Is the Future of the Coffee Industry in Central America?
In December of 2014, I was talking to a Salvadoran specialized coffee producer who explained to me that he had identified 45 different factors that go into making a quality cup of coffee. Those 45 factors include a myriad of decisions taken by the growers, pickers, millers, as well as non-human factors including the coffee bush’s interaction with the soil, the shade, the sun, the rain, the terroir, as well as the coffee bush’s own genetic makeup and specific variations, and that’s all before the roasting, grinding, preparation, and serving of the coffee. At least 45 factors to take into consideration and try to manipulate in order to turn a basic staple into a liquid work of art.
Central America is not, and never will be, a region competitive in high yield coffee cultivation. What the region does have the capacity to do is create a certain amount of abundance for those who work in the coffee industry—not the erstwhile barons, but the men and women in the fields, the warehouses, and the shipping yards who grow, harvest, handle, and have the chance at perfecting their beans. Given its unique geographic and climatic position, Central America has the opportunity to forge its own sustainable model of coffee production, suiting its own needs and those of its people.
When the small coffee bean first made it to America towards the end of the 18th century, it is said that the wet milling process, as it is known today (and which is second most used method of milling in the industry), was developed to adapt to the conditions the bean, originally from Africa, faced in a completely new climate. The process of wet milling, or removing the husk from the bean before it is completely dried, is now one of the principle ways all coffee is processed. But despite the region having influenced world coffee production and processing, some might say the region is suffering. And, indeed, there are many troubles, most of them structural, in Central American coffee production. Let’s look at the numbers of beans produced from Central America.
In terms of production and exports, Central America, as a region, out-produces both Colombia and Ethiopia, and is second only to Brazil, whose production consists of two species, Arabica (70 percent) and Robusta (30 percent). Central America, producing almost exclusively Arabica, is thus one of the top Arabica bean producers in the world.
But should we only think in macroeconomic terms? Doing so has become a source of some of the main problems faced by the largest coffee-producing countries of the region.
Honduras, for example, has for many years been trying to take the place Colombia holds in the market. It is true that the cost of production in Honduras is lower than other countries in Latin America. However, the country has built a sector that shares in its misery, not only for the farmers themselves, but also for farm workers. Why continue producing more if you are unable to create any dignity or prosperity for the people involved in production?
Honduras has bet on the market for certified coffee, which is coffee officially recognized as organic, fair trade, or UTZ (which means the coffee is traced from producer to consumer, fairly traded, and non-exploitative). Honduras is in a position to make such a move because of the country’s high-output coffee industry, which is dominated by small farmers—a desirable combination for multinationals basing their structural models on buying extremely cheap commodities, maintaining wages only to the bare minimum, and positioning their brand as conscientious and equitable.
El Salvador does not have the same low production costs farmers can take advantage of in Honduras, but due to the previous administration’s strategy (if we can call it as much), Salvadorans have started to distribute disease-resistant varieties' seeds among farmers. The goal is to produce more coffee, even if the quality goes down.
Currently, Honduran and Salvadoran coffees, of an equivalent quality, can be obtained at the same price as Brazilian coffee, even while the cost of production in Brazil is half as much.
This demonstrates that current production levels could give Central America more leverage in the coffee market, though it should not come at any cost. To make fair profit and to gain a larger foothold in a competitive global market, Central America needs to either lower costs of production or sell at a higher price.
Colombia is the second largest Arabica coffee producer in the world, and the current market price in Colombia is significantly higher than the average of the price for coffees paid in the region (with the exception of Costa Rica and Panama), for a simple reason: their national coffee federation (FNC) has raised the prices of exported coffee. Their reasons are largely political, but have the effect of saving thousands of farmers from not being able to cover their cost of production, as sometimes occurs in El Salvador and Honduras.
Worldwide, the coffee industry is becoming more and more concentrated in terms of production, export, import, and roasting. A few multinationals are filling the same role we have seen them fill in other industries, such as beer: buying up smaller players and muscling their way to near monopolistic control. The part of their share at the global market has risen to unprecedented levels.
It’s the main reason why Central America should take advantage of its position with their current production and exports, but keep clear in mind that they won’t be part of the future commodity sector, or producing in high volume. A regionally tailored strategy that lets farmers control their product and at the same time creates an added value not only for them, but for their countries, should be the current focus.
Small farmers mean diversity, a diversity which can give life to a sector increasingly overrun by big business.
Many assume that coffee is produced the way we see it in our farms in Central America, with plenty of shade trees and biodiversity, the same way it was originally produced in Ethiopia. But that is a romantic and antiquated image of coffee production, and far from the current reality. When coffee started to be mass produced, the percentage grown under shade was around 70 percent; today, almost 70 percent of the coffee produced in the world is grown under the direct sun. Coffee used to be produced in harmony with the surrounding environment—its forest ecosystems adapting to coffee production. Nowadays, the reality is that as coffee consumption increases, forests are cleared to create new farms to fulfill these requirements
An industry whose practices result in widespread poverty should not be expanded. Instead, we should aim to develop an alternative and seek to create a real value—for the workers, their communities and environments, and for the product.
At the same time, two coffees unequal in value shouldn’t be priced the same. And it’s probably there, where a Central American coffee federation could step in to support its farmers and workers. I would add two more factors, slightly more abstract, to the 45 that make a quality cup of coffee: dignity and sustainability for coffee-producing communities.
FI name: July 2020