indonesia is growing. A lot. So that puts pressure on [coffee] supply. And then, of course, the other is export, where people are really worried about [shortage and costs], and they order more. 

[ Apakah harga robusta akan naik? Dengarkan diskusi selanjutnya di podcast Singalong. ] 

 

 

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