The cost of producing specialty Coffee - Part 1

As an industry we talk about FOB prices, contextualising these figures by describing them in relation to the C-Price or Fair Trade Price Floor. However these numbers don't reflect what farmers actually earn, or what they have to invest to produce coffee of such high quality. 

Most of us are aware that producing specialty coffee requires a greater investment from the producer, but knowing exactly how much is hard to calculate. 

Colombian producer, Maria Bercelia Martinez, was an entrepreneur before she was a coffee producer, and her daughter graduated university with an accounting degree. She keeps detailed accounts of her expenses for her farm, Finca Los Angeles, in Acevedo, Huila, and she has very generously compiled and shared some financial information with us. This data, in the downloadable spreadsheet below, provides an insight into the kind of investment required to produce specialty grade coffee. 

Maria Bercelia Martinez is a unique producer. Almost 70% of the coffee she cultivates achieves scores of 86 or higher, which is a remarkable achievement. But she admits that she is struggling to make ends meet. The costs of production are increasing, but the price paid for coffee does not reflect this. 
 

Maria Bercelia's biggest expenses

Picking
The number one expense is picking coffee. Maria Bercelia pays her pickers 5000 Colombian Pesos (COP) per arroba (12.5kg), plus the family provide food and accommodation. Maria told me the salary of pickers has more than doubled in the last two years, and finding trained pickers who know how to select only the ripe cherries is a challenge for all producers of specialty coffee in her region. 

The cost of food increased significantly in the last two years, something I can attest to from personal experience, having lived in Colombia from 2011 until early this year. This is due to two main factors. Firstly the country was hit by a drought two years ago. Secondly, the Colombian peso lost over 40% of its value in a six month period in 2014/2015, which caused high inflation and an increase in the cost of living. This impacts Maria Bercelia's costs of production, as she offers food in addition to the pickers' wages, rather than subtracting the cost of food from their salary. 

Inputs
This sudden devaluation of the peso also significantly increased the cost of inputs like fertilizers and fungicides (to fight the ever-present threat of coffee leaf rust), which are imported, or use imported ingredients. 

Drying
Drying coffee while maintaining quality is a slow and involved process. On Maria Bercelia's farm, the coffee spends four to six days in a second story drying bed with a plastic canopy and walls that can be raised to allow airflow, and closed when it rains. The coffee is then moved to a series of raised drying beds. During this process the coffee is moved every couple of hours, depending on humidity, to ensure even drying. This is also the period when the parchment coffee is carefully hand-sorted to remove any contaminants and less than perfect beans, a time-consuming task. 
 

Caveat

The financial information in this spreadsheet was provided by one producer, working on one farm. It is not meant to be representative of all farmers working in specialty coffee, or even all farmers in her region. We do not present this information as verified data, it is self-reported financial information reported directly to us. The estimated day-rates of labor are Maria Bercelia's. The estimated cost in USD is based on an average conversion of COP to USD for the December 2017 to May 2018 period in which Maria Bercelia was paid for her coffee.  
 

Not included in this document

There are many costs that are not included in this spreadsheet, including the cost of purchasing land, setting up the farm, buying the seedlings, planting trees, building worker accommodation, or the interest Maria Bercelia must pay on the loan she took to keep the farm running when Colombia's coffee prices plummeted. These costs should be considered as part of the cost of production, and without them we decided not to calculate a cost of production per kilogram in the spreadsheet below. 
 

Why share this information?

Despite its omissions, this is detailed financial information that can enlighten those of use who work in specialty coffee, but don't spend our days on a farm. We see this document as a crucial starting point for a discussion about specialty coffee prices, in Colombia and beyond. Maria Bercelia, and most farmers we have spoken to in the region, all question why the price paid for specialty is linked to the C-Price, and does not reflect the cost of production. For farmers like Maria Bercelia, the latter has significantly increased in recent years while the price they earn for their coffee has not. 

