December 2018 | Vol. XXXI No. 8 www.coffeetalk.com
THIS MO sue Special Is
WHAT'S THE PROBLEM? WHAT'S THE SOLUTION?
An insider's view on what is happening in the specialty coffee industry, directly from its own members.
• Revitalizing Mexico’s Specialty-Coffee Industry, Liam Brody, Sustainable Harvest • Old Roastery Permits. New Environmental Rules, Scott Stouffer, Vice President, Probat Inc. • Taking the Necessary Steps to Ensure a More Sustainable Future, Olga L Cueller G, Sustainability Strategy Leader, S&D Coffee & Tea • 2018 Year in Review: Communication is Key, Kellem Emanuele, President, International Women’s Coffee Alliance (IWCA) Global Board of Directors • It’s Gonna Be OK! – We Can Deliver On The Promise!, Rocky Rhodes, International Coffee Consulting Group • True Sustainability or Short-Term Profits?, Ashley Prentice, Entrepreneur and Coffee Producer • Putting the Special Back in Specialty, Erin Meister • China – A Coffee Culture Blooming, Yunnan International Coffee Exchange • Going Forward - David Browning, CEO, Enveritas
ur Annual State of the Industry Report is your chance as a coffee-related professional to explore our industry leader’s opinions on changes, challenges, and opportunities coming our way in 2019. Topics cover globalization, industry consolidation, industrial automation, customization, and depersonalization. Everyone’s story is different. Each of us approaches the coming changes and challenges from our unique perspective depending on our role in the Industry, but we are also all in this boat together. Being informed, looking for new ways to do the same old thing, being competitive in the modern world, without exploring these there is no chance for survival. Please enjoy the stories and thank you again to the industry icons who care and share. • Bolstering the Foundation, Rick Peyser, Sr. Relationship Manager, Coffee & Cocoa, Lutheran World Relief • State of The Industry 2019, Steven Mangigian Managing Partner, Zingerman’s Coffee Company Ann Arbor, Michigan • Raising The Cup, Marianella Baez Jost, Specialty Coffee Producer, Finca Café con Amor and Founder of Farmers Project – Naranjo, Costa Rica • November Trade Shows Reveal Much About The State of the Coffee and Water Service Industry, Ken Shea
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Bolstering the Foundation Rick Peyser, Sr. Relationship Manager, Coffee & Cocoa, Lutheran World Relief
State of The Industry 2019 Steven Mangigian, Managing Partner, Zingerman’s Coffee Company, Ann Arbor, Michigan
Raising The Cup
Marianella Baez Jost, Specialty Coffee Producer, Finca Café con Amor and Founder of Farmers Project – Naranjo, Costa Rica
November Trade Shows Reveal Much About The State of the Coffee and Water Service Industry
Revitalizing Mexico’s Specialty-Coffee Industry
Old Roastery Permits. New Environmental Rules
Taking the Necessary Steps to Ensure a More Sustainable Future
Liam Brody, Sustainable Harvest
Scott Stouffer, Vice President, Probat Inc.
Olga L Cueller G, Sustainability Strategy Leader, S&D Coffee & Tea
2018 Year in Review: Communication is Key Kellem Emanuele, President, International Women’s Coffee Alliance (IWCA) Global Board of Directors
It’s Gonna Be OK! – We Can Deliver On The Promise!
True Sustainability or Short-Term Profits?
Putting the Special Back in Specialty
China – A Coffee Culture Blooming
Rocky Rhodes, International Coffee Consulting Group
Ashley Prentice, Entrepreneur and Coffee Producer
Yunnan International Coffee Exchange
Going Forward David Browning, CEO, Enveritas
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Sponsors Index Company.........................................................Phone........................... Web................................................................ Page Add A Scoop / Juice Bar Solutions Inc..........................(415) 382-6535........................ addascoop.com.............................................................................23 ASHE Industries LLC-Fluid Bed Coffee Roasters.......(844) 722-4968...................... ashellc.com........................................................................................ 9 Brewista........................................................................................(307) 222-6086...................... mybrewista.com.............................................................................31 Bühler Inc.....................................................................................(763) 847-9900...................... buhlergroup.com...........................................................................15 C2 Imaging/ Identabrew.......................................................(888) 872-7200...................... c2spark.com/beverage-dispenser-branding/.................... 6 Cablevey Conveyors................................................................(641) 673-8451......................... cablevey.com...................................................................................13 Coffee Holding Company.....................................................(800) 458-2233...................... coffeeholding.com......................................................................... 5 Costellini’s....................................................................................(877) 889-1866........................ costellinis.com.................................................................................. 6 Don Pablo Coffee Roasting Company............................(305) 249-5628...................... cafedonpablo.com........................................................................19 Fres-co System USA, Inc.......................................................(215) 721-4600........................ fresco.com..........................................................................................7 International Coffee Consulting.........................................(818) 347-1378......................... intlcoffeeconsulting.com............................................................ 21 Java Jacket.................................................................................(503) 281-6240....................... javajacket.com............................................................................ 6, 11 Primera Technology Inc.........................................................(800) 797-2772....................... primeralabel.com..........................................................................25 Shore Measuring Systems....................................................(765) 769-3000...................... moisturetesters.com.................................................................... 27 Texpak Inc | Scolari Engineering........................................(856) 988-5533....................... scolarieng.net............................................................................ 3, 35 Tightpac America Inc.............................................................(888) 428-4448...................... tightvac.com..................................................................................... 6 WaterWise...................................................................................(865) 724-1200....................... waterwise.pro.................................................................................29
For complete and updated show information visit our online calendar: http://coffeetalk.com/industry-calendar/
SCA Origin Trip to Yunnan
Winter Fancy Food Show, San Francisco, CA, USA
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Bolstering the Foundation by Rick Peyser, Sr. Relationship Manager, Coffee & Cocoa, Lutheran World Relief
he powerful impact of a volatile coffee market has once again catalyzed concern about the long-term sustainability of our industry. While the recent low prices are robust in comparison to those experienced in 2001, when the “C” dipped to forty-five cents, prices have again fueled migration from the coffeelands to urban centers and neighboring countries. Watching the news, it is hard not to wonder how many coffee farming families from farmer organizations we know have joined the migrant caravans heading north to the U.S. border to seek asylum and to start new lives. For decades we, as an industry, have proudly differentiated ourselves from our brethren more focused on commercial-grade beans by sourcing high-quality coffees that have frequently included sustainable attributes like certifications. Over this same time, our industry has been recognized as a leader for its focus on sustainability, which has brought new information and healthy debates that have informed all members of the coffee supply chain about the challenges we face relating to farming practices, fair wages, labor conditions, gender, food security, youth, climate change and much more. Despite these efforts, untenable coffee prices and economics on the farm are continuing to take their toll at origin and are contributing to the accelerating exodus of young people from the farm who are seeking better opportunities. Our industry relies upon a consistent supply of high-quality coffee. Many small-scale coffee farmers devote nearly all of their land to coffee production and are entirely dependent upon income from coffee to purchase everything their families need, including food. In times of lowto-moderate coffee prices, they just cannot make ends meet.
