Guatemalan
Coffee News
The
price, processing and production challenges
of growing coffee profitably & sustainably in Guatemala
By
Don Lotter, for New Farm.
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.
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
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.
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.
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
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.
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
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%.
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!
Panajachel, Guatemala - April 15, 2003
http://www.newfarm.org/international/guatemala/coffee.shtml
Back
to Top
