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Sourcing in Central America

Text and photos by Bram De Hoog, Ally Coffee buyer for Central America


Finca Los Pirineos in Usulutan, El Salvador

It is now November, which means the Central America is gearing up for its next harvest. The previous harvest has landed and been delivered to roasters around the world. The web of exporters, freight forwarders, and shipping lines created a hefty pile of paperwork to get those on the water, but it’s exciting to see the coffee make its way from origin to points of consumption.

Coffee itself, and the value attached to it, is funneled through an hourglass shaped supply chain. Millions of people work in the production of coffee and billions drink it daily. The two groups are connected by a complex value chain that involves much more than processing and physically moving coffee.

This year I have had the to honor to visit dozens of farms, cooperatives, and exporters throughout Central America. Some origin partners have been working with Ally for years and for others it was the first time working together. In total, we have purchased coffee from numerous producers (farms/co-ops/wet mills) and the amount of offers and potential relationships is even greater.


Aquiares Coffee & Community in Turriabla, Costa Rica. Labeled hybrid experimental lots and milling facilities

The first step I take in sourcing coffee is to identify the type of producer we are working with. In general, there are four common types of producers in Central America.

· Single Estate

· Smallholder Farmer

· Cooperative/Producer Association

· Central Wet Mill

In Central America, we work with all four types of suppliers, and all countries have a different mix of these categories. Furthermore, we may be introduced to these suppliers through an exporter or we may have a direct relationship and contract an exporter to fulfill a logistics support role. Each type of supplier and type of relationship has different virtues which can also differ by country. Moreover, there are four potential sourcing methods for procuring coffee from each supplier based on roasters’ business needs (talk to your Account Manager to see which options work for you). When added up, this leads to a myriad of different value chain set-ups.


Drying patios at COMICOVEL in Honduras

· 6 countries

· 4 types of suppliers

· 2 types of relationships

· 4 procurement paths

= 192 different value chain set-ups in Central America.

There is a lot of overlap between the different value chain set-ups, but you get the idea.

When sourcing coffee, I look at four aspects of the potential supplier, which are evaluated through different methods and over a longer period of time than just one visit, and which may be reevaluated at any time. The four aspects are:

· Quality

· Sustainability

· Traceability

· Service

Together, these aspects make up the value of a supplier and the coffee they offer. This value is then evaluated against the price asked for the coffee and the potential market for the coffee given the price asked. Please note that we will always ask the supplier to quote us a price they deem to be fair for the value offered and never the other way around.

Let’s breakdown these four aspects to see how this value is generated.Fairtrade Organic coffee at COMICOVEL in Honduras.

Quality:

Quality in specialty coffee is intrinsically related to cup score and cup profile as well as the physical quality of the green coffee. I believe each quality has a market and it is our job to find the best home for that quality.

Sustainability:

Major indicators for sustainability include third-party certifications that look at all or some of the three sustainability pillars: economic, social, and ecological. These pillars are inter-related; very often one cannot be achieved without the other. Although certifications are the major indicators and market drivers, there may be other indicators of sustainability beyond or besides the certifications. Some producers implement amazing sustainability initiatives without being certified. It is especially important to identify these producers and reward them for their initiatives although they may not have the certifications that indicate a standardized premium.COMICOVEL’s member records

Traceability:

Traceability deals with the question “What coffee am I buying and where did it come from?” Different types of sourcing relationships have different levels of traceability. It is my job to identify the level of traceability and to assess its importance for each coffee. This includes looking to see if there is a possibility to enhance the traceability in the future. I think it is important here to note that more traceability is always better, but that limited traceability is not always worse. The key to building a good value chain without full traceability is having trustworthy partners and understanding the value chain. If we would only operate 100% farm-level traceable coffees, we would restrict many producers’ access to higher-paying markets.


Team at La Ilusion and Expocamo in Nicaragua.

Service:

This is an underestimated part of value in any relationship, in my opinion. It, in part, is a sum of the above as well as the quality of the working relationship overall. This includes the process of receiving samples in a timely and correct manner, clear communications, honesty, transparency, and swiftness in exporting. For example, I may find the most beautiful coffee from an excellent producer, but if it takes weeks to hear back on questions regarding availability or the samples come mislabelled and mixed up, then that makes the relationship more complicated.

In the end, the value of a supplier and the coffee offered is a mix of the above four aspects. For example, a generic 80-point lot will be more valuable if it is a single estate coffee (traceability) and Rainforest Alliance certified (sustainability) and can be exported by the producer themselves in full container loads (service). On the other hand, an 86-point coffee will lose value if its origins cannot be verified and its path to export is obscure. Nevertheless, coffee is not about transactions; it is about relationships. Although the value of a supplier may not be maximized yet, it is also our job to identify potential to improve and assist in realizing that potential and then reward the added value.

Check out Ally Coffee's offerings from Central America and talk to your Account Manager for more information different ways to procure green coffee for your roastery.


Juanachute micromill in Costa Rica.
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