Volcano erupts, Indonesian coffee premium rises and supply decreases

At present, the price of robusta coffee remains high because the Red Sea crisis has led to the outage of shipping routes or the increase in transport costs. In addition, production has been reduced in many countries affected by El Ni ñ o, which in turn has led to a decline in exports, including Indonesia.

Indonesia, Sumatra Robusta coffee premium rose, the recent Sumatra Robusta coffee beans this week premium of $500-520, compared with last week's premium of $500. One of the traders said the premium widened to $500 this week from $450 earlier, a trend that will continue for some time, at least until the main harvest is expected in April and June.

It is reported that millions of small farmers in Indonesia have been suffering from rising fertilizer prices, rising cost of living and increasingly extreme weather in recent years. The river basin in Batuji Forest, off the southern coast of Lambang province in Sumatra, has almost dried up after months of drought in and much of Indonesia. The drought is exacerbated by El Ni ñ o and climate patterns in polar states in the Indian Ocean.

Indonesia is located in the Pacific Rim volcanic belt, with frequent earthquakes and volcanoes. There are more than 120 active volcanoes in the country. Recently, according to the Indonesian Geological Hazard Technology Research and Development Center, a number of volcanoes in Indonesia have erupted one after another, including Mount Merapi, one of the most active volcanoes. Mount Merapi is located in eastern Java, and the Semeru volcano, also in East Java, also reported volcanic eruptions earlier. Due to multiple volcanic eruptions, thousands of people have taken refuge from their homes, with no casualties for the time being, but many people in the industry are worried that it will affect coffee growing areas.

In addition, chemical fertilizer and geological problems also have an impact. Fertiliser prices reached an all-time high in 2022 when Russia, a major fertiliser producer, went to war with Ukraine in 2022. Although prices have fallen since then, potash and other fertilizers are still expensive by historical standards, adding to the pressure on low-and middle-income farmers. Many farmers around Batuji also grow coffee, but local farmers say the soil quality is beginning to deteriorate, so yields will decline. Therefore, Ka Nong believes that in order to increase coffee production in Indonesia, the state needs to provide training to farmers and the most effective planting system, and the government and farmers are still using the old model, which has been proved to be ineffective. I hope it can be improved.