Direct Trade coffee is important. We should all drink it this new year…but what is it? Oh, here you go:

1. The best way to get an exceptional cup of coffee, comes from knowing the hands that work on the farm.
2. Understanding the growers, plants, sites, sounds, smells and culture of each region, we can ensure that our coffee is not blindly accepted as fair or sustainable.
3. A commitment to frequent communication with our growers, giving each of us a voice in the bigger than business transaction of life and economies.

You’ve already started on this resolution…did you know that? Just by drinking at Everyday Joe’s.

But what about at your home? In your kitchen…on your deck…at your desk…on the front porch…looking out the window…in good company.

You could always buy the beans of Novo Coffee from Everyday Joe’s, but coffee from different roasters is like beer from different breweries. It comes to a point when you have a desire to try them all. A solution on the coffee front is here.

Enter the Direct Trade Coffee Club (they wrote that nice three-point summary up there). Currently a partnership between our old friends at Intelligentsia and the Grand Rapids-based Madcap Coffee, the DTCC (just coined that one) delivers Direct Trade beans to your home every month. A little bird told me they are evaluating a few more roasters and pursuing others with hopes to top out at six total, allowing each partner to provide the beans twice a year.

“We started the Direct Trade Coffee Club to connect consumers with the finest roasters of specialty coffee who purchase coffee direct from the farmer.”

The club also provides brewing, tasting, and seed-to-cup infos on their site. Information is the key, I hear. All that info & the ordering process can be found here. A wise way to spend that Christmas money, I say.

FURTHER:

• Join the Direct Trade Coffee Club
• MadCap Coffee Company
• Intelligentsia Coffee

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Hola,

I’m in Bogota, Colombia enjoying some time with friends and seeking to loosen up and disengage whatever stress barnacles managed to build up over 2008. Every year brings plenty of joy and stress, among other things, and while the turn of the calendar year may not be an all-powerful life-cleanser, it is certainly as good a time as any to step back a bit and do a system re-boot, if for no other reason than that it feels good.

At the moment I’m staying in a hotel called Celebrities Suites, which I can vigorously recommend. The place is perfectly located in central Bogota and the rooms are big and tastefully set up in a clean, sparse, Scandinavian kind of way. Each room is themed after a different celebrity, and the slogan is “escoja con quien pasar la noche” (choose who you would like to spend the night with). Sinatra, Greta Garbo, Beyonce, Sean Connery, Bob Marley, Angelina… they’re all here. I got assigned J.Lo when I checked in, and after the first night, I moved up to Alfred Hitchcock when I found that the place was nearly empty and the rates were ultra-discounted for the holiday.

Thinking about what is in store for 2009, I cannot remember entering any year in the last decade with more reason to be excited, despite whatever economic difficulties continue to linger. We’ve got an incoming president who has the entire planet slightly giddy with anticipation of Change, in whatever form that may take. Even without knowing what exactly is to come, there is a sense of trust that it will somehow be good, that our collective world is on the verge of altering course in a decidedly positive way. And I do believe that what is sometimes needed most is just a basic belief among a large number of people that a door has been opened, an obstacle removed, and that we have an opportunity in front of us to unify international efforts that perhaps seemed quite a bit less possible just a year ago. Inspiration can accomplish a lot, regardless of where it comes from or what it really means. Working with coffee over the last 13 years has shown me that oftentimes the most critical and elusive element needed to achieve real forward progress is the ability to motivate people. Once motivated, people tend to rise towards their real potential and even surprise themselves in finding that they’ve got more ability to control the outcome of their works than they had previously believed.

During the last pile of years that I’ve been traveling, I found that whenever I mentioned I was from Chicago, regardless of whether I was in Africa, Indonesia, or Latin America, few people had any sort of knowledge of the city. Was it on the coast? Is it in California? Whenever there was any sort of recognition it came down to one of three things: Al Capone, Michael Jordan, or wind. Such has been the legacy of my home in the eyes of the world at large. But the last few months have been different. Now when people hear “Chicago,” there is a noticeable light in their eyes as they say “Obama!” Good stuff.

