Peru Country Manager
2020 has been an immensely challenging year, not only because of the pandemic but due to structural issues within the industry and the country itself.
One of the main problems that threatened to affect this harvest was the lack of motivation in the producers to continue producing coffee at 2019 prices, which, according to our own internal cost of production studies, were about 17% below cost. This primarily affected conventional (non-specialty) coffee producers, many of whom opted to abandon coffee, sell their farms, or neglect their plantations.
Additionally, abrupt climatic changes – unrelenting rains in particular -stunted plant maturation and encouraged the proliferation of leaf rust.
As if these issues weren’t enough, the pandemic struck in early March, and from the outset Peru was among the countries most severely affected. Government restrictions were imposed immediately, with devastating economic impact.
Coffee was mainly affected by labor shortages on farms of more than 3 ha, and in regions where the harvest was at its peak, such as Selva Central. Mobility restrictions not only limited work on the farms, but also hampered their economic activity, generating a serious impact on producer´s income.
Arguably the biggest challenge facing us once government mobility restrictions were lifted was sifting through multiple subjective interpretations of the safety guidelines from regional and / or municipal governments. From that moment Caravela, along with other leading companies and cooperatives in the Cajamarca and Cusco regions, began drafting a proposal for operating under Covid and won approval to open up the purchasing units and boost the economy of these regions that are highly dependent on coffee.
The airports remained closed, aside from repatriation flights, essentially prohibiting customer visits, trips which in many cases were the first step towards signing a contract. By May, producers and cooperatives were beset by uncertainty at a time when they were accustomed to already having signed contracts in hand.
Once the national government realized the importance of coffee for the economy and the negative impact on thousands of families’ livelihoods (as stated emphatically in the documents submitted by the coffee coalition) the entire industry welcomed the decision and our team immediately started to share and explain the protocols to our partner producers.
Looking to provide support during the lockdown until things returned to something approaching normality, Caravela relied on phone calls and SMS to keep producers informed about the Covid protocols and how to stay healthy during the pandemic, as well as advising how to properly take care of their harvest. Given that mobile networks do not provide complete coverage of rural Peru, we started a pilot radio program named “Tripulando Mi Cafetal” aiming to reach the most remote locations, benefiting not just our partner producers with technical/practical content, but anyone interested and able to listen.
Despite the positive news and recovery progress, an element of fear understandably crept into producers’ decision-making given the deficiencies of the healthcare system, creating the perfect scenario for middlemen to exploit the situation. By offering to limit the exposure risk for producers, these middlemen collected their coffees from farms level via truck and paid in cash. Unfortunately, the farmers were offered really low prices.
Caravela´s partner producers remained calm and committed to quality, thanks to constant communication and an understanding of the local dynamics and realities.
Our approach towards solving the logistical challenges were customized and with one main objective: minimize the risk for producers and our teams. Measures included sending our PECA technicians from farm to farm collecting samples, completely subsidizing local freights, organizing small local groups with leaders who will deliver multiple producers lots (tagged), avoiding exposure of more people while maintaining traceability, and creating temporary delivery points to collect coffee as close as possible to the farms.
In addition to this, and as a result of our work during the last years educating producers about the benefits of financial inclusion, electronic payments worked smoothly, and for the most remote locations we found a way of partnering up with Cajas Municipales to prevent producers from needing to travel longer distances to collect their money.
As the harvest progressed, we found new ways of adapting to the day-to-day challenges, we put our efforts in support of producers, encouraging them to be patient and committed while waiting for our partner roasters to put contracts on the books while they navigate their own hardships and uncertainties.
Now at the end of the harvest, we are grateful for the relationships we have established with our partner producers and roasters, where trust is embedded and served as a key driver of our success during such difficult times.
This year has brought two valuable lessons to us: When producers, employees and roasters become aware of being a part of something bigger, creating shared value with a purpose -like an “ecosystem”-, facing challenges together only creates stronger bonds. 2. Demonstrating just how important it is to be as close as possible to producers. They are the both the foundation of, and the most fragile link in the supply chain only by being on the ground in the producing regions provides the necessary insight and depth of understanding about their realities.
Every year we are digging deeper into the complexities of profiles this country has to offer, as new brands/cup profiles are added to our portfolio. Reach out our sales representatives for details on our exciting selection of Spot coffees about to land.
We invite you to be part of our Ecosystem and grow together!
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