Farmer Issues

The Rising C: Some Potential Hidden Consequences of Higher Prices

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Coffee in Peru

Coffee in parchment. Daily Coffee News file photo.

The recent green coffee market volatility can create a daunting situation for actors throughout the coffee supply chain. On the surface, rising prices are a good sign for farmer incomes, but the reality is that a rapid increase and volatility may make the situation more difficult for many cooperatives and smallholder producers in the longer term.

When C-market prices are historically low — as they had been throughout much of 2018, 2019 and 2020 — they can be expected to move back upward. Yet such volatility tends to cause actors throughout the supply chain — including roasters, importers, exporters, and producers — to counter with drastic measures, exacerbating price volatility.

What are some of the consequences of the most recent rise in the NY C-market price, and how might this impact producers in places like Peru, Brazil, Indonesia, Burundi or Rwanda, where peak harvesting season is approaching?

Deforestation can increase. Producers may become incentivized by higher prices to expand production into primary forested areas with the hope of increasing yields as soon as possible. Yet within the time it takes for a forest to re-grow, prices will ebb and flow many times over.

Coffee quality can suffer. When the market goes up, farmers are more likely to pick their crops and deliver cherry to mills as quickly as possible to take advantage of higher prices. Fast delivery can hamper quality due to lack of selective harvesting practices and meticulous post-harvest practices.

The rising C-market price may encourage strip-picking, meaning the amount of quality coffees available in later months can be diminished. The price differential between red, ripe selective harvests and mixed underripe selections is often not enough to justify selective harvesting when prices are presently high.

Private collectors become competitive. Cooperatives often struggle to afford coffee parchment from their members because they must compete with heavily financed, privately owned buyers who are able to pay higher prices without delay. This can strain cooperative structures and membership benefits.

Ed Canty, the general manager of the United States-based trading cooperative Cooperative Coffees, addressed this issue in a story on price risk management (PRM) tools way back in 2015.

“Independent smallholder organizations always need to pay producers a local expression of the current commodity price to collect coffee. If they do not, producers will sell to someone else,” Canty stated at the time. “Estates pay workers a rate that is not immediately tied to the commodity price of coffee. So their risk of not being able to collect coffee in a rising coffee market is greatly reduced. This allows many Estates to sign fixed price contracts without protecting against the risk of a rising market.”


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When market stability is higher, the tendency is for cooperative members to lean more on their organization for support and benefits. Stability in prices allows for selective harvesting throughout the harvest months, leading to potential increases in quality, which can in turn lead to higher consistent prices, and subsequently more cash for cooperative member benefits. The opposite can take shape when price volatility is higher.

Supporting cooperatives during a time where the C-market prices increase beyond the Fair Trade floor price ($1.40) is arguably as important as supporting cooperatives in times of low prices. Both swings potentially can disrupt the operations of a cooperative and its potential longer-term benefits to members.

Keeping cooperatives strong despite volatile price conditions requires buyers who are committed to maintaining or exceeding a higher floor price. Well-funded large buyers will always win the ‘race to the bottom’ price; yet not all buyers maintain the kinds of commitments cooperatives do to re-invest in those communities. The benefits often end once the C-market spike runs its course.

In addition to finding dedicated buyers, there are a number of price risk management tools that can help strengthen relationships between roasters, importers and cooperatives.

Kraig Kraft, previously of Catholic Relief Services and now with World Coffee Research, penned a series of articles addressing PRM tools and how they might help cooperatives achieve more financial stability.

In short, stability takes time, commitment, communication and trust — virtues that are difficult to come by in a volatile market in which producers have been historically positioned as “price takers.”


Editor’s note: This story was written for Daily Coffee News by Jon Ferguson, the North American Green Coffee Representative for the ElevaFinca Alliance of Cooperatives in Peru and Colombia. Daily Coffee News does not publish “paid content” or “sponsored content” of any kind. Any views expressed in this piece are those of the author and are not necessarily shared by Daily Coffee News or its affiliates.