While market prices have been erratic, farmer production costs have steadily increased. During a recent (November 15, 2018) SCA “Farm Profitability and Prosperity” webinar, panelists shared that production costs vary by location and can range from $1.15 to $1.50 or more per pound when good agricultural practices are employed. Ironically, as green coffee market prices fell 11.1% during the 3rd quarter of 2018 to well below costs of production, retail prices rose by almost 6 percent, according to the Specialty Coffee Retail
Price Index (SCRPI) developed by researchers at Emory University’s Goizueta Business School.1 Many well-intended government and private sector programs have put a strong emphasis on helping coffee farmers increase their yields and the quality of their coffee, which in an ideal world, should increase farmer income and profitability. For decades this approach has met our industry’s need for improved supply, moderate prices, and ever-higher quality. Yet farmers have continued to struggle to sustain themselves and their families. While these programs have been successful in boosting production and quality, farmers have remained vulnerable to unpredictable shocks that can quickly neutralize these programmatic advances, including the impacts of more frequent and powerful climate-related events and market instability. With all beans in one canasta, and faced with rising production costs, erratic market prices, and the impacts of a rapidly changing climate, is it any wonder that young people are looking to build their future elsewhere? Despite the benefits of these programs, most small-scale coffee farmers have not seen an appreciable improvement in their livelihoods, and they continue their struggle to meet basic needs. As our industry has increased its focus on sustainability, millions of coffee farming families around the world remain focused on sustenance – on having enough nutritious food to make it through the “thin months” that arrive every year with the rainy season. Beyond food, coffee farming families and communities remain challenged to access clean water, healthcare, educational opportunities for their children and more. Coffee farming families are the foundation upon which we have built our industry. The needs of this foundation and the systemic economic imbalance that has evolved in our supply chain need to be addressed, if we are serious about the long-term viability and sustainability of our industry, from tree to cup. Where do we start? Let’s allow ourselves the luxury of taking the long view and consider what may be best for the future participants in our industry decades from now. While many excellent suggestions have been made by others, I offer these for your consideration:
• It is time to address the elephant on the table: the “C.” The current reliance on the “C” as the pricing benchmark is not working well for buyers or for farmers. Pricing discussions among competitors in our industry are verboten. However, could the SCA convene a task force to come up with concrete recommendations for a pathway to move this needed discussion forward – to reform the current system or move beyond the “C”? • Can transparency become mainstream, so that true costs are visible from the farm to the cash register? This may help accelerate moving away from the “C.” Some roasters have already voluntarily started to share trade information, not only relating to the price they paid for green coffee, but what this price represents as percentage of a coffee’s retail sale that goes back to origin. (See Transparent Trade Coffee: www.transparenttradecoffee. org).2 Let’s include environmental and social metrics in this effort as well. • Let’s design and implement projects with farmers to help them maximize their profits from coffee and build their resilience to market, weather, and other shocks through on-farm diversification and market linkages for their new products. This approach will reduce risk and provide farmers with income they need to invest in their families, their communities and their coffee production over the long-term. While the climb ahead is steep, there is no industry more willing and better prepared to take on these challenges than ours. Let’s get to it! Footnotes: 1,2 - Transparent Trade Coffee: www.transparenttradecoffee.org
Rick Peyser, Sr. Relationship Manager, Coffee & Cocoa Lutheran World Relief
State of The Industry 2019 by Steven Mangigian Managing Partner, Zingerman’s Coffee Company Ann Arbor, Michigan
ver the course of the last several years I have written for this publication about the state of the industry. In one article I wrote about the ushering in of the 4th wave of coffee and how this “wave” would be grounded in the reversal of the historical customer experience. As the customer becomes more educated, they will learn to express their preferences and we, the specialty coffee providers, need to be prepared to “get the customer what they want.” We must build relationships to ensure the customer views us as approachable. Otherwise, we are unable to encourage the customer to experiment with new and better coffees.
somewhere in between. In my experience, what we are observing right now is a shift. The roasters mentioned above have crossed the line into “mainstream” leaving a space for the smaller artisans to hone their skills to create the next disruption. Remain True to Your Message/ Embrace “The Road Less Traveled” As a business owner, I need to consider the impact of larger players coming into what was previously a “safe space” and use these potential
For context, I am a small wholesale roaster of specialty coffee with a retail cafe as well as a large base of retail customers. When I consider the state of specialty coffee my mind centers on what appears to be an interesting dichotomy: the beginning of the commoditization of specialty coffee AND the increasing accessibility of specialty coffee to the general consumer. Is It Evolution or Revolution? It is evident that specialty coffee has and is becoming BIG business. The attention of multinational giants such as Coke, Pepsi and JAB Holdings have been newsworthy. Their entry into this market suggests that high-end specialty coffee and items such as cold brew and nitro will become consumer mainstays. Their current strategy of entry into this segment has been through acquisition or capitalization of existing ventures and leverage those brands to establish a foothold in the market without building their own product. Companies such as Stumptown, Intelligentsia, Blue Bottle and La Colombe are notable examples. The other side of this dichotomy is that specialty coffee is much more accessible in virtually all formats from just a few years ago. If you were to walk through a small neighborhood in Brooklyn five years ago touting one or two specialty coffee shops, that same neighborhood now supports six to eight. The question is, is this proliferation of accessibility a function of acquisition and capitalization or a backlash from smaller artisan producer’s intent on preserving the specialty nature of coffee? Is it evolution or revolution? 10 I have learned that the truth probably falls
“threats” as opportunities to differentiate, innovate, evolve and improve. If I do so, I conclude that WE become the disruptors and shape our future and destiny. As business owners, it is OUR job to listen to the tiny seismic shifts, make the necessary course corrections, focus on being great rather than being big and let the rest of it fall into that space we call “white noise”. Foundationally, principled roasters of specialty coffee have always been passionately committed to being “about the coffee”, “not selling out” and delivering a personalized and customized guest experience. This philosophy is one of the factors that has built the barrier, kept the big players out and has separated specialty from commercial/ commodity. After all, many would agree one cannot (or it is very difficult to) replicate craft and preparation of some of the finest beverages our palates have ever experienced in a commercialized fashion. That barrier to entry has lowered or has at least shifted, and the next several years will likely see a new landscape unfold. Private equity and venture capital are now as common in coffee as it was
during the internet boom. Some companies have succeeded, but many have failed. “Social Listening” And The Impact of the Generations Other considerations are the consumptive patterns of the generations (baby boomers, millennials, gen Z, etc.). Now, obviously, generational conclusions are not always 100% true for each person in that age group but they allow us to consider some interesting differences. Baby Boomer patterns come out of the early days of commercial coffee (diner coffee, office coffee, etc.) Their desire for convenience over quality drove the rise of K-cups and to a lesser extent, Nespresso capsules. Only the later boomers have caught the “bug of specialty”. Previously, the specialty experience was “a treat to be enjoyed over the weekend”. Millennials and Gen Z on the other hand, explore and educate themselves in understanding great coffee, unique preparation trends and the beauty in the presentation in the cup itself, as demonstrated through social media platforms, such as Instagram, twitter, and reddit, dedicated to coffee and the rise of coffee influencers who share insights with millions of followers. In 2018 alone, “coffee” has been mentioned over 36 million times across these particular social channels. Furthermore, millennials will not tolerate the environmental impact that K-cups and Nespresso capsules leave behind. Social listening through data analytics and the rise of artificial intelligence to capture a clearer understanding of generational desires will be at the forefront of exploration in years to come in this industry. As always, our industry has many challenges and opportunities. In my experience, those of us that have the ability to identify and assimilate sustainable business from short term trends will stand the test of time. If we focus on the fundamentals of successful business practices, such as delivering craft coffee with an attentive experience, building relationships from the producer to the end-user and pay attention to social listening to ensure that we understand the desires of the next generation of coffee enthusiasts we will be poised to capture and be in the best position to capitalize on whatever shifts the industry encounters in the future.
