Today Fairtrade raised their minimum prices for Fairtrade and organic certified coffees, for the first time since April 1st, 2011. This is a necessary step in addressing the issues of rising costs and keeping up with prices that are approaching what is considered economically viable for coffee producers. As the price does not come into effect until August of 2023, this will be a very interesting harvest for Peru, as many of producers may hold out on locking in contracts prior to the price increase, while buyers may look to lock-in prior to securing current pricing levels. We may have been hoping for somewhat more normal trading activities for the 2023 season in Peru, but it will likely be anything such.
Overall, this price increase is well overdue and will be helpful for the health and management of cooperatives in Peru. On the other hand, this provides opportunities for individuals to take advantage of these new pricing levels, and we must remain diligent in continuing to deeply vet and review cooperative financing and management strategies. Peru will have an actively challenging year to navigate this new pricing reality, as cooperatives will remain hesitant to sell or deliver prior to August.
The amount of harvest capital and financing may become a challenge for cooperatives for pre-financing these prices to pay for higher minimums collected from their members.
The ElevaFinca team will continue to monitor how this change will impact domestic prices in Peru. Short-term speculation may cause a rise in domestic prices and a distortion in the other offers for conventional coffees, organic RFA, etc.
We invite you to provide us with feedback on how these price changes may influence or impact the demand for Fairtrade and organic coffees this coming season. With your insights, our team will work closely with each cooperative to plan accordingly.
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