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Pictured above: Coffee,
with white flowers, and macadamia trees on Oriflama farm
in the highlands of Guatemala. |
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Posted May 13, 2003:
Good coffee, like wine, has cachet – it’s delicious,
it adds richness to your daily routine, it expands your vision.
Even more than wine however, coffee has embedded in it a rich
matrix of social, economic, and environmental dynamics that
span the globe.
Coffee is the second most valuable globally traded commodity;
only the petroleum trade does more business. Furthermore,
in a stark distinction from the notoriously concentrated petroleum
industry, coffee is produced
by more than 20 million farmers worldwide.
In 2001 the price of coffee fell from over $1/lb. on the world
market to less than $0.50 because of the increase in supply
brought on mainly by Vietnam becoming a major coffee producer
and by increases in production in Brazil. The price drop has
been an unmitigated disaster for Central American economies,
causing some 600,000 people to become refugees and 1.2 million
to need direct food aid.
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"Worldwide it is
widely said that the average coffee farmer receives about
1% of the price of a cup of coffee bought in a café.
By simply increasing the percentage that goes to the farmer
to 2%, a few pennies are added to the cost of a cup of
coffee, but a doubling of the farmers income can be achieved,
making coffee production profitable. " |
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The signs of the coffee crisis can be seen everywhere in
the Guatemalan highlands, where some of the finest coffee
in the world is grown. Huge swaths of land that formerly held
coffee with beautiful stands of shade trees lie smoldering
or blackened, being readied for planting of some other crop.
The use of large trees for shading coffee is a Guatemalan
coffee-growing custom and is said to have been developed here.
Coffee grown under the proper level of shade takes longer
to develop, which favors the development of rich and complex
flavors. Shade-grown coffee is one of the most environmentally
benign crops in the world and is perhaps the ideal agroforestry
crop. Over 100 species of shade trees have been counted on
a single Guatemalan coffee farm.
The vast majority of alternative crops being planted in the
place of coffee are not nearly as environmentally friendly
– most are monocultures, many need much higher levels
of pesticides and fertilizers and many are annual crops that
leave the soil exposed to erosion.
Less visible than the loss of coffee crop land is the human
suffering and struggle due to the loss of jobs on and income
from coffee farms. The indigenous people of the highlands
of Guatemala are not a demonstrative people. They suffer their
setbacks quietly. However, it doesn’t take a long conversation
to find out how difficult the past two years have been for
people here whose livelihood depends on coffee. While, historically,
the coffee industry in Guatemala has been intimately linked
with the exploitation of the Mayan people, as described in
books such as the widely read I, Rigoberta Menchu,
the loss of those jobs has made the situation worse. Swarms
of people from the countryside ply the streets of tourist
towns trying to sell homemade weavings and crafts.
Premium grade coffee,
low grade prices: The Guatemalan
struggle to be recognized in the gourmet market
Central America, and particularly Guatemala, produces some
of the finest, if not the finest coffees in the world. Terms
like “kaleidoscopic, exceptionally sweet, elegant and
powerful” have been used by coffee professionals when
describing Guatemalan highland coffees. The problem is that
much of the Guatemalan coffee is sold on the standard world
coffee market, known as the “C market,” whose
average coffee quality is far lower than Guatemalan highland
coffee. The C market price is currently less than the cost
of production. Reaching the “specialty” or “gourmet”
coffee market is a major goal of Central American coffee producers.
The task of selling to the gourmet coffee market can be daunting,
however, as there are at least two dozen major steps in the
chain of production and processing that must be carried out
flawlessly in order to sell to the specialty coffee market.
If any one of those steps is botched, the coffee will surely
be rejected by coffee brokers, whose practice of tasting,
known as “cupping,” the roasted, ground and brewed
product is a standard regimen in the marketing chain.
Everything from varietal selection, soil fertility, pest
and disease management, harvesting, time from harvest to processing,
plus a dozen major steps in processing from initial fermentation
to final drying, storage, and transport have to be spot-on
in order to make the gourmet coffee grade and get the top
prices - $1 - $1.50 per pound for “green” (unroasted)
coffee. (Green coffee is the form of coffee traded on the
world market.)