Raising The Cup
by Marianella Baez Jost, Specialty Coffee Producer, Finca Café con Amor and Founder of Farmers Project – Naranjo, Costa Rica
s a member of the coffee industry, I am very thankful for the ongoing conversation regarding the current coffee pricing crisis. As a small producer of specialty coffee, I join the majority of farmers around the world who are considering hanging up the hat. We are facing an evergrowing demand for increased cup quality, differentiation, innovation, and sustainable practices while staring at the undercutting of coffee prices with no light at the end of the tunnel. Many of us are questioning the viability of farming as a long-term investment. The reality is stacking the odds more and more against farming, and I’m afraid that those who have other choices, will soon flee the coffee fields for more financially sound activities or jobs. Let’s be honest, “Sustainability” is for the land; “profitability” should be for the people who work on it. If the pricing model for Specialty Coffee does not parallel the added expectations and extra effort it takes to produce it, there is little motivation or return on investment to sustain Specialty Coffee farming. This is not to say that coffee is at risk of extinction, however; small farmers are. The trifecta effects of climate-change, low prices and the Internet are picking up speed like a small tornado, and are beginning to leave a path of damage behind. You may wonder, “why is the Internet a part of this trifecta”? Even though the Internet has contributed many positives to farming, it has also allured the new generation of would-be farmers away from agriculture. With laptops and smart phones available in 12 every corner of the world, young people are
It is not a cure for all the coffee pricing ailments, but an important and timely step in the right direction.
being introduced to new possibilities and understandably tempted to pursue the potential of a much better life than their parents. While all these challenges have become the hot topic for sustainability lectures, webinars, forums and reports, action is not happening fast enough. Many green coffee buyers don’t know how, or perhaps don’t want to step out of the “undercutting pricing” game. When the competition down the street is getting cheap specialty beans (devaluated by the unfair forces of the C- Market), many buyers give into sourcing “good deals”, to follow the path of short gains, further eroding prices by disregarding the real value of quality. Meanwhile, small specialty coffee producers continue to feel the side effects of the “bargain” price epidemic, bearing the brunt of it, while everyone else enjoys discounts, and shopping for sales. There is no easy solution. The good news is that the Specialty Coffee pricing crisis is fixable; the bad news is that we only see a slow start, much like a grassroots movement. This movement is being led by honest and noble people who value the future of Specialty Coffee as a whole.
This positive movement is taking root on utilizing a new pricing benchmark, a new starting point for Specialty Coffee completely independent of the C-Market. This is an “S” Market model, where pricing is based on the quality of Specialty Coffee and more directly correlated to the cupping score. This approach is the fair differentiation that Specialty Coffee farmers deserve, it brings more transparency and fairness to the table, literally. As producers, we are told that to participate in the world of Specialty Coffee, our beans must score 80 + points. At origin, cupping is becoming part of our own process to evaluate the quality of our product so we can learn and do everything possible to improve cupping scores. We welcome an “S” market model where pricing negotiations start at the cupping table, far away from the conventional market. If an 80+ is the entry point for Specialty Coffee, those who know farming and export costs would agree that the parallel entry price point should begin at around $2.50/LB FOB, regardless of the country of origin. Raising the pricing benchmark and treating Specialty Coffee like the delicacy it is, is the only way we can ensure the sustainability of Specialty Coffee farming and the profitability of the farmers who are still willing to raise the cup. If you agree with this solution join the movement, if not, I just hope you agree with the fact that it is time to switch gears from discussion to action. Higher expectations for Specialty Coffee must go hand in hand with higher value. Raise the cup!
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November Trade Shows Reveal Much About The State of the Coffee and Water Service Industry by Ken Shea
yield them more than double the profit that my company was enjoying.
cheduling two trade shows the same week always makes for a strenuous but stimulating sojourn. As I pen this article, I am less than one week removed from attending both the NAMA Coffee, Tea and Water Show in New Orleans and the National Association of Blind Merchants’ BLAST event in San Antonio. Both were very well attended and chock full of industry impacting consumables, water and brewing equipment on display….and news. Where are “Cup” Sales Heading? Interacting with a number of OCS operators at CTW, most everyone concurred that while Brew by Pack single cup brewing remains extremely popular, led still by Keurig Green Mountain (now a part of Dr. Pepper Snapple) there continues to be downward pressure on pricing. This is being driven by e-commerce giants Amazon and Walmart, the emergence of more value brands and lastly, price based operator competition. The resulting race to the pricing basement has resulted in more operators, both DSD and E-commerce, not renewing their KAD (Keurig Authorized Dealer) agreements and opting to rebuild their cup programs around offerings often being purchased below the 25 cent per serving mark and with modest minimum purchase requirements. More significantly, there is a growing wave of interest in Bean to Cup brewing as the primary vehicle to deliver single cup beverages to the office place. These eyes viewed brewing systems ranging in price from $3,000 through $7500 that offered differing multiples of bean canisters and water soluble hoppers providing blending combinations that will satisfy most any taste preference. The beverage quality delivered by these systems is superb! Bean to Cup Wave – On the product side, the number of whole bean offerings were ample. From recognized coffee shop and retail brands to private label programs, you could find it all. The brief show hours made it difficult to devote ample time at each booth but operator sample bags appeared to be stuffed with literature for follow up. As noted earlier, asset costs of entry are significantly higher than with the cup style brewers but most concur that a full return on asset investment should be satisfied between 14 18-24 months. Many operators suggest that
rental revenue ranging from $50 - $150 is achievable in a number of markets. Same Account Sales Heading Northward – The bigger story lies beyond the cup. The majority of operators with whom I visited were sharing success stories of building incremental same account revenue with snacks, RTD drinks even fresh food. Much of this is being subsidized by the employer, eager to keep employees at their desks and happy. In those offices where the expanded offerings are not provided free, there are a variety of cashless payment applications and solutions that facilitate the return of the sales proceeds to the employer, thus funding the on-going product replenishment. Herein lies both the opportunity and danger for the operator. Vending operators that have Coffee Service businesses have an advantage in that they already have well developed snack and drink menus for their Vending and Micro Market businesses that can and are being offered to OCS accounts. While some “OCS and Water only” operators have identified the opportunity and have been enjoying these accretive dollars, many OCS operators have made little or no efforts to provide snacks and drinks to their customers. The opportunity is a ticket building opportunity that is huge. The danger is that there could be dramatic account loss where demand for snacks and drinks is not being met by the service provider. This dynamic reminds me of the early nineties when Mars Drinks introduced their Flavia systems. Like some other operators, my company opted to take a more defensive approach, bringing in the Flavia systems only when we sensed accounts were in jeopardy. Unfortunately, most of the time we became aware of the potential loss while we were pulling our batch brewer as our competition placed their shiny new Flavia system, which would
A Blast at BLAST – During the back half of CTW week, I participated in a panel and trade show at BLAST, an annual event supporting the National Association of Blind Merchants. While I have not yet heard official attendance figures, I can confidently report that at least 300 were in attendance for the Thursday morning speaking sessions where trends and opportunities were explored beyond the business supported by the Randolph-Sheppard Act. The Vending Facility program under RSA, enacted into law in 1936, was intended to enhance employment opportunities for trained, licensed blind persons to operate facilities within governmental properties. RSA operators consistently receive high marks for their service and maintain quality relationships with the decision makers. This opens the door quite wide for the coffee and water business. Historically, most of these operators have not pursued coffee and water service. Under the leadership of NABM President Nicky Gacos and his Board of Directors team, that is changing. Many operators have already begun to site survey the buildings for these new opportunities. Could we see a shift in market share? One thing is for certain, the opportunity is there for NABM. In summary, I have never witnessed a more exciting time to be a Coffee and Water Service operator. Similarly, there is a lot white space for snack and RTD drink suppliers within the office environment. But on the other hand, times could prove to be perilous for the overly timid. Observe your competition. Listen to your customers! Until next time - Ken
Ken is President of Ken Shea and Associates and also serves as V.P. of Coffee Service for G&J Marketing and Sales
