Farm Profitability Q&A — Ashley Prentice

Farm Profitability Q&A — Ashley Prentice

The Sustainability webinar series on Farm Profitability and Prosperity generated great discussion and many questions from viewers. This post is the second of four in which panelists from the second webinar, which took place September 25th, will answer your questions. You can watch a recording of webinar #2 here.

Ashley Prentice is a 3rd generation coffee producer from Guatemala. She has a degree in Business Administration and a Masters in Coffee Science and Economics. She is a licensed Q Grader and Q Processor. Ashley formerly worked with USAID’S Rural Value Chains Project assisting farmers with business strategies to access new and differentiated markets. She also leads the National Coffee Association of Guatemala, Anacafe’s sustainability committee supporting different projects and sustainability initiatives. She is the founder of Gento Coffee a social enterprise focused on promoting value-added activities at origin to increase farmer profitability, encourage sustainable business models, and advance transparency in the coffee value chain. Ashley is an active volunteer of the SCA Sustainability Center working specifically in creating awareness of critical topics like farm profitability.

What I can glean from this talk and international reports is that there is an oversupply in physical coffee and artificial oversupply from speculators outside the coffee market. Is the SCA attempting to address oversupply at this moment?

There have been different ways producing countries have reacted to this in the past, I believe Janina explained this more in depth. Promoting an increase in consumption is one part of the solution, and the International Coffee Organization (ICO) is launching campaigns in producing countries to promote local consumption. However, specialty coffee should not be treated as a commodity and we could do a better job promoting this to consumers, that it’s not only about the excellent quality (which is a small piece of the pie) but also about the impact the coffee market can have on producers’ lives. Consumers are a key component to scale up change.

And while this is a “free market,” producers today are being paid 1/3 of what they got in the ’80s. Meanwhile producers have had to absorb increases in cost of living, surges in the costs of supplies and rises in minimum wages, a system that has fostered poverty for many producers and their families around the world, and has made coffee growing unsustainable for most, and left coffee farmers vulnerable naturally causing a long list of effects like food insecurity, immigration, aging farmer populations, etc. What does this say about our industry? And the thing is, WE CAN DO SOMETHING.

There is nothing preventing companies from working closely with producers to ensure their prosperity, setting price floors, and assuring transparency in their own supply chains. So for the future of specialty coffee and just coffee in general, I do hope that companies and individuals look into their buying models and build more sustainable and equitable trading practices that can provide dignified livelihoods and finally treat coffee farms as a business.  I also hope to see that a bigger chunk of the pie can stay in producing countries so farming families can prosper, and the next generation of farmers is willing and able to have dignified living out of coffee farming.

I also look forward to leveraging technology to ensure transparency and traceability, and more research and initiatives like the ones being lead by Transparent Trade Coffee.

Each cup of specialty coffee could have a positive impact, but it’s up to us.

How many “manpower” hours go into producing an average size bag of your coffee? (farming/harvesting/processing/etc)?

This is a very complex question, as there are many variables to consider such as farm infrastructure, terroir, origin, and efficiency of labor since in farms you can have both skilled coffee pickers and unskilled coffee pickers.  In a very broad scenario, you can consider that a coffee picker can pick between 1-2 quintals of cherries a day (each quintal equals 100 lbs). This is considering a specialty coffee farm that selectively picks only ripe coffee cherries and seeks quality.

For a 69kg bag or 150 lbs of green coffee, you need approximately 915 lbs of coffee cherries depending on your conversion rates to parchment and then the conversion to green coffee prepared for export. Depending on the efficiency of pickers, you need 5-9 full work days to pick the 915 lbs of cherries, or 5-9 pickers working a full day picking cherries to produce that one 69kg bag of green coffee.  

Processing the cherries depends entirely on the farm’s infrastructure and capacity. Drying will also depend on if you are drying in patios or raised beds. Drying on raised beds is more labor intensive as you have to be moving it more often, and since your objective is to dry it slower, then it can almost double the drying time.

If you want to educate the consumer I would recommend making a few different scenarios with specific coffees, and having real farm examples describing its specific infrastructure and process characteristics, also different origins vary in how they process and move coffee.

For Ashley and Herbert, are there talks about oversupply in Guatemala and Colombia?

In the case of Guatemala, production has remained pretty steady in the past years, and many efforts were made to increase supply after Roya devastated many farms since 2011-2012. Today, supply is mostly centralized in the hands of a few big producing countries: Brazil, Vietnam, Colombia, Indonesia—which affects us all.

Costs of production depend on many factors but one important one is productivity and efficiency. Every farmer’s goal is, or should be, to decrease costs, by being more efficient or producing more and better coffee. In Guatemala, we are fortunate to have a National Coffee Association (ANACAFE), which is owned by coffee growers, that give technical assistance to farmers and promote this. There are also private and non-profit organizations that work with producers to help them increase productivity. In Guatemala, 97% of producers are small-holders, who usually have very low productivity which in turn affect profitability, so helping them improve productivity, infrastructure, and most importantly market access is very important. However, I think that there are a lot of aid programs that are funding “new” origins to produce coffee that in a big way are altering market dynamics and promoting the same cycles of low pricing and oversupply. And forcing traditional origins, like many of us in Central America, that are known for High Specialty Coffee, out of the game.

The problem with this “oversupply” is that all coffee and all qualities are mixed up. Many countries that provide the specialty coffee industry with quality and diversity are the ones that suffer the most as they cannot compete with at all with the low prices. Quality coffee should be valued as such, and while many Specialty Coffee Roasters have strived to create more sustainable and direct buying models, it has only impacted a small chunk of the pie. We need to ask ourselves how we can scale these models to cover a broader spectrum of coffees and have a real impact on more producers.

As for external players, as long as the c-market exists, a free market, there is nothing that can be done to control external players, speculators. It’s up to companies to develop more sustainable buying models that strive to ensure a more equitable distribution of risk and profit in the value chain.