Nicaragua Seed to Port: Microlot Logistics at Expocamo

Text and photographs by Bram de Hoog, Central America Buyer for Ally Coffee

The global coffee supply chain is a complex system that involves dozens of parties to eventually produce millions of cups of coffee every day. The growth of the specialty coffee market has increased transparency and consumer awareness about where the coffee actually comes from and by whom it is grown. The focus of these transparency efforts have been mostly on the coffee producers, who certainly merit the credit for their work. However, there is much more going on at origin than just coffee growing. Many people are overlooked or even shamed despite being vital parts of the coffee supply chain.

Particularly in specialty coffee, a lot of work and people are needed to grow the coffee and also to put it in the right market and obtain the best price possible. Here, we look closely at the complexities of handling of specialty coffee at origin from seed to port by examining the operations of our Nicaraguan exporting partner, Expocamo, in Ocotal.

Expocamo fulfills a complex role by drying, commercializing, and exporting specialty coffee for roughly 90 producers in three departments: Nueva Segovia, Jinotega, and Matagalpa. In Nicaragua, it is common for small producers to grow, harvest, and wet-process coffee themselves; the drying, however, is often outsourced to drymills or exporters. Hence, Expocamo receives wet parchment from producers daily, which is carefully dried on shaded African beds. Once dried, it is graded and stored in its dry parchment form.

The dried parchment is stored until it is ready to be exported. For the coffee to be export-ready, a handful of factors need to fall in place. First, the coffee needs a buyer. Second, a container must be filled with enough lots to make shipping affordable. Finally, the container must be allocated to a shipping vessel that will take the coffee to its destination port. Let’s have a look at these different steps more in detail.

How does parchment coffee find a buyer? As early as possible, Expocamo sends samples to potential clients; often these are returning buyers who have previously purchased coffee. These are type samples which indicate the quality of that particular lot, whether that lot is sorted by single producer, single varietal, or regional profile. Type samples give exporters the chance to offer coffee that is still on the trees based on what has already been picked from those same trees; equally, it gives buyers an idea of the quality and estimated amount available of that coffee. Based on these type samples, a purchase contract can be drawn up. Purchase contracts are usually subject to the approval of Pre-Shipment Samples (PSS). A PSS is sent once the coffee has been milled and blended after harvest. However, for the coffee to be milled, it first needs a container to go in.

Unless the sold lot of coffee is a full container load (FCL), it is often necessary to fill the container with other lots of coffee with the same destination port. This can often delay the export of a farmer’s coffee, for example if it is shared with a coffee from a much higher altitude that is harvested later. Although solutions are found for these obstacles, it is not inevitable that coffee that has been sold must wait for a spot in a container. Once it has, it is time to mill and blend.

Yes — you read that correctly. The coffee must be blended. As stated previously, a farmer brings wet parchment on a daily basis to the drying facility. All these different day lots are dried and graded separately. For Expocamo, this results in about 2500 different day lots per harvest. It is a huge puzzle to blend that back into the different qualities and quantities sold based on the contracts written by farmer, varietal, or region.

Once the coffee is ready to be exported, multiple day lots of the same quality are blended together to amount to the quantity of bags sold per the contracts in place. These are now the final lots of coffee, which could be anything from a microlot of five bags made up out of three daylots to a full container of a regional blend made out of dozens of daylots. A sample is drawn after milling, blending, and bagging, which serves as the final pre-shipment approval.

The final step is to then to bag the coffee, stuff the container, and allocate it to a vessel bound to the destination port. Overland transport trucks bring the stuffed container to the port where it is loaded on the shipping vessel. Almost all Expocamo’s sales contracts are written FOB (free on board), which means that Expocamo’s legal responsibility ends once the container is on board the ship and the importer will make payment immediately after receiving confirmation of coffee’s transfer onto the vessel. In practice, however, Expocamo provides service to roasters and even baristas long after coffee is afloat; in the end it is about creating and nurturing long-lasting relationships more than fulfilling legal responsibility.

Microlots offer incredible quality and the opportunity to connect to growers. But, it does make an already complex supply chain even more complex. Nevertheless, companies like Expocamo are built on these principles and are more than happy to take extreme care of such delicate processes. Here at Ally we could not be more proud to work with and help grow Expocamo and many other companies alike.

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