I visited three traditional plantation style coffee farms
as well as a number of small scale coffee producers and cooperative
managers. The coffee plantation owners are relatively wealthy
by Guatemalan standards. However, with the fall in coffee
prices, even these families are struggling hard to make ends
meet. Much of the pioneering work on the development of methods
for coffee sustainability and quality is being done on these
farms.
Oriflama Farm, in
the mountains just south of Mexico:
Environmentally friendly, agriculturally innovative, socially
bold
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| Walter
Adams of Oriflama breaking social molds:
Standing in the tan sweatshirt, Walter runs a workshop
for his workers to apply for leadership positions
on the farm. He encourages the women to attend,
and says he actually prefers women as supervisors
because they don't bring with them the old Latin
American tradition of poor treatment of workers,
as many men do. |
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Walter Adams, whose great-grandfather Don Bernardo Hannstein
was one of some 5,000 German coffee pioneers in Guatemala
in the 1800s, showed me his family’s 185 hectare coffee
and macadamia nut farm, Oriflama, in the mountains just south
of the Mexican border. After leaving the main road, we drove
for two hours on a four-wheel track to reach Oriflama.
Oriflama is certified for sustainability by the Rainforest
Alliance, a process that involves inspection of a spectrum
of farm elements: fertilization, pest management, waterway
protection, recycling, worker pay and housing, biodiversity,
and transparency of the marketing chain, to name a few.
This certification is not an organic certification –
it is broader in its scope than organic, although a farm can
be certified under both frameworks. Under the Rainforest Alliance
certification program, certain types of pesticides and low
to moderate levels of synthetic fertilizers can be used, a
major distinction from organic certification. On the other
hand, criteria such as the recycling of waste from processing
facilities and on-farm households, worker wage and housing
criteria, coffee marketing channels and their transparency,
and standards for protection of riparian and natural zones
are all issues addressed by the Alliance that generally stand
outside the scope of organic certification.
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Oriflama
Farm
Owner: Walter Adams
Size: 185 hectares
Certification: Rainforest Alliance
sustainability certification
Innovations: water-efficient
wet processing system; low-cost pest trap for
the coffee berry borer; the hiring of women as
supervisors on the farm
Sells to: Starbucks, others
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Starbucks pays 10% more for coffee that is certified as sustainable
by Rainforest Alliance and several other certifiers. They
pay approximately $1.20 per pound, about twice the C-market
price and close to the current Fair Trade price of $1.26 per
pound. Oriflama sells a substantial percentage of its coffee
to Starbucks.
Water pollution from the wet-processing system that most
Central American coffee producers use is coffee’s biggest
environmental impact. The waste water is acidic and high in
natural effluents from the fermentation of the mucilage that
envelopes the coffee berry. Oriflama has developed a method
of wet processing the freshly harvested coffee beans that
reduces the amount of water used by 95%, virtually eliminating
the discharge of waste water into surrounding streams. They
recycle all of their coffee processing pulp back to the coffee
plantation as fertilizer.
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"Adams and his crew at Oriflama
have developed a low-cost attractant trap for controlling
the coffee berry borer, coffee’s worst insect pest.
The traps are made from discarded plastic liter-sized
soda pop bottles and two inexpensive alcohols as attractants." |
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Over 100 species of trees have been counted as part of the
shade regime on Oriflama. About a third of the coffee is interplanted
with macadamia trees, the nuts of which are also processed
on the farm. Where macadamia is not interplanted with the
coffee, the predominant shade tree species is Inga spp., known
as chalun. Chalun, is a legume, yields excellent firewood,
and is the most commonly used coffee shade tree in Central
America.
Adams and his crew at Oriflama have also developed a low-cost
attractant trap for controlling the coffee berry borer (Hypothenemus
hampei), coffee’s worst insect pest. The traps are made
from discarded plastic liter-sized soda pop bottles and two
inexpensive alcohols as attractants. In the absence of adequate
research infrastructure for organic and sustainable methods
in Guatemala, the better-off plantations such as Oriflama
play an important role in developing this type of technology,
which can then be replicated by small-holders.
