unionroasted blog

Series about Union Direct Trade

In the previous post Pascale talked about getting stuck into the interviews with farmers in Huehuetenango to obtain data for our Monitoring & Evaluation study. We have worked with these farmers only for two seasons, so are still in the early stages of our relationship. Pascale was learning more about coffee production in this remote region of Northern Guatemala. Here, she talks about what the farmers have been working for during the previous twelve months; receiving an income for their coffee.

¡Hola!

Coffee payments in Tuiboch

Traditionally, farmers are paid in full at the end of the season, in May, at the final “liquidation meeting” of the coffee harvest. The timing of this payment causes problems because producers have large costs to cover during the year, particularly through season when fertilizer is needed, and during the harvest to pay for labour. Union pays part of the contract earlier to help with cashflow.

Cashflow problems mean that some farmers do not sell all their coffee to their co-operative. Instead, farmers sell a small amount to coyotes (middleman). Even though coyotes pay on average less than the co-operative, they pay directly in cash at the time of harvesting. Some farmers need this money to pay to the day labourers who harvest the coffee. This is why pre-finance is very important for small-scale farmers. Having some money in advance allows farmers to enter all their crop into the co-operative which pays a higher price than coyotes and more importantly will offer a sustainable price not only today but also in the future.

This “liquidization meeting” started with a visit from ANACAFE (Guatemala Coffee Board) who will help the cooperative to obtain a loan for their next harvest. Low interest loans with good conditions are crucial. Currently some farmers, those who are not members of the cooperative, have no other options but to pay up to 36% annually in interest. These are all cost which reduces the final amount of income available for investments in coffee production, education for children and health care.

This year, representatives of the Co-operative were happy to announce they had a small victory; it was the first year that they succeeded in paying their farmers so early, in May. In previous years final payment was later than June. Waiting so long requires a lot of patience and commitment of farmers and can put them in a position in which they cannot pay off their debts and continue to pay interest. The commitment that farmers show to their organizations is strong; they really want to make this project work.

It is incredible to see how transparently the Co-operative works. Before farmers received their payment a presentation was given, clearly explaining how much coffee was received what the expenses were. The presentation was illustrated with pictures; many producers never (will) have the opportunity to see the beneficio seco (dry mill) in Huehuetenango and with these pictures they can learn about what happens with their coffee after they deliver it to their co-operative. Each farmer signs a form that states the amount of coffee that he delivered and the price he received. By doing this the co-operative can be completely transparent to Union Hand Roasted, and prove that they paid a fair price to their producers. From an outsider perspective this may seem obvious since co-operatives are owned by small scale farmers and consequently they should all have access to this information. Unfortunately, the level of transparency as we see here rarely happens within other cooperatives.  

Signing the act of the meeting

A copy of the coffee cupping evaluation form was also handed over to the farmers. Farmers can see for themselves how there coffee was cupped and which exceptional qualities their coffee has. If coffee showed signs of fermentation and was rejected, this is also listed on the cupping form. Hence, the form also serves as direct feedback, since fermentation can be avoided by handling the coffee carefully when processing the cherry into parchment.

A small talk was given about the history and reasons for the project for both new and existing members. Many small scale farmers have a rather short-term vision, rather than planning for their future, they sell to those who pay soonest if not the most. This is understandable.

The importance of a guaranteed minimum floor-price and having a long-term buyer-relationship may not always reach the minds of the producers. Their main concern is the price that they will receive for their crop that season.  Therefore, reminding them and explaining the goal and aim of the project is an important task of the co-operative.

It is not only time and labour intensive to cultivate coffee, but also commercializing coffee requires knowledge, time, negotiation and organization skills. After the coffee is harvested there is a lot of work to do. First samples of each “lote de cafe” need to be cupped to grade coffee on the basis of quality and lots are selected by Union Hand Roasted. Any coffee not suited for export, because it shows any defect, like fermentation, is sold at the local market.

