September 2016 mycuppa Newsletter

This month, we hail the return of our much-beloved PNG Highlands - and this one is going straight to the Trophy Cabinet.

A finals-season coffee in top form, super-fresh and just arrived from harvest three weeks ago.

We have been waiting on our new PNG Highlands coffee for almost six months, and it's everything we wanted plus a whole lot more - a game-changing coffee.

Anyone calling or emailing asking for a recommendation will get PNG Highlands as my #1 pick - rich, complex, balanced, clean and sweet - a perfect coffee in every regard and ideally suited to the Australian coffee palate.

We also look at the hot topic of Climate Change and the future of coffee and offer up the latest hot beverages, the Golden Latte Tumeric Blend.

PNG Highlands - a phoenix rising
In an article we published on Papua New Guinea (PNG) coffees back in March 2015, I put forward some strong views that, in our opinion, the best days of coffee from our nearest neighbour were unfortunately behind us.

It was with a sense of frustration and a degree of emotion that we believed the telling signs of a once mighty PNG coffee industry were in turmoil and decline.

Papua New Guinea is blessed with some of the world's best micro-climates and coffee-growing conditions.

The proximity to the equator, high altitude, and rich volcanic soil produces excellent coffees, which are often considered some of the finest available by coffee industry experts worldwide.

Moreover, PNG is rich in natural resources such as oil, gold, copper, gas, timber, cocoa, and coconut.

Unfortunately, these resources have sometimes suffered from lost opportunities or have been unfairly exploited, resulting in the country and its people not receiving the broader economic benefits.

The social structure of PNG is complex and challenging to navigate.

Hundreds of dialects are spoken, and the population is dispersed throughout the country in small communities of people referred to as "wantok" or "speak the same language".

This highly distributed peer-type social system presents difficulties in enabling the traditional organisational and hierarchical controls required to manage trade and industry throughout the country.

Law and order in PNG has long been and remains a vital issue, as theft by hijacking bandits often occurs when goods are transported from the point of production to the exporting port.

These types of incidents mean supply from PNG is difficult due to poor roads that can be washed out from heavy rains or haphazard from thefts or incredibly bureaucratic delays - export Companies risk becoming bankrupt very quickly.

I had seen some of these challenges in 1992 when working on projects in Lae and Port Moresby.

Villagers shut down all communications systems (phone and data networks) in a remote, distant community - they had cut the cables in a repeater station on top of a rugged, inaccessible mountain.

The dispute was about the land's right to use and the amount of Kina being paid in return for such requests.

It was an incident that flared up often without warning, and something I had learned was a regular fixture of modern life in PNG.

In late 2012, I withdrew from our traditional long positions in PNG coffees.

Over 30+ years, a personal and emotional attachment had developed towards consistently sourcing great coffees.

The task's frustrating nature gradually diminished my passion towards it.

Importing arrangements in Australia were disorganised, and it was typical for each new ton of coffee to be significantly different from the last.

We knew great coffee was still being grown and harvested in PNG, but we concluded that buyers in other countries were getting offered the first pick of the best lots - sold to many high-paying Japanese, US and German customers.

Our long positions were replaced with Colombia and Guatemala, while the PNG position was changed to a short/tactical place.

Despite this ever-present backdrop of turmoil and chaos, PNG coffees possess a Phoenix-like ability to bounce back to even greater heights.

The varietals grown in PNG are direct descendants from the famous Jamaica Blue Mountain (JBM) - one of the world's most desirable and expensive coffees.

Combined with perfect micro-climate conditions and the richest, fertile soils, when the stars align, there can be no mistaking the sheer undeniable brilliance of PNG coffees.

In my long history of drinking great PNG coffees, to this day, I still struggle to articulate the fundamental attributes of a quality PNG coffee, other than a simple descriptor of "really rich".

However, "rich" does not do fair justice to great PNG coffees.

The depth of PNG richness can be astonishing.

Starting velvety-smooth and creamy, building in structure, depth and complexity until the full body saturates into a long, clean and sweet chocolate finish.

It's the roundness and symmetry that PNG coffee lovers find intoxicating - it's not one thing, but many.

We have mentioned that the Australian coffee palate was developed on PNG coffees from the 1970s to 1990s.

This experience left a lasting impression on our memories.

The good news is that through our trusted raw coffee broker connections, we have good access to ongoing supply from PNG's best quality exporter.

Grown in the Simbu province of the PNG Highlands, this coffee is specialty grade small landholder lots produced at the highest altitude of any coffee grown in PNG - 1750 metres above sea level.

