cup of excellence - sept 2004

7/30/2019 Cup of Excellence - Sept 2004

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CLOSE-UP

13

september 2004

Cup of Excellence,

Fair Trade, Organic Coffee

Is there a future for coffee in Nicaragua?

The Cup of Excellence is more like a lottery than a widely applicable recipe.

Meanwhile, with fair trade and organic coffee providing better options,

higher prices and new markets, there are still opportunities

to be tested and gambles to be taken.

W hen coffee prices plunged in 2001, the crisis

generated widespread panic: two banks went

under, others teetered on the brink, farms were

embargoed left, right and center, rural unemployment in-

creased significantly and the government reached certain

agreements with hundreds of starving families that it has

never been able to honor—or perhaps never really wanted

to. Since then the groups of hungry and unemployed people

drawing attention to their plight by camping out along the

highway between Matagalpa and Managua have only in-

creased.

Gourmet coffee and the

search for “hidden gems”

Is there any future for coffee in Nicaragua? While debated

on a daily basis, the reflections this basic question generates

are loaded with uncertainties. The gourmet coffee market

has been perhaps over-hyped by those calling for efforts to

salvage the coffee sector and turn the crisis around. It has

more than a few enthusiasts... and its fair share of skeptics.

In this particular market, producers have to compete with

already-established brands and those with greater competi-

tive edges. This makes it essential to implement measures

to ensure that the bulk of the profits don’t end up in other

coffers, in a market controlled by the eternal big fish.

With an eye to extracting the kind of benefits that Nica-

raguan coffee quality deserves, stopping others from getting

the lion’s share and exploiting the diversified markets, a

group of coffee growers launched the annual Cup of Excel-

lence competition. This event culminates in the certifica-

tion of quality coffee and an internet auction that providesprices differentiated according to the coffee’s classification.

It also appears to offer the chance of starting a dialogue be-

tween consumers and producers.

Brazil and Guatemala pioneered this experience, which

Nicaragua took up in 2002. In that first year there were 285

participants, of which 23 were selected. The best coffees

came from Nueva Segovia and Madriz. Auctioned over

internet, the coffee obtained a base price of US$120 a hun-

JOSÉ LUIS ROCHA



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14

envío

NICARAGUA

The Cup of Excellence is not a national

panacea, although the fanfare with

which it was announced certainly

created that illusion. Other, more

widely applicable solutions have to be

sought that aim for wider markets while

maintaining quality

dredweight, or quintal. To the surprise of almost everyone,

the first prize winner broke the record when it was pur-

chased at $1,175 per quintal. The top two prizes were

awarded to Eliseo Lumbí and Arturo González, two small-scale growers from Jinotega.

Three rounds of tasting guarantee the quality of the

selected coffee. The final round includes the participation of

the best international tasters who can detect the most highly

prized chocolaty, citric or fruity tastes. Coffee grower Erwing

Mierisch, who coordinates the competition’s national com-

mittee, stressed that the competition’s basic aim is “to find

Nicaragua’s gems, its hidden diamonds; to discover them

and make them available not only to the traditional buyers

but also to roasters, so they can enter into direct contact

with our producers.”

According to the UN’s Economic Commission for Latin

America and the Caribbean (ECLAC), 80% of Nicaraguancoffee is eligible for marketing in the specialized coffee mar-

kets, but lacks a national identifying seal. The Cup of Excel-

lence is aimed at getting duly identified Nicaraguan coffee

out onto the international market and get international trad-

ers to recognize its quality. This is a very worthwhile effort

in a context in which the big marketing companies are seek-

ing greater benefits by selling lower quality products on a

massive scale.

In 2003, some 385 samples were entered in the compe-

tition and 38 growers—24 individuals and 14 cooperatives,

mainly from Jinotega and Nueva Segovia—were selected.

Of those, 7 sold their coffee on the “fair trade” markets. The

highest price reached at auction was $705 a quintal, less

than half the price achieved a year earlier.

According to a study aimed at revealing the secret of

better quality coffee, most of those selected in the 2003 Cup

of Excellence concentrate on the caturra variety at an aver-

age altitude of 1,185 meters above sea level. They work

with few varieties, do soil conservation work, systematically

fertilize with moderate amounts, keep their plantations

under shade, weed at least twice a year, have access to their

own sources of clean water, have pulping machines that arein good working order and ferment their coffee in 24 to 36

hours.