Next week we will publish data of Maria's production, and the prices she was paid for her coffee from the recent 2017/2018 harvest. Sign up for our newsletter if you would like to be notified when Part 2 of this blog post is live. 

We welcome your thoughts, opinions, concerns and ideas. Please leave us a comment below.  

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Download the document: Production Costs, Finca Los Angeles. 

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Violencia, pérdida y café en Colombia: Una carta de María Bercelia Martínez

Read this blog post in English

Dos cosas me impactaron cuando conocí a María Bercelia Martinez en su finca en Acevedo, Huila. Primero, que ella y su familia tenían una aproximación diferente al cultivo del café. Segundo, lo unida que era su familia, aún en comparación a otras familias colombianas. Curiosa de saber más sobre ella, le pedí que diera un poco más de información sobre ella. Así fue que ella le escribió esta carta a CCS.

No es fácil de leer, en especial para alguien que conoce la generosidad, el afecto y la determinación de esta mujer. Tristemente, es una historia común en Colombia y es posible oír diferentes versiones de cualquier persona que vive en el campo. Eso no la vuelve menos conmovedora o menos importante de leer.

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Maria Bercelia en su finca, Los Angeles, Acevedo, Huila, Colombia. 

Apreciados CCS, 

Gracias por esta oportunidad de contar un poco de mi vida y de mis inicios con el café.

En 1982 mis padres se separaron, y tuve que cuidar de mi mamá y de mis dos hermanos menores. En 1984 me casé con José Vianey Erazo, y juntos trajimos al mundo a nuestros tres hijos, Andrea, Diego y Daniel.

Mi esposo y yo comenzamos nuestro negocio propio con los pocos recursos que teníamos entonces. Iniciamos con una pequeña ferretería en el pueblo de El Tigre, en el departamento del Putumayo y, gracias a Dios, pudimos comprar un terreno y construir una casa. Con ese hogar, nuestro negocio y nuestros hijos, fuimos muy felices. Habíamos realizado nuestros sueños, y pensamos que podríamos vivir allí toda la vida. 

Tristemente, no habría de ser así. De un momento al otro, empezó la fiebre por plantar cultivos ilícitos (tales como coca, el insumo necesario para la cocaína) en nuestra región, aquellos que tanto daño le han hecho a nuestro país. Con estos cultivos llegaron las guerrillas y tomaron control del área con la ayuda de “milicianos” (colaboradores de la guerrilla). Fue una época terrible donde se asesinaban personas a diario y muchas veces por razones injustas.

Como vivíamos en medio de la zona controlada por la guerrilla, todas las autoridades gubernamentales nos miraban a todos como si fuéramos guerrilleros, aunque muchos vivíamos de nuestros negocios y éramos inocentes. Eramos más los buenos que los malos, pero nos juzgaban a todos por igual.

Vivíamos tan tranquilamente como era posible, en la medida en que no nos metimos en problemas y solo nos dedicábamos a cuidar nuestros hijos y atender nuestro negocio. Eso fue así, hasta 1999. A media noche llegaron los paramilitares (grupo mercenario financiado por el narcotráfico y el mismo gobierno para combatir las guerrillas), se tomaron el pueblo y asesinaron a sangre fría y sin discriminación a 32 personas, en su mayoría inocentes. Desaparecieron muchas otras. Quedaron muchas familias destruidas; mujeres solas, hijos huérfanos. A nosotros, gracias a Dios, no nos pasó nada. Nada físico, porque el corazón y nuestra tranquilidad quedaron destruidos. Perdimos muchos amigos. Fue un momento de gran tristeza que marco nuestras vidas. 

Quedamos sin saber qué hacer ni para donde ir. No queríamos dejar abandonado todo lo que habíamos logrado, nuestro esfuerzo, nuestra vida. Los paramilitares dejaron una amenaza: iban a regresar para rematar a los que nos quedáramos. Esos días nos fuimos a quedar donde un hermano que vivía en La Hormiga, un pueblo vecino. Mirando a nuestros hijos pequeños decidimos que no era el sitio donde debían estar. Decidimos reunir algunos recursos y compramos un lote en Pitalito, Huila, y construimos una casa. Estábamos felices. Era una ciudad tranquila y no se escuchaba violencia por ningún lado. Mis hijos estudiaban en buenos colegios, pero como ni mi esposo ni yo teníamos buena formación académica no fue fácil encontrar trabajo y los gastos de la ciudad eran muchos.

