Exporters and cooperatives from Peru are seeing a surge in contracts despite high parchment prices. Leaf rust led to a short supply of clean cup lots—just when Peruvian coffee became the go-to option to cover shipping delays from Ethiopia. Get the full picture here.
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Hot weather led to premature ripening at lower altitudes (Photo: Origin Coffee Lab)
The Peruvian coffee harvest kicked off early this year, with parchment deliveries starting in March in lower altitude zones. By June, micro-lots were already on cupping tables—normally, this happens in August. The wet season between January and March was hit or miss, with hot and humid periods between rainy days triggering early cherry ripening.
Quality vs. volume
Total production is expected to match last year’s 3.95 million bags, give or take, but with more lower-grade coffees, mainly from farms below 1,500 meters above sea level. The combination of rain and heat created an ideal environment for fungal diseases like leaf rust (photo below).
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“We’re seeing more volume and clean coffees at higher altitudes, but that’s only 30% of Peru’s production. At lower altitudes, which account for 70% of our coffee, we see less because of leaf rust,” says Marjorie Parrilla of Cooperativa Agrária Cafetalera Valle Alto. She believes this will mostly affect the commercial-grade coffee used for blends.
The impact of leaf rust on prices
With more defective coffee in the mix, sourcing clean cups has become tougher for cooperatives and exporters, driving up prices. “If there’s not much clean cup coffee, the local purchase cost rises. And if the base quality is higher, the better qualities get more expensive because you just can’t buy both for the same price,” Marjorie explains.
José Rivera of Origin Coffee Lab agrees. “Volume with quality is the issue. For example, on a farm without leaf rust, 1,000 cherries ripen. In a farm with rust, only 500 ripen fully. You end up with the same volume but not the same quality. This pushes the local price up because to buy a coffee of 85+ points… I have to fight for it.”
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Farms below 1,500 m have been the most affected (Photo: Valle Alto)
What’s behind a strong demand
Despite these price hikes, the demand for Peruvian coffee is high. Exporters and cooperatives have already contracted more coffee than usual for this time of year. In May, exports were up by 23% compared to 2023. Valle Alto and Origin Coffee Lab expect to sell out by October, so roasters looking to source from Peru should get their samples ASAP.
It’s tricky. Here’s why Peru’s selling season might be shorter. First, producers had coffee to sell earlier than usual and nothing left from the last harvest. Normally, domestic stocks last until January, but warehouses in Peru were cleared out before the end of 2023, adding pressure on the new crop.
Filling the gap for Ethiopia
Peruvian coffee is also being sourced as a gap filler by many roasters and traders facing delayed shipments from Ethiopia. “Many buy grade 2 or 3 from Ethiopia for use between July and September. But with the shipping delays there, that coffee won’t arrive in time,” says José. “So we’re seeing a big demand for good quality coffee. And buyers are fighting over it because they have to ship fast.”
The plot thickens. While traders are snapping up all the 84+ coffees they can get from medium-altitude farms, the story is different for commercial-grade coffee. Many buyers are still asking for prices similar to those in 2023. Even if they convince a cooperative to agree, there’s a huge risk of producers defaulting on such transactions.
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Good Peru is coveted by buyers waiting for Ethiopian shipments. (Photo: Aprocassi)
The mere fact that differentials are lower this year—whenever the market goes up, differentials tend to go down—creates a problem for cooperatives. “The banks that finance us are used to seeing contracts with differentials of +40 or +50. Now that we offer +20 or +30, it’s an issue. They think we’re giving producers lower prices when we’re not,” Marjorie explains.
Overview of the local market
In the domestic market, the price for one quintal of parchment (55.2kg) has risen from 500 Peruvian soles in 2022 to 750 and even 850 soles in 2024. That’s the price for standard quality, cupping below 82 points on the SCA scale. It’s an increase from US$3.00/kg to US$4.55/kg and US$5.15/kg farm gate.
Cooperatives and exporters are happy for farmers, who now have the funds they need to fertilise and maintain their crops. However, José worries that producers might have less incentive to work on quality, especially if buyers are not willing to pay for it. “To pay them more, we either charge more or reduce our margins. The problem with simply reducing our margin is that any mistake or sample rejection is a massive loss.”
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Farmers have more money to invest in their farms (Photo: Origin Coffee Lab)
Decoupling from the market
But it’s not impossible to keep farmers interested in quality with more stable prices, even in times like this. Origin Coffee Lab has customers that pay above US$6.80/kg every year. For them, nothing’s going to change. José also suggests that early contracts can greatly help producers, even if the payment is later, upon shipment.
“Every year, exporters wait until July or August to start signing contracts. It would be amazing to have some in January or February. There’s a lot of investment in fieldwork early in the year, and most times people don’t invest what’s needed because they don’t know how much they’ll sell. If they have the security that they’ll sell at a good price, they’ll invest eagerly. When people plan, everything is better.”
When an exporter like Origin Coffee Lab gets an early contract through Algrano, they can also access our Grower Capital program. Once the contract is signed, they receive a full or partial pre-payment that helps them cover costs and even advance money to farmers. Ultimately, this can lead to a more secure and profitable supply chain.
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Smaller cooperatives can build strong farmer-buyer relationships (Photo: Valle Alto)
Strengths of small cooperatives
At Valle Alto, Marjorie believes that when buyers build relationships with small cooperatives, producers can easily see the benefits of the partnership and feel more motivated. “We have 100 producers, so the impact of every sale is perceived by everyone. But it’s very complicated with large cooperatives with 300 or 600 producers, where the visibility of the impact is minimal.”
Act now to secure your coffee
When the volume of high-quality coffee is scarce and demand is strong, securing your contracts early is crucial. Roasteries who want to keep using the same coffee should be talking to the producers they buy from and requesting samples before the summer holidays.
There’s a varied selection of coffee lots on offer on Algrano’s marketplace, with qualities ranging from 83 to 86 points—and the first Gesha micro-lot is already listed! As higher altitude zones reach the peak of their harvest, more samples will arrive at the lab. So check what’s available now and keep your eyes open for more at the end of July.
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Roasters can start talking to producers on Algrano now. (Photo: Origin Coffee Lab)
Important dates
There are five shared shipments planned for this season: three to Europe, one to the UK, and one to the USA. Here are the key dates:
Europe
First container: last orders by mid-August. Release from December.
Second container: last orders by mid-October. Release from February.
Third container: last orders by mid-November. Release from March.
United Kingdom
Last orders by mid-August. Release from December.
United States
Last orders by mid-November. Release from March.
Need coffee from Peru?
Go to Algrano’s marketplace and order samples from a range of cooperatives. Qualities from 83 to 86 to contract with or without certifications. Ship faster when you order 100+ bags.
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