This year 497 producers competed in the competition,

and 29 were selected—in other words, more participants

but fewer won than in 2003. The first prize went to Daniel

Canales, a grower from Estelí. His batch will probably bring

in $30,000, providing his business with an excellent boost.

A lottery for the select few

As with any event involving magic, politics, scandal or a lot

of money, as is clearly the case here, the media have blown

the importance, impact and meaning of the Cup of Excel-lence out of proportion. Although presented as the salvation

of national coffee growing, the Cup of Excellence event is

quite a lottery. It involves relative few participants, the

rewards drop off abruptly the further down the ranking you

are and, above all, a few seconds more or less in the roast-

ing—to mention just one step on the processing ladder—can

make an enormous difference in the coffee’s value.

But an even more serious problem is the competition’s

elitism. As one organizer put it, “By definition this coffee is

for a select public. The demand is small, although it pays

well.” In other words, it can’t be reproduced on a massive

scale. Gourmet coffee is aimed at a minority public, with a

certain palate and income to match. This year a policy deci-

sion was made to reduce the number of winners by raising

the minimum acceptable quality to 84 points, which ex-

plains why the number selected fell from 37 to 29.

The Cup of Excellence only accepts limited harvests,

coinciding with the International Coffee Organization’s strat-

egy to reduce the volume of coffee marketed in accordance

with quality criteria. In 2003, the minimum weight for

participation was 22.5 quintals of export-ready beans and

the maximum weight was 225 quintals. The winner of the

first prize in this year’s competition entered a batch of just

27.36 quintals.

How much does a cup of coffee cost when it comes from

a quintal valued at over a thousand dollars? How many

coffee addicts could afford such a price? How long will we

have to wait for Nicaragua’s 30,000 coffee growers to obtain

the recognition and prize that will change their lives at the

current rate of 29 per year?

The Cup of Excellence is not the national panacea, al-

though the fanfare with which it was announced certainly

created that illusion. Other, more widely applicable solu-



CLOSE-UP

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15

september 2004

The decline in coffee prices and in

growers’ net profits are two critical

factors that make the terms of exchange

increasingly unfavorable for coffee

growers. Two decades ago, a coffee

grower could buy the simplest model

of the famous Swiss Army knife in

exchange for 9 lbs of coffee. Today,

that same knife costs the equivalent of

23 lbs

tions have to be sought that aim for wider markets while

maintaining quality.

In the world market:

Some suffer and others have windfalls

Coffee is big business for the processing and distributing

companies. Sociologist Orlando Núñez calculates that, at

$300 per quintal of processed and packaged coffee, the

businesspeople of the industrialized metropolis would make

a profit of $140 million on the million quintals of coffee

Nicaragua exports.

While the big marketers’ profits have skyrocketed, the

benefits received in the producer countries have fallen. Ten

years ago, the coffee producing countries earned $10 billion

in a market worth $30 billion. But now, with a much bigger

market, producer countries don’t even break the $6 billionmark. Coffee growers receive 1% or less of the price of a cup

sold in the Starbucks US coffee shop chain and 6% or less of

the price of a bag of coffee sold in an English supermarket.

And while unroasted coffee represented 64% of the retail

price in the United States in 1984, it only accounted for 18%

of that price in 2001.

Producers have seen their participation in and benefits

from coffee’s chain of value added drop dramatically. Ac-

cording to sociologist René Mendoza, the gross income of a

Nicaraguan grower fell from 27.6% of the coffee’s final price

in 1980 to 14-18% in 1996. During the same years, the price

of Nicaragua’s coffee delivered to the export dock fell from

50.4% to 24.9% of the final price.

Out of the $2.77 that 100 grams of coffee cost in En-

gland in 1996, a grower in Jalapa received $0.52, leaving a

net profit off $0.22. When prices fall, the producers’ profit

margin can even go into the red, as happened in 2001, when

it was calculated that growers were losing $0.04 for every

100 grams of coffee. ECLAC calculated the loss at $27 per

quintal.

The decline in coffee prices and in the growers’ net prof-

its are two critical factors that make the terms of exchange

increasingly unfavorable for coffee growers. Two decades

ago, a coffee grower could buy the simplest model of the

famous Swiss Army knife in exchange for 9 lbs of coffee.

Today, that same knife costs the equivalent of 23 lbs.

Monopolies and big profits:

The world trade giants

The future of thousands of coffee producers is decided at the

Coffee, Sugar and Cocoa Exchange Inc. of New York, created

to reduce the risks linked to the physical exchange of coffee.