As regards to Intelligentsia and our plans for ’09, I would like to mention just a few things before I sign off to take my first tango lesson. Here, in no particular order, are some of the places we expect to be putting our energies:

1. East Africa
Kenya and Ethiopia should be on nearly every coffee lover’s Top 5 list when it comes sensory quality. Some of the most deeply flavorful, complex, nuanced and profoundly sweet coffees the world has to offer come from these two countries, and yet they still lag far behind places like Costa Rica and Colombia when it comes to consumer recognition.

This is partly because of a lack of infrastructure and access to technical resources have meant massive inconsistency in quality when compared to some of the more developed countries in Latin America. Corruption and limited transparency in the financial chain have played a big part in holding these industries back as well. Windows are opening, however, and I’m particularly excited about what the next few years will hold for our coffee projects there. You’ll be hearing a lot about them in the coming months.

2. Indonesia
In 2003 when I first traveled to Indonesia on a three week tour through Sumatra, Java, and Bali, I turned right back around and spent the next several years focusing most of my efforts in Central and South America. Indonesia was just too messy and too far away. Situated on the other side of the earth, it takes nearly five days just to get there and back. The coffee industry is incredibly fractured, and the efforts necessary to attain the levels of transparency and quality made it seem like it would rival the work of Sisyphus. I wasn’t necessarily prepared for the work then, but it is now 2009 and things are different. We’ll be putting in the work to get some world-class coffees out of Indo in the coming years.

3. Coffee by the cup, brewed to order
The age of the urn and the airpot is coming to a close. I believe that brewing in large batches is antithetical to the very idea of specialty coffee. Once brewed, coffee begins to lose aromatic and flavor qualities almost immediately, and after even 15-20 minutes, it has changed so much as to have lost many of the very things that made it special in the first place. This method of preparation means that the retailer loses out because they are dumping a lot of coffee down the drain after it gets too old to sell (at least I hope that they are doing this!). The consumer loses out because she is deprived of choice. What if I want a cup of Kenya, my sister prefers a tasty coffee from HueHuetenango, and my girlfriend wants to drink some Colombian coffee from Santuario? People have different preferences and they ought to be able to choose their favorite coffee each time they walk into a shop rather than settle for whatever happens to be on tap at the time. The coffee loses out because it doesn’t really get a chance to show what it can do.

4. Coffees being bought and sold seasonally relative to their harvest cycles
There is always harvesting happening somewhere in the world, and we are aiming to showcase coffees from each country we work in during the months in which they are in their prime. Doesn’t that just make sense?

5. More information about each coffee delivered to our customers through the web
There is so much detail behind each and every coffee we sell, but much of it has historically gotten held up in my laptop or in my brain. Coffee Info sheets and Nod emails and the like have been a good vehicle to get you more intimately acquainted with the origins of our coffees, but they only scratch the surface. Look for much greater depth of information and interactivity to be coming your way—I want to help you understand these coffees the way that I do, and in lieu of bringing each and everyone of you with me to the farms, I’m going see what I can do to bring the farms closer to you.

There is surely a 6, 7, 8, 9, and 10 but I need to get to my dance lesson. Before I leave, I am going to ask you to read up on Kurimi, our Direct Trade offering from Ethiopia. This coffee is tasting great and is one of our real successes from 2008. So goodbye for now, happy 2009, and I hope you are all as excited about the coming year as I am.

Saludos,

Geoff Watts
Green Coffee Buyer
Intelligentsia Coffee & Tea

Further:

• About that Sisyphus fellow
• Concerning Kurimi
• Intelligentsia Official Site

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Each Thursday, our weekly shipment of coffee arrives from Intelligentsia Coffee & Tea. They roast the beans Tuesday, and two days later they delight your pallate and blow your tastebuds’ minds. Thank you Intelligentsia, we love you.

