Coffee Supply Chain Update: Civil Unrest and COVID-19 Spike in Colombia
On April 28, protests broke out in Colombia in response to the introduction of a new tax reform that critics said would disproportionately increase financial burdens for the country’s middle and working classes. Although President Iván Duque withdrew the tax bill four days later, the protests have escalated into a movement over larger issues surrounding inequality and police violence.
Genuine Origin is in close contact with suppliers and sourcing partners in Colombia for weekly updates on the current situation. In our most recent report earlier this week, Lohas Beans, one of our suppliers based in Bogotá, communicated a general return to normalcy, albeit tensions still running high.
Mass protests, roadblocks, and strikes have disrupted economic flow throughout the country, significantly impacting the protest epicenter in Cali and cutting off food and gasoline supplies to isolated areas like Nariño. Large rallies demanding health and educational reforms, police reform, and guaranteed basic income have been spattered with violence, with dozens of deaths ensuing from clashes with riot police.
“Constitutionally, roadblocks and barricades are prohibited, and the participation of organized crime, drug traffickers, and guerilla groups in the protests to destabilize the government has caused great harm and needs to be stopped…We have seen an increase in terrorist activities not only in major cities but in rural areas, including those where we work with our partner associations in the south of Tolima and north of Huila. We hope the security conditions will not deteriorate and threaten the coffee producers in these regions,” says Juan Pablo Campos, Founding Partner of Lohas Beans, in an update earlier this month.
As the rest of the world is cautiously reopening, it’s a different story in South America. Colombia alone is facing over 25,000 new cases and over 500 deaths from COVID-19 each day in a surging third wave. What’s different in this wave is the age range of patients — more young people are dying because it’s young people who attend the protests, according to The Guardian. Earlier this week, protest leaders agreed to pause mass marches in consideration of the overwhelmed hospitals. Despite the third wave of infections, Colombia has gone ahead to relax social distancing measures in an attempt to reactivate the economy.
The Impact on Colombia Coffee
In late May, the Federación Nacional de Cafeteros de Colombia (FNC) reported only 20% of the usual coffee volume made it to shipping ports, with an estimated backlog of 580,000 bags. Buenaventura, one of the most important gateways in the Pacific, faced a severe reduction in volume down to 10–15%. With reports of trucks en route being attacked by protestors or stopped at blockades, coffee exporters like Lohas Beans celebrate every successful arrival of coffee to their mill.
Now that most blockades have been cleared, port warehouses face another crisis in the sudden increase in traffic to fulfill delayed contracts. Shipping containers are still scarce, and warehouse capacity is limited. Lohas Beans estimates that Colombia will need another 4–6 weeks to catch up with the coffee shipment backlog.
From the perspective of a local private business like Lohas Beans, Colombia is facing one of the most critical situations in recent history, a sentiment echoed by healthcare experts who view the government’s response to the pandemic and the civil unrest as catastrophic. ICU occupancy is at 97%, and Colombia is struggling to cope as the country with the 10th most COVID-19 cases in the world.
“Colombia’s middle class doubled to 32% from 2002 to 2019. Since the COVID-19 pandemic began, we’ve lost 2.7 million Colombians that had grown into this middle class, back to a low-income class…It will take no less than five years of hard coordinated work between the government and the business community to regain track and return those 2.7 million Colombians back to a growth trend. This is the magnitude of the impact we will see from 15 months of COVID-19 and the recent protests,” says Campos.
Coffee prices are at a record high due to a combination of lower yields in Brazil and supply chain disruptions. Although areas of Colombia are experiencing high rainfall that complicates road logistics, there is no specific effect on coffee quality or volume so far in the smaller harvest season from June to July.
Lohas Beans’ Agroeco Mill in Santa Marta, where Genuine Origin sources coffee from the Coogracol co-op in Huila, is back at 75% of their normal flow, and everyone is working around the clock to secure shipping schedules. Genuine Origin will continue to monitor the coffee export and shipping updates closely with the help of our partners in Colombia.
As we await further news, check out Genuine Origin’s Colombia portfolio for coffee that has already arrived in our warehouses across the US.
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