The New York Coffee Exchange has become the Mecca for

trading in standardized arabica coffee following the failure

in 1989 of the international coffee agreement, which regu-

lated that market by means of a system of quotas and price

bands. Speculators now go to the Exchange to buy up har-

vests and wait for favorable selling times. Their transac-

tions are sometimes big enough in themselves to influence

sudden price changes.

There are hundreds of coffee roasting and distribution

companies in the world, the largest being Kraft, Nestlé,

Procter & Gamble, Sara Lee and Tchibo, which together buy

up almost half of the world’s unroasted coffee stocks. The

first two alone alone buy up a quarter.

Kraft Foods International Inc. (Altria Group) produces

foods, coffee and sweets under the following brand names,

among others: Aladdin, Altoids, Bensdorp, Carte Noire, Côte

d’Or, Fineza, Jacobs, Kaffee Hag, Kaba, Kraft, Lila Pause,

Lunchables Marabou, Maxwell House, Milka, Mirabell

Mozartkugeln, Miracoli, Nussini, Onko, Oreo, Philadelphia,

Ritz, Suchard and Toblerone. In 2002 its sales were worth

76.6 billion euros, leaving it with profits to the tune of 10.6

billion euros. The US multinational tobacco company PhilipMorris Company Inc. absorbed Kraft in 1988, then two years

later bought the German company Jacobs Suchard, which is

the world leader in the coffee market. Kraft’s Maxwell House

brand has a sizable share of the US coffee market.

For its part, Nestlé produces foods and sweets under the

following brand names, among others: After Eight, Alete,

Aquarel, Bärenmarke, Beba, Bübchen, Buitoni, Caro, Choco

Crossies, Herta, KitKat, LC1, Lion, Maggi, Milkybar, Motta,



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16

envío

NICARAGUA

Nescau, Nescafé, Nespresso, Nesquik, Perrier, San Pellegrino,

Smarties, Thomy, Vittel, Yoco and Yes. Its sales were worth

61 billion euros in 2002, providing it with profits of 5.2

billion euros. According to Austrian journalists Klaus Wernerand Hans Weiss, Nestlé is Switzerland’s biggest industrial

consortium and, with its 520 factories in 82 countries, the

biggest food company in the world.

Nestlé boasts that 3,900 cups of Nescafé are drunk ev-

ery second in over 120 countries and that it earns a net profit

of 30% on the price of its instant coffee. This explains why

the coffee business is so attractive for these companies. The

Heineken company only made a 12% profit on its famous

beer in 2001, while the price of Danon yogurts only provided

an 11% profit during the same year and Sara Lee netted 10%

on the price of its packaged meats in 2002 and didn’t even

hit 5.5% with its bakery goods.

earnings of $2-3 per quintal. Growers often cannot accu-

rately judge the quality of the coffee they produce and some

feel that the exporters adulterate their coffee by mixing it

with lesser-quality coffee beans so they can pay them lessthan they really deserve.

This point alone leads to habitual squabbles and gener-

ates a level of distrust that undermines institutions and

consolidates underdevelopment. And it lays the founda-

tions for guile in which each link of the chain tries to exploit

the rest in order to reap the greatest individual benefit at

the expense of their untrusted counterparts. But this fric-

tion hasn’t stopped some growers from obtaining what they

consider very favorable agreements with the exporters, which

include credit and technical assistance, thus generating the

desired synergy between different links of the chain.

Fair trade: One of the best options

Fair trade has emerged as a very effective way to increase the

growers’ profits. The first fair trade coffee was imported by

Holland from Guatemalan cooperatives in 1973. Thirty years

on there are 200 coffee cooperative unions in the world made

up of 675,000 growers plus 350 coffee companies that meet

the standards established by the Fair Trade Labeling Orga-

nizations International.

This is a growing and promising alternative. The sale of

fair trade coffee on the world market increased by 12% in

2001, even though coffee consumption increased by just 1.5%.

Fair trade accounts for over 1.4 million quintals of coffee in

Latin America and almost 2.5 million quintals globally.

During the 2002-2003 cycle, Nicaragua channeled 85,334

quintals of coffee through fair trade, representing 6.12% of

the Latin American and 3.45% of the world totals. The de-

mocratization of coffee cultivation in Nicaragua has provided

favorable conditions for fair trade. Cooperatives and small-

scale producers are very attractive to the institutions pro-

moting this alternative to the conventional market, such as

Espanica, a fair trade organization in Spain that distributes

coffee grown in Matagalpa and Condega by small-scale grow-

ers organized in cooperatives whose land was part of the

Area of People’s Property in the eighties.

