Coffee leaders in Oregon recently held a roundtable discussion with Democratic U.S. Rep. Suzanne Bonamici to discuss how changes at the federal level are affecting the industry, according to Daily Coffee News. Leaders in the Portland area say they’re concerned about how a 10% tariff could affect already high coffee prices. Additionally, countries that produce coffee including Ethiopia and Honduras have been hit by USAID cuts. Programs that operated with USAID funding have been shut down overnight, affecting farmers and supply chains.
Emily Smith is a relationship representative for Hacea Coffee. Darrin Daniel is a consultant for coffee roasters and retailers and has more than two decades of experience as a green coffee buyer. Cassy Gleason is the co-owner of Buckman Coffee Factory and Marigold Coffee. They join us with more on how Oregon’s coffee industry is tied to international relations and what federal policies mean at the state level.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Geoff Norcross: This is Think Out Loud on OPB. I’m Geoff Norcross. We love coffee in Oregon. There’s a coffee shop for every 2,500 people here. But it might be the most export-dependent industry that operates in this state. So it’s uniquely exposed to the politics around global trade, something that has been put on blast with the president’s tariffs and cuts to international aid recently.
We wanted to get an idea of the state of the coffee industry in Oregon right now. Emily Smith is with Hacea Coffee, Darrin Daniel is the founder of Cityful Press Coffee Consulting, and Cassy Gleason is the co-owner of Buckman Coffee Factory and Marigold Coffee. Welcome all of you to Think Out Loud. It’s good to have you.
Cassy Gleason: Thank you.
Emily Smith: Thank you.
Darrin Daniel: Thank you.
Norcross: Darrin, let me ask you a very basic question which I know is complicated: Where do we get our coffee?
Daniel: We are able to access at least 34 different countries around the world that export coffees into the U.S., obviously Brazil being the largest. There are many countries in East Africa that produce coffee, Ethiopia, Uganda, [and] Indonesia, another large supplier as it pertains to the U.S. Those would be some of the major larger exporters, including Vietnam as well.
Norcross: But if we were to talk at all about domestic production, what is that … Hawaii? Is it Puerto Rico?
Daniel: Those are the two and they represent less than 1% because they’re really micro regions. They’re not large producers of coffee on the level of Vietnam or Brazil. Because of that, they’re a higher price coffee, especially with how labor is treated in the U.S. [There’s] a much higher labor rate per hour for work and therefore the prices of coffee are much higher. That’s part of it. But it’s just because there isn’t enough land space to really grow on the level that you would find with Colombia, Brazil or Indonesia.
Norcross: So we have to source our coffee in other countries. Understood.
What is your understanding right now of the tariffs on those countries that produce our coffee? I know it’s a moving target and it’s been one thing, it’s been another. But right now, what is the tariff picture on coffee coming to Oregon?
Daniel: There’s an immediate impact. There is that 10% levy that’s now on any contracts after April 9. And there are negotiations going on up until July 9, policy conversations to either go to a no-tariff policy, or to keep the 10%, or to actually go up. So it’s completely uncharted waters that we’re in, in terms of the impact of that.
There are contracts now, coffees that are afloat, that are about to land in Oregon and be warehoused here and also in Seattle, another major warehouse, in Washington state. And those contracts are subject to that 10% increase. That means that either the importer or the exporter, or the roaster or the consumer is gonna get hit with that dramatic increase.
Norcross: Emily Smith, I guess maybe a finer point on that question. Do you have a sense of how the tariffs will actually affect prices for all the people down the chain that Darrin just mentioned? What might the tariffs mean for prices here?
Smith: Across the board, with coffee, we operate in a very, very small margin industry. So for us, in importing, the margin might be 10%. Our margin is 10%. Many operate with even a smaller margin. It leaves no room to absorb any kind of tariff costs. So the tariff costs have to get passed through all the way down to the consumer. Any company that tries to absorb those costs is probably looking at the loss of the majority of their revenue.
Norcross: What about the foreign aid part? The presidential administration is very interested in gutting aid to other countries. How might that show up as a problem for Oregon coffee lovers?
Smith: One of the things that’s really important to remember is that coffee comes from a region that is prone to political unrest. These are governments that are really fragile and economies that are really fragile. So, anytime that that gets interacted with, there’s going to be a ripple of repercussions, whether it is farms closing, labor migrating to places they have jobs or they have medical care. All of those things are being impacted by the aid organizations being closed.
Norcross: Cassy Gleason, you hosted a roundtable with Oregon Congresswoman Suzanne Bonamici about all of this recently. Why did you do that?
Gleason: For all of us in small business right now, speaking on my [own] behalf only, you’re so focused on the day-to-day operations, it can feel really overwhelming when there’s something that is also outside of your control like the economy or during COVID, all these things were impacting us. The only way to really get a handle on something that is this big is to come together with other peers in your industry.
So I think we were all just waiting for that moment to come together. Emily actually was the one who spearheaded the original communication with Bonamici’s office. But we were so pleased when they agreed to meet with us and to hear our concerns.
Norcross: What did you share with her?
Gleason: We shared with her the impact that this is going to have on us individually, as owners, but also the impact that it’s going to have on the customer, on the consumer. As Darrin and Emily both mentioned, coffee, food and beverage in general, has a very, very tight margin. So there’s really no way for us to absorb this ourselves.