Tomamos una decisión difícil. Dejamos a nuestros hijos solos en Pitalito para que terminaran sus estudios básicos y de bachillerato, y nosotros emprendimos un viaje a un pueblo llamado Llorente, en el departamento de Nariño. Era un pueblo dominado por la guerrilla, los paramilitares y el narcotráfico. No era lo que queríamos hacer. No queríamos volver a vivir en carne propia la violencia, pero trabajar como comerciantes en el negocio de la ferretería era lo único que podíamos hacer. Gracias a Dios fuimos muy responsables con nuestros proveedores, quienes nos abrieron sus puertas para iniciar de nuevo con el negocio. En poco tiempo teníamos un negocio bueno y rentable y nuestra situación económica volvía a estar bien.

Pero no todo era felicidad. Nuestros hijos permanecían prácticamente solos todo el tiempo. Los podíamos ver cada seis meses cuando salían a vacaciones, pero con la ayuda de Dios, ellos terminaron el bachillerato. Andrea siguió su carrera universitaria como contadora pública y Daniel empezó odontología. 

La situación en Llorente se tornó critica. Nosotros vivíamos casi como secuestrados. Abríamos la ferretería a las 6:00 de la mañana y cerrábamos a las 6:00 de la tarde. Luego de esa hora nos encerrábamos, porque los grupos armados habían prohibido salir después de esa hora. El que desobedeciera era asesinado. La violencia se apoderó del pueblo y la guerra por el poder no daba tregua. Desafortunadamente, no teníamos opción sino quedarnos; era la única forma de conseguir los recursos económicos para que mis hijos siguieran en la universidad. Eso fue, hasta que asesinaron a mi primo.

Nunca supimos por qué fue asesinado, porque nuestra familia nunca se involucró en la guerra o la violencia, pero no estábamos sorprendidos. Los paramilitares contactaron a mi esposo y le dijeron que fuera a recoger el camión que mi primo había estado manejando, que nos pertenecía. Cuando mi esposo llegó, un soldado paramilitar le dijo que no informara del sitio donde lo habían asesinado y desmembrado, porque no tenían planeado regresar el cuerpo a la familia. Pero la familia de mi primo hizo su propia averiguación, encontraron el sitio donde lo habían enterrado, lo exhumaron y le dieron un sepelio de acuerdo a sus creencias.

Desafortunadamente, esto creo problemas para nosotros. Los paramilitares pensaron que habíamos sido nosotros quienes les habíamos dicho a la familia de mi primo sobre su asesinato, y amenazaron con matarnos. Tuvimos que dejar Llorente inmediatamente, así que dejamos nuestro negocio atrás.

Lo único que queríamos era estar cerca de nuestros hijos y vivir una vida pacífica. De esa manera nos volvimos caficultores. Nos gustaba la idea de trabajar en el campo y con un producto insignia de nuestro país. Compramos la finco Los Ángeles, y comenzamos a cultivar café.

Al principio no sabíamos nada del cultivo del café, de la siembra, de la recolecta, de la fermentación o del lavado. Ni siquiera sabíamos como venderlo. No entendíamos qué era el factor de rendimiento y cómo afectaba el precio del café. No endeudamos por qué a veces nos pagaban menos. Afortunadamente somos gente de negocio y emprendedores. Contratamos a un caficultor local para que nos enseñara y aprendimos sobre la prueba de taza y como afecta el precio que se nos paga. Fue ahí cuando decidimos tratar de cultivar café de alta calidad. Pudimos sostener a la familia y, gracias a Dios, mi hija pudo terminar su carrera, cumpliendo mis sueños para ella de ser una profesional educada.