PRODECOOP: A titanic undertaking

The Promoter of Cooperative Development in the Segovias

(PRODECOOP) is one of the most successful coffee coopera-

tives incorporated into the fair trade markets. It was founded

in 1993 and represents over 2,000 small growers belonging

to 40 cooperatives. In its 11-year existence it has accumu-

lated an enormous amount of experience that has allowed it

Growers vs. exporters

In Nicaragua, the proliferation of exporters has not improved

our country’s negotiating capacity. There are currently 40

coffee exporting firms in Nicaragua, the strongest of which is

Exportadora Atlantic, run by foreign capital, which negoti-

ates 25% of national coffee exports. It and the other three

companies that move the largest export volumes buy and

sell 67% of the coffee exported by Nicaragua. Some export-

ing firms charge a flat commission of US$1-2 per quintal. In

the growers’ view, this commission-based operation, de-

signed to cushion the exporters from the many risks involved,

does not help strengthen the community of interests be-

tween growers and exporters. In lean times, the exporters

are thus not affected by the price fluctuations, provided the

overall volume being bought and sold does not fall.

There are other negotiating methods, the most danger-

ous of which occurs when the exporters also control the cof-

fee processing, a very profitable activity that generates net

Fair trade has emerged as a very

effective way to increase growers’

profits and is a growing and promising

alternative. The sale of fair trade coffee

on the world market increased by 12%

in 2001, even though coffee

consumption increased by just 1.5%



CLOSE-UP

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17

september 2004

The producing countries need to sell

more roasted coffee. Companies from

industrialized countries always

dominate a good part of the process—

the buying of green coffee, relations

with the shipping companies, roasting,

grinding, publicity and distribution to

the retailers—which is one of thefactors impeding the growers from

receiving a more significant

percentage of the final price

to run various programs, develop links with many interna-

tional organizations and market 37,000 quintals of green

coffee in 2002.

Its credit program granted nearly $150,000 in short-term loans to its associates during the 2001-2002 cycle, and

since 1998 it has disbursed $93,000 in housing credits and

57,000 for wet processing plants, as well as financing the

renovation of just over 376 manzanas of coffee plantations

belonging to the growers most affected by Hurricane Mitch

(1 manzana = .7 hectares).

In 2002, PRODECOOP was worth over a million dol-

lars. Part of this is being invested in training small-scale

coffee growers in credit, production techniques, strategic plan-

ning, gender approach, social support and organic agricul-

ture. It invested nearly half a million dollars in a dry pro-

cessing plant, which has made it independent of the big pro-

cessors. The plant now has bean sorting machines and otherequipment that enable it to guarantee the quality of its

coffee and to win two prizes in the 2002 Cup of Excellence.

Fair trade = higher prices

The price fetched by fair trade coffee is considerably higher

than the one set on the New York Exchange. With the aver-

age price in the 2002-2003 cycle at $68.93 a quintal,

PRODECOOP and another fair-trade linked association of

northern coffee producing cooperatives (CECOCAFEN) re-

spectively paid $110 and $104.76 per quintal. The average

prices paid out by CISA and Atlantic Exportadora, both big

exporters, were $71.15 and $64.94 per quintal, respectively.

Fair trade’s relatively captive clientele means that the

price difference between fair trade coffee and the coffee on

the New York Exchange becomes even greater in times of

crisis. In 2001, with an average national price of $60.22 a

quintal and CISA and Atlantic offering no more than $56,

the Union of Agricultural Cooperatives (UCA) paid $87.15,

PRODECOOP $80.25, CECOCAFEN an average of $99.61

and COSATIN, a cooperative from Boaco, as much as $104.

The weight of these exporting firms is increasing sig-

nificantly. CECOCAFEN and PRODECOOP respectively

account for 3% and 2.4% of Nicaraguan coffee exports, mak-

ing them the country’s seventh and ninth biggest coffee ex-

porters.

For David to beat the Nestlé Goliath...