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Revitalizing Mexico’s Specialty-Coffee Industry by Liam Brody, Sustainable Harvest
exico is a beautiful and sprawling nation, with ample arable land on which farmers grow a wide range of crops. One of these key crops is coffee, as Mexico boasts more viable land for coffee cultivation than all of Central America put together. However, Mexico’s coffee industry has been struggling in recent years— the country currently produces 2.5 million bags of coffee compared to 4.5 million in 2013, and in 2016 it produced 35 percent of the output of one Central American nation, Honduras. There are several reasons for this recent downturn in Mexico’s coffee production. Only a few years ago, barely 23 percent of Mexico’s coffee plants were resistant to the world’s most important coffee disease, coffee leaf rust (also known as la Roya). Its productivity per hectare remains the lowest in Mexico and Central America; its processing technology and equipment are antiquated; and its production and commercial systems are highly fragmented. Given Mexico’s traditional varieties of trees, coffee farmers were extremely vulnerable when the Roya outbreak arrived in 2016, decimating production. While Mexico’s coffee industry has been struggling in the wake of Roya, many coffee professionals there also credit the outbreak as providing a necessary “wake-up call” to bring the country into 21st-century coffee production. Responding to this call are the resilient farmers in the coffee-farming communities of Mexico. Smallholders there have spectacular topography, employ well-honed processing methods, and come from a rich culture dedicated to quality and detail. By drawing on these attributes and support from Mexico’s Agriculture Ministry, SAGARPA, many have been able to revitalize their farms through successful Roya-recovery and plant-renovation efforts. But there is still 16 a long way to go for this coffee giant to return
to its former prominence as a top production origin. As the home to our first office and many of our producer partners, Mexico is near and dear to our hearts, and it has been important for us to get involved directly in helping the country’s coffee sector with its recovery. One way we’ve done that is by spotlighting Mexico in our La Lucha line, which connects enterprising, quality-driven producers who are disconnected from specialty markets with leading roasters. In the aftermath of cooperative collapse resulting from the Roya outbreak, many specialty-coffee farmers in Oaxaca have lost their market access. To honor the resilience of these farmers and bring their exceptional coffees to market, we’ve given La Lucha coffees from Oaxaca a special designation: La Lucha Single Village Coffees. The sales of these Single Village offerings directly support the dedicated coffee producers and revival of Oaxaca. The Single Village Coffees are just one recent effort we’ve made to support Mexico coffee growers. At Let’s Talk Coffee 2018 in September, Sustainable Harvest announced a comprehensive new program in Southern Mexico with the InterAmerican Development Bank (IDB) to help smallholder farmers increase their profitability and resilience by giving them access to cuttingedge science, technology, and training. The program focuses on four key elements:
- Establishing World Coffee Research Verified nurseries to give farmers access to high-quality, climate-smart planting material that is disease-free, genetically stable, and conforms to the variety standard. - Creating a tool and providing training to help smallholders make costeffective decisions that help them increase profitability in the face of climate change. - Developing and refining information-management systems aimed at improving social, environmental, and core business performance. - Integrating smallholder farmers into traceable, transparent supply chains with premium pricing. The program will be executed in conjunction with leading experts, including World Coffee Research, the Committee on Sustainability Assessment (COSA), and SAGARPA. “The recent crisis in Mexico’s coffee sector, brought about by la Roya and other factors, has caused significant hardship for farmers and other stakeholders across the country,” says Vera Espindola Rafael, who works in sustainability and shared value at SAGARPA. “It has taken collaboration from a broad range of partners to make headway in solving these challenges, but I’m heartened to see how much progress has been made in helping our nation recover. The recent project with IDB and Sustainable Harvest will make our resilient coffee sector even stronger.” We at Sustainable Harvest will continue to work closely with smallholders to help Mexico regain its coffee-producing prestige and support farmer livelihoods, and we welcome your support. If you’re a roaster interested in becoming part of Mexico’s revival by purchasing coffees from these inspiring farmers, or an impact organization interested in collaborating with us, please get in touch at Revival@ sustainableharvest.com.
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Old Roastery Permits. New Environmental Rules by Scott Stouffer, Vice President, Probat Inc.
n my job I visit many coffee roasting plants ranging from small to large and new to old. At many older and smaller roasting facilities, I find roasters operating with no pollution control equipment or with pollution control equipment that is not functioning properly. When I inquire about the functional state of this equipment, I frequently receive an answer like, “My roaster is grandfathered.” My reply to this is short: “You are living a lie! Your roastery is one complaint away from a ‘Consent Order’ or a ‘Notice of Violation’. It is not a matter of if, but when.” In this article I’ll attempt to answer the following: • What laws apply to roasting plant environmental permits? • Why do emission laws vary from one location to another (Los Angeles compared to New Orleans)? • Why do roasting plant owners / operators believe their facilities are grandfathered? • How do you know if you need a permit or if your permit should be updated? Let’s start with a review of the regulations that shape present US roasting plant environmental permits: In 1970, the U.S. Congress passed The Clean Air Act, (CAA, https://www.epa.gov/clean-airact-overview/clean-air-act-requirements-andhistory). This legislation, created to promote clean up of air over the cities in the U.S., established the basis for our how air emission permits are issued and governed. The CAA limits specific emissions that cause smog, acid rain and other damaging pollution that may be emitted. Under the law, US States must regulate pollution within their borders. The law further requires States to regulate air pollution that moves from their State to another region. Finally, the CAA requires stationary sources to use Best Available Control Technology (BACT) to control emissions. In 1990, Congress passed significant amendments to the Clean Air Act (https:// www.epa.gov/clean-air-act-overview). These amendments required the U.S. EPA to define and adopt a National Ambient Air Quality Standard (NAAQS, https://www.epa.gov/ criteria-air-pollutants/naaqs-table) for the protection of human health and public welfare. 18 The NAAQS sets air quality limits for specific pollutants CO, PM, NO2 and others, for
durations of time (i.e. 8-hours, 3-months or 1 year). These limits are the basis for regional air quality standards, which occasionally make the news. For example, during an inversion in Denver, CO, the smog or particulate may increase above the NAAQS for an 8-hour period and the air quality could be deemed unhealthy. In 1995, the U.S. EPA published their first edition of section 9.13.2 of AP 42. In advance of this publication, the EPA conducted numerous source tests at Maxwell House, Hills Bros, Melitta and other coffee roasting facilities. The EPA measured emissions; CO (carbon monoxide), VOC (volatile organic compounds as Methane), and PM (filterable particulate matter) at the emission point of coffee roasters. In AP42, 9.13.2, the EPA published emission factors for these compounds as a function of the type of roaster and the pollution control device used. For examples, for a batch roaster with a thermal oxidizer, an average emission of 0.85 lbs of PM was found per ton of green coffee roasted. This document is noted as the first, definitive statement of BACT for coffee roasters. US EPA AP42 emission factors are noted today in many current roasting plant environmental permits! The CAA in combination with the NAAQS amendments forces local Air Quality Management Districts, AQMDs, to enforce air regulation specific to their areas. If emissions
in an AQMD are above the threshold limits set by the NAAQS, the area is in non-attainment. AQMDs in non-attainment are obligated to enact rules to reduce offending air pollutants. A well-known example of local regulation in a non-attainment region is the continuously increasing emission regulation in California and its various AQMDs. California has globally fought smog through Nation leading automobile emission regulation. The South Coast AQMD (Los Angeles Region) has further regulated smog producing emission sources through the enactment of Rule 1153, (https://arb.ca.gov/ drdb/sc/curhtml/r1153-1.pdf), which obligates stationary sources to use low NOx and ultra-low NOx burners. How do these regulations define your roasting plant emission permits? If your roasting plant is in an attainment zone, region with air quality measurements below the thresholds set by the NAAQS, your local AQMD will require your roaster to use BACT to control emissions as required by the CAA. This could include a thermal or catalytic oxidizer to control roaster emissions, a cyclone to control cooler emissions and dust collectors to limit particulate emissions from green coffee cleaning equipment. In most AQMDs within attainment opacity is limited to 20% for no more than 5 minutes per hour. (The following link references this regulation for the State of Tennessee with
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cont. on page 20
Old Roastery Permits you are required to sign a Consent Order, this will stipulate a time period after which your equipment must be repaired or otherwise made compliant. You may be obligated to complete a Source Test after you implement the corrections to prove your new or repaired equipment is compliant.