Another of Walter’s innovative practices is to hold
workshops for any of his workers who wish to train to become
supervisors, known as caporales. He encourages the
women to attend, and says he actually prefers women as supervisors
on the farm, as they do not bring with them the old Latin
American tradition of exploitation and poor treatment of workers,
as many of the men do. Women tend to focus on the tasks at
hand rather than power issues, as the men tend to.
Of three highly successful women caporales on the
farm in the past, only one remains, as the two others’
husbands could not accept the women having an income greater
than theirs and forced them to quit! The remaining woman caporal
put her foot down and told her husband he could leave if he
wanted, but she wouldn’t give up her post. He hasn’t
left.
Finca Santo Thomas
Perdido, on the lower slopes of the Toliman volcano:
Fighting erosion, preserving older varieities, supporting
local people
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Finca
Santo
Thomas Perdido
Owner: Carlos Torrebiarte
Size: 280 hectares
Certification: Mayacert, a Guatemalan
organization with standards similar to the Rain
Forest Alliance
Innovations: using honey bees
to increase productivity; promoting responsible
use of firewood from coffee shade trees, along
with fuel-efficient, home constructed adobe stoves;
preserving older tipica varieties of coffee, which
Carlos says are very flavorful
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Several hours drive to the south of Oriflama, where the Guatemalan
highlands begin to descend from Lake Atitlan to the Pacific
Ocean, Carlos Torrebiarte owns and runs a 280 hectare coffee
farm, Finca Santo Thomas Perdido. Santo Thomas is certified
for sustainability by Mayacert, a Guatemalan-based organization
that uses the same framework used by the Rainforest Alliance
for certification. As with Oriflama, St. Thomas has reduced
water discharge from processing to negligible amounts, the
biggest step in making coffee production sustainable.
Carlos is also a leader in developing honey production in
coffee, and keeps one hive per acre of coffee throughout the
farm, harvesting 125 lbs. of honey per year per hive. The
honey is from flowers of both coffee and chalun. Carlos maintains
that pollination of coffee by bees raises his coffee yields
by 25% -- a recent discovery. Coffee is mostly self-pollinated
and has not been considered to be a crop that needs insect
pollination. Carlos believes that the coffee crop has great
potential to be a major honey producer in Central America.
Carlos is also enthusiastic about the substantial amounts
of firewood supplied by coffee shade trees. Eighty percent
of energy use in Guatemala is still firewood, and shade-gown
coffee can provide much of that, taking some pressure off
of the remaining beleaguered forests. Carlos works in the
community to promote the Lorena stove, a simple, home-constructed,
adobe stove that reduces fuel use by half. He is also involved
with his coffee-grower neighbor, Andy Burge, in preserving
the remaining forests in the area.
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"Carlos maintains that pollination
of coffee by bees raises his coffee yields by 25% -- a
recent discovery. Coffee is mostly self-pollinated and
has not been considered to be a crop that needs insect
pollination. Carlos believes that the coffee crop has
great potential to be a major honey producer in Central
America." |
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Andy, whose farm I visited with Carlos, is one of the leaders
of local conservation groups and is involved with The Nature
Conservancy. Andy is attempting to obtain the Smithsonian
“Bird Friendly” coffee certification, but says
that it’s very stringent and not easy. As we sit and
talk on the porch of his old plantation-style home, he identifies
at least a half-dozen calls of birds considered to be rare
and threatened. Andy says that since he and other neighbors
have improved the shade tree abundance and diversity in their
coffee plantations, plus banned the use of slingshots on their
land by locals (traditionally used to hunt birds), many birds
have reappeared that did not exist here a decade ago.
Destruction of forest on the volcano slopes above the Santo
Thomas Perdido farm by people needing new crop land has caused
wells to dry up, and two major mudslides to occur. The second
mudslide wiped out a village, killing over 30 people in 2002.
