Yesterday I got a link sent to me by a good friend and coffee enthusiast in San Francisco. The link is to an Internet forum called Home Barista that is basically a discussion forum for coffee enthusiasts from around the world. I was a bit surprised to read this post on a forum created by and for coffee lovers, so I felt I had to reply in order to educate our customers and also to try to explain that not all coffee companies are the same.

Transparency

A lot of high quality driven roasters, including ourselves, preach that transparency is the most important part of our trade, but rarely do we actually get to see the numbers in the coffee industry. Sustainable Harvest is one of the few companies that are trying to do something about this through their Relationship Information Tracking System.

Cup of Excellence is also a great example of where consumers can get full traceability of the coffee trade.

I have been trying to establish a traceability system of our own and also to develop a contract that shows what the farmer gets when we pay USD 3 pr. lb (453g) FOB for coffee. We do have the contracts in Kenya as this is cooperative coffees created by hundreds of farmers. For all the other coffees we have bought this year we feel we don’t need it as we are communicating directly with the farmers anyway. We are still far away from being 100% transparent but hopefully in the future we will be able to get a system for it that enables our customers to get all the info they need.

As a temporary solution I have started to systemize all the information about our coffee purchases from the end of last year, and to my surprise we are actually paying a higher average price for our coffee than I thought we were.

Coffee prices

For the past months we have read that the C market price for coffee is at it’s highest in over 10 years at about USD 1,6 pr. lb. (453 g) of green coffee.

Although this is not a very high price for coffee it is still very positive that it is going up, as the price has been way too low for the last 10 years, forcing a lot of producers to start growing other cash crops in order to survive.

As you all probably know, we do not trade coffee based on the C market price and we do not sign future contracts based upon today’s prices like most of the bigger roasteries do. We buy the coffee direct from exporters or farmers and negotiate the price based on taste and quality. We negotiate with the farmer and the exporter. Not with a broker. We also have gentlemen’s agreements with farmers that if they continue their work with quality, we will be there to support them by buying their coffees.

As promised, I will try to do an effort for transparency, so here are the prices in USD pr. lb that we have payed for our coffees FOB  (free on board) in 2010:

Panama, Hacienda la Esmeralda:______ 26,50 $ + packing

Honduras, Cielito Lindo 2010 COE:_____  8,10 + packing

El Salvador, Las Palmas 2010 COE:_____ 5,31 + packing

Honduras, Naciemento:______________  3,50

Honduras, Finca El Pantanal:___________3,00

Guatemala, Santa Ana:_______________ 3,50

Kenya, Mugaga:_____________________ 4,77

Kenya, Tekangu:____________________  5,23

Of course these lots are not the same size. The Esmeralda was only about 120kg for instance. So the average price per lb. so far this year is actually USD 5,06.

Adding to the cost

As you may know, this is just for the green coffee. We also need to  pay for the shipping and handling of the coffee before it gets to our roastery. Shipping cost can vary greatly depending on the origin of the coffee. The price of the coffee gets about 25 to 30 % higher for the coffee when we include these costs. On average this means the price for the coffee when it has arrived to Norway is about USD 6,58 pr.lb.

We also need to cover our travel expenses that we spend when we travel around the world to find these coffees and visit the producers.

So far this year I have been to Kenya and Honduras, and I am going to Brazil next week, to Colombia in October and visiting Kenya again in November. That adds up to 60 days of traveling and a cost around NOK 120.000,- or about USD 20.200,- only for 2010.

My accountant may think I am crazy spending so much on traveling, but I think it is totally necessary and a good investment for the future. We are building relationships with serious farmers and we are trying to secure a good supply of great coffees in the future. We want to develop long term relationships with the farmers, not have one night stands with them.

After the coffee has arrived to Norway we still need to roast it, so you have to add the  cost of production, rent needs to be payed as well as salaries, delivery truck, electricity, maintenance, etc, etc. Of course the cost of living is higher in Norway than in Colombia and therefore we need to add a bigger margin to the coffee than a farmer in a producing country needs in order to make a living. For example, a beer in Colombia is about 1 USD. In Norway a beer in a bar is about 10 USD.

Is coffee expensive?

