Coffee buyer Geoff Watts travels the globe looking for a few good beans
By Hugh Dellios
Tribune staff reporter
Published January 22, 2006
Arriving unannounced at Las Brumas,
Watts was embraced by the farmers outside their new co-op headquarters,
which they had built with money from direct sales to Intelligentsia and
other premium and fair-trade buyers. They also had used money from
Cecocafen's social-development fund to build a two-room schoolhouse,
repair the pocked road and provide families with small-business loans
and 160 high-school scholarships. The Arauzes, who earn an additional
bonus because they now grow all their coffee organically, had settled
their debts and were sending their daughter to college to study tourism.
"We found out how good our coffee was," said Arauz, 41, a thoughtful man
who speaks with the confidence of an army commander, which he was. "Now
we have a new horizon."
Speaking through an interpreter, Watts responded that Las Brumas is "the
coffee project I am most proud of" and encouraged the farmers to keep
improving the crop by picking only mature beans, washing them thoroughly
and processing each batch separately. He then handed over two boxes of
clothes and other items donated by Intelligentsia's Chicago employees.
Watts and the villagers discussed setting aside 2 cents per pound from
Flor Azul sales in Chicago for the community's own development fund.
Watts had a health clinic in mind; the farmers said they needed a truck.
Afterward, outside the shack, Arauz told Watts about co-op members'
doubts that the extra work Watts wanted them to do would really result
in higher prices. "It's difficult to change the tradition of coffee,"
Arauz said. "It's difficult to convince farmers used to just throwing it
in a sack and taking it to market that they need to clean it, care for
it and protect it from bad odors. Sometimes the farmers believe us.
Sometimes they don't."
Arauz said the co-op wanted a written contract that locks in the prices
and amounts Watts will buy each year. The farmers were disappointed that
he had bought only a third of their crop in 2005. Watts replied with a
big promise, saying they could work out a written contract on his next
visit. Noting that Intelligentsia's business was growing rapidly, he
said the price could be adjusted upwards, but never downwards.
"I will never pay less. I don't care where the market is," he vowed.
"The only thing that could sabotage this relationship is if the
improvement [in quality] stopped. The coffee has to perform on the
table."
From the back, one of the farmers expressed the group's anxious desire
for a guaranteed, long-term relationship with Intelligentsia by piping
up with a single word in English:
"Forever," he said.
He was referring to the coffee deal, but his choice of words had its
roots in the complicated history between Americans and Nicaraguans, one
scarred by promises and disappointments. Asked where he learned the
word, the farmer said he remembered it from a phrase heard during the
time of the U.S.-supported dictator, Anastasio Somoza, whose brutal
regime was overthrown in 1979 by leftist Sandinista guerrillas.
"Somoza forever," the saying went.
Not far to the north of Las Brumas is the Honduran border, where much of
the war was fought in the 1980s between the Sandinista army and the
U.S.-financed contra rebels who contributed to the Sandinistas' fall
from power in 1990 elections. Some of the farmers were involved in the
war, including Arauz, who was a Sandinista army lieutenant and says he
took part in some 50 battles. Other farmers supported the contras.
More than 15 years later, they struggle together against common
adversaries: the global coffee market and unscrupulous middlemen.
Traditionally, the farmers sold their coffee to three or four local
brokers who resold it at prices unknown to the growers. Relations often
were bitter, with farmers suspecting they were being short-changed, but
forced to sell to the brokers as a requirement of pre-harvest loans from
local banks.
Growers say they would find out the global coffee price had jumped on a
certain day, but were told the broker was unavailable or "out of the
country." By the time he appeared again, the price had dropped. Other
times, brokers would exploit a farmer's desperate economic situation by
offering them half the market price in advance of the harvest.
"As we say in our country, there are thieves with guns and thieves in
ties," says Arauz, who remembers almost losing his farm and not having
enough money to pay his pregnant wife's hospital bills after the 1999
price crash.
Since 2001, Las Brumas has instead sold through Cecocafen, which helps
find alternative buyers, arrange financing and negotiate better prices
for 1,900 growers. Four such marketing co-ops now represent a quarter of
Nicaragua's 25,000 growers.
The Las Brumas farmers still aren't completely happy. They were
disappointed with the overall price that Cecocafen sold their coffee for
this year. Watts said he planned to take along an accountant on his next
visit to make sure Intelligentsia's money is reaching them.
Many industry officials believe the premium-quality coffee market, by
appealing to a wider range of consumers, can benefit more farmers than
the even smaller fair-trade, organic or environment-friendly coffee
markets. Those other approaches ask socially-minded consumers to pay a
premium but do not directly promote better-tasting beans.
The downside to the quality market is that it lacks the verification and
labeling those other systems have to assure cappuccino sippers that the
extra money they're paying isn't going into the pockets of middlemen.
Paul Rice is the founder of Oakland-based
Transfair USA, a company that certifies that buyers pay at least the
fair-trade price of $1.26 per pound for coffee, of which the farmer
usually gets around $1. Rice estimated that in 2005 about 10 percent of
U.S.-consumed coffee carried Transfair's certification label, and
lamented that it wasn't more.
