Note from El Salvador: Coffee Makes a Comeback

 

A surge in coffee production over the past several years has flooded the global market with cheap commercial beans, causing prices to plummet to 30-year lows. The World Bank estimates that more than 600,000 farmers across Latin America have been forced out of work as a result. Today, with USAID’s help, some of these farmers are rebounding by breaking into a different market altogether: environmentally-friendly, specialty coffee. USAID is also connecting local cooperatives ith major international buyers, such as Kraft Foods. Chemonics International’s Sean Killian continues:

“Las Lajas, a cooperative of 30 farmers in the northwestern province of Santa Ana in El Salvador, is a case in point. After failing to break into the market less than two years ago, the cooperative bounced back and sold 187,500 pounds of specialty coffee from 2004’s harvest at an average of 26 cents more per pound than the global market price. The cooperative used the additional revenue — more than $50,000 — to pay off the debt it incurred at the beginning of the decade while struggling to cover the cost of production. ‘This boost in sales has really helped the Las Lajas farmers avert a financial crisis,’ commented Mr. Motes.

 

“The Quality Coffee Program was implemented in 2003, and stretches from El Salvador to five other Central American countries and the Dominican Republic. Coffee has long been a big export in these countries and a staple of the rural economy. But coffee accounted for only 3.5 percent of El Salvador’s GDP in 2002, compared with about half in 1988.

“To boost returns on coffee and its share of GDP, USAID started by helping the farmers of Las Lajas and other cooperatives in El Salvador improve the way they harvest and process coffee. Farmers were taught when to pick ripe cherries and how to sort them before pulping. Cherries, which encase coffee beans, are de-pulped and then fermented and washed to remove the cherry’s casing and mucilage. Farmers were also shown how best to dry and mill coffee beans.

“By improving the entire process, the cooperative was better able to produce high quality arabica coffee. Varieties of arabica, a pricier bean than commercial robusta, can be sold as specialty coffee.

“Working with the Rainforest Alliance, USAID also showed farmers how to treat wash water to protect the environment. This has allowed the Las Lajas cooperative to certify its coffee as environmentally-friendly, boosting the market value of its products and attracting more buyers.

“‘Coffee is actually an environmentally-friendly crop that can help improve hillside water retention and protect biodiversity,’ Chemonics’ environmental specialist, Dave Gibson explains. ‘But coffee production can also harm the environment if the pulp surrounding the bean is discharged directly into streams.’ Pulp feeds algae, which rob the water of oxygen. The lack of oxygen kills fish and aquatic plants. ‘Wash water can easily be recycled through the washing station with minimal investment,’ Mr. Gibson says. ‘The pulp can be composted and used as an excellent fertilizer.’

“While farmers were busy improving the production process and certifying their coffee, USAID was working with local exporters to identify market opportunities and connect with commercial buyers.

“Exportadora El Volcan, a local exporter, helped connect Las Lajas with Kraft Foods. Kraft, which buys about 10 percent of the world’s coffee, signed a deal with the Rainforest Alliance last fall to purchase more than 5 million pounds of certified coffee this year from countries across Central and South America.

“Not only have these buyers helped Las Lajas increase its sales, some have begun to invest in the community to support production. One buyer donated $20,000 to Coatepeque, the community which Las Lajas calls home, for a water-collection tank to provide fresh water during the dry season.

“Global coffee prices have risen to about 70 cents a pound and are poised for further growth this year. Production is expected to fall below demand for the first time in six years. Although this bodes well for the farmers of Las Lajas, they’re not depending on it. Armed with the ability to tap specialty markets, Mr. Motes confidently states, ‘they’re better prepared to protect themselves from another crisis.’"