Some people think our coffees are expensive, and I understand that they believe so, especially if they compare us to a coffee sold in a supermarket. But if you taste the difference and understand how much work and effort is behind these coffees, I still believe that our coffees are cheap. It all boils down to about NOK 5,- or about USD 0,9 pr. cup. Compare that to what you pay for a bottle of water here in Norway (USD 5) where we have plenty of super clean water free from the tap, I think there is no need to discuss whether coffee is expensive or not.

Why is some coffees worth more than others?

Because quality of the coffee varies. Not only from farm to farm but within the same farm we can sometimes find a huge range of different qualities and varietals.

Take Cielito Lindo and Naciemento for instance. These 2 farms are neighbouring farms run by father and son. They grow coffee from 1500 to 1800 masl. in 2 very different types of soil. They grow 5 different Arabica varietals (Pacas, Catuai, Catimor, Geisha and Bourbon) These trees produce (like all other fruit trees) both very mature coffee cherries and also unripe and cherries that fall to the ground and get mouldy and rotten. Of course this will produce coffee of different quality.

Next year we will be there during their harvest in order to help them separate the different varietals. We are going to taste the coffees blind and  score them according to the COE cupping form. We will pay more for the better tasting lots and less for the lots that get lower scores. Would we do this if there wasn’t a difference? I think not. So, why do we do this? Because we want to encourage the farmers (above: Jobneel and Extreberto) to grow more of the qualities we like so that we can get more of this coffee in future years.

Simple and easy.

Why pay more for coffee?

Well, I see it as an investment. The farmers are able to invest in necessary equipment in order to raise the quality and they are able to save a little money and make a decent living. If we treat them well today, they will treat us well tomorrow.

I  believe that we cannot continue to exploit the coffee producers. Sooner or later they will stop producing coffee and that is a scenario I would not like to see. So, if you love coffee and would like to continue to be able to appreciate its wonderful flavours and diversity, then choose quality coffee before cheap quantity coffee.

I also think all roasters need to practice transparency in a greater way. It is time we practice what we preach so that more people understand what we are all about.

Hopefully this post was of some help to clarify what we are doing and trying to do in the coffee world. I could go on and on writing about this, but instead I encourage you to leave comments in our comments section and I will make sure I reply as soon as I can.

The total amount of money we managed to raise for the Tekangu drying table project is USD 4600,-

Hopefully this will be enough to build 5 tables.

Tim Varney and I will be going to Kenya in November to oversee the harvest and also to document the benefits of using these new drying tables.

A huge thank you to all our customers who contributed. It is much appreciated.

Extreberto from Cielito Lindo at the Cup of Excellence 2010

We are very pleased and proud to announce the purchase of Cielito Lindo CoE #18 in the Honduras Cup of Excellence for the 3rd year running. The purchase price was $8.10 per pound.

Tim was part of the international jury this year, so had a very close relationship with the top coffees – and especially with the wonderful Cielito Lindo which has become a favourite at Tim Wendelboe between both staff and our customers. It is very exciting to know we will be offering this coffee again soon!

More information on the Cup of Excellence and what it means to us and the farmers can be found here.

More info on Cielito Lindo can be found here.

For those of you who wonder what is going on with fair trade and why we are not selling fair trade coffee, please read this long e-mail from Geoff Watts. Geoff is one of the worlds absolute pioneers when it comes to sourcing and buying green coffee and establishing relationships and direct trade models with the coffee producers he and Intelligentsia (the company he works for) buys their coffee from.

This is by far the best read I have had about Fair trade and Direct trade.

We are proud to announce that we just bought the no. 11 lot at the 2009 Guatemala Cup of Excellence.

The coffee is grown on the farm San Antonio De Esquipulas y Anexos and is a mix of Bourbón, Catuaí and Caturra.

Here is a taste description:

Aroma: Hints of almonds and chocolate.
Acidity: Tropical and stone fruit-like acidity. Lively and refreshing.
Mouthfeel: A clean cup with a fat texture without being heavy. Intense sweetness and a really nice balance.
Flavour: Intense chocolate flavour. Hints of rasberries and peach. Sweet finish.

The coffee was bought for USD 7.45 per lb. (453g) of green unpacked coffee ex. transportation cost. This is about USD 6.19 above fair trade price. The farmer gets 80% of the money, the remaining 20% goes to managing the Cup of Excellence system.

