Summary
Buyers and producers of Burundi coffee are facing frustrations at the moment as all coffee shipments from the nation have been halted while the Burundi government debates increasing the market value of coffee, but how has this come to happen?
Rumour has it that an international buyer offered to buy Burundi’s entire coffee production for the year, at a price far higher than the current market. That buyer has since disappeared, but left in their wake an important question: is Burundi undervaluing it’s coffee?
While the government decides on an answer, they’ve frozen all coffee exports, meaning that there’s no US dollar coming into the country for Burundi’s biggest source of income.
Our article on the matter
(Originally found in our October blog post.)
For many years, coffee exports have been the primary source of income for Burundi, accounting for about 69% of the country's total exports. Put simply, coffee is a crucial export product to an economy that is already facing significant challenges.
It’ll therefore be shocking to hear that no coffee shipments have left the nation for more than a month now, due to intense internal disputes within the government regarding the market value of coffee.
Not only does this mean our own exports have been delayed, but so have all others, and we wanted to share some of our thoughts on the situation and explain a bit about the realities the producing partners we work with in Burundi – are facing.
To give you a bit of context - Burundi’s economy is struggling. Not only is inflation rocketing, but the country is also battling fuel shortages alongside many longer-term financial pressures. So, the government is understandably looking for quick solutions to mitigate this pressure wherever they can. And that, perhaps, goes some way in explaining what’s been happening these last few weeks…
We’ve heard through the grapevine from many buyers who purchase coffee from Burundi that a mysterious International buyer has put a proposal together stating they’d buy the entirety of the country’s coffee production this year for a considerable amount of money… a figure far above the current market price.
Tempting for the government? Well, of course, and therefore it’s no surprise this proposal was accepted.
However, we hear this mysterious International buyer has since disappeared and left a raging debate behind them.
With exports leaving the country now lower in monetary value than the price this buyer was proposing to pay, the government has frozen all exports while it debates increasing the market value of coffee to be in line with what the buyer was proposing. But with no exports, there’s no US dollar coming into the country – which will have a detrimental impact on Burundi as a whole.
Though we admittedly don't know all the details behind the nation-wide freeze, what we do know is that the longer it goes on, the more Burundi’s economy suffers as a consequence.
We’ve heard there are some government advisors who are working to try and free up the exports, as are the US embassy, and while that happens our producers – and others – are working to get new contracts signed with agreed prices so we can start moving coffee again as soon as possible.
All of this is compounded as well because the coffee price has inflated, creating a perfect storm.
Last year we had the Suez Canal crisis, and much of the coffee from Burundi was delayed having an impact on the coffee quality when it arrived, Meaning some of our forward contracts were cancelled due to signs of fade in the coffee – This is the realities of the coffee industry that we deal with year on year, and something we are aware needs greater commitment from everyone. Accepting that some things are just out of everyone's control is challenging but a level of understanding is in order to mitigate this.
It’s incredibly frustrating for the producers we work with, but we’re in this together – and we commit to our contracts. And we’ll remain with them until a solution is reached.