#028 - Before the AI Hype: How A/B Testing Rewrote Our Coffee Harvest

Why AI takes a backseat to old-school engineering in the race to escape the commodity trap.

It is harvest time in Brazil. This marks our eighth harvest since we made the conscious decision to break free from the coffee commodity cycle.

By "commodity cycle," we mean the traditional practice of selling an entire harvest in bulk to local cooperatives. These co-ops sell to international traders, who then supply massive European and American mass-roasters like JDE or Nestlé. We will dive into the governance of this traditional process—and just how damaging it has been for producers—in a future newsletter.

For now, let’s talk about quality.

Over decades, coffee quality across the region deteriorated, a direct reflection of mass-roasters’ corporate incentives to maximize scale and squeeze margins. Under the old model, we sold our coffee in bulk, and cooperatives aggregated our harvest with everyone else's. Because there was no bean differentiation, there was zero incentive to improve quality. At the end of that race-to-the-bottom supply chain, companies like Nestlé simply blended Arabica and Robusta beans to produce instant coffee like Nescafé.

Since 2016, we have taken a different path. We renewed our coffee trees and invested in post-harvest processes.

The post-harvest stage is where the magic happens. It is an especially fascinating topic today, given the buzz around real-world AI applications. In theory, AI should be able to simulate infinite combinations of post-harvest variables to optimize both quality and efficiency.

However, theory and practice are two very different things.

Because the post-harvest cycle only happens once a year, real-world testing is slow and expensive. While we look to studies from agricultural research institutions like Epamig, Embrapa, and local universities, their findings are rarely economically conclusive for an independent farm.

Long before AI was scalable, our father took a hands-on, engineering approach to data. He conducted A/B tests on the farm, experimenting with:

• Drying methods: Raised vs. traditional patio drying beds.

• Timing: Cherries picked only in the morning vs. throughout the entire day.

• Sorting: Meticulous separation by bean color and variety.

• Blending: Mixing specific varieties at different stages of processing.

• Micro-climates: Separating beans harvested from high-sun, high-cold exposure areas from those grown under stable shade.

The conclusions we’ve drawn from years of this data are cool, but too dense for a single newsletter. If we had to share one major takeaway, it is this: long-term crop resilience matters even more than short-term quality scores. In the quest to beat the commodity cycle, diversification beats over-specialization every time.

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Weekly Highlights:

• Coffee Futures KC Price in NY: +3.21% weekly, closing at 276.40 cents/lb.  

• Coffee Price in Brazil's B3 in USD: +6.57% weekly, closing at 352.70 USD per 60kg bag.

• BRL/USD fx rate: +0.27% weekly

• Proxy of 20' container freight prices from Santos to Rotterdam: down ~2% weekly

• Strait of Hormuz Blockade Risks: Global coffee supply chains face threats as the ongoing Strait of Hormuz closure disrupts fertilizer shipments, risking higher production costs and cutting off major Middle Eastern export destinations for producers like India.  

• Lisbon Selected for World of Coffee Europe: The Specialty Coffee Association (SCA) officially announced that Lisbon, Portugal will host the prestigious 2027 World of Coffee Europe event, marking the first time the show will take place in the country.  

• SCA Launches Master Distinction: The SCA introduced its brand-new "Master of Specialty Coffee" program, establishing the highest professional title in the global coffee sector, with the inaugural cohort applications opening in late 2026.  

• Fully Electric Roastery Concept: Coffee Equipment Pros launched an all-electric showroom in Texas, pushing forward zero-emission corporate targets and showcasing what the company defines as the "Roastery of the Future."  

• Upcycling Breakthrough for Coffee Grounds: Researchers at China's Shenyang Agricultural University successfully turned used coffee grounds into eco-friendly insulating wall foam, offering a circular economy alternative to petroleum-based Styrofoam.  

• Vietnam Coffee Exports Surge: Vietnam's National Statistics Office reported that coffee exports from January to May 2026 reached 922,000 MT, tracking a robust +7.9% year-over-year increase amid elevated global baseline demand.  

• Weather Delays in Brazil Harvest: Brief seasonal harvest delays in localized Brazilian fields provided short-term technical support to Arabica spot prices, tightening immediate prompt delivery windows despite high overall crop expectations.  

• Macro Headwinds and Strong Dollar: Financial analysts at StoneX highlighted that a strong US Dollar index hovering near 101.0 continues to create macro resistance across the agricultural commodity complex, capping steeper coffee price rallies.  

• Summer Menus Drive Iced Coffee Innovation: Major retail coffee chains rolled out aggressive summer campaigns centered heavily on cold brew and functional additions, catering to a distinct behavioral shift toward chilled beverages among younger consumers.

• ICO Notes Premium Resilience: Data from the International Coffee Organization (ICO) suggests premium specialty sectors remain highly resilient to inflation, whereas mass-market commercial coffee retail is seeing marginal volume pullbacks due to global cost-of-living adjustments.