Source: Roast Magazine

Isolation and Fear Among Myanmar Coffee Producers as Military Coup Wears On

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The Shwedagon Pagoda in Yangon, Myanmar. Photo by Susan Heller Evenson.

Hours before Myanmar’s new parliament was set to begin session on Monday, Feb. 1, Myanmar’s armed forces known as the Tatmadaw staged a coup d’état.

State Counsellor and de-facto leader Aung San Suu Kyi, President Win Myint, and other elected members and high-ranking officials of the National League for Democracy (NLD) — whose party had captured 83% (396 out of 476) of available parliamentary seats in the November 2020 election — were deposed and detained.

Citing electoral fraud, the Tatmadaw and its leader Min Aung Hlaing declared a one-year state of emergency, promised elections in a year’s time, and accused Aung San Suu Kyi of an obscure violation while keeping her under house arrest. On February 2, the military regime formed a military junta to rule the country, christening it the State Administrative Council (SAC).

Suu Kyi and the NLD encouraged the public to reject a return to military rule and a nationwide civil disobedience movement was born. With a three-fingered hunger salute as its icon, civilians protested the military coup through art, wearing the NLD color red, peaceful demonstrations, social media outreach, and through massive walkouts in multiple sectors such as schools, banks and hospitals.

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Coffeelands near Ywa Ngan in southern Shan State. Photo by Susan Heller Evenson.

The Tatmadaw has responded with crackdowns, killing an estimated 550 civilians, including children, as of this writing. The group has instituted social media blackouts, media blackouts, internet blackouts, a nightly curfew in larger cities, arrests, and the violent use of force during protests. With each passing day, more civilians are killed as the Tatmadaw — estimated at about 300,000 to 500,000 members in a country of 54 million people — continues its reign of terror with impunity.

As the military’s takeover marches into its third month, thousands of refugees have fled west to India and east to Thailand to escape the violence. Separately, over 800,000 Muslim Rohingya — one of Myanmar’s many ethnic minority groups — refugees remain in limbo in the world’s largest refugee camp in Bangladesh after the Tatmadaw began a bloody military campaign in Rakhine state in 2017 that the UN described as a “textbook example of ethnic cleansing” with “genocidal intent.”

As actors in a global coffee industry, it is important to recognize Myanmar’s complex history and myriad ethnic minority groups, rather than focusing solely on headlines related to these military actions. Continuing to do business with smallholder farmers in Myanmar — many of whom are a part of historically persecuted ethnic minority groups — has become even more critical in recent months as the broader political situation has deteriorated.

Coffee Backdrop

British colonists and missionaries introduced coffee to Myanmar in the 1880s, establishing small farms around the city of Pyin Oo Lwin in the Mandalay region. Commercial production never really took off, and when British colonial rule ended in 1948, coffee was typically sold in the local market at low prices or across borders in China, Laos or Thailand through unofficial channels.

In 2014, the commercial coffee sector was struggling, and specialty coffee was nonexistent. The country’s only dry mill was a government-run mill in Pyin Oo Lwin, and the few farmers who hadn’t abandoned coffee altogether were strip-picking cherry and selling it to the local market for next to nothing.

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Coffee drying at a wet/dry mill near Pinlaung, southern Shan State. Photo by Susan Heller Evenson.

In late 2014 a new era of coffee in Myanmar emerged through a 5-year USAID Value Chains for Rural development project implemented by Winrock International and supported by the Coffee Quality Institute (CQI) to motivate farmers away from opium poppy cultivation, improve coffee quality and processing, and provide business training and market access to smallholder farmers.

Atlas Coffee Importers (my employer) has been involved in Myanmar’s specialty coffee scene since 2014 through CQI and Atlas founder Craig Holt, and in 2016 imported the first specialty coffee containers from Myanmar to the U.S. market.

Roasters have enthusiastically embraced the coffees for their unique flavor profiles. Mandalay and Shan State produce the majority of the coffee in Myanmar. In Mandalay, most of the farmers own large estates, and primarily produce washed coffees as well as natural- and honey-process lots. Shan State producers are almost exclusively smallholders who typically own less than a hectare of land and produce natural-process and coffees.