There is still much to be done to improve the fair trade

system. For example, the producing countries need to sell

more roasted coffee. Almost 100% of the coffee that passes

along the fair trade chains worldwide leaves the producing

countries as green beans. Companies from industrialized

countries always dominate a good part of the process: the

buying of green coffee, relations with the shipping compa-

nies, roasting, grinding, publicity and distribution to theretailers. This is one of the factors impeding the growers

from receiving a more significant percentage of the final price.

While the grower receives 8% of the final price in the

traditional coffee chain, some of the fair trade companies

offer them only 8.4%. The advantage for the grower comes

from the higher final price—almost a dollar more per 100

grams of retail coffee. In other words, the fair trade compa-

nies offer the growers a higher price based on the mark-up

paid by consumers, not on the profit margin, as in the tradi-

tional chain. In fact, the scale of operations of fair trade

companies keeps their unit costs higher: while Nestlé con-

trols 87% of instant coffee sales in the United Kingdom,

Cafédirect sells just 1.5%.Fair trade also has its work cut out with respect both to

informing its consumers just how the benefit really gets back

to the producers, and to quality, which is sometimes reduced

by fraudulent practices during processing in the country of

origin. It should also seek to outperform the traditional

chains in its storage networks, offer of credit and timely

payment and should improve the growers’ cash flow to en-

able them to buy products such as maize when prices are at

their cheapest. By correcting these and other weaknesses,

the small David of PRODECOOP/Cafédirect will be better

able to take on the Nestlé Goliath and may even have a

greater possibility of defeating him.



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18

envío

NICARAGUA

Small and medium farmers are the only

devotees of organic coffee, as it suits

their particular situation, which is long

on family labor but short on money for

agrochemicals. The big producers’

costs skyrocket if they invest in the

work required for organic crops

Coffee with a gender agenda Another fair trade experience in Nicaragua is the Society of

Small-Scale Coffee Producers and Exporters (SOPPEXCCA),

in which women play a very relevant part. Founded in 1983,

this union of 12 cooperatives is currently seeking better prices

for its members’ coffee in the fair trade arena. Its 450 mem-

bers, 200 of them women, each own between 1.5 and 3

manzanas of coffee producing land. All of them live in dis-

persed communities in the mountains around Jinotega City,

where some of Nicaragua’s best coffees are produced.

SOPPEXCCA runs a training program on organic agri-

culture, an education program for young cooperative mem-

bers and another program that supports recently formed

women’s cooperatives. Having recovered from fraudulent

administration that left them with a $700,000 debt and a

sullied image, they exported four containers of green coffee

from the 1999-2000 harvest, the first time they registered

as SOPPEXCCA. They hope to export as much as 25 contain-

ers of green coffee from the 2003-2004 harvest to the United

States, Germany, Italy, Austria and France.

“We’re working to make the transformation from tradi-

tional to ecological coffee,” explained SOPPEXCCA vice

president Víctor Manuel González. “We’ve demonstrated

that the cooperative model is a good one if it’s run transpar-

ently and efficiently. It’s the leaders and administrators

we’ve had who’ve been bad and harmful. If it wasn’t forFátima Espinoza, the manager we have today, we wouldn’t

be where we are.”

Women are also showing a particular talent for coffee

tasting. After taking various intensive courses, Marbelí García

López is now recognized as one of the best coffee tasters in

the world at the tender age of 23. She was first invited to

work as a coffee taster for SOPPEXCCA and was later on the

national jury at the 2002 Cup of Excellence. She then trav-

eled to Norway to participate in the Coffee Fair there and to

Brazil where she was an international judge at its Cup of

Excellence 2002. During that event she placed third among

the international tasters. This young woman from the com-munity of Puertas Azules in the department of Estelí is now

the main guarantee of the quality of coffee grown and ex-

ported by SOPPEXCCA, whose members have placed three

times in the Cup of Excellence competition.

The organic coffee fad

Another widely reproducible option for pulling the country

out of the crisis is organic coffee. Nicaragua’s cultivation of

organic coffee was initiated in the coffee farms on the slopes

of Granada’s Mombacho volcano at the end of the eighties

by the then state-run “Mauricio Duarte” company. When

the company was turned into a cooperative and joined theUnion of Agricultural Cooperatives (UCA), the UCA and the

National Farmers’ and Ranchers’ Union (UNAG) assumed

the promotion of this method. The Nicaraguan Environ-

mentalist Movement (MAN) provided the certification, tech-

nical assistance and marketing contacts.

A few years later this form of cultivation was adopted

by two cooperatives on the San Cristóbal volcano in the de-

partment of León, five cooperatives on the Carazo plateau

and 12 cooperatives in San Juan de Río Coco in Madriz.