Carlos has housed the remaining villagers on his land. He
has planted a South American bamboo Guadua angustifolia known
as the world’s strongest and longest lasting bamboo,
to help stabilize the slopes. Pressure to exploit the few
forested areas left, mostly on steep slopes, has increased
and will continue to grow. The population growth rate is high
amongst the poor, mostly Mayan, highland population - the
population doubling time is approximately 20 years. Families
typically consist of at least 6 children. The gardener of
the house I am renting has 12 children. The outdated, corrupt,
and vastly unfair land tenure system of Guatemala makes the
situation worse for the poor and landless.
Another of Carlos’ projects is the planting and preservation
of tipica varieties of coffee. These varieties were brought
to Guatemala by the Spanish hundreds of years ago and were
selected to thrive under local conditions. The tipicas predate
the venerable Bourbon variety, considered to be the oldest
of the more modern coffee varieties. Carlos maintains that,
while the tipica plants tend to be large and scraggly, the
taste of tipica coffees is unparalleled.
Andy’s coffee farm is in transition to organic. He
is the third coffee grower I have talked to who maintains
that going organic means enduring a yield reduction of 50%-70%,
due to soil fertility constraints. I am skeptical that this
magnitude of yield reduction should be the rule, for several
reasons. First, a study done in Costa Rica showed an average
organic underyield of 17% in paired conventional/organic coffee
farms, despite the fact that state-of-the-art organic methods
have yet to be developed for coffee. Second, all of the evidence
from other crops around the world shows that organic crops
yield on the average 90% of conventional, after transition
and the development of state-of-the-art organic methods. This
point of view is bolstered by Carlos and Andy’s mention
of a consultant who maintains that organically managed coffee
can attain equal yields as conventional, all other things
being equal. So the jury is still out on this issue. Research
needs to be done, particularly on green manure crops for building
soil fertility.
Smaller coffee growers
near the shores of Lake Atitlan:
Struggling to survive the low world prices on less than an
acre of land
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| The
impact of low world prices: Small coffee
grower Antonio Quic shows a neighbor's land, where
coffee has been taken out because of the fall in
prices and loss of income. |
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I visited Francisco Sajquiy’s small (less than an acre)
coffee farm in San Pedro la Laguna, near the shores of Lake
Atitlan. He is now harvesting the last of the coffee beans,
and selling the “cherries” to buyers nearby for
$7 per hundred pound sack, or seven cents a pound. The buyer,
who has a pickup, then sells the cherries to a nearby processing
plant for a small profit.
A one hundred pound sack of freshly picked coffee cherries,
after going through the processing plant, makes 20 pounds
of green coffee. Therefore, Francisco was paid about 35 cents
per pound for what would end up as green.
The C-market price right now for green coffee is 63 cents
per pound. Whoever ends up selling the green coffee from the
processing plant may, depending on the quality, be able to
sell it above the C-Market price because it is “strictly
hard bean” (which means high quality Guatemalan) coffee.
Let’s say they get 85 cents per pound. Several commercial
steps later, the end of the marketing chain, Guatemalan premium
highland coffee, roasted, is going for about $6 per pound
on the Internet (the roasting process reduces the weight by
about 20%). The higher one goes up on the marketing chain,
the higher the value-added markup becomes.
The average size of the smallholder coffee crop around Lake
Atitlan is about a half acre, and the average smallholder
fresh bean coffee yield is 4800 pounds per acre. Thus at the
current rate of $7 per 100 pound sack, the half acre of coffee
pays $168. The average cost of production is considered to
be $430 per acre, or $215 per half acre. Therefore it is not
hard to see why farmers are ripping out their coffee to put
in other crops.
Worldwide it is widely said that the average coffee farmer
receives about 1% of the price of a cup of coffee bought in
a café. At 1/3 oz. of coffee per cup (strong!), and
$1.50 per cup (cheap!), a pound of coffee earns $72 in this
bargain of a café. Francisco earned about $0.43 per
pound of roasted coffee ($0.35 per pound for green). This
comes out as exactly 1%, but my estimate is generous, and
it is probably less than 1%.