Who issues environmental permits?
What should you do if you know your plant is not compliant with your AQMD requirements? If your permit is current, and your plant is not compliant, fix it! Don’t wait for a complaint and the subsequent Notice of Violation.
Who issues environmental permits? Counties Designated Non-Attainment for PM-10
New York Co., NY (Moderate)
If your permit is not current, you should confirm the local AQMD requirements and develop a plan to make your roasting plant compliant. Schedule a meeting with your local AQMD permitting engineer to re-permit your roasting plant. If you arrive at the AQMD office with a plan, your new permit process will be a smooth process. If you are installing new emitting equipment, any installation with a stack, you are required to amend your facility environmental permit. This is a good opportunity to remediate any noncompliant equipment and update your permit.
Classification Serious Moderate
PHOTO COMPLIMENTS OF UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
Who issues environmental permits?
If you have 28+ year old, obsolete environmental permit and have installed new equipment within the past 28 years that is not listed on this old permit, you are in violation! The equipment installed over the past 28 years must comply with current rules. You must remediate and update your permit.
8-Hour Ozone Non-Attainment Areas (2008 Standard)
Can a roaster be too small to require a permit? The U.S. EPA and most AQMDs exempt roasters with a batch size less than 10 lbs / batch from most air quality regulations. However, an operator of a small roaster may still be obligated to comply with local AQMD rules, such a low NOx burner or zero opacity. Please consult your local AQMD website to see if your small roaster is exempt.
8-Hour Ozone Classification Extreme
Serious PHOTO COMPLIMENTS OF UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
reference to several other SE States, https:// www.epa.gov/sites/production/files/2017-11/ documents/chapt-05-2017.pdf.) This opacity limit will subsequently require all roasters to use an AP42 BACT device to control roaster emissions. If your roasting plant is in a non-attainment zone, like CA, Western WA, or most NE States, your AQMD is obligated to enforce rules such as SCAQMD Rule 1153, or PSCAA (Puget Sound Clean Air Agency) zero opacity regulations. These rules result in local definitions of BACT for coffee roasters. SCAQMD BACT definitions include ultra-low NOx burners for coffee roasters. PSCAA BACT statements require 1450F thermal afterburners or regenerative thermal oxidizers (RTOs) for roaster and cooler 20 emission control.
If all AQMDs are required to regulate emission sources through BACT, how can any roasting plant be “grandfathered”? No roasting plant is grandfathered. If your roasting plant permit was issued prior to 1990, then it was issued prior to the NAAQS Amendments and the AP42 definition of BACT. Your permit was current then, but not now. Today, your roasting plant is permitting time-bomb. Your plant is one odor or opacity complaint away from an AQMD enforcement officer visit. Before arriving at your plant, the AQMD official will review your permit. She (or he) will see the permit is obsolete and will arrive at your plant with statements of current rules. You will be required to define a plan to bring your equipment to current standard. If
Need help? If you need help determining what to do about your permit or how to fix your pollution control equipment, please contact your roaster manufacturer or a local environmental consultant. We are here to help!
Scott Stouffer, Vice President, Probat Inc.
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Taking the Necessary Steps to Ensure a More Sustainable Future by Olga L Cueller G, Sustainability Strategy Leader, S&D Coffee & Tea
his year marked the third time in the last 30 years that the New York C-price for coffee fell below USD$1 per pound. A dramatic increase in supply due to abnormally productive harvests in Brazil and Vietnam, coupled with distrust of coffee volume data, spurred speculation and caused prices to plummet. The impact stands to threaten the livelihood of millions of farmers who are struggling to make up for their losses. This in turn can lead to significant household strain for small farmers and pressure their basic needs. Meanwhile, longer term impact can be seen in the quality of the coffee, as well as other supply chain issues due to decreased investment in the farm itself. Historically, when coffee prices fall below $1 per pound, farmers resort to reducing their investments in best agricultural practices,
particularly inputs like fertilization (20% of their cost of production) and better harvest techniques and labor practices (usually 40% to 50% of their total costs). A prolonged decrease in coffee price can warrant more drastic measures among farmers as they struggle to make ends meet and provide the basic necessities, like food, for their families. Some farmers mortgage their farms while others actually abandon their farms altogether. These reactions to short-term economic instability can be felt for years to come.
coffee prices and how to respond strategically to fluctuating markets to ensure long-term stability.
In addition to fluctuating coffee prices, many farmers who own farmland lack modern agricultural training and resources to optimize the fertility of the soil. This can lead to actions that negatively impact the environment, like the unnecessary planting of new trees and using more land than required.
S&D works closely through its partners in various coffee-producing countries to implement long-term solutions with measurable improvement in mitigating sustainability challenges. The Raíz platform addresses social, environmental and economic industry issues including fair labor practices, soil health, productivity and cost management. While sustainable investments and proactive risk management drive the success and profitability of the business, they are also about doing the right thing. Arming the entire supply chain with training and resources that promote sustainable practices enables producers to thrive.
The current challenges the industry is facing, serve as a wake-up call that we must band together and prioritize economic and environmental sustainability for farmers. Coffee has long led other commodity industries toward developing a more sustainable supply chain. However, the current state of the industry proves what many of us know to be true, while coffee is being bought at origin like a commodity, it is being roasted and sold as a specialty item. In response to these challenges, S&D Coffee & Tea, the largest custom coffee roaster in the U.S., is taking the necessary steps to ensure a more sustainable future for farmers and the industry as a whole, beginning with the creation of a data-driven sustainable sourcing platform called Raíz Sustainability®. Raíz takes a holistic approach to sustainability, from environmental to economic, by preserving the environment at the source, enriching the lives of coffee growers and investing in the long-term viability of coffee production. Through Raíz, S&D provides small-scale coffee farmers with immediate access to training and technical assistance to help them adopt best practices in agriculture and business management. The program then guides farmers toward agricultural best practices in agroforestry and biodiversity, allowing them to increase productivity while preserving the environment. Business management education provides farmers with a better understanding of
In addition to providing farmers with the training and tools they need to succeed on the ground, Raíz aims to collect rich on-farm data from over 4,500 growers across six countries in Central and South America. This data measures the program’s progress against a detailed set of guidelines and practice-based indicators, allowing S&D to constantly learn and optimize its sustainability efforts.
Although impactful, these efforts are only the start when it comes to overcoming challenges facing the coffee industry today. In order to implement real change, industry leaders must band together to improve the response to supply and demand, beginning on the farm, thus offsetting the hurdles presented in a commoditybased system. Brands and suppliers can also contribute to the overall health of the industry by enacting individual sustainability programs or purchasing from sustainable supply chains. How makers and suppliers approach sustainability will help shape the best practices that ensure a prosperous future for everyone involved in the coffee production process, from farm to cup.