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Coffee processing at a wet/dry mill in Ywa Ngan, southern Shan State. Photo by Susan Heller Evenson.

The Myanmar Coffee Association (MCA), founded in late 2014, has hosted a yearly coffee competition in Yangon since 2015, with the winning lots reaching the upper 80s. Specialty coffee production can be found in many regions across the country — Shan State, Mandalay, Chin State, Kachin State, among others — and there are at least five dry mills throughout the country. In 2019, annual total coffee production was estimated at 3,500 to 4,000 metric tons, or around 200 containers, with 400-500 metric tons being exported to the U.S., Canada, UK, France, Singapore, Australia, Russia, and elsewhere.

Despite reductions in demand in 2020 due to the COVID-19 pandemic, 2021 was poised to be a big year for Myanmar’s specialty coffee producers, with larger buyers taking notice of the unique story and cup profile.

The Coup + Coffee

In December 2020 and January 2021 I had been in regular communication with several producer groups as we confirmed contracts and shipping schedules for the year. Some groups were having their largest harvest on record and others were struggling with production due to a drought. Yet all were enthusiastically coordinating early-season samples and looking forward to economic stability after nearly a year of COVID-19, which had increased income-based poverty from 16% to 63% between January 2020 to September 2020, according to a study from the International Food Policy Research Institute (IFPRI).

Then the coup hit, bringing with it widespread fear of the future, concern for physical safety, and uncertainty for Myanmar’s future as a whole. For coffee producers who were in the middle of their harvest — which runs from late December/early January to the end of March — the pressing concern became whether or not they would still be able to generate income through coffee.

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Coffee growing under silver oak shade trees at an estate in Pyin Oo Lwin, Mandalay region. Photo by Susan Heller Evenson.

Widespread bank closings due to the civil disobedience movement made access to finance difficult. Some farmers understandably sold their coffee cherries to the local market in order to access cash quickly. Roadblocks went up, and the Tatmadaw imposed daily internet blackouts. I was still able to communicate via email and WhatsApp with our partners while navigating the changing blackout times. DHL in Yangon — the primary means to send samples — is closed through April 20, forcing many of the groups to use alternative routes to ship samples.

In addition to economic uncertainty, producers have shared with me and my colleagues feelings of deep sadness and fear, with many not leaving the house at night or avoiding public transportation. Blackouts and media crackdowns have further caused emotional, political and technical isolation.

Through it all, cherries keep ripening and producers keep processing coffee, not knowing whether their efforts will pay dividends,

Multiple countries, including the United States, have already issued sanctions against specific military personnel. On March 29, United States Trade Representative (USTR) Katherine Tai announced the “suspension of all U.S. engagement with Burma under the 2013 Trade and Investment Framework Agreement (TIFA), effective immediately.”

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Coffees drying in Mandalay region. Photo by Susan Heller Evenson.

The announcement was a largely symbolic gesture — Myanmar is not a big U.S trade partner — and two-way trade with Myanmar is still allowed and with no current restrictions on U.S. imports from Myanmar. However, the USTR is also likely to reassess Myanmar’s eligibility for the Generalized System of Preferences (GSP) program, which allows for tariff-free access to the U.S. market for certain goods. With generally low yields and a higher cost of production, coffee producers in Myanmar already struggle to compete with price on the international market; additional tariffs could have catastrophic effects on demand.

On March 31, my colleagues and I arranged a call between five different producer groups and our roasters — a tiny technological miracle. I ended the call with a sense of hope about the strength of relationships and the viability of exports for the year, reminding myself that coffee usually finds a way because people usually find a way. The next morning I received an urgent WhatsApp from one of the producers with the news that the SAC “ordered internet service providers to shut down wireless broadband providers until further notice. They are keeping Myanmar in darkness & away from the world by cutting all telecommunications channels. WE NEED YOUR HELP. #WhatsHappeningInMyanmar #Apr1Coup.”