We are proud to announce that we just bought lot no. 5 lot on the 2009 Honduras Cup of Excellence.

This is the same coffee we bought last year from Cielito Lindo both years it has by far been our favourite on the cupping table among the other Honduras Cup of Excellence lots. (we taste the lots blind of course)

This is why we payed the 3rd highest price for this coffee this year at USD 12.05 per pound (453g) of green unpacked and unshipped coffee.

Last year we payed USD 14 per pound, but it does not mean this years coffee is any worse in flavour.

The 2009 lot is a bit lighter than last years coffee, but shows much more complexity and an even cleaner mouthfeel. It looks like Mr. Extreberto has done an even better job this year, hopefully investing in his farm with the money we payed him last year.

Here is a small taste description of the coffee:

Intense citric and berry aromas. Sweet acidity as in stonefruits. Sparkling acidity and a firm sweet aftertaste.

When hot it has a lot of stone fruit aromas as in peach and nectarines. When it cools it developes more rose hip flavours and black currant like flavours.

Hopefully we will get the coffee within 2 months.

We are proud to announce that we just bought the 2009 Costa Rica Cup of Excellence lot #8 for USD 7.10 per pound (453g) of green unpacked and unshipped coffee. (Marketprice is about USD 1.30 per pound.)

The Coffee from the farm San Pedro was one of our favourites among this years auction lots from Costa Rica.

Here is a brief taste description:

A very juicy and sweet coffee with soft mouthfeel and sweet berrylike acidity. Flavours of chocolate, cherries and blackberries. Sweet and juicy finish.

Hopefully we will get the coffee within 2 months.

Although the coffees became expensive, we managed to buy 2 delicious small lots of coffee at the Best of Panama auction today. We are not only proud of getting our hands on such lovely coffee, we are also proud to say that we payed the 3rd and 4th highest prices on the auction. Only beaten by Esmeralda at 1st and a lovely Geisha coffee on 2nd place.

Lot no. 7 had a distinct floral and citrus nose. Lively and crisp acidity. Sweetness like in yellow melons and taste of violets, coffee flowers and bergamoth.

Lot no.14 had a very strawberry- like fruity aroma. Warm and ripe acidity. Soft and berrylike sweetness and a lovely balance.

I have not figured out how to ship the coffees yet, so we will probably get them after summer is over.

The 2009 Esmeralda Auction yesterday was pretty amazing. Once again this farm has broken records in terms of average price per pound. (The highest price so far on auction was in 2007 Best of Panama, where Esmeralda got 130 USD per lb.) Although I am not astonished anymore by the highest price at USD 117.50 per 453 grams of green coffee, what struck me the most was that even the not so tasty lots went for over 24 USD per pound (453g). See the results here.

If we look at this in perspective the best Cup of Excellence lots are selling for around 20 USD per pound. This is the reason why we decided to back out of the auction when prices went over 20 USD. The coffee is just not worth that amount of money, or to put it in a different way, our customers are not willing to pay those prices for qualities that are not up to those standards.

Just to give you an idea of the difference in coffee prices. The commodity price for coffee today is about USD 1.25 per pound. This is of course not a sustainable price for quality coffee, as the pickers and farmers are not making a good living at these prices.The cheapest coffee we have in house today was bought at USD 2 per pound, and people still complain about the prices in our store.

The fact is we need to wake up and smell the coffee. If we want higher quality coffees in the future, I think we need to prepare ourselves and our customers for prices that are much higher than what we are seeing today. Remember, in 2005 the Esmeralda also sold at a record breaking USD 20 per pound at the best of Panama auction. Today the same coffee is 117.50 USD.

There is little doubt that traveling to origin is exhausting. With work piling up at home while we were away there has been little time to blog about the last days of our Colombia trip.

I promised you more, so here goes.

Day 3:

Early in the morning on our 3rd day in Garzon, we started with a cup tasting at the Coocentral cupping lab. There were not many coffees on the table as this was at the start at the harvest, and the qualities are not 100% yet. Still we tasted a very intense and winy coffee that came from the Garzon area. Apparently the farmer of this coffee had been delivering consistent quality over the past years, so we decided to pay him a visit later on that day. After a short stop at the recieving point in Garzon to see how they analyze and grade the coffee and calculate the price for the farmer, we stopped at the mill in Garzon for a defect cupping. We tasted some minor and some major cases of both phenolic coffee, fermented coffee and also some low quality coffee from the area. It was really nice to get a perspective of what we are buying from the same area and also to learn more about defects. It is much easier to detect minor defects once you have tasted a very tainted cup.

