Wednesday, January 25, 2006

coffee = thought

while drinking a cup of the late juan de dios blanco's 1st-place bolivian c.o.e. winner from andrew of ecco this morning (brewed in a chemex -- yum!), i took to thinking about this recent post on

why? because that screed seems more wrong to me every day. what is haunting me this morning is this statement:

"likewise, if you want to help coffee farmers and their kids, maybe the worst thing you could do is something that keeps them clinging to their unmechanized farm one generation longer. markets send 'signals' and you ignore those signals at your own peril."

if the market was working, this might be true. but the tragic case of juan de dios blanco i think proves exactly that the market is misfiring in coffee.

i'm not sure those "signals" can be trusted.

juan de dios blanco was apparently growing fantastic world-class quality coffee for a little while. in his acceptance speech to the c.o.e., he says that he couldn't participate last year because he didn't have the "possibilities."

he also states that this year, inspired by his neighbors who did compete, he improved his processing, and so he won. in short, he was a responsible entrepreneur -- he saw what his neighbors were doing to be competitive, and he matched their efforts to arrive and surpass their level.

so why haven't we heard of juan's coffee before? why was it "mistakenly" grouped with lesser-quality coffee?

i would argue it's a clear sign that in the coffee sector, the current market structure is failing big time.

if i may massively over-simplify, the job of the market and its "invisible hand" is to match buyers and sellers, to transparently allow them to discover a price/value, and to maintain the law of supply and demand. or so most economists say.

but the current coffee market lacked the mechanism to "find" juan's fantastic beans and value them properly. it took an extra-market program to do that, the cup of excellence.

li'l ol' me, the upscale specialty coffee consumer; andrew b., the artisan microroaster; and juan, the specialty coffee grower were all seeking each other. but we couldn't find each other, because the market isn't working for us.

once the cup of excellence allowed us all to finally find ourselves in an open auction space, juan and andrew discovered their price/value -- which was an astonishing US$12.55 a pound green for those 16 bags -- and now andrew and consumers like myself can engage in a retail transaction.

i believe a standard coffee bag in bolivia contains 70 k/154 lbs. of coffee. this means juan made about US$31,000 for his crop.

in impoverished bolivia -- it's 113 on the so-called "human development index" -- where the average income is just US$900 a year -- juan's US$31,000 was a significant sum.

with this mind, i absolutely have to disagree that keeping juan "clinging" to his land, as the comment above puts it, is a bad thing. if he and his family had left their farm for la paz in hopes of finding one of the scarcely-existent jobs in the capital, how would they have been better off?

the comment above assumes the inevitable obsolescence of juan and his unmechanized 4.5 hectacre farm. when in fact, it's producing competitive, world-class coffee.

it's just that for the first time that elements of a real, functioning market have been extended to juan, andrew, and myself. the obvious question is how many other juans are out there?

i bet many, many more. it's in everyone's interest -- including the middlemen who dictate the parameters of the current coffee market and who missed out on their chance to take a chunk of juan's deal -- to institute serious reform now.

posted by fortune | 8:13 AM | top | link to this | email this: | links to this post | | 1 comments

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