Without getting too far down into the weeds with what coffee has been going through lately, we’re already seeing that the cost of coffee is extremely high. For a number of my peers, I can say we’ve all been staving off the increase in our pricing because it’s not fun to raise prices. But now with tariffs coming, I just don’t think it’s possible to hold off any longer. And that means raising prices for my business partners as well, my cafes, my restaurants, other folks who I do business with.
Norcross: You mentioned the pandemic and that was a big disruption too. I’m wondering if you learned any lessons from four or five years ago that can be applicable here?
Gleason: Yeah, absolutely, the one through line is that we are all going to be impacted. And that can be very terrifying. It can be very sobering, but it can also be galvanizing. If we are all going to be impacted by this, that means that we have a real opportunity to unify with some singular voices. I can say from my vantage point that there is no benefit to this particular tariff. I would make the argument there’s probably very little benefit with the other tariffs that we’re seeing. But with coffee in particular, as Darrin’s pointed out, there’s not an alternative product here in the United States. We can’t magically grow coffee in California; it’s not going to happen.
Norcross: Why not?
Gleason: In spite of the fact that we are experiencing climate change and a warmer environment, we are not going to have the same environment as the coffee growing in the tropics because of sunlight, not because of heat. So it’s a non-starter.
Norcross: Darrin, it seemed like you had something you wanted to add to that?
Daniel: It’s very dependent upon the equatorial belt, where almost all of coffee is grown around the world. It’s so conducive to that microclimate on a global level. It’s scalable, to a certain level, to grow coffee … And there is coffee production in California. It’s a very, very specialized, small production. But to do it at the scale of consumption that the U.S. requires, being one of the largest consumers of coffee in the world, it’s just a non-starter.
Norcross: For sure. Emily Smith, what are some of the misconceptions that people have about your industry that you think this experience with tariffs and with international aid might bring to the surface and help people learn more?
Smith: One that my colleagues just touched on [is that] a lot of people don’t understand just how much we depend on imports of coffee. So we look at coffee in the U.S. The U.S. can only produce about 19 million pounds of coffee. But we import 3.6 billion pounds of coffee. So when we talk about the divide between what we could possibly produce, it’s a vast, vast divide.
I hope that also people can look at the coffee industry and look around. It’s in every small town. It’s part of every chamber of commerce, it’s small businesses. And we’re at a spot where these sorts of costs just can’t be absorbed. They’re either going to put companies out of business or it’s going to have to get passed on to the consumer. Right now, in the coffee industry, with importing, the federal government is making more money than we are in the coffee industry – and that’s rough.
Norcross: Darrin, people in the industry like to get together and talk. I know Coffee Fest just happened in Portland. What kinds of concerns are you hearing from your colleagues out there?
Daniel: I was there for the event and this subject did come up. Overall, I believe people just aren’t comfortable with the unknown aspect and the length of time that it’s taking for either our Congress or our representatives to tell us what is going to happen after July 9. Why do we have to wait this long? There is a coffee caucus that has been established, a bipartisan caucus ...
Norcross: A coffee caucus?
Daniel: Yes, just recently. We found out during the roundtable. First time ever in the history of the U.S., that I know of, that this has happened. That’s a good move, but we need outcomes. We need to have some quick, immediate information from our representatives because the industry is in, I wouldn’t say a free fall, but there is this sense of how much do I increase my prices? How am I being competitive with other people that I compete with? How do I tell the story to my wholesale clients? And who’s sharing the burden? That’s a big issue.
Norcross: What does a good outcome look like to you at this point?
Daniel: Well, I think the idea that coffee would be exempt and many other products. Tea is another one that is going to be impacted too, because it’s not grown in the U.S. Many tropical agricultural products are part of this. So I think exemption is the only way to resolve the issue. And that lobbying is happening right now, with the National Coffee Association trying to lobby for an exemption. There are no reports back though.
Norcross: Cassy, you run the Buckman Coffee Factory. Can you talk a little bit about your operation and how it is exposed?
Gleason: We are a co-roasting facility. We are a shared space. Currently, we have around 40 people who are renting equipment from us. These are small individuals, all the way up to multi-cafe owners. So we are deep in the world of coffee. Whatever impact this is going to have on the industry, we’re going to feel first, because we’re at the front lines. We’re also small businesses so we don’t tend to have huge reserves. So again, going back to this idea of needing to pass, I’m just going to call it a regressive tax, on to the customer … because when you’re a small business, the most important things are payroll and rent. So those are the priorities.
Norcross: We’re hearing from a lot of industries across the state, especially ones that rely on imports, that they are exposed deeply. Is there something unique about your story in the coffee industry that you think people need to know, because we are such an import-dependent state?
Gleason: We are an import-dependent state. I’ll just say coffee, for me, is a very romantic product so I take a big view on this. And I think of these tariffs as not just hurting our industry, but I think it’s hurting the very idea of free trade in general. What is below that is also, I think, the network of interactions and relationships that are peace promoting. That could make me sound very Pollyannaish, but we are in a very precarious time globally. And I think anything we can do to promote peace, whether it’s by trade or just general good global relationships, we should be promoting. Coffee, again, is a product that we come together to share stories, meet for a date, whatever. And it’s a perfect tie-in to be discussing things like global peace.
Norcross: For sure. Thank you all very much. It was good to talk to you.
Gleason: Thank you so much for the opportunity.
Daniel: Thank you.
Smith: Thank you.
Norcross: Cassy Gleason is the co-owner of Buckman Coffee Factory and Marigold Coffee. Darrin Daniel is the owner of Cityful Press. And Emily Smith is with Hacea Coffee.
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