Since then I have only been able to communicate with one associate in Myanmar via WhatsApp. Producers who live in regions with a complete internet blackout are using cell phone calls to communicate amongst each other as they continue to process coffee. Witnessing the Tatmadaw ramp up its efforts to snuff out all communications in order to retain total control is devastating. An expert from the think tank the Lowy Institute shared that Myanmar is on the brink of being a “failed state” and that the international community needs to step up its to bring stability to Myanmar.

Where Do We Go From Here?

The outcomes don’t look good. China and Singapore, major trade partners with Myanmar — Singapore was the largest foreign investor in Myanmar last year, followed by Hong Kong — are unlikely to sanction Myanmar’s military personnel or trade in a way that would induce a return to a democratically elected government.

While it’s important for the U.S. and other international governments to publicly condemn Myanmar’s military, suspending a trade agreement is — as my husband and I tried to explain to our 4 -and 7-year-old over the dinner table — like a distant relative you barely see saying, “If you don’t behave, you won’t get dessert at my house.”

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Producer home nursery, southern Shan State. Photo by Susan Heller Evenson.

We cannot force countries and companies who bankroll the Myanmar military to threaten “no dessert” for continued bad behavior. Appealing to the Tatmadaw on the basis of humanity is futile as they see themselves as the guardians of a country and its way of life, and are socially isolated from civilian life, with their own schools, internet, banks and hospitals.

We can, however, act through continuing to pressure our elected officials. Meanwhile, coffee producers in Myanmar continue to process coffee and prepare it for export, hopeful that their country’s return to democracy — however fragile — is on the horizon.

We must do what we can do help our friends and partners in Myanmar. They have asked our community for help, and we must respond.

Act

Please consider taking five minutes to write your elected officials by going to https://democracyformyanmar.org/. There’s a look-up tool by address (if you are in Australia, Canada, Germany, Norway, Sweden, the UK, and the U.S.) and a message to copy/paste to your officials.

Source: Roast Magazine

Exploring the Possibility of Florida-Grown Coffee

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Researchers are exploring the potential of coffee growth in areas currently suitable for citrus growth.

For centuries, coffee has been grown between two somewhat arbitrary lines above and below the equator. The stretch between roughly the 23.43°S and 23.43°N parallels — also known as tropics of Capricorn and Cancer, respectively — is also often referred to as the “coffee belt.”

Countries with large swaths of land within this boundary — Brazil, Colombia, Ethiopia and Vietnam, and dozens more — have historically dominated the production of coffee that then travels to points farther north or south for consumption.

Yet what happens when we consider the artificial nature of these boundaries? Is it possible to grow coffee outside of these latitudinal restraints?

The short answer is yes. With reasonable conditions, a coffee plant could grow inside a home anywhere in the world. In one extreme example of how coffee growth in controlled conditions is feasible, South Korea’s Paldang Coffee Farm has maintained some 800 coffee plants for more than a decade within greenhouses at roughly the 37°N parallel.

Yet commercial coffee production continues to take place almost exclusively within the coffee belt, where consistently better conditions for temperature, light and rainfall promote proper development of fruitful coffee plants.

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Coffee growing in Brazil. Photo by Jonas Ferraresso.

Thus, it may not be advisable to grow coffee in the potato fields of England. But what if we step outside these lines just a little bit? An increasing number of groups have been exploring this question — particularly with an eye on commercial cultivation — and some answers are to beginning to emerge.

Coffee Fields in the United States

Growing coffee in the U.S. is not new. Hawaii has been harvesting berries for more than a century at roughly the 19°N parallel within the coffee belt, finding broad commercial success along the way.

A more recent example of coffee cultivation has been taking place in California over the past decade, where the private group Frinj Coffee has been leading a network network of farmers and finding encouraging results regarding quantity.

This has taken place in the hills near Santa Barbara at roughly the 34°N parallel, where there is about 17.7 inches (450 millimeters) of annual rain and periods of low temperatures from November to April. Such conditions and associated costs are likely to challenge cultivation on a large scale.