The coffee needs to be transported to Huehuetenango City where the “beneficio seco” processes the parchment coffee into “café en oro”, coffee ready for export. Afterwards it needs to be transported to the harbour from where it is shipped.

Small scale farmers exporting coffee face many challenges and costs, not only in farming coffee but also in commercializing. Processing, transport and administration cost are uncured during the year. Yet they are devoted to producing and exporting top quality coffee. In the past there were many obstacles thrown into the path, and there are still obstacles to overcome. Yet, they are working hard on further improving the quality of their coffee. 

Saludos,           Pascale
A word from Steven…Again Pascale has talked frankly about the true hardships that farmers face on the yearly coffee cycle. Some good work has been achieved in creating loyalty to their cooperative. This gives the farmers direct access to the export market and opportunity for greater earning potential. It is clear how important the access to pre-finance is and this will be one of the main projects Union will be working on for next season.                    Steven

Series about Direct Trade

My previous blog post introduced Pascale; she is studying the working and living conditions of some of the small holder coffee farmers that Union Hand-Roasted Coffee source from in Central America.  Here is Pascale’s next update of her work in Huehuetenanago.  This is a new relationship for Union;  now in our second year of sourcing from these producers, we want to identify the complexities the farmers face to enable us to determine what actions we can take to support them in the future.  (SM)

¡Hola!

 Everybody in the cooperative (and La Libertad) has been extremely helpful and friendly to me. I feel very welcome here. However, it is a distinct area they have their own rules which are important to respect. Therefore I prefer to stay close to the people of the cooperative since they know what to do and what not to do. However, this has several implications for the research:

It may influence amount of structured formal interviews that I can do; maybe not as many as planned. This is because everybody in the cooperative is extremely busy. The last harvest is coming in, contracts need to be made, the last coffee needs to be collected, people need to be paid. After this period there will be more time they assure me (semana santa, the period of rest, is coming).

 I know I must have a control group, although this is difficult for two reasons: First the speed in which I can work the questionnaire is slow. Therefore, I will first try to interview as many cooperative members as possible. Second, I prefer to stay within the area of cooperative members because it is safer and less risk when in remote rural areas.

Putting aside any negativity about these limitations, the cooperative is doing loads and loads of positive stuff. There is so much to write about. Iliana, the Manager of the Cooperative, is amazing; very smart, enthusiastic and full of energy to change and develop things.

I have started to perform formal interviews. I have spoken to several people and gathered a large amount of knowledge. I have collected coffee in Palmira and spoke briefly with the people there, I had a quick visit to ANACAFE (the Guatemala Coffee Board), I have cupped coffee in La Libertad and Huehuetenango, I have visited the export company where the coffee is prepared to be exported. Talked to some people of the cooperative and now know a lot the history of the cooperative. This has meant leaving the house at 7am and coming back at 9pm exhausted in the evening, so there has been until now little time to write down everything. But I am catching up with this now in the coming weeks.

The farmers are introduced to me “as the girl who is going to calculate what is a fair coffee price”. Although for me this is a very interesting and challenging assignment it is an extremely difficult and complicated job. Information on other areas of interest, such as I will therefore collect in a more qualitative way.  I really believe that it will help the cooperative if I can help calculate a fair coffee price for them. It is not easy to do but will be very worthwhile.

Saludos,

Pascale

 Pascales’ main work is to focus on the social conditions of farmers but the producers want to take full advantage of her background in development economics to create a business model.  I think it helps to be transparent and reveal the complexities that happen in the field. Producing coffee is hard work, not romance. And farmers’ livelihoods depend upon getting a good income.  These cooperatives in Northern Guatemala are in remote areas and life is about survival. Until Union started to work with them they had uncertainty from one season to the next. Through continuing our relationship, our vision is to bring stability and economic prosperity.

Next posts from Pascale will continue to talk about the importance of helping small scale farmers do business.

Steven