According to a survey by UNICAFE, 16.91% of the country’s

coffee farms are currently run organically. If this sample is

representative, there are around 5,000 organic coffee farms

in the country. The departments of Nueva Segovia and

Madriz are particularly notable for their organic coffee farms.

Small and medium farmers are the only devotees of organic

coffee, as it suits their particular situation, which is long on

family labor but short on money for agrochemicals. The big

producers’ costs skyrocket if they invest in the work required

for organic crops.

Forced by circumstances

Organic coffee had a predecessor in “natural” coffee, a form

of agriculture that many producers were forced to take up

because of circumstances, particularly problems involved in

getting hold of and paying for agrochemicals. The “Pedro

Joaquín Chamorro Cardenal” and “Armando Gutiérrez

Pérez” cooperatives in Carazo quit using agrochemicals in

1983 to reduce production costs in light of the increase in

agricultural input prices and their fear of intoxication. The

Pancasán Cooperative on Mombacho gave up chemicals in

1989, when they became a cooperative and were awarded

state lands. The reduced credit availability imposed by the



CLOSE-UP

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19

september 2004

In addition to catering to the

environment and health, organic coffee

growers have a real economic

incentive: the organic model avoids

dependence on imported agriculturalinputs and thus shields them from the

increasingly unfavorable terms of

commercial exchange

Central Bank to bring down inflation was a decisive factor in

their decision to dedicate themselves to the organic fad.

One of the most successful examples of organic coffee

cultivation is in San Juan de Río Coco. Many of the zone’scoffee growers abandoned their farms during the war and

returned at the end of the conflict to find their plantations

completely overgrown after over five years devoid of man-

agement. Such events, added to the difficulties in obtaining

credit under the new market economy with its liberalized

banking system, led many producers to try to run their cof-

fee plantations without agrochemicals. Unaware that they

were on the path to organic production, they viewed the

situation as making the most of a bad situation until the

NGO Cenzontle informed them of the advantages of organic

coffee in the international markets.

The Nicaraguan Environmentalist Movement certified

their coffee as “natural” rather than “organic,” but afterthey joined the UCA in 1990, they exported 375 quintals of

organic coffee. This incipient success encouraged them to

extensively reproduce the experience and seek certification

from important international institutions such as the Inter-

national Federation of Organic Agriculture Movements

(IFOAM), the agency responsible for governing the global

movements of organic production. They later linked up with

the Association for the Improvement of Organic Products

(OCIA International), which runs one of the biggest certifi-

cation programs in the world. The multiplication of certify-

ing entities has brought with it a reduction in certification

costs.

Five-tier coffee plantations

The challenge for organic coffee growers has been to increase

the yields from just 1.5 to 6 quintals per manzana, which is

the national average. In seven years they have managed to

achieve close to 4 quintals per manzana, but to do so, they

had to change from natural to organic coffee, which involved

a lot of work. As grower Claudio Hernández from San Juan

de Río Coco put it, “The important thing in the struggle to

improve production is not to sit back, which we’re no longer

doing, but were back then, when we were pinning our hopes

on natural coffee.” With time, Hernández and many other

growers became experts in the use of green fertilizers, crop

rotation, incorporation of organic matter, soil conservation

techniques such as contour plowing, seed selection, shade

regulation, the breeding of worms and organic control of pests

and diseases.

Projects that aim for harmony between coffee growing

and the environment propose incorporating coffee planta-

tions into a five-tier diversified forestry system. The high-

est tier is a layer of tall wood-bearing trees that provide

shade for the coffee bushes and can be profitably managed in

a way beneficial to the ecosystem. The second is made up of

species that provide, firewood and fruit as well as shade.The third involves interspersing coffee furrows with plan-

tain or banana trees, as well as avocado and citric trees to

provide food and short-term income for the family. The fourth

tier contains the coffee bushes and the fifth the plants that

immediately cover the soil, protecting it, preventing erosion

and providing organic matter.

This form of coffee growing includes integrated pest

management, agroforestry combinations in harmony with

the different coffee growing zones, improvement of the tropi-

cal biodiversity, natural forestry management, recovery of

water sources and treatment of the waste water from the

coffee processing. In addition to catering to the environ-

ment and health, organic coffee growers have a real economicincentive: the organic model avoids dependence on imported

agricultural inputs and thus shields them from the increas-

ingly unfavorable terms of commercial exchange.