Mi felicidad no era completa, y mi corazón todavía duele por Daniel. Cuando el estaba en el cuarto año de universidad (de cinco), hubo una crisis en los precios del café en Colombia. Tuvimos que pedir unos préstamos para cubrir los sueldos de nuestros recolectores; de lo contrario, nos hubiéramos arriesgado a que se pudriera el café en el árbol. Logramos aferrarnos a nuestra finca, pero no pudimos pagar los gastos de la universidad, y Daniel se vio obligado a dejar sus estudios. Hice todo lo que pude para que se volviera una realidad, pero fallé. Hasta este día seguimos pagando los prestamos que tomamos para mantener la finca andando.

 Esta es la frustración de producir café. Los precios para el café especializado están enlazados con precios inestables de materias primas, aunque es un producto muy diferente. Producir café especializado requiere más dinero, más tiempo, más atención y más determinación. En estos días, todo lo que la fina produce, va a pagar nuestras deudas y no tenemos el dinero para invertir en la misma finca. Vemos los estragos de esto, con una baja producción y una mala densidad en el grano respecto a lo que solían ser.

Quisiera a veces que José y yo hubiéramos continuado nuestras vidas en el Putumayo, criando a nuestros hijos y administrando nuestra ferretería. Estábamos bien financieramente, y teníamos los medios para educar a nuestros hijos; pero estábamos rodeados de violencia y no podía mantener a mi familia a salvo. 

Pero, como dice el dicho colombiano, “no hay mal que por bien no venga”. A pesar de nuestras dificultades, aprendimos el valor de la vida y de la familia. Y, descubrimos el mundo del café! Fue frustrante ver a nuestros hijos abandonar sus estudios universitarios y cambiar sus libros por guadañas y cocos de recolección, pero me siento afortunada porque ahora vivo lejos de la violencia. 

Estoy enamorada del café, y estoy muy feliz de estar con mis hijos. Me trae mucha alegría trabajar junto a ellos para construir una mejor vida para nosotros mismos.

Hemos pensado vender la mitad de la finca para poder pagar nuestras deudas y empezar a re invertir. Buscamos un socio que conozca el mundo del café y que comparta nuestro sueño de producir la mejor calidad. Sé que mi finca tiene un gran potencial y sin la presión de pagar nuestras deudas, podremos vivir una vida más relajada.

Pero hay otra cosas que me motivan, como trabajar con ustedes. Con su apoyo y experiencia y el valor que le dan a mi trabajo, puedo sentir que he logrado mis sueños. La experiencia de recibirlos en mi casa ha sido una de las más bonitas, y siempre espero con ansias su regreso al país, para que vengan a visitarme, poder atenderlos con alegría y amor, un buen pedazo de carne ahumada y cerveza. Podemos compartir una charla entre amigos, y poder contarles sobre nuestro esfuerzo para mejorar día a día y así lograr un buen café.

Esta es una breve descripción de la historia de mi familia, de donde vengo, las situaciones que he debido enfrentar con mi esposo, que le han dado forma a mi carácter y a mi deseo por ir siempre hacia adelante. Me han salido algunas lágrimas escribiendo esta carta, pero lo hice con gran amor por el equipo de Collaborative Coffee Source.

Agradezco su interés en mis origines y en mis sueños. Espero que nos puedan visitar de nuevo pronto!

Con amor,
María

Maria con su esposo, Jose Erazo, y sus hijos Diego y Daniel

Violence, Loss and Coffee in Colombia: A letter from Maria Bercelia Martinez

Leer este articulo en español

Two things struck me when I met Maria Bercelia Martinez on her farm in Acevedo, Huila. Firstly, that she and her family approach coffee cultivation a little differently. Secondly, her family are especially close, even by Colombian standards. Curious to know more, I asked her to give me some background. So she wrote CCS this letter, which explains her unique perspective on coffee, and the joy her family exude just being together. It also tells a very sad story.   

