When Dutch traders introduced the Typica cultivar to Indonesia in the 17th century, coffee production underwent a rapid expansion. This was aided by a particularly favourable microclimate near the equator and mountainous regions across its many islands. But in the late 1880s, disaster struck when coffee leaf rust swept through large swathes of the country; virtually wiping out the varietal with the exception of the higher slopes of Sumatra. In response, the hardier Robusta coffee plant species was cultivated in much of the low-lying regions and the species flourished to account for nearly three-quarters of the Indonesia’s total coffee total coffee production today.
To catch a glimpse into the coffee value chain of the future, let’s take a quick look at some of the pioneering developments that are dramatically reshaping the landscape today. In a digital age of big data, powerful algorithms, just-in-time logistics and more interconnected communities globally than ever before, a revolution in coffee is taking place – and it is gathering a powerful head of steam.
In a climate of consolidation where eight major trading houses now control more than half (60%) of the world’s coffee bought and sold on the global market, there has been a tectonic shift in the supply chain that now seems unstoppable. Driven by the power of digital technologies fuelled by increased consumer demand, a new era of transparency and traceability is changing the conversation about coffee.
In the eighties, there were lots of agencies in the supply chain so roasters had very little idea of coffee production at origin. The traders offered coffee on a delivery basis to the factories from the warehouse, not necessarily from the farm gate. The internet changed all that and opened the door to establish direct contacts at origin built on trust; and above all, coffee is about trust.
Behind the macro-trend of consolidation in bulk markets, specialty coffee has been confidently moving in the direction of craft beer. A new generation of customers want to know the story behind the single origins and they demand greater sustainability which means fair prices at the farmer level. They want to participate at a deeper level and have confidence that their coffee is traceable and traded transparently.
No one can dispute that digitization is laying new tracks in the way physical coffee is being traded; particularly in specialty markets where price is largely disconnected from the world market and provenance is highly prized.
This shift that we are seeing in the supply chain will change the role of traders. As growing transparency in price and pressure on margins increases, traders will become more like data analysts as roaster’s search for the most cost efficient and transparent system to buy and market their product. Service providers such as algrano with digital platforms that connect the buyer and seller directly are challenging the way coffee has been traditionally traded.
And as the third wave in speciality coffee roasteries and independent coffee shops continues to gather pace, the mainstream market is now paying more attention to the journey from the crop to cup. Through its award-winning platform, algrano is responding to this need by helping to bridge the gap between growers and roasters. The platform also helps to overcome the enormous logistical challenges and risks of moving large volumes from one continent to another.
Whether it is a micro-lot or a full container’s worth of green coffee, growers want access to an open digital market space where they can sell their coffee online to the world. They want to tell their story and show their varieties or processing methods to potential buyers. This awareness is empowering greater knowledge sharing as producers can now compare directly with their neighbours – or even other countries. Technology is underpinning these new capabilities as people at both ends of the value chain have the tools to access more information and become more informed.
The head of steam in the engine room of the coffee trade is building, and story is moving. It’s about access to quality, transparency and traceability for roasters and new markets for producers. For a fairer and more sustainable value chain, this is definitely the direction that coffee needs to go. Since algrano was launched at World of Coffee in Gothenburg in 2015 – when we scooped an award for tech innovation – the online community has now grown to represent more than 400 growers and cooperatives from across ten coffee producing countries in central, south America. Over 500 roasters have joined to source coffee that is directly delivered to their door.
Next stop is East Africa and Asia as producers from Ethiopia and Indonesia plan to get on board later this year.
As demand for transparently traded green coffee increases, algrano have developed a producer-led initiative that empowers growers to reach specialty coffee roasters more effectively through its award-winning platform.
The new ‘Spot Europe’ feature means that producers can now ship their coffee to Bremen before selling to specialty coffee markets. It guarantees significantly lower waiting times for coffee samples, nano lots, micro lots and larger orders to be delivered directly to the roastery door.
Co-founder of algrano, Gilles Brunner, explains that the new initiative was developed in response to producer-need: “Growers told us that they want to be closer to the roaster by having their coffee warehoused in Europe”, he comments. “Our mission is always to bridge the gap between growers and roasters so the ‘Spot Europe’ tool is another step towards fulfilling our goal. It is a great opportunity for growers to take control of developing their own brand, while having much greater visibility in specialty coffee markets”.
Markus Fischer of Finca La Bastilla is a single estate coffee grower based in Nicaragua who is one of the first producers to take advantage of the ‘Spot Europe’ mechanism: “There are several advantages for us as growers. Not only do we have direct contact with the final buyer or roaster but it gives us the opportunity to offer specific qualities in small lots, allowing for total transparency in the supply chain,” he says.
Currently, Finca Las Bastilla produces around 250 specialty micro-lots in parchment or green bean each year. Situated between 1100 – 1450m in Jinotega, the 165-hectare coffee estate benefits from microclimates that contribute to the diversity in cup profile of the coffees grown across the region. Varietals such as Red and Yellow Catuai, Caturra, Catimor, Geisha are all cultivated alongside other hybrids as part of a recent varietal trial programme.
He adds that they have the facility to fully wash, honey process or naturally sun-dry their coffee. A dry mill on the farm also gives them full control in preparing the coffee for specialty markets before it leaves the farm gate for the port, and finally shipped to the warehouse in Bremen.