Yesterday our Black Cat Espresso arrived in this:

Instead of this:

Resulting in this reaction from Diana:

And this reaction from Chris:

Why all the excitement? A few (two) reasons:

• The bag is the prettiest thing I’ve seen since I kissed the wife goodbye this morning.
• Black Cat Espresso is now officially Direct Trade, a result of the ongoing Black Cat Project.

A word from Intelligentsia about the Black Cat Project:

“Black Cat Espresso is one of our proudest accomplishments…and after 13 years of pulling great shots of espresso, we are re-examining everything about this coffee to make it even better.”

More concisely, this is the “never ending pursuit to re-invent espresso.”

This is something that is very exciting and intriguing. There is a lot more info concerning the project – much more than this blog can handle – over at blackcatcoffee.com. Head over and read and watch and look forward to things to come.

Further:

• The Black Cat Project
• Official Intelligentsia Site

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Last week, the Nod arrived in my inbox and I opened it and it was long. Real long. Perusing it, I could tell it would be interesting. Geoff Watts – author of The Nod & Intelligentsia’s VP of Coffee – knows quite a bit about many things, and perhaps the primary thing is coffee. In this latest edition, he explains the rising cost of Kenyan beans…an explanation that can, for the most part, be translated to many coffees and probably many of the other things Mr. Watts knows quite a bit about.

So, in order to assist you in your navigation of this explanation, a handy little summary is below (and is also offered at the end of Mr. Watt’s essay). Click on a point of interest and you can read the expanded version. I do, however, recommend reading the entire thing in context. Just start below the summary if that is your desire.

The Summary:

• Big rises in costs of production at the farms in Kenya.

• A shortfall of volume and of quality coffee in the recent harvest, leading to greater competition over top quality lots.

• Our movement towards Direct Trade in Kenya and investment in the farming societies and in building relationships.

• The falling value of the dollar.

• Greater costs of production here in the US with the costs of everything from roasting, packaging, and transporting having gone up.

• A reworking of the quality pricing model to better estimate real costs of production and attribute appropriate value to exemplary/exceptional quality coffees

• And of course the coffee is among the best harvested the entire year in Kenya, so you know it is worth it, my brethren.

The Nod:

Hola:

Last Friday saw the release of one of our favorite, and in my humble opinion, best coffees. A question that we have been asked since this time is: What’s up with the Kenya prices? Why have they risen so sharply this season? There are a lot of things that have contributed. I’ll try to explain as clearly and concisely as I can, knowing full well that the latter has never been one of my strong suits. Let’s break it down into a couple categories:

1.) The rising production costs at origin.

This is not just occurring in Kenya. EVERY coffee producer I know has seen coffee production costs rise dramatically over the last two years. It is a worldwide phenomenon. What has gone up?

A.) Fertilizer and Transport costs. This is directly related to the rising prices of fuel worldwide. We’ve felt it here in the US, but man….many developing countries feel it even harder because they do not have any buffer whatsoever. Their governments do not have the kind of reserves we’ve got or the ability to subsidize prices for farmers. So while fuel costs have risen profoundly here, they’ve gone up at an even faster rate in many coffee producing countries. As a result, everything that requires energy to produce (fertilizer is just one example) is also more expensive now. I was recently examining fertilizer costs in Guatemala and found that in many cases it has more than DOUBLED over the last two years. So the farmers are paying more for inputs than they ever have. Transporting the coffees overland (farm to wet mill, wet mill to dry mill, dry mill to exporter, exporter to port) has gotten way more expensive as well, due once again to fuel costs.

B.) Labor costs. Labor is often the number 1 or 2 most significant cost of production on a coffee farm. It keeps getting more expensive as the labor force dries out. This is especially true in Central America where there has been (and continues to be) mass emigration to urban areas and to the United States. In Africa it is not quite as big a deal as labor is still abundant in many places, but they are still facing the problem of the “aging farmer”. Most coffee farmers are in the latter third of their lives and increasingly find it more difficult to put in the work needed to manage a coffee farm to its top potential. Younger generations have not shown an interest in being coffee farmers. Why would they? They look at how their parents and grandparents have fared and they see the poverty and depressing commodity cycles and mercilessly rising costs and intense climate impacts and the sheer unpredictability of it all and they say “no way!” Why would they want to follow in their father’s footsteps when the path has failed to take them anywhere?