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2018 Year in Review: Communication is Key by Kellem Emanuele, President, International Women’s Coffee Alliance (IWCA) Global Board of Directors all are united by the vision that empowering women is essential to achieve sustainability. This year has been one of incredible communications progress to pursue this vision:
In the absence of communication, that absence becomes your communication”. So many people have heard me say it, it’s become a quasi-mantra. I come by this as a student – of coffee, of women in coffee, of IWCA, and the contexts surrounding each. The more I learn, the more I am convinced that communication is just as much about what we convey, as what we receive. More than messaging pushed out, effective communication, the kind that strengthens organizations and achieves meaningful change, is also what we remain open to receive. The IWCA is a locally-driven, global organization. This means effective communication is essential. Whereas local contexts vary for each of member and partner,
Global, external communications include a new partnership with the International Coffee Organization to leverage the unique, solutionfocused perspectives our respective members can bring to address shared challenges. We’ve also made significant internal strides that strengthen the global IWCA organization: launching a Code of Conduct, Participation Guidelines, and other resources. [link: https:// www.womenincoffee.org/chapter-formation/] Locally-driven communications have been equally significant this year. IWCA Brazil, working with Embrapa and other partners, released its e-book; a first of its kind resource documenting roles and perspectives of women in coffee. While specific to the world’s largest producing country, it shines a light on women’s work in coffee that is relevant globally. [link: https://www.womenincoffee.org/ research-alliance/] Other significant, locally-driven communications include the awareness-, support-, and partnership-building activities IWCA Chapters hosted to celebrate International
Launch of English version of IWCA Brazil e-book at ICO Meeting where IWCA-ICO MOU was signed Coffee Day; and sharing diverse examples of the impact of women’s empowerment through the new IWCA Case Studies series. From peace to prosperity, women are solution-focused leaders. [https://www.womenincoffee.org/case-studies/] The IWCA pursues empowerment through leadership development, strategic partnership, and market visibility. Our model is unique and effective. It is also most successful when its understood and included in collaborative, solution-driven efforts. As an organization intimately familiar with coffee’s challenges, we look forward to even greater progress in 2019: working together, listening and being listened to, and achieving sustainability across the global coffee industry.
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It’s Gonna Be OK! – We Can Deliver On The Promise! by Rocky Rhodes, International Coffee Consulting Group
a complex and difficult thing to do. I made a commitment however to work it out. I became a Q-Instructor and was able to deliver needed education at origin. I sold my business roasting coffee so I could concentrate on delivering services like the Q-Grader material. I have made an excellent living doing so and I feel I am making some bit of a difference in the world.
here are many things to be of concern in the industry but I was just moved and touched by an event that reminds me that the stupid decisions of our industry organizations can’t halt the true difference the industry can, and is making in the world. When I came to coffee 23 years ago I was an idealistic dreamer and had deep romantic notions. Coffee came from exotic places I had to look up on a map. I was fascinated by every aspect of the industry, but I started as a roaster. I learned early on that a good story added to the market value of the coffee so I went about research to tell stories of these places I had never visited and the people I never met. I found the Roasters Guild and put as much energy into sharing and learning from my fellow roasters as I spent growing my business. Some of ‘the old guys’ would share stories around the bonfire of their trips to origin and what it meant to them. I saw them as they were; thoughtful trailblazers able to merge trade and compassion. I was blessed to be on an origin trip to El Salvador. Here I met some truths about our industry and myself. I knew I could not change the entire industry and that each problem is country, village and farm specific. Creating prosperity for producers is not as easy a problem as it seems from the first world, consuming country point of view.
I was also fortunate to find CQI in the early stages of the Q program. They had a slogan that I had already adopted in my business as it just made sense for the industry. “If we can increase the quality of the coffee we can increase the quality of the lives of those that produce it.” I did, and I do, believe this in my core. It has layers that make delivering on that concept
But this week the world smacked me in the head as if to say: deliver what they need, where they need it and when they need it. But the people disrupting my homeostasis were a couple from Myanmar, new to coffee, that just wanted to do some good for the farmers in their country. Last year, to do some good, they agreed to buy all of the coffee from this set of villages in the Kayah State in Myanmar. This area is lost to the international NGO’s that come to help. There is no funding, no education and really crappy coffee coming from this area. There is one buyer for most of the cherry and that means it is ‘take it or leave it’ to the farmer. Why did this couple want the coffee? They really didn’t! They have a small coffee shop but they would never use the amount of coffee they were buying. They also didn’t understand what happens after you pick the cherry so the entire 80 bags or so of green coffee they were able to get in the 2017/18 crop were undrinkable due to about 70% defects. They asked me to help. The problem is that this is not my expertise. They asked if I could just help improve it to ‘drinkable’ this year. With a bar that low I found it hard to say no! I am on my way back from Myanmar as I am writing this. I was able to witness a local Myanmar NGO assemble representatives from 19 villages, a naive buyer agreed to take everything that was red cherry and me there to find someone to process the coffee and teach them how. We were a collective of misfits with the same goal: Improve the quality of the coffee and pay for the increase. Then figure out how to use the coffee. In just three and a half days there are villages set to deliver red cherries in a new agreement that was struck. There are raised drying beds being
constructed and there is a nervous guy willing to be in charge of this crazy processing thing they have never done in that area. There is a dry mill being set up in Yangon where a staff will be trained to finish the coffee to specialty standards. 3.5 days, some funding and a commitment to improve the lives of farmers. The icing will be when this becomes sustainable by selling the green or roasted coffee. This came from passion, a sense of service and a hint of capitalism that culminated in a part of the world likely to leap from commercial usury to specialty rewards. The farmer will be paid a well above market price for Red Cherry and they are ecstatic. The coffee has a working plan and will likely break even this year setting the stage for really improving the coffee next year. So the promise the industry made to these producers is being fulfilled in this small corner of the globe. Good people doing good things using quality as the sustainable factor in the project. We are delivering on the promise in the industry; improving the quality of coffee and improving the lives that produce it. It is being done by the good people of the industry and it will happen with or without all the foolishness going on in our professional organizations. The state of the industry is gonna be ok as we will continue to deliver on the promise. Rocky Rhodes is an 18 year coffee veteran, roaster, and Q-Grader Instructor, and his mission now is to transform the coffee supply chain and make sweeping differences in the lives of those that produce the green coffee. Rocky can be reached at rocky@INTLcoffeeConsulting.com
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True Sustainability or Short-Term Profits? by Ashley Prentice, Entrepreneur and Coffee Producer
am a third-generation coffee producer from Guatemala, that started a career in the coffee industry right out of Business School. I worked for well-known coffee companies in our industry, and even went to get a Master’s in Coffee. However, as soon as I started trying to get involved with our farm to help my mother (who manages the farm), I quickly noticed that farming was not the business to be in. It hit me like a big bang. I was passionate about coffee, farming was my heritage, but it’s just not profitable. With an incredibly volatile market, low coffee prices, and weather variabilities coffee farming is a risky business. And naturally, not a business a young professional should be interested in. A BROKEN SYSTEM As I write this article, yet again coffee is around the one-dollar marker. Low coffee prices this year has stirred up outrage specifically from the farmer side. However, the value of coffee has been low for many years, and even stagnant compared to other products. But more alarming, is that even though this is a “free market,” producers today are being paid one third of what they received in the 80’s. Taking into account factors like inflation, increases in costs of living, and costs of production; we are in a deeper crisis than ever. Meanwhile, producers have had to absorb increases in the costs of inputs and machinery and rises in minimum wages. It is no surprise that farmers don’t feel motivated to continue in farming. Here in Guatemala, I am seeing farmers switching to other crops, selling their farms, and many small producers migrating to find better means of income to provide food for their families. Throughout history Guatemala has been a pillar of coffee for the industry, both specialty and conventional. However, origins that have supplied our industry with quality and diversity are producing less and less, leaving production in the hands of a few big producing countries that are the only ones that can survive these low prices. But is this really sustainable?