"Intelligentsia may be very committed to a direct relationship with
farmers, but most companies don't operate that way," Rice said. "Most
companies don't really know where the money from most of their purchases
goes."
Watts said 15 percent of Intelligentsia's coffee is fair-trade
certified. He said the roastery could certify more, but that it would
rather give more money to the farmers than pay the certification costs.
I RETURNED to Nicaragua last July, without Watts, to speak with Las
Brumas' farmers.
Arauz, who by then had handed leadership of the co-op to another member,
lives with his wife and five children in a modest, cement-block home in
the city of Jinotega and drives up to his coffee fields several times a
week.
Arauz, whose family has always grown coffee, owns a total of 35 acres,
on which he pays a family to live as caretakers. During the three-month
harvest season, he hires another 20 or 30 laborers who move their
families onto the land to pick the beans. He said he made about $6,000
last year, "a good year."
Arauz explained how he had first met Watts and how a Cecocafen official
advised the co-op not to rely on the coffee buyer, thinking he'd never
purchase enough coffee to justify a relationship. But a co-op consultant
advised them not to miss out on the higher prices Watts was offering.
"It's a beginning," said Maria Ennis Velasquez, Arauz's wife, as their
children dashed in and out of their living room. "We want them to tell
us directly how much they are going to buy. That's the concern of
everybody."
While driving back down from the coffee fields one day, Arauz asked how
Intelligentsia was selling his coffee in Chicago. We stopped at an
Internet cafZ in Jinotega, and Arauz sat spellbound as Intelligentsia's
Web site came up on a computer screen, followed by the page featuring
Flor Azul. He didn't bat an eye at the $12.95 price. "That is
understood. We are just part of the chain," he said.
The day before, however, he had appeared less comfortable while
calculating aloud how many cups of coffee a retailer can get out of a
pound bag and how much the retailer could earn if selling cappuccinos at
$3 a cup.
"We're in agreement that everyone in the chain makes something, but it's
got to be a just distribution," Arauz said.
FOR THE THIRD day in a row, during his visit last spring, Watts is at
Cecocafen's processing complex, sitting at a round table ringed with
glasses of freshly brewed coffee. It marks the 15th time in three years
that he is smelling and sipping coffee samples from Las Brumas and other
co-ops.
Out the rear window one can see acres of concrete, the drying platforms
for beans. Behind them is the building where the best beans are sorted
from leaves, sticks and inferior beans in a maze of elevator columns,
chutes, filters and floor grates.
Across the table from Watts sits Consuelo Arauz, 18, the Las Brumas
president's daughter, who is learning to taste-test coffee. She is one
of 65 young Nicaraguans being trained with the help of USAID and private
groups, so that someone besides buyers can gauge the quality of the
farmers' product and can better haggle over prices.
Traditionally, Nicaragua has not had a well-developed coffee-consuming
culture; their best beans have always been exported to bring in hard
currency. Arauz says she likes the taste, "although what I don't have in
my head are 'chocolate' and all those other terms they use."
Later, comparing taste scores on a laptop, Watts identifies one
consistently excellent Las Brumas grower as Jose Luis Gonzalez, whose
farm sits at an ideal 4,500 feet above sea level. He vows to find
Gonzalez on his next visit to learn what he is doing right.
IN JULY, I found Gonzalez in a big sloping field of carrots, which he
had planted to supplement his falling coffee earnings. He lives in a
one-room, unlit shack in the middle of his coffee trees with his wife,
Rosario, 23, and their son, Herson, 2.
Gonzalez, 38, who has spent his life tending his family's coffee, said
he produced 1,000 pounds of coffee last year on his 2 acres-the coffee
that Watts rated high-but that the carrots earned him more money.
Told by other co-op members that Watts liked his coffee, and that it
could mean more money, Gonzalez was intrigued but full of questions.
"What happens if the [global market] price drops again?" he asked. "When
is this guy coming back?"
THE FLOW OF JOE
The price of high-end coffee from Chicago-based Intelligensia is determined by numerous expenses- from the farmer's labor in Central America to the cost of Chicago baristas' health insurance.
CONTRIBUTING COSTS
Breaking down the cost of one pound of Intelligentsia Flor Azul coffee
1. Farming/harvesting $1.42
TOTAL: $1.42
COSTS: Planting, fertilizing, tending and picking the beans from coffee plants
2. Initial preparation .26
TOTAL: $1.68
Milling, drying, sorting, and transporting the beans
3. Shipping .09
TOTAL: $1.77
Shipping fees
4. Importing .15
TOTAL: $1.92
Offloading, storage, sampling for quality, customs and import fees
5. Trucking .12
TOTAL: $2.04
Shipment fees from Oakland to Chicago
6. Wholesale preparation 5.91
TOTAL: $7.95
Employee salaries and benefits, roasting, marketing, packaging
7. Retail sales 5.00
TOTAL: $12.95
Same as wholesale, plus rent for 2 Chicago retail sites
SOURCE: Intelligentsia Coffee & Tea, Inc.; Chicago Tribune graphic.
Copyright © 2006, Chicago Tribune