This letter is not easy to read, certainly not for anyone who knows this woman’s generosity, warmth and determination. Unfortunately, it is a common story in Colombia and you will hear versions of it from almost everyone who lives in the countryside. That doesn’t make it any less heartbreaking, or any less important to read. 

I have translated this letter from Spanish, edited for brevity, and I have added some notes in brackets to give context where needed, but as much as possible, I have tried to keep Maria’s story in her own words. We are so honored she agreed to let us share it with you. 

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Maria Bercelia on her farm, Finca Los Angeles, in Acevedo, Huila, Colombia. 

Dear CCS, 

Thank you for this opportunity to tell you a little of my life and my beginnings with coffee.

In 1982 my parents separated, and I had to take care of my mother and my two younger siblings. In 1984 I married Jose Vianey Erazo, and together we brought into the world our three children, Andrea, Diego and Daniel. 

My husband and I began our own business with the few resources we had at the time. We began with a small hardware business in the town of El Tigre, in the department of Putomayo, and, thanks to God, we were able to buy a piece of land and build a house. With that home, our business and our children, we were so happy. We had realized our dreams, and we thought we would live there forever. 

Sadly, it was not to be. Suddenly, there was a great rush to grow illicit crops in our region (such as coca, the raw material for cocaine), those that have done such damage to my country. With those crops came the guerrillas and they took control of our area with the help of “milicianos” (guerrilla collaborators). It was a terrible time, people were killed daily, and for unjust reasons. There was no help from the government or military. They viewed anyone who lived in a guerrilla controlled area as guerrillas, even though most of us were merely hard working people living our lives, running businesses, raising families.

We lived as peacefully as we could, we didn’t put ourselves in trouble’s way and we dedicated ourselves to caring for our children and running our business. That was, until 1999. That was the year the paramilitaries arrived. These are mercenary armies created to combat the guerrillas, sometimes financed by narco-traffickers, sometimes financed by the government. One night they arrived in the early hours of the morning and took control of the town. That night they murdered 32 people in cold blood and without discrimination. In the following months many more people disappeared, families were left destroyed, mothers became widows, children were orphaned. 

We thank God nothing happened to us, or that at least we suffered no physical loss. But our hearts were broken and our sense of security was destroyed. We lost so many friends. It was a an era of such great sadness, one that marked our lives. 

We didn’t know what to do or where to go. We didn’t want to abandon everything we had achieved, our hard work, our life, but the paramilitaries threatened to return to kill all those who remained in the village, so we left. We stayed with my brother in the nieghboring village called La Hormiga, but it was not a safe place for our children. So, we gathered all our resources and bought a small plot of land in Pitalito, Huila and built a house. There was no mention of violence in that region. Our children could study in good schools. We we were happy to be safe.

However my husband and I couldn’t find jobs. We never received a good education which made it difficult, and the cost of living in that city was so high. We had an opportunity to open another hardware store in a town called Llorente, in the department of Nariño. It was a town caught between guerrillas, paramilitaries and narco-traffickers. We did not want to return to that violence, but running a hardware store was all we knew how to do. We made the difficult decision to leave our children alone in Pitalito, where they would be safe and could finish high school, and Jose and I moved to Llorente. 

Our business was successful. We had been very responsible towards our suppliers in the hardware business in Putomayo, and all of them opened their doors when we decided to start again. In a short period of time we were making a profit and our economic situation was once again stable.  

We were unhappy that our children lived alone. We only saw them once every six months when they could take a vacation. However it was worth the sacrifice. With the help of God, Andrea and Daniel finished high school. Andrea began studying a degree in accounting at the local university, and Daniel soon followed to study dentistry. 

Sadly the security situation in Llorente deteriorated. Armed groups imposed a nighttime curfew, and to ignore the curfew was to be killed. We lived like hostages in our own home. We opened the hardware store at 6am, and closed at 6pm, then we locked ourselves inside. Violence took over the town and the war for power between different armed groups gave no respite. We had no option but to stay, it was the only way we could afford to keep our children at university. That was, until the day the paramilitaries killed my cousin. 