Our industry is based on an antiquated system that has fostered poverty for many producers and their families around the world, and has
made coffee growing unsustainable for most, leaving coffee communities vulnerable to a long list of effects - food insecurity, unemployment, migration, and an aging farming population. TRUE SUSTAINABILITY While the word “Sustainability” seems to be a buzz word nowadays, and we are seeing many initiatives being led by multinationals and NGO’s, it seems like they are forgetting to consider the basic pillar of sustainability: profitability. TRUE sustainability relies absolutely on economic sustainability. If a farmer is hungry, he cannot take care of the soils, period. Economic sustainability promotes both social and environmental sustainability. A farmer that is financially stable will be happy to invest in complying with basic sustainability standards. However, a farmer that is barely making ends meet is being forced to cut corners to survive. Farmers need to be profitable in the short-term but also in the long-term, so they can reinvest and have healthy and productive farms. Farmers should not live in cycles of scarcity where they can’t nourish plants, entering in a vicious cycle of low productivity and therefore lack of profitability for the future years. There are visionary industry leaders who understand this concept - long-term profit is the foundation of sustainability - and they are running their businesses that way. Yet, some large firms in the coffee industry lack any vision except for maximizing their own short-term profit and those of their shareholders. Choosing to ignore a sad reality. THE ONLY WAY TO SURVIVE Going back to my story, it wasn’t until some years ago that we connected with clients that became engaged and cared. They have come to visit the farm and have remained fully committed to building a long-term and equitable relationship. They have remained interested in learning about our needs as a farm, but most importantly they have agreed to pay fair prices for our coffee and to step outside the conventional antiquated system. Seeing this, helped me see a future in our family business.
Today, we are at a critical point and as an industry we need to decide: True sustainability or short-term profits? Buyers must be engaged. Whether specialty or conventional, all buyers must be completely engaged in their own supply chain and in the future of farmers. Except for the opportunistic mindset, there is nothing preventing companies from working closely with producers to ensure their prosperity, setting price floors, and assuring transparency in their own supply chains. Reaching long-term profitability involves establishing loyal and stable relationships between buyers and farmers and sharing the risk. We need to involve consumers. We need to invite consumers in the conversation if we want to change the way things are currently working. Only when consumers understand what is behind a “cheap” cup of coffee, will they possibly start demanding more ethical and transparently traded beans. Increasing competitiveness at origin. Farmers need to continue to strive for efficiency and better productivity, but they also need to seek value added activities such as differentiation, diversification and even vertical integration to increase profitability. And most importantly, producing countries need to leverage technology to improve efficiency, knowledge transfer, market access, and traceability. For the future of coffee, I look forward to companies and individuals looking into their buying models and building more sustainable and equitable trading practices that can provide dignified livelihoods at origin. But most importantly, seeing our industry collaborate to strive for TRUE sustainability. Ashley is a 3rd generation coffee producer from Guatemala, a licensed Q Grader and Q Processor. She has a degree in Business Administration and a Masters in Coffee Science and Economics. Ashley is the founder of Gento Coffee, a social enterprise focused on promoting value added activities at origin to increase farmer profitability. She is also an active volunteer of the SCA Sustainability Center working specifically in creating awareness of critical topics like farmer profitability.
Putting the Special Back in Specialty by Erin Meister
his summer when we lost industry icon Erna Knutsen, we collectively felt and mourned the loss of the woman who gave us the perfect name for the work that we do: Specialty coffee. Erna coined that phrase in the 1970s as a way of expressing the significance of the variables that make certain coffees stand out: terroir, processing, profile, “taste of place.” Since those two words were so brilliantly put together to shine a light on the world’s best coffees by the world’s most committed producers, we have grown as an industry, commanding a louder voice in the marketplace and making more prominent ripples in the global coffee trade. Specialty may still be a drop in the proverbial barrel statistically and economically speaking, but the culture that the words specialty coffee imply has had an undeniable impact on people, places, and communities that perhaps even Erna couldn’t have imagined at first. It is often said that “specialty coffee” is a young industry, a niche segment of a centuries-old exchange of commodity and cash crop that is focused on savoring the flavor rather than taking the money and running. As that young industry, we have also endured plenty of growing pains: Where do we fit? What do we want? Who is our customer? Who are we? The years since Erna Knutsen’s coinage in 1974 and our experiences in 2018 staring a new year square in the eye have brought incredible innovation, entrepreneurship, ingenuity, and creativity. They have also brought us a lot of tension, struggle, competition, and, frankly, identity crisis. In my mind, those last four things are positives, not negatives—though naturally your mileage may vary. What I see as our real imperative as an 30 industry entering some version of adolescence
or young adulthood is to use 2019 as a year to truly and deeply evaluate some of the markers we’ve used to differentiate specialty coffee, and to do the difficult work of deciding what actions and philosophies no longer serve us with regards to our business practices, our ideas about quality, our ethics, and, frankly, our future.
What do I mean? For starters, I think it’s time we take every opportunity to actually listen to what customers want, and to rebuild a trust relationship with consumers that shows them that we care about what they have to say. Do consumers—even interested, educated, enlightened consumers—want or even need a farm’s elevation, the quality of the soil the specifics of its coffee’s processing, the astrological sign of the farmer? What are people in coffee shops asking for when they walk up to the counter, and how can we deliver on those actual questions without drowning them out with what we think those customers want to hear? Now consider what that self-reflection implies along the rest of the supply chain as well: If we focus less on the nitty-gritty agricultural and personal details of every producer who is making outstanding coffee, will it free us up to have a more open mind about what we’re tasting? Will it free us up to buy coffees that would otherwise be outside our notice because they don’t have a “romantic” or marketable
story? Would it allow us to do our work faster, more efficiently, without as much red tape as we wait for after-the-fact traceability information? Would it allow us to create more truly equal partnerships because we will be more concerned with the product itself and not with violating a producer’s privacy in order to get every single statistical detail? Would it allow us to put more money into the producer’s hands because we wouldn’t need to physically be present on every farm or in every coffee-growing country on earth? What are the ways that we can look at the work we do in order to streamline, re-center, and focus our attentions and efforts? This is my personal mission for 2019: Coffee shouldn’t be cheaper for the consumer, but coffee should be cheaper for us to produce n our roasteries and cafes so that we can give more of that money to the producer. Coffee shouldn’t be a status symbol for a roaster or retailer who wants to show off how much knowledge or how many passport stamps they have, but it should be a way of connecting all of the actors along the supply chain on a human level, on a sensory level, on a partnership level. Clearly these are my torches, and I’m prepared to bear them into the new year blazing. They also happen to be issues that directly concern the work that I do, and I recognize that by asking myself and my peers these questions, by raising these concerns, I have the very real potential of re-evaluating myself out of a career. Frankly, I welcome the opportunity to have dynamic and vulnerable (and, judging from previous experience, occasionally somewhat heated) conversations about what we should keep and what we should slough off as specialty coffee enters the last years of the decade. I hope to see you at the table, at the conferences, on the message boards, in my e-mail inbox wrestling with the state and the future of the industry, and I can’t wait to flip over that first calendar page to a brand-new commitment to put the “special” back in “specialty.” For Erna!