The facilities at Simbu are the most modern and advanced in the country, making these coffees highly sought after by International buyers of premium grades.

Undoubtedly, this is one of the PNG's finest coffees and is in high demand worldwide.

The results have exceeded our expectations since receiving our first shipments in mid-August.

So impressed have we been with these new PNG coffees that we integrated these fine PNG coffees into some of our blends, and we will run long on this coffee.

This exceptional coffee was developed for the specialty market worldwide.

We are proud to offer PNG Highlands as our single origin.

Despite many farms and co-ops in PNG, most coffee production is dominated by global companies like Ecom and VolCafe.

The great thing about our PNG Highlands coffee is that profits from this Producing Co-Op are distributed directly to the local Simbu Province communities - not transferred back to Commodities Companies in Europe.

This PNG coffee is a game changer in our local market.

The balance and finish are magnificent and fit perfectly into the classic taste profile preferred by Australian coffee drinkers - it's bang on target.

Rich flavours show good complexity.
Hazelnut and chocolate on aroma,
Hints of spice with balanced acidity,
Lingering chocolate aftertaste.
Lovely full body.

Grab it here - PNG Highland coffee beans.

Securing a future for coffee

Some of you may have read the headlines from a recent report by The Climate Institute commissioned by FAIRTRADE Australia & New Zealand.

Claims in the report have generated interesting commentary and appeared in both industry and mainstream media, with critical messages appearing to reinforce the negative impact of climate change on the future security of coffee as an essential food crop.

Their report states that 2.25 billion cups of coffee are consumed daily, with an increasing annual consumption rate of around 5% worldwide.

Some fear rising temperatures and rainfall will increase the risk of plant diseases and pests that negatively impact both the volume of crop yields and degrade cup quality.

It's worth noting that some of the incidents reported have already taken place in the past.

For instance, the coffee leaf rust epidemic (also known as Roya) was observed in Colombia in 2010/2011 and, more recently, in Central America in 2014/2015.

These outbreaks have caused a significant impact on coffee production, destroying nearly 40% of crop volumes in some regions.

Roya's direct link to global climate change emphasises the urgent situation.

Colombia managed to bounce back, but we fear some Central American countries, such as El Salvador, will suffer long-term structural industry harm.

These are serious widespread events that wipe out entire coffee farms and, in severe cases, whole communities that rely upon the ecosystem of coffee farming as a means for cash crops.

In some cases, there are limited mitigation strategies a farmer can implement to protect against such outbreaks as the on-set of Roya can be frighteningly rapid.

In the next few decades, almost half of the land currently dedicated to coffee farming is expected to become unsuitable, leading to a significant increase in production costs.

It will also cause severe financial hardship for the 25 million coffee farms worldwide.

As the demand for coffee continues to increase, it is expected to surpass the supply, resulting in more frequent price bubbles when coffee is traded as a commodity.

The challenge of this rhetoric is how both companies and individuals can act responsibly on climate change or whether we can work in some way positively.

The climate debate will continue in the political, commercial and social realms - it's not a situation confined to risks associated with just the coffee industry but a threat that affects all agricultural produce and our living conditions.

It was once possible to buy Ethiopian Harrar with outstanding blueberry notes, and today, the very best coffees from that region are a stark contrast to crops from a decade ago.

Sure, there may be a degree of local economic decline and a lack of coffee industry focus or incentive.

Still, the proof is in the pudding, as many of the delicate heirloom varietals cannot survive extreme weather patterns, aggressive diseases or pests, relegating these wild coffees to extinction.

The solution may be genetic engineering - developing crops resistant to rot and pests, grown at lower altitudes or enabling coffee to flourish in areas away from the equator.

These new varietals must withstand excessive rains, frosts and droughts. Still, more importantly, the new breeds of coffee varietals need to perform where it matters most - in cup quality and performance.

New varietals are a long and slow program versus the dark clouds of climate that change move in comparably faster cycles.

The tipping point for coffee pricing had already occurred a few years ago.

We are unlikely ever to see a repeat of the 2013 lows as the demand for quality coffees already exceeds supply today.

Peering into the crystal ball, we think that in the absence of breakthrough varietal coffees that are robust, capable of surviving the effects of climate change and produce equivalent cup quality, there is a case for coffee prices to rise on average each year between 5% - 10% based on demand metrics burdening supply.

There will also be periodic event-based bubbles, maybe every three years, of swings up to 20% that will be challenging to hedge or smooth over a longer term.

How the game plays out in the retail segment will be interesting as saturated and competitive markets cause further margin pressures on suppliers unable or unwilling to raise prices by variable input costs.

mycuppa Golden Latte