Speciality coffee products, support and shared value are key to success

Ten years ago, the residents of Kabada Boddaput — in southeastern India’s remote Araku valley — were impoverished subsistence farmers, living in mud huts and getting by on the millet, yams, pumpkin and greens they grew on their one- to five-acre plots.

Cash was scarce and emergencies meant borrowing from friends and family — debts that might take years to repay. “It was a very terrible situation,” recalls Sanyasi Gullela, a farmer. “There were not enough clothes and no money for cattle.”

But life has changed dramatically for Kabada Boddaput’s tribal farmers — along with around 13,000 others in the Araku valley — since they began cultivating coffee, encouraged by the Naandi Foundation, a Hyderabad-based philanthropic organisation.

Last year, Mr Gullela earned Rs105,000 ($1,640) from coffee, which he grows on 1.3 of his three acres of land, and additional funds from the pepper vines coiling around the surrounding shade trees. In recent years, these earnings have financed four cattle for ploughing and an auto-rickshaw for his son. His neighbour has purchased a second-hand tractor.

Daily life has improved, with the newfound cash used to buy more nutritious food, such as lentils, and new clothes. Some locals have upgraded their mud homes with cement and tiles. “Nowadays, I have a lot of choices,” says G. Tirupati Rao, who grows coffee on two of his 3.5 acres. “What we want we can easily buy from the market. Earlier, we had to compromise.”

While around the world coffee has developed a reputation for bringing few tangible benefits to those toiling to grow it, the view in the Araku valley is different. The crop — grown bio-dynamically without costly fertilisers or agrochemicals — has become an unlikely stepping stone to socio-economic progress for some of India’s most neglected and marginalised peoples. “Coffee has given dignity to farmers,” says Chiranjeevi Naidu, a board member for the Small and Marginal Tribal Farmers Mutually-Aided Co-operative Society, set up in 2006 to process the coffee grown through the Naandi project.

The Araku valley has a history of coffee production dating back to the colonial era, when British planters grew thousands of acres. After independence, India’s government-run Coffee Board took over the plantations, employing local people. And the board gave coffee seeds to farmers, although few flourished in the absence of other support.

But many Araku farmers were eager to keep trying. “They said: ‘Anything that was valuable in India, the British took control of, so coffee must be valuable’,” says Manoj Kumar, Naandi’s chief executive officer.

Naandi’s corporate donors were less enthusiastic, he recalls. “I’ve never heard of anyone coming out of poverty through coffee,” one told him. But Mr Kumar — who had rather stumbled into the coffee business when he was asked in 2004 to develop “livelihood projects” to help Araku farmers — was undeterred. Naandi promised technical support with cultivation and offered to market the farmers’ produce overseas.

Since then, Naandi’s agricultural experts have taught Araku’s novice growers to produce top-quality organic coffee, some of which is being sold as “speciality” coffee to select roasters and traders from Japan, Korea, and Europe. These high-end buyers — who taste and rate each lot before purchasing — are willing to pay up to Rs700 per kg for the best of the beans. The bio-dynamic agriculture practised by the Araku farmers is labour intensive but requires no costly cash inputs. Farmers enrich the soil through mulching, using leaves, fallen fruits and other freely available organic matter. They use inexpensive, herbal soil additives to enhance soil fertility and fight pests.

They have learnt the discipline of harvesting beans only when they are bright red and fully ripe. For these efforts, co-op members last year received a guaranteed price of Rs375 per kg of top quality, fully-ripened beans.

From that, the co-op — where the beans are processed within 12 hours of being harvested — deducts Rs90 per kg for transport and processing, with Rs280 per kg profit left for the farmer.

This compares with Rs90-Rs110 per kg that Indian farmers typically receive for bulk coffee to be sold on the New York Commodity Exchange.

“If you want to do sustainable coffee at scale, it has to be speciality coffee,” says Mr Kumar. “When they buy, they pay more than anyone else will pay.”

Problems remain, especially in finding enough buyers willing to pay a premium for all the high-quality coffee the Araku farmers can produce. Last year, co-op members grew 100 tonnes of coffee, but Naandi is working with another 7,000 farmers whose saplings will mature soon, and other villages are pleading to join the initiative.

Mr Kumar believes Araku’s coffee output could easily rise to 500 tonnes or more. But the total world market for speciality coffee was just 10m tonnes in 2011 — although it is said to be growing fast — and speciality coffee buyers tend to buy in small lots from diverse regions around the world. “I don’t have enough high-quality buyers,” Mr Kumar admits.

To expand the market for its own speciality coffee, Naandi recently raised $5m from its Indian philanthropists for Araku Originals — its dedicated, for-profit, coffee marketing arm — to market its wares in Europe.

Araku Originals has opened a flagship store in Paris and is also selling its coffee though 34 other gourmet food shops and other upmarket retail outlets across France. The coffee that does not make the grade as speciality coffee is sold as organic, fair trade coffee elsewhere in Europe. “We are a benevolent link to the international market,” Mr Kumar says. “It can’t just be procured and dumped.”

Despite the challenges, Mr Kumar is convinced that coffee can be made a sustainable cash crop for farmers — but only if those involved across the industry are willing to share the profits more generously.

“You need a very clear-cut, shared-value business model with the farmer,” he adds. “Otherwise, it won’t work.”

source: http://www.ft.com / Financial Times / Home> Agricultural Production / by Amy Kazmin / September 24th, 2017

Coffee Board to finalise estimates after consulting stakeholders

Coonoor :

India is becoming a manufacturing hub for instant coffee after Brazil and Peru, said Y Raghuramulu, Director of Research, Coffee Board.

In his presentation on coffee at the 124th UPASI annual conference here, he said the country is doing extremely well on the export front

The total volume of export between April and August this year stood at 1.78-lakh tonnes, up from 1.63-lakh tonnes in the corresponding period the previous year.

The country has moved from bulk exports to value-added coffee exports, he said. “We are consistently importing more for re-export. Imports are mainly for value-addition and re-exports by EOUs with duty free under FTP.”

Import volumes during 2015-16 stood at 65,618 tonnes and the re-export volume at 67,283 tonnes. This surged to 78,042 tonnes and 79,254 tonnes the following year. Value-wise, the imports were estimated at ₹927 crore (₹802 crore) in 2016-17 and re-export at ₹ 1,346 crore against ₹1,147 crore in the previous year.

Green coffee exports account for 70 per cent of the total export volume, with specialty green coffee exports inching its way from 3.20 per cent between April and August last year to 3.80 per cent during the corresponding months of this year. Value-added coffee exports have stagnated at around 25 per cent.

Reverting to production, Raghuramulu said: “USDA has forecast India’s production at 3.3-lakh tonnes, but the Coffee Board is yet to release the estimate for 2017-18. The board is in consultation with various associations for finalising the estimates. We do not want to release as in earlier years and come out with a revision.”

The board has undertaken a couple of fresh initiatives, such as the revamping of India Coffee House, brand ambassadors to promote Indian coffee and organising outreach programmes.

“We are looking to franchise at least 10,000 vending machines in the medium-term. Our initiatives will indirectly benefit small coffee growers. We have also initiated discussions with small growers to form producer organisations to help them achieve better returns.”

source: http://www.thehindubusinessline.com / Business Line / Home> AgriBusiness / by L N Revathy / September 13th, 2017