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"the consensus among North American
coffee buyers is that the quality of Fair Trade coffees
tends to be inconsistent at best and inferior at worst,
compared to the traditional plantation coffee sold through
private channels. Given the sophisticated management needs
for production of top quality coffee, this is not surprising,
and the challenge is for the cooperatives to develop the
management skills to consistently produce high quality
coffee. " |
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By simply increasing the percentage that goes to the farmer
to 2%, a few pennies are added to the cost of a cup of coffee,
but a doubling of the farmers income can be achieved, making
coffee production profitable. One of the rays of hope in this
area of improving producer-consumer equity is the work of
organizations which promote what is known as Fair Trade coffee,
whose goal is to increase the farmers’ share of profits.
Fair Trade coffee currently pays a minimum of $1.26 per pound
of green coffee to producers, nearly four times that which
Francisco is receiving. Fair Trade coffee, such as that sold
by Equal Exchange, is generally bought from coffee associations
or cooperatives of smallholders who are certified by Fair
Trade certification organizations such as Transfair.
I talked to Rainiero Lec, a Mayan Guatemalan who works for
a American NGO with a consortium of smallholder coffee associations,
representing several thousand farmers. Currently they are
working at obtaining organic certification for several of
the associations via Maya Cert. Because of the cost of certification,
smallholders’ only avenue for organic certification
is via forming an association, in which 300 holdings are certified
at once. Currently organic Guatemalan highland coffee sells
for $1.41 per pound of green, a higher price than the $1.26
Fair Trade rate. For coffee to be sold as certified organic,
the coffee processing plant must be certified organic as well.
Currently Rainiero’s associations pay processers for
this service. They are in the process of building four organic
coffee processing plants.
Rainiero’s consortium is also working to obtain Fair
Trade certification for the small-holder associations, via
Transfair. The main certification criteria is assurance of
payment of the Fair Trade price to producers. Since farmers
often need the money in hand immediately after harvest, credit
and partial up-front payments are part of the Fair Trade certification
program.
Much progress needs to be made to improve Fair Trade coffee
commerce, both at the producer end as well as the consumer
demand end, in order to bring about a consistent implementation
of improved producer-consumer equity. One challenge is that
the consensus amongst North American coffee buyers is that
the quality of Fair Trade coffees tends to be inconsistent
at best and inferior at worst, compared to the traditional
plantation coffee sold through private channels. Given the
sophisticated management needs for production of top quality
coffee, this is not surprising, and the challenge is for the
cooperatives to develop the management skills to consistently
produce high quality coffee.
Mike Roberts, owner (as well as barista) of Crossroads Café
in Panajachel, Guatemala, where one can buy possibly the best
cup of coffee in Guatemala, has worked in the specialty coffee
industry for nearly 20 years. Mike buys, blends, roasts, and
sells coffee on the specialty coffee market, and often buys
organic and cooperative produced coffee, but always tests
each lot. “When you have 300 farmers bringing their
coffee to one cooperative processing plant, if the management
isn’t right on top of things, just one or two bad batches
from one or two farmers can ruin the whole lot for selling
to the gourmet coffee market.”
Dan Fireside, a Cornell University graduate student doing
his Master’s degree thesis on Guatemalan cooperative
coffee maintains that there is a bias against cooperative
and Fair Trade coffee in the North American coffee buyer community,
and that more could be done to increase demand for coffee
from these sources. According to Dan, there are now associations
of cooperatives in Guatemala with an umbrella organization
in Guatemala City, the Federation of Coffee Growing Cooperatives
of Guatemala (FEDECOCAGUA) that does quality selection, cupping,
and marketing on a level as sophisticated as any of the established
private sector businesses.
Ultimately, the quality debate will have to be settled with
blind cuppings of Fair Trade coffees and privately produced
and traded coffees from the same region. So next time you
go to your favorite café for coffee, ask them if they
sell Fair Trade or organic coffee, and give it a try –
you may be pleased.
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