Markus highlights why having his coffee physically based closer to his customers will help him to realize to his aspirations as a producer: “Roasters will benefit due to the immediate availability of our coffee. This will allow for an intense exchange of information and opinion on quality, production, and other feedback from buyers – which is crucial to us. We are aware of the risks of having coffee consigned to a single destination port but this is important for the expansion of our customer base. For roasters interested in a continuous and dependable supply of a coffee they like, even in small deliveries, this new way of doing business should be interesting. We hope that the algrano platform will change our business from a simple commodity to a branded product for La Bastilla”.
Once the container of microlots from Nicaragua arrives in Bremen this September, algrano plan to roll out the ‘Spot Europe’ feature to other coffee producing countries so that fresh crop from Honduras and Peru will soon be available for roasters to request samples later this year.
The story of Costa Rica’s grano de oro – or golden bean – began in the late 18th century when arabica was first introduced to its rich volcanic soils and favourable climatic conditions in the central Meseta region. Coffee production has since flourished and is now a vitally important cash crop for the national economy. Although the country produces a small percentage of the world’s overall coffee production, it is highly regarded for the diversity of its varietals and award-winning cup profiles which has led some Costa Rican producers to enjoy their fair share of Cup of Excellence accolades in recent years.
While other Central American coffee producing countries opted for a more centralized coffee-plantation owner model, Costa Rica took a different path. Today, it still represents one of the most democratic models of coffee production in the world. This has been characterized by the ‘micro-mill revolution’ that has taken the country by storm in the past decade. In a country where 90 percent of all coffee producers cultivate less than 12 acres (five hectares) of land, the number of micro-mill facilities where producers grow, harvest, depulp and process their coffees on the farm has grown dramatically. Without this reliance on third-party millers, producers have been able to retain more of the the value of their coffee by cutting down on production costs. They also benefit from more freedom to experiment with innovative new processing methods before the coffee leaves the farm gate.
Representing the fifth generation of producers at Chumeca, based in the renowned Tarrazu region, Emilio José Urena Jimenez, talks about his shared sense of pride on the family-run farm: “Generations have passed but the good habits stay. My great grandfather’s sowed large quantities of coffee in this region. Then my grandparents took over and now my parents and brother are adopting the same love and care”. On the 8.4 hectare farm, a wide range of varietals are being cultivated for production including Red and Yellow Catuai, Caturra, Villa Sarchi, while other varietals such as Geisha, Pacamara, Sarchimor and Kenya are being experimented. The coffee is 100% sun-dried and Emilio says they have been introducing natural anaerobic process into the drying phase.
But producing specialty-grade coffee for export is not without its challenges, adds Emilio: “Maintaining quality is the hardest thing. It is very important that we focus on quality and not on quantity. We want people to know that in Chumeca, and Costa Rica, there is great coffee, and we work with dedication to produce a cup that will be enjoyed by people who admire our product”.
However, the 22 year-old who is studying to be a mathematics teacher highlights a trend that he seeing amongst his own generation: “A large number of our generation are identifying themselves more with what happens after the harvest such as being a barista, roaster, or cupper. They are also interested in the mill or the drying process. But what worries me is that fewer people are interested in the work at the farm. This includes maintaining the plantation, experimenting with different varieties, altitudes and everything that our fathers are doing with a lot of knowledge – and that is all part of the work to create the best cup of coffee”.
In a bid to incentivise the next generation of producers by sharing knowledge at the farm level, Rebeca Moya of 100 Libras has been supporting producers to increase their yields without sacrificing quality. “We collaborate with smallholder producers to add value and increase the quality of production”, she says. “At first, we wanted to export specialty coffee which is not without its risks. Two years ago, we started an alliance with Coop-Agri to help producers provide the correct documentation. We gather all the information so it is presented in the right way before consolidating the coffee ready for embarkation on the ship”.
Rebecca explains how the jute bag is a form of documentation in its own right and great care is taken to ensure that it meets the high standards set by Costa Rica’s coffee institute, eCafe. Even the bag print designs, which are a source of great pride for Costa Rican producers, help to differentiate from others and ensure a marketable visual identity that adds value whilst reinforcing traceability back to the farm. Since a great deal of regulatory procedures are involved in order to ready the coffee for shipping, 100 Libras is working with farms like Emilio to build-in efficiencies that help to improve the sustainability of the coffee sector in Costa Rica for future generations.
“This is important because it gives small producers an incentive to stay in coffee production. Many young people will go away to study but we want to see them return back to their family-owned farms. It gives a boost because they bring back new ideas about business and agronomy”, she adds. 100 Libras has now established its own laboratory farm to experiment with cultivating different varieties that are high yielding, disease resistant and offer good quality in the cup. It is this entrepreneurial spirit that has come to define Costa Rican coffee as producers develop new ways and approaches to adapt to the impacts of climate change.
Yet in spite of the many challenges, Emilio and his family at Chumeca are optimistic when finding new buyers through transparent trading platforms such as algrano. Their first ever printed bag design this year is a clear indication that high quality Costa Rican coffee continues to be in high demand internationally. He concludes: “It is touching to remember that they visited us one day and called the next day to buy our coffee. Above all, to know that the fruits of our labour is being enjoyed on the other side of the world. This is important for us and makes us feel proud about our work which motivates us to get better”.
Nicaragua is a highly-regarded coffee producing country that enjoys huge farming potential and has recently undergone a step change in the mechanization of its agricultural sector. Already, the results of this public and private investment has helped to increase quality, while at the same time reducing the cost of production of its highly sought-after specialty coffee.