We never learned why he was killed, because our family never got involved in the war or violence, but we were not surprised. The paramilitary contacted my husband and told him to come and pick up the truck my cousin had been driving, which belonged to us. When my husband arrived, a paramilitary soldier told him not to inform anyone of the place where they murdered and dismembered my cousin, because they did not plan to deliver the body to the family. But my cousin’s wife, and children did their own investigation and found the place where he was buried. They exhumed him, and gave him a burial according to his beliefs. 

Unfortunately this created problems for us. The paramilitaries thought we had told my cousin’s family about his murder, and they threatened to kill us. We had to leave Llorente immediately, so we walked away from our business. 

The only thing we wanted was to be close to our children and to live a peaceful life. This was how we came to be coffee producers. We liked the idea of working in the fields, cultivating the signature product of our country. So we bought the farm, Los Angeles and began cultivating coffee. 

Maria and her family hired a neighbor to teach them how to cultivate coffee. 

In the beginning we didn’t know anything about coffee farming, we didn’t know how to grow coffee, how to pick it, ferment or wash it, we didn’t even know how to sell it. We didn’t understand Yield Factors and how they affect the price of coffee. We didn’t understand why sometimes we were paid less. Fortunately we are business people and hard workers. We hired a local coffee grower to teach us, and we learned about cup quality and how it affects the price we are paid. That’s when we decided to try and grow high quality coffee. We were able to support our family, and thanks to God and coffee, my daughter finished her degree, fulfilling my dreams for her to become an educated professional. 

However my heart still aches for Daniel. When he was in the fourth year of his degree (of five years), there was a crisis in coffee prices in Colombia. We had to borrow money to cover the wages of our pickers, or face letting the coffee cherries rot on the trees. We managed to hold on to our farm, but we couldn’t afford the university fees, and Daniel had to quit his studies. I dreamed he would become an educated professional, and I did everything I could to make this a reality, but I failed. To this day we are still paying off the loans we took to keep the farm running.  

This is the frustration of producing coffee. Prices for specialty coffee are linked to unstable commodities price, even though the product is different. Producing specialty coffee requires more money, more time, more attention and more determination. These days everything we earn goes to paying off our debts, and we don’t have the money to invest in the farm itself. We are seeing how detrimental this is, production is dropping and our beans have poorer density than they used to. 

I wish Jose and I could have continued our lives in Putomayo, raising our children and running our hardware business. We were doing well financially, and we had the means to educate our children, but we were surrounded by violence and I could not keep my family safe.

But, as the Colombian saying goes “there is no bad that doesn’t produce some good.”  Despite our difficulties we learned the value of life and of family. And, we discovered the world of coffee. It was so frustrating to see our children abandon their university studies, and change their books for scythes and collection buckets, but I feel lucky because we live far from violence.

I have fallen in love with coffee, and I am so happy to be with my children. It brings me such joy to work together with them to build a better life for ourselves. 

We have decided to sell half of our farm so we can pay our debts and begin reinvesting. We are looking for a partner who knows the world of coffee and who shares our dream to produce the best quality. I know my farm has great potential and without the pressure to meet our repayments, we could live a more relaxed life. 

But there are other things that motivate me, like working with you. With your support and experience and the way you value my work, I feel I can achieve my dreams. The experience of having you here in my house was one of the nicest moments of my life, and I eagerly await your return, so I can host you with happiness, love, a good piece of smoked steak and a beer. We can have a chat between friends, and I can show you all the effort we’ve invested in improving and producing great coffee.

This is a brief description of my family’s story, where I come from, the situations I’ve endured with my husband, that have shaped my character and my will to go forwards. I shed some tears writing this letter, but I did it with a lot of love for the team at Collaborative Coffee Source.

I want to thank you for your interest in my origins and my dreams. I hope you can visit us again soon.

With love
Maria

Maria with her husband Jose Erazo, and sons Diego and Daniel.