3.5 Minute Read

Ana Sofía Narvaez
Relationship Builder
As I continue to immerse myself in my role as a link between farmers and roasters, I have witnessed a steadily growing disconnect between what the market demands and what coffee farmers can realistically produce. Many roasters are interested in unique high-end, coffees, but are also price sensitive. This expectation of quality-at-a-low-price ultimately results in farmers being unable to re-invest and, ironically, prevents them from doing exactly what is being demanded.
Think about this, what specialty coffee means for the coffee industry vs your own perception? There is a great deal of variation in how different buyers see high-end specialty coffee and much of this is based on the need to buy “the next-best-unique thing”. Specialty coffee is broadly defined as a coffee that scores above 80 points. However, coffees that score between 80 and 83 are now considered by many specialty buyers to be “high-commercial”. As the cup profile changes and becomes more complex, we move up the scoring scale, and this progression should theoretically increase prices and sales opportunities for producers. Unfortunately, this is not happening fast enough nor on a large enough scale. There is a popular sentiment in the coffee community that only 86+ lots are considered “top-notch-coffees”, while anything below that is considered “not-good-enough”. However, many want 86+ point coffees for 83-point prices, especially when the ‘C-market’ price is so low.
Is there a single producer that can achieve a full crop of 86+ lots? Will there be a time when all producers can achieve this? What would be the ideal balance for the coffee industry with respects to prices and production?
On the producing side, perfection and quality require labor, time, and money. Not everything produced will be an easy-selling micro-lot, nor is it common that everything produced will be sold at a premium. While producers do benefit from their outstanding, one-of-a-kind lots, these coffees necessitate substantially more work and an accompanying increase in operational costs, which can quickly become burdensome when expected results and prices are not met. Markets can easily nosedive or even skyrocket, BUT supplies, labor, and inputs prices/costs remain constant or even increase due to inflation. Not to mention how exchange rate movements can massively impact the price that farmers will ultimately receive in their local currency. Consequently, the one who absorbs a majority of these macro market shifts is the farmer.
However, there is something often overlooked, and it is the farmer's need to sell their entire specialty coffee production. The fact is, producers need to sell their consistent but less remarkable lots above the market price, as micro-lots nearly always represent a small portion of their total productions. Remaining lots falling in the gray area (between 83.5 and 86), must be sold at a significant price premium to recover investment, or at least to reach a breakeven point. While many 86+ point coffees can easily find a home, this is not the case for the 83-85.5 point coffees.
By embracing the potential of coffees in the 83-85.5 range and being open to buying them, we recognize and value producers’ work. Acknowledging this work also creates an incentive for the producer to continue pushing forward and re-invest in their farms, making it more likely that they will be able to enter the 86+ market.
Alberto Ochoa is an example of how the market should function. He is one of the 4,000+ producers that Caravela works with across Latin America who deliver solid, good tasting coffees with a specific cup profile and good yields, but who currently does not produce micro-lots. He has been working with Caravela for over two years, and he sells 85% of his crop as an A and AA, with the remaining 15% sold to the local market. By purchasing almost all his coffee, we can be part of the development and transition of the producer from good, to excellent, to outstanding. It is a win-win dynamic.
Every coffee needs to find a buyer, every buyer needs a specific quality and volume to offer, and every farmer needs to be sustainable. There is no silver bullet, but there are a few options to consider that can help create a more sustainable coffee industry:

How to Create a Specialty Coffee Line to Attract Commercial Coffee Drinkers Into The Specialty Coffee World? Part II

How to Create a Specialty Coffee Line to Attract Commercial Coffee Drinkers Into The Specialty Coffee World?

LOTSA Potential: The Long-Term Supply Agreement as a Tool for Financial Stability and Building Relationships

I want to comment on your timely and articulate message to the Industry. In 30 years of roasting, I have been conscious of this gap as described. My relationships with the producers I work with ensure that I support the farmer through thick and thin as I buy from them over 9-20years. It is important for the farmer to have consistent projected secure sales of most of the coffee produced. The high score micro lots are just icing on the economically sustainable cake. As experienced in a Latin American Coop a few years ago, the farmers did not want to engage us with tasting their coffees for fear of yet another waste of their time if only 6 bags of their highest scored beans were to be bought. What they needed was the bulk of their (excellent quality) beans sold for the effort they put in. As they made clear, they just cannot live on the few lots of high score beans.
Roasters are an important cog in the education of consumers, whereby, if a high score micro lot is not priced high enough in the consumer market, after all the extra work done by the farmer, then the consumer expects more for less, but is not to know about the gap.
I sell some coffee at $260kg (AUS), which sounds outrageous, but when broken down per cup, it is outrageously cheap at approx $2.60 per cup of brewed coffee at home. That’s far cheaper than a regular beer!
Only when great coffees are priced through the chain with respect to the sustainable value through the entire chain, will farmers gain the sustainable pricing they need to invest in better coffees as their standard.
Excellent points, I think that farmers understand better the dynamics of the market and the roles of the different links in the coffee chain, however we keep fighting to “break” the traditional business models where a few win, I am part of the third generation of coffee producers, and until a few years ago we started to establish direct relationships with roasters, the few lots that we have sold directly have had a positive impact on our economy, but we only sell 30% of our production directly, the rest of the coffee is sold through a cooperative that has never shown us the contracts they sign, we still live with these situations.
Greetings from Nicaragua