After a quick tour of the local food market, we headed straight for the farm that had been producing the coffee we really liked earlier that morning. The farm Vereda la Soledad was located at about 1600 metetrs above sea level in a small valley. The farmer, Mr. Arcadio Cevalles had 2 farms, each located on separate sides of the valley, together with his wife and family. A family business if you like.

Mr. Cevalles took us on a tour up and down his valley of coffee trees, that pretty much looked like a jungle. He also showed us a 50 year old Tipica tree that he had just ripped out of the ground last year. (What a shame) The walk was quite steep, hot and humid so our translator passed out right in the middle of the coffee field. We therefore decided to make some natural afrodisiac and energy booster, Guarapa, the liquid pressed out of sugar cane. Little did we know that the sugar cane press was a manual one that used to be run by donkey power. Tim, Mario and myself stepped in and started to push the old sugar press in order to make some very sweet energy drinks.

It took us about 10 minutes to make 2 liters or so, and it was exhausting. While enjoying the Guarapa, we had a nice chat with Mr. Cevalles and it turned out that we were the first foreigners they had ever met. That totally blew our mind and hopefully we did not make a bad impression on them. (Although we probably were a bit rude not drinking all of the sugar heavy guarapa.)

At the end of the visit Mr. Cevalles showed us how he processed his coffee in one of his micro mills. Although the equipment was very basic it was very clean and did the job perfectly well. After all his coffee tasted great.

In the afternoon we visited another farm in Garzon called Finca Villa Adriana. This was by far the most well organized farm I have ever been to in Colombia. I think the Farmer, Mr. Diogenes Polania, had some German DNA, because he was definately a perfectionist which is not very common in farmland, Colombia. Since the farm was only at 1300 m.a.s. he had a lot of problems with leaf rust attacking the trees. Half of the trees he had on his 4 hectars of land were under severe attack, but according to himself he was able to control it. (See the contrast on picture below. Left side is attacked by leaf rust.)

Although the farm was not in a high elevated area and the trees were under attack, the climate was quite cool which translates into longer maturation times and more flavour in the cup. The farm was very interesting and well organized so we asked Mr. Polania to send us samples of his coffee by the end of May so that we at least can see how it tastes like and give him some feedback. You never know, maybe it is a hidden treasure.

One of the most interesting parts of this visit was that we got to interview some coffee pickers together with our translator Sonia who is a teacher. As we all know teachers are not very well payed. Sonia earned about 10 USD per hour in her private school. A coffee picker earns about 7 USD per day if he picks about 90 kilos og red coffee cherries per day. (Which is a lot of cherries). This is what makes me frustrated when people complain about quality coffee being too expensive. It is not our coffee that is expensive it is the mass produced coffee that is way too cheap and not sustainable for a farmer, nor a picker in terms of income. If the consumers only knew.

After a full day in the field, both Tim and I went straight to bed after a refreshing beer. All the impressions and travel really makes you tired in the evenings.

Day 4:

Day 4 started with a really bad car ride from Garzon to Neiva. After a short plane ride from Neiva to Bogota, we went straight to Virmax’ office for a cup tasting where we tasted their newly crowned “SCAA’s coffee of the year” and some of the 2009 Colombian Cup of Excellence winners. It was a really strange experience to taste coffees at 2600 m.a.s. since the low oxygen in the atmosphere makes the aroma impression of the coffee really weak and different from what we are used to.

In the afternoon, I had a seminar / training for a group of Colombian baristas at Amor Perfecto, a small specialty roastery in Bogota. You would be surprized by the level of the baristas in Colombia and their enthusiasm. The fact that they are so close to the coffee farms as well makes me really envious, although most of them have never been to a farm in their life. To me that is madness.

The evening was spent eating a lovely dinner in one of Bogotas appartment buildings overseeing the whole city. The reason for taking an easy night in, was because on our last day in Colombia we celebrated my 30th birthday at a crazy place called Andres Carné de Res. If you ever go to Bogota, make sure you go there!

Salut. Tim W.