Nicaragua: A leading organic light

In the 2002-2003 cycle, Nicaragua produced 62,843 quin-

tals of organic coffee. Since the mid-nineties, it has been one

of the main organic coffee exporters, accounting for 6.8% of

world production. The only countries exporting more are

Mexico (20.5%), Guatemala (9.6%) and Kenya (9.6%), three

of the countries with the greatest volume of coffee produc-

tion and number of inhabitants.

Latin America currently produces only 1.29 billion quin-

tals of organic coffee from 221,778 manzanas of land, with



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20

envío

NICARAGUA

Those increasingly gambling on fair

markets and organic coffee know that

the current battles are focused on the

search for new market niches offering

non-standardized merchandise. The

struggle is not being waged in the

arena of cost reduction through

massive serial production, but rather in

made-to-measure products tailored to

the consumer’s own particular taste

an average productivity of around 5.8 quintals per manzana.

The yields in Nicaragua are slightly below that average so it

can be estimated that there are around 10-11,000 manzanas

of organic coffee. The production of organic coffee in the

2002-2003 cycle represented almost 6% of national produc-

tion. While that is a good level, it means there’s still a long

way to go and many conversions to be undertaken.

In any case, there’s a need to act quickly, because the

market has its limits, its logic and its trends. German, Brit-

ish, Dutch, Austrian and Italian companies buy organic cof-

fee and pay the international market price plus a 10% mark-

up for natural coffee and a 30% mark-up for organic coffee.

This mark-up can even go higher. In the middle of the crisis,

with an average price of $60.22 per quintal in Nicaragua,

the Union of Organic Coffee Producing Cooperatives (UCPCO)

paid $144.51 per quintal. That was a strong incentive for

more growers to take up the idea. But a slight drop in growth

can already be detected in the main consumer markets, caus-

ing a reduction in prices. The supply is starting to overtake

demand and Nestlé is already selling organic instant coffee

in England on a massive scale.

Increasing awareness

and developing a new palate

Increasing demand implies increasing awareness. Some pro-

pose opening new markets in eastern Europe and Asia, but

perhaps we should also turn more of our attention and our

coffee toward the national market. For now virtually all of

the organic coffee produced by Nicaraguan coffee growers is

exported. There is no campaign aimed at making the na-

tional consumer appreciate and reward this product, nor has

any attempt been made to develop an ideological or ethicalpalate in Nicaragua for improving health and respecting the

environment. Mexico and Brazil are magnificent examples

to copy, as they respectively reserve 52,920 and 39,690 quin-

tals for domestic consumption. In terms of production, we’re

not doing at all badly, producing almost half as much organic

coffee as Brazil, the world’s coffee giant. But the big prob-

lem is the absence of domestic consumers. The challenge is

to turn that absence into an opportunity.

Those in favor of increasingly gambling on fair markets

and organic coffee know that the current battles are focused

on the search for new market niches offering non-standard-

ized merchandise, such as healthy and environmentally

friendly products (the organic niche), ethical products basedon solidarity with the most vulnerable (fair trade) and high

quality products. The struggle is not being waged in the

arena of cost reduction through massive serial production,

but rather made-to-measure products tailored to the

consumer’s own particular taste. For example, three unions

of cooperatives in Nueva Segovia and Madriz have banded

together to subcontract a local company to roast, grind and

package their organic shade grown coffee—with the option

of grinding organic cinnamon or cardamom seeds into it—

then market it nationally through a peasant-owned distri-

bution cooperative called Nicaraocoop under the label VIDA,

productos naturales y orgánicos. So far they have only ex-

ported their coffee green, but are now looking to break into

the European export market for these special roasted vari-

eties.

The income boom in developed countries, added to a

growing awareness of the situation of coffee growers and the

effects of certain agricultural practices on the environment,

is segmenting their markets and paving the way for consum-

ers with a more distinguished palate and guided by ideologi-

cal factors who can also afford to cater to their interests.

Certain Nicaraguan growers are already exploiting the grow-

ing market segmentation resulting from the diversification

of consumer taste. Public policy makers, researchers and

journalist, among others, could help by turning their atten-

tion and efforts towards such experiences, which are much

more promising than the much publicized Cup of Excel-

lence.

José Luis Rocha is a researcher for Nitlapán-UCA and a

member of envío’s editorial council

cup of excellence - sept 2004

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