Microlots Will Not Save Smallholders

In Coffee Economics, News & Research by Karl WienholdLeave a Comment

Currect Situation

Global coffee prices are too low for farmers to make ends meet in most areas were coffee farming is not industrialized. Even though specialty coffee and mild arabica are prized for their sensory profile and earn differentials over the base market price, they are still being drug down to unsustainable levels by the global market, flooded by hard arabicas and speculative short positions on the C contract. How we got here and how it could or could not change is a story for another day. This story is about getting more farmers’ heads above water before they drown.

We Aren't Doing Enough

For the last 5-or-so years we have been operating as a collective of small farmers in Colombia with our own export and import companies, sending the single-farm microlots we produce directly to roasters and earning stable prices equal to the roaster price minus expenses. For about 75 of us, things have been good, and we are doing fine.

However, there are about 560,000 coffee farming families in Colombia, most of them subsistence smallholders like us, and without access to marketing channels allowing them to earn more than base price, which in Colombia has tended to oscillate around C+10, comparatively good by global standards, but still well below production cost for the last 6 months at least.

There are about 250 provisional members of our collective group, receiving support to improve quality, still working toward the 86-point microlot threshold that will allow them to earn prices more than double what the market is paying today. But many will not make it through another harvest selling at a loss. They are falling deeper into debt with nefarious loan sharks, losing or abandoning their farms, and uprooting coffee in favour of less sustainable land uses, often renting it to large cattle ranchers for grazing.

We as a collective cannot sit back and let this happen. We also cannot dilute our product offering with generic, faceless commercial blenders. Therefore, the workaround we are proposing is a Traceable Micro-Regional blend.

Traceable Micro-Regional traits:

  • 10-50 smallholder farmers in confined areas of single municipalities to preserve unique terroir profile
  • 5-85.5 point lots
  • 50-275 bag lot sizes (no minimum purchase per roaster)
  • Low to high $2-range per-pound depending on quantity, preparation, market conditions, and cup score
  • Full traceability and price transparency down to each farm that contributes to the lots
  • Farmer prices above production cost guaranteed
  • Forward bookings only (immediate delivery or draw as needed)

In order to provide farmers with prices above production costs and keep roaster prices competitive with other offers on the market, the collective earns a very thin margin on these. There is very little margin for error, and we cannot take on uncertain costs like warehousing, financing, and potential spoilage loss. Therefore, we cannot offer these spot, rather only on a forward basis.

We are entering harvest season and can have Traceable Micro-Regional lots afloat as early as late May from the origins listed below, so if you would be interested in supporting smallholder farmers that make up the collective group and bring in some unique, traceable, transparently traded regional coffees, please get in touch so we can discuss your potential requirements and get you some offer samples!

See the full list of Traceable Micro-Regional coffees.

For May shipment

  • Clavel – Gaitania, Tolima
  • Passiflora – Planadas, Tolima

For June Shipment

  • Ranita – El Águila, Valle del Cauca
  • Lagarto – Corinto, Cauca
  • Chontaduro – La Rivera, Valle del Cauca

Are single farms more up your alley? Check out our current spot offerings and help us make room to support more farmers in trouble.

What do I think is the best way we can help individually in addition to conscientious sourcing? You didn’t ask, but Ill tell you anyway.

Financial education for small-scale coffee farmers that teaches them to think like the independent small business owners they are. We and the No Free Refills team are hard at work developing and testing a workshop and individual assistance program called Finca Emprendedora focusing on costing, budgeting, understanding global markets, and cost-benefit analysis. As soon as the pilot implementation is finished and necessary adjustments are made, we will be looking for fiscal sponsorship and volunteers to begin to implement on a large scale. Interested in getting involved? Please contact karl@directorigin.com


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