Coffee production has been promoted among rural populations around the world as a means of combatting poverty and promoting rural development. But it has not lived up to its hype. One reason is the precipitous drop in the percentage of the price of a cup of coffee captured by coffee producers. In 1930s and 1940s it was approximately 33%, today it has fallen to less than 1%.
But surely the fair trade and organic movements have made a difference.
Our research has found that the benefits of the fair trade and organic movements have largely not reached small producers but typically are captured by second tier cooperatives which collect, process and sell the harvest to international buyers. There are many reasons why those premiums do not get to the producers, but two important ones are: 1) many small producers, because of their need for cash throughout the year, see themselves forced to sell their future harvest months before the harvest time to local coffee brokers, usually at about 30% of its value. So, often the smaller and most impoverished producers have little or no coffee to sell to their cooperatives at harvest time. 2) second tier cooperatives often tell their member cooperatives that those premiums need to be used as investments to improve their coffee-buyer-facing infrastructure. As a result, we have found it extremely rare for small coffee producers to receive those premiums, and almost never any share of the profits of their cooperatives.
To further complicate the situation, most producer “cooperatives” are run like haciendas, where information and resources are largely controlled by the president and manager with the members treated as “fieldhands”. They act more like coffee brokers than the leaders under the control of a “one-member-one-vote” cooperative.
For years we have worked with such cooperatives to help them take basic steps toward acting as cooperatives, like sharing key information with their members, ensuring the functioning of their key organs (administrative council, oversight board and credit committee), and profit sharing. As one of the few sources of direct loans at lower than market rates, WPF has incorporated these elements into our loan contracts with cooperatives.
Surprisingly, we did not find support for these organizational changes among the coffee buying community, not even among cooperative buyers. When buyers ignore local efforts for cooperative reform, they effectively are seen as taking the side of the status quo, which reinforces the hacienda and broker-style behavior of cooperative leaders. So, we found their encounter with the market worked against local community efforts for cooperative reform.
In response, we also began working with Community Social Enterprises (CSEs), composed frequently of people disillusioned with their experience with these typical “cooperatives”, who have taken the initiative to jointly collect, process and sell their coffee, while sharing all the information of that process among their members, holding quarterly assemblies where key decisions are made in the open, sharing profits both individually and socially (i.e. a community fund also gets a share of the profits).
We then worked to create a market of US roasters interested in buying from these producers precisely because of how they functioned. Starting in the 21-22 cycle we took on the tasks of importing and storing their coffe, creating a database of roasters, contacting them, sending them samples on request, and then shipping the coffee ordered.
A byproduct of this process is that we have now learned a lot about the US side of the coffee chain. We were able to lower the costs of importing from 44 to 25 cents a pound; storage costs from 75 cents/bag/month to 50 cents. We identified a warehouse capable of doing their billing, collecting payments from roasters, and making bank transfers to their Nicaraguan account, only charging 1% for those services. This is important because it means that once this effort has identified a stable and loyal set of roasters, the CSE will not need to maintain a costly physical presence in the US, but will be able to manage everything from Nicaragua.
The first two years the initiative had losses, which WPF assumed, the third year there were profits of $12,594 on 127 bags imported (19,319lbs of coffee). In the 24-25 cycle we imported an entire container composed of 9 microlots (285 bags or 43,354 lbs) of which we have coffee from 4 microlots still availlable (see table below). That year we paid an additional 10% due to Trump´s tariffs, and we have now applied to be reimbursed for that expense. Now in this 25-26 cycle we have imported two containers composed of 9 microlots (544 bags).
All profits, information and learning are returned to the producers. This, of course, improves their percentage of earnings from a cup of coffee sold to a consumer, but it also helps them better understand the entire coffee chain and their role in it. This gives them immediate feedback on their coffee quality, and since they share in the profits from the US end of the chain, they are motivated to improve quality and relationships with roasters.
COFFEE AVAILABILITY 24-25 cycle
| microlots | Price/lb | Price/lb >5 bags | # bags | Fragrance/Aroma | Flavor |
| Estrechura | 4.00 | 3.60 | 6 | cherry, cereal, vanilla, bran, baking spices | Baking spices, chocolate |
| Samarkanda | 3.80 | 3.40 | 26 | cherry, cereal, bran, baking spices | raisin, baking spices |
| Nueva Esperanza | 3.90 | 3.50 | 60 | cereal, chocolate, bran, baking spices | Baking spices, chocolate |
| Santa Ana | 3.75 | 3.35 | 38 | cereal, milk chocolate, chocolate | cereal, grassy, chocolate |
To access a description of each community and photos which you can use on your webpages to promote their coffee, click on the live links in the tables above and below. On request we can provide you with a file of any of the above descriptions formatted so they can be easily printed on 3 x 5 1/2 labels to be attached to the bags of roasted coffee.
25-26 Cycle:
| microlots | Price/lb | Price/lb >5 bags | # bags | Fragrance/Aroma | Flavor |
| Estrechura | 4.45 | 4.05 | 169 | cherry, chocolate, bran, cereal, brown spice | bitter-orange, orange blossom, raisin, cereal, grape |
| Samarkanda | 4.40 | 4.05 | 10 | vanilla, chocolate, cherry | orange blossom, vanilla, cherry, floral, cereal, brown spice |
| Martha Hernández | 4.50 | 4.10 | 26 | cherry, vanilla, sweet | cherry, orange blossom, raisin |
| El Portillo | 4.50 | 4.10 | 17 | Chocolate, vanilla, grape, cherry | orange blossom, cherry, floral, vanilla, cereal |
| Leonidas Ruiz | 4.45 | 4.05 | 9 | cereal, bran, molasses | orange blossom, cherry, vanilla |
| Pedro/Osmar | 4.45 | 4.05 | 15 | cereal, chocolate, vanilla, cherry | cherry, orange blossom, vanilla, grape |
| Nueva Esperanza | 4.50 | 4.10 | 202 | cherry, vanilla, almond extract, cereal | cherry, vanilla, cereal |
| Santa Ana | 4.50 | 4.10 | 88 | cherry, almond extract, chocolate, cereal, citrus | cherry, orange blossom, cereal |
| Ariel /Claudio | 4.50 | 4.10 | 8 | cherry, brown spice, cereal | cherry, orange blossom, raisin, lemon-citrus milder intensity |
To request samples, more information, or place an order, contact us at marklest@gmail.com or 859-803-8726. The coffee is stored in the Theta Ridge Coffee warehouse in South Bend, Indiana. On request we can get you a quote on the cost of trucking to your destination prior to submitting your order.