One more interesting coffee cultivation destination has recently emerged from the continental United States, at a point that’s even closer to the coffee belt at about the 28°N parallel: Florida.

Understanding the Needs of the Coffee Tree

Worldwide, the two main coffee species cultivated for commercial consumption are Coffea canephora (robusta) and Coffea arabica (arabica). With robusta preferring hot and wet climates and arabica favoring milder climates, arabica tends to be the focus when cultivation is considered outside the coffee belt — i.e. farther away from the equator.

Originating in the mountains and forests of Ethiopia, the arabica species is cultivated in dozens of countries. Over the years, hundreds of varieties of this plant have emerged through the hands of breeders, farmers or by nature itself.

Each variety has some unique characteristics such as size, productivity, resistance to drought, nutritional needs, resistance to pests and diseases, resistance to low temperatures, quality, and more. Some of the best-known varieties are Caturra, Bourbon, Gesha, etc.

Here I’d like to explore some basic components of arabica cultivation and how it might look in or alongside the citrus groves. Keep in mind, variability is to be expected here, especially given the unique conditions of the Sunshine State:

ripe oranges

ripe oranges

Sunlight: Arabica coffee grows well in shade conditions, although it likes to receive at least 6 hours of light per day, and up to 11-14 for maximum production. That would be feasible in most of Florida, where there is roughly 9 hours of sunshine in December and 15 hours in June. Technologies such as intercropping could filter light and assist farming if the sun is too intense.

Temperature: An adult coffee tree grows well at temperatures between 62.6°F (17°C) and 73.4°F (23°C); however, it can tolerate minimum temperatures of 50°F (10°C) and maximum of 93.2°F (34°C) without major damage to the plant. For short periods some varieties of arabica can tolerate 35.6°F (2°C) without major problems. In the central region of Florida where oranges are grown, the temperature range is between 48.2°F (9°C) and 91.4°F (33°C), which might be suitable for coffee growing. Microjet systems already used in Florida citrus could be adapted to provide temperature control for young coffee trees.

Rain: In places like Polk City, an important producer of citrus fruits, the rainfall average is above 47 inches (1200 millimeters), and distributed throughout the year. The coffee tree develops and produces well with annual rainfall between 1,200 millimeters and 1,800 millimeters, but with volumes of only 800 millimeters, good results can still be achieved. Irrigation could be a solution in the event of drought.

Altitude: Coffee is well known for being produced in high-altitude conditions, to which Florida cannot lay much claim. However, plant growth can succeed if other critical conditions are met, and flatter terrain could potentially facilitate the use of machinery to reduce labor costs.

Soil: This would be one of the biggest challenges, as the Florida citrus region is characterized by sandy soils, mostly Spodsols and Entisols of marine origin. These soils have good water drainage and low nutrient retention. To meet the needs of coffee plants in their different stages throughout the year — growth, flowering, granulation, maturation, etc. — new models for well-structured and fertilization and soil management systems might need to be devised.

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Photo by Jonas Ferraresso.

Could the Coffee Taste Good?

This is one of the most complicated topics in modern coffee cultivation, since coffee quality is the result of a huge number of interrelated variables. Some field variations are fertilizers, management, genetics, temperature, rain, sunlight, etc. After that, variables affecting quality include post-harvest technologies such as drying method, drying speed, type of processing, type of fermentation.

The final stage in quality assessment will come through roasting and brewing, where all those previous factors will come to bear on the finished cup. We don’t yet have an idea of what Florida coffee might “taste” like, but the prospect is intriguing.

Researchers at the University of Florida/IFAS Plant Science Research and Education Unit in Citra are already carrying out the first tests to study the feasibility of coffee cultivation in Florida’s citrus-growing region. These may be the first steps towards making “Florida-grown coffee” a reality.

Source: Roast Magazine

Women in Coffee Project Profile: Melanie Herrera

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(Editor’s note: This is part of a series of interviews featuring women taking part in the inaugural Women in Coffee Project panel discussion next month in New York City. The…