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China – A Coffee Culture Blooming by Yunnan International Coffee Exchange
he Chinese coffee industry is in the midst of a transformation. Once an afterthought in the global coffee landscape, China is now a burgeoning coffee origin, and is poised to play an important role in the green coffee sector in the years to come. In-country consumption is also on the rise, opening exciting new markets for roasters, retailers, and investors. After years of infrastructure investment, annual growth rates of Arabica production in China are nearing 20%. Farmers across China’s coffee-growing regions are working closely with organizations like the Coffee Quality Institute (CQI) to improve farming and processing practices. Results have been promising, with the country’s best coffees earning Q scores that rival coffees from some of the world’s most celebrated origins. A seismic shift in green coffee production Home to 46 million people, 26 ethnic groups, and seven temperature zones, China’s Yunnan province is also home to 98% of China’s coffee production. Most Yunnan coffee is grown in the mountainous highland region, which boasts cool nights, mild days, and abundant water resources. Catimor is the dominant cultivar because of its high yield and leaf-rust-resistant properties, but farmers are increasingly experimenting with other cultivars to meet demand. Although coffee is grown throughout Yunnan, Pu’er is the official “Capital of Coffee in China.” The Pu’er government has gone all in on coffee production, promoting Pu’er coffee as one of the “Three Treasures of Pu’er,” along with tea and dendrobium (a genus of orchids). Given the ideal growing conditions, you’d think coffee would have gained a foothold in China much earlier. But coffee wasn’t introduced to mainland China until 1893, decades after most other origins. China didn’t grow coffee on a commercial scale until the mid-1950s, and production stayed modest for half a century afterward.
The tide began to turn in 1988, when the Chinese government initiated a project to encourage coffee production as an alternative to tea, tobacco, rice, and other crops, with
assistance from the World Bank and the UN Development Program. China’s Ministry of Agriculture further amped up support in 2007, providing additional financing, technology, and research to Yunnan farmers. The investments have paid big dividends in the years since. From 1998 to 2012, annual coffee production grew 19.4% on average. Production took a huge leap in 2013, nearly doubling to 1.5 million bags.
Because of these and other efforts, cup quality in China has never been higher. In the 2017 Best of Yunnan competition hosted by YCE and CQI, an international panel of judges gave the winner an average 85.5455 score. James Craig, an Australian roaster and licensed Q Grader, described his experience as a Best of Yunnan judge this way: “There are just so many surprises here. Honey/natural process, new varietals, different growing techniques ... all the hallmarks of a progressive, vibrant industry with massive resource and potential.” Skyrocketing consumption Traditionally a tea-drinking country, China’s coffee consumption is increasing nearly as fast as production. A 2015 ICO analysis estimated that China’s consumption has grown 16% per year over the past 10 years, reaching 1.9 million bags of coffee in 2013/2014. This level of consumption made China the 17th largest consumer in the world—and growing.
In the 2013/2014 crop year, China produced nearly 1.9 million bags of coffee, placing the country just above Costa Rica in total output according to the International Coffee Organization (ICO). This made China the 14th largest producer of coffee in the world in 2014, compared to the 30th worldwide just 10 years before. It is projected that China will exceed 2.0 million bags of coffee in 2018. This explosive growth shows no signs of slowing—a welcome sign to an industry concerned by a global shortage of high-quality coffee. Specializing in specialty While much of China’s commercial output is bought up by Nestle, Starbucks, and other large merchandisers, an important specialty niche is emerging, as producers and local officials seek access to new markets and higher prices. Farmers are working closely with organizations like CQI and local extension stations to implement best practices at the farm level and improve wet/dry processing techniques. Various organizations are also diversifying with other cultivars in an attempt to improve the cup profile of individual coffees.
The real eye-opener, however, is how much growth potential the Chinese market still offers. With a population of 1.4 billion people, percapita consumption in 2013/2014 was a mere 5 to 6 cups per year. Compare this with per-capita consumption in the U.S., which has remained at roughly 985.5 cups per year since 1999. Moreover, coffee shops and Western-style coffee culture are just now gaining a foothold in China, as coffee sales to this point have mostly been in the form of instant coffee. Fresh-roasted, whole-bean coffees are expected to become more prevalent as the Chinese society and economy develop and Eastern and Western cultures continue to converge. The upshot? The China coffee landscape you once knew is changing before your eyes. The Yunnan International Coffee Exchange (YCE) runs a service platform designed to encourage quality and transparency. To further improve quality, the YCE is launching a new industrial park in 2019 that will offer a range of services for farmers, including training, financing, equity investment, and equipment leases. The industrial park will also include processing plants, warehouses, and a cultivar farm for research. For more information, email email@example.com.
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Going Forward by David Browning, CEO, Enveritas
he most important decision in the coffee industry this year was Juan’s decision to go back up the mountain. In June, Volcán de Fuego erupted, spewing forth a pyroclastic flow of lava and mud that descended as an avalanche on coffee communities. Thousands fled for their lives, but Juan Galindo, son of a coffee farmer, went back to help those in need. He died, in service of something larger than himself. Surveying the remains of 2018, there is much cause for dismay: public servants who lied and corrupted government for their own ends, civil organizations such as USA Gymnastics that betrayed the faith and trust of their athletes. The private sector was not immune, with repeated revelations of fraud, abuse or malfeasance. It’s easy to shake our heads from the comfort of the couch, but none of us are secure from censure. One in four coffee farmers live in extreme poverty; one in ten will have a child die. There is ample evidence that many of the safeguards and investments put in place to improve farmer lives, prevent abuse, protect the environment, and safeguard children have not worked. The coffee industry did not create this situation, but all of us, all of us, profit from it. How did you measure success this year? Stores opened, coffee served, profits earned? These metrics matter, they decide which businesses survive and thrive. But our actions can be measured not just in terms of success, but significance. Commenting on the abuse that has pervaded USA Gymnastics for 20 years, former US Soccer Captain, Julie Foudy, observed; “At all levels… there was an adult in the room that could have stopped it, and they never did”.
Many in the coffee industry have become disillusioned with the gap between the promise and performance of certification. While the tool may be imperfect, we might all be able to agree that the ideals behind it are worthwhile: That, in the pursuit of profits, children should not be forced to work in dangerous conditions, irreplaceable rainforest should not be destroyed, or unjust discrimination tolerated. These are not unreasonable guidelines by which to hold ourselves accountable as an industry. These are guardrails that we would expect of other companies, other products that capture our loyalty beyond coffee. If the current tools have not delivered as promised, this does not give us the excuse to walk away from our responsibility. Concluding that we should give up trying to identify and resolve supply chain issues because certification doesn’t work is like deciding to abandon democracy because our elected leaders disappoint. We should strive, certifiers and companies alike, to search for new and better solutions. And we should not be lulled into the complacency that self-reporting, or a red carpet roaster visit announced months in advance, is a substitute for independent assurance. Whether it be government, commerce, or civil society, creating a system without credible checks and
balances and independent review has predictable consequences on behavior. I do not mean to imply that these are easy issues to resolve. Many issues in the coffee supply chain are exceedingly complex with no quick fixes. But in the words of civil rights commentator James Baldwin, “Not everything that is faced can be changed, but nothing can be changed until it is faced”. Specialty coffee is in a unique position to set an example for the world. The industry has greater than average visibility back to the farm, healthier margins than many industries due to the retail prices consumers are prepared to pay for extraordinary coffee, and smallholder farmers in great need. If sustainability principles are not yet encoded in enforceable legal systems, then how should they be assured? Who should lead? If you are in need of a New Year’s resolution, perhaps this; to be the leadership you would wish in the world. If the world is not perfect, let’s strive for perfection here, in coffee. Let this be our “light on the hill”, our unfinished work. In so doing, we honor Juan, and what he did for all of us.
What will be our legacy? What will history say of our performance? There are basic rights and mores that we, as a society, have built over time. Some of these rights have been achieved only with great patience and sacrifice. They are enshrined in our laws, protocols, and constitutions. They are woven into the books we read and the movies we watch. They represent what we believe about justice, voice, and responsibility. But once won, these ideals do not automatically preserve. They can corrode and must be defended and 34 protected each day anew, by ordinary people.
David and coffee farmer Vicente Canrey on Volcán de Fuego, 2018.
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