C.) Cost of Production per hectare has gone way up due to falling productivity. There is always a chain reaction that takes place when coffee farmers aren’t making enough money for their crops. First they stop making inputs (they use less fertilizer, spend less on husbandry, stop pruning, and stop planting new trees) and then they cut costs during harvest. This means fewer cherries per tree and more disease and fungus problems as trees become old and weak. It means less care taken in selecting cherries for ripeness. It means the per-hectare cost of production is higher than ever while the quality has gotten worse! Trees growing in poorly managed and nutrient deficient soil get quickly debilitated. They don’t produce as much coffee and they struggle to bring the fruits to full maturity. The reality is that today the costs of production on most coffee farms (and other agricultural products too) are WAY higher than they were even two years ago, sometimes by as much as 50%. The market is going to need to adjust to this somehow, or a lot of farmers are going to be in big trouble over the next couple of years.

2.) The Kenyan Auction system dictates market price.

The Kenyan Auction system was the model on which the Cup of Excellence was founded. It has consistently been the world leader when it comes to delivering the BEST price per pound for coffee of quality. Every year there are a handful of coffees that crack through into the $4.00+ range and sometimes quite a few. It is a great system for finding “market value”, as there are close to 20 exporters who compete at auction to purchase the best coffees. Each exporter receives an “auction book” and accompanying set of samples every week, and each Tuesday there is a live auction during which all those coffees get put on the block. There can be ferocious competition sometimes, especially whenever a true 90+ coffee passes through.

This season was a low crop and the general quality was not very great. When that happens, the prices for the best coffees get even higher than usual since everyone is scrambling to get a piece. That’s the nice thing about the auction from a farmer’s perspective. It also rewards scarcity, so when there is a down year in volume or quality, it drives prices for the good stuff even higher than expected because various buyers are fighting over a smaller number of available coffees.

Unfortunately, the individual farmers are not always beneficiaries of these nice prices. The link from farmgate to auction is not as clean and direct as it should be, and layers of organizational inefficiency (and outright corruption as Kenya as a nation has managed to institutionalize corruption like no country I’ve ever seen!) eat away at the profit until there is next to nothing left for the farmer. Banking is screwed up there, with interest on debts overwhelming any income.

So while the auction has yielded many clear benefits, there is still a lot of work to be done to make the system sustainable, meaning making it viable for the farmer.

This is the first year that Intelligentsia has begun to purchase some Kenyan coffee using our Direct Trade model. It is super-freaking-exciting to me, because I’ve wanted to work more closely with farmers in Kenya for almost a decade. It is my favorite coffee year-in and year-out, and it has always been profoundly saddening that the farmers, despite great auction prices, never seemed to really be able to move forward.

About half of what we purchased this year was purchased under Direct Trade principles with prices negotiated directly with the farming communities, full transparency in the chain, and quality rewarded with premiums. It is a significant step for us and for Kenyan farmers as it was not permitted under law to deal directly with farmers until about 22 months ago, and today the huge majority of coffee is still passing through the auctions.

We WANT TO BE AN EXAMPLE. We want to show Kenyan farmers what is possible and participate as leaders in the effort to re-engage farmers and introduce new expectations about transparency and commitment at the farm level. We want to earn the trust of the farmers and prove to them that pursuing a long-term, Direct Trade relationship with Intelligentsia is a great option for them. Based on lots of experience buying coffee in Kenya, it is my opinion that we’ve partnered with some of the best cooperative groups in the country, in the heart of what I consider to be the top growing region in Kenya.

I’m hoping that next year all of our Kenyan coffee will qualify as Direct Trade and that we will be able to sell it that way. For now it should be considered “Direct Trade in Transition”. This season we purchased some coffee in the auction and some directly, all from the same cooperatives whose coffees we’ve been buying in the auctions for several years. For any DT system to work in Kenya it is vital that the farmers are able to see a true benefit by selling direct versus selling through the auction. So the auction will continue to function as a sort of “market regulator”, at least on the high end, and at least until Direct Trade takes hold and farmers begin to really understand the value of working closely with roasters and establishing reliable, long-term markets for their coffees.

3.) The Falling Value of the Dollar

We feel this pretty hard-core in many countries. The problem is that farmers pay everything in the local currency, pesos, shillings, quetzales, francs, cordobas, lempiras, but they get paid in dollars. So labor, fertilizer, bags, boots, everything has gotten more expensive for the farmer due to the fact that the local currency is worth far more versus the dollar than it used to be. If this continues, at some point the industry at large will need to decide whether or not the coffee market can continue to be tied to the dollar since another 5-10% drop in value will make the equations completely untenable for the farmer. Even without adjusting for inflation, most farmers are making LESS today than their parents did…in real dollars per pound. That is not acceptable.

4.) The rising costs of production here at home.

As you know, Intelligentsia is a company that believes in constant research, development and innovation. We’re freaks about quality, and we spend money, time, and energy to make sure we get it right. That’s why we’ve invested in roasting locally in LA, that’s why we keep hiring staff for Quality Control and Roasting, and that’s why we invest so much in our Baristas. We’re always doing things to try to make our coffees even better, and there is a price that comes with that. I would hazard a guess that we have one of the deepest teams in the industry when it comes to coffee expertise and knowledge.

But beyond the costs of innovation and intense quality control operations, our raw materials costs have risen sharply. Fuel costs are high, and we depend on fuel to roast and deliver coffee. It runs our roaster’s afterburners, which clean the exhaust to ensure that we are good stewards of the local environment, but those suckers eat up gas like it was candy. We will probably need to invest in alterative technology soon.

5.) Coffee has always been very under-valued and under-priced.

There is another point that must be made, one that is to me more important than everything I’ve just mentioned: The fact is that coffee has never been valued correctly to begin with, dating back to well before all of the recent economic downturns. The only coffees that have succeeded on a large scale over the last 20 years in getting the value they should have been a handful of well-known brands from Jamaica and Hawaii (Kona). And as we all know, those coffees usually cannot even hold their own in the cup when compared to the best coffees from places like Kenya, Ethiopia, Rwanda, Guatemala, Bolivia, and so forth. They get smacked up and down and exposed for being very well cultivated, very clean, very well-handled but altogether too mild and, for lack of a better word, just boring.

When I say “the value they should” what I mean is this: valuation based on actual costs of production and real intrinsic/material quality. Just like any other business, coffee farmers ought to have the opportunity to sell their coffees at a price that nets them a profit, and that is tied to measurable quality. The better the quality, the more a coffee farmer can stand to earn in a competitive market.

Let’s select a couple of industries for comparison. The wine, spirits and beer industries all have some obvious similarities with coffee. Wine has a lot in common with coffee with regard to the way it is produced (fruits produced under specific environmental conditions and then processed into liquid goodness) and in the way it is talked about. The language of tasting is nearly identical between them, although coffee is actually the more chemically complex of the two beverages and has a greater range of potential flavor. When we talk about beer and spirits, there is similarity with coffee because these are considered “luxury goods” and they are consumed as liquids.

Now consider the range of prices you might find when shopping for a nice bottle of Scotch whiskey. You can probably find a fairly cheap bottle at your local supermarket, something that is kinda nasty going down and even worse once it has had time to soak in. You can find something mid-range, a decently distilled blend of decently produced malts. And if you go to specialty importers or big-time liquor stores you’ll find a huge variety of small-batch, limited production single malts that have been aged for many years to improve the texture, perceived sweetness, and complexity. The prices will range from $10/750 ml for true swill that will surely pummel you into joyless submission by the next morning to perhaps $150 for the finest commercially available single-malts. Most Scotch drinkers likely find their place of comfort somewhere in between, happy to pay $30-$40 for a nice bottle of Glenlivet or Macallan.

With beer it is the same…your basic six-pack of aluminum Milwaukee’s Best cans can be had for a couple of bucks, while you could easily pay $12.00/16 oz bottle for a nice Belgian small-batch.

Surely wine has been the best explored by most consumers when it comes to “tasting the range” and learning about what the low-end (frighteningly astringent and sour and ethanol-like with big-time headache power) and the high-end (ah, kill me now while I am floating on this cloud of sweet and savory bliss) can deliver on the pleasure scale. Most wine people, like beer or scotch drinkers, settle somewhere in the upper-middle of the range. No cheap stuff, but save the tip-top-barely-out-of reach shelf for those who have made a lifestyle out of sipping priceless delicacies. The $10-$40 range seems to serve people quite well when it comes to measuring out a nice pleasure-to-value ratio.

Then we could even expand the discussion to cheese, where the scale takes us from Velveeta all the way to the nicest 15-year old hard cheese with more taste per square millimeter than there are bad jokes in Marc Johnson’s arsenal. (Marc is our Marketing Director, he tells lots of bad jokes, and my comment means infinite taste, for those keeping track at home.) One costs $1.50/lb, the other costs $50.00/lb. One makes you fart and weep and rot away from the inside, the other one makes you want to high-five the cheese guy.

My point is that consumers have learned how to differentiate value pretty well for most products out there in the world today. They, of course, sometimes attribute value to certain things due to reasons of fashion or trend. And sometimes clever marketing combined with gullible consumers can lead to freaky pricing for what are really low-quality goods. But most of the time people come pretty close to getting it right, over time.

When you consider coffee, one thing to realize is that there is a very small amount of truly high-quality coffee available in the world. Just isn’t produced very much. Why? One reason is that it is very hard to accomplish. Really, really hard. The second is that the world has rarely been willing to pay farmers what it actually costs to produce this kind of quality. Instead of being priced according to actual costs of production, with better coffees getting additional premiums as a result of their better taste, coffee is priced like corn, cotton, soybeans, petroleum, or other commodities out there. It is a futures market that has always determined value.

Much has been written about the “coffee crisis” of 1999-2004, which put hundreds of thousands of coffee farmers out of business because the prices people were paying were below even the most basic, rawest costs of production. One thing that was exposed was that we as consumers (and those of us working in the coffee business as roasters, retailers, baristas, restaurant owners) really need to re-think the way we understand value as it applies to things like Specialty Coffee, and coffee in general, which is not actually a traditional “commodity” in any practical way. The range of different qualities, different production costs, and different cultural traditions behind the coffee are huge and diverse.

The reality is that we fight nearly a century of history during which coffee was bought and sold as a commodity and where the idea of the “bottomless” cup became entrenched in the minds of most consumers. Coffee has usually been a loss-leader for most restaurants and shops, given away for free or for next-to-nothing. Cheap coffee is far-and-away the norm.

Our objective is to try to get things right. We want to pay farmers what these coffees are really worth. When someone purchases Intelligentsia coffee, they are getting an amazing deal. Some of the best coffee produced on the planet for what still amounts to very little compared to what one might expect to pay for any other consumable the sits at the top end of the quality spectrum. That’s not to say we over-pay. We’re not a charity, and I do not have much faith in development models that show up in Africa or anywhere else and give money away without building anything that can last. That model has proven over the last 30 years that it simply doesn’t work, and in many instances has even made the problem of poverty WORSE.

We pay what both we and the farmers agree to be the right price, call it whatever you like: fair, just, honorable…those are just adjectives. The whole nature of this business, as I see it, is to figure out what farmers need to earn in order to produce extraordinarily great coffee. That’s what I do; I work with them to figure out how much everything costs, to quantify those things, and make sure that the farmer, who shoulders so much responsibility and so much risk in this