Colom­bia’s grow­ers stir prof­its into their cof­fee

Los Angeles Times - - The World - Chris Kraul re­port­ing from maniza­les, colom­bia

These are golden days for cof­fee grower Se­gundo Car­dona and thou­sands of other farm­ers in Colom­bia. Global prices for his beans are close to 14-year highs and, ac­cord­ing to some an­a­lysts, may re­main at or near these lev­els for years to come.

The rea­sons in­clude less than op­ti­mal har­vests in top cof­fee-pro­duc­ing coun­tries Brazil and Viet­nam and ris­ing con­sump­tion in Brazil and Mex­ico as well as in tra­di­tional tea-drink­ing na­tions, in­clud­ing China, In­dia and Rus­sia.

World­wide cof­fee con­sump­tion has grown an av­er­age of about 2% a year over the last decade, dou­ble the 1% an­nual av­er­age in­crease in sup­ply.

“It is a clas­sic mar­ket im­bal­ance,” said Rabobank agri­cul­tural econ­o­mist Guil­herme Memo in Sao Paulo, Brazil, cit­ing In­ter­na­tional Cof­fee Or­ga­ni­za­tion statis­tics show­ing a 30% in­crease in prices over the last year for ara­bica, the cof­fee typ­i­cally grown in Colom­bia. Prices for ro­busta, the va­ri­ety iden­ti­fied with Brazil, have in­creased about 12%.

An­other fac­tor boost­ing prices is in­creas­ing con­sumer in­sis­tence on so­called spe­cialty cof­fees, a trend that more Colom­bian farm­ers, in­clud­ing Car­dona, are tap­ping into.

The world’s largest cof­fee re­tailer, Star­bucks, an­nounced Thurs­day that it was rais­ing prices, just as many su­per­mar­kets have done in re­cent months. Star­bucks Chief Ex­ec­u­tive Howard Schultz cited the “ex­treme na­ture of cost in­creases” in jus­ti­fy­ing the move.

In­stead of merely sell­ing his beans in bulk, Car­dona, 77, will soon be re­ceiv­ing a pre­mium of up to 10% above the stan­dard price once his cof­fee is la­beled “fair trade cer­ti­fied,” as he ex­pects later this year. The la­bel is be­stowed by Fair Trade Colom­bia, a non­profit or­ga­ni­za­tion that helps mar­ket cof­fee for grow­ers who pro­duce eco-friendly beans.

Car­dona over the last year has be­gun con­serv­ing more wa­ter, given work­ers masks to pro­tect against harm­ful dust and stopped us­ing cer­tain haz­ardous chem­i­cals.

A cof­fee grower for half a cen­tury, Car­dona was slow to jump on the spe­cialty cof­fee band­wagon, even though the lo­cal grow­ers co­op­er­a­tive has been cam­paign­ing for farm­ers to join.

“Grow­ing it their way just seemed too com­pli­cated. But the prices jus­tify it, and get­ting the seal will also bring other ben­e­fits,” Car­dona said. Those ben­e­fits in­clude health and fu­neral ex­penses aid in a pro­gram fi­nanced by the Na­tional Fed­er­a­tion of Cof­fee Grow­ers of Colom­bia with a por­tion of the price wind­fall.

Fed­er­a­tion Di­rec­tor Luis Ge­naro Munoz said in an in­ter­view here that more than one-third of all Colom­bian cof­fee now qual­i­fies for a “value-added” spe­cialty sta­tus, up from less than 5% in the early 1990s. The strat­egy has paid off be­cause Colom­bia’s spe­cialty cof­fee sales are grow­ing at three times the global rate.

One of the spe­cialty cof­fee la­bels most sought af­ter by Colom­bian grow­ers is that of the New York-based Rain­for­est Al­liance, which gives its mark of ap­proval to grow­ers who ful­fill spe­cific en­vi­ron­men­tal re­quire­ments and pro­mote high health and ed­u­ca­tion stan­dards for work­ers and their chil­dren.

Twenty per­cent of all cof­fee grown in the state of Huila, home to Colom­bia’s sec­ond-largest cof­fee har­vest, now earns the Rain­for­est Al­liance’s im­pri­matur. The pro­gram is par­tially spon­sored by the U.S. Agency for In­ter­na­tional Devel­op­ment, which sees grow­ing pre­mium cof­fee as a way to raise liv­ing stan­dards.

The ex­pand­ing spe­cialty mar­ket for grow­ers “is leav­ing the mar­ket tight on sup­ply” for the ara­bica beans Colom­bia is fa­mous for, said Ju­dith Ganes-Chase, who heads a com­modi­ties re­search firm in Ka­tonah, N.Y.

And tighter sup­plies mean higher prices paid by con­sumers for beans grown in Colom­bia, which is the world’s fourth-largest cof­fee pro­ducer and ac­counts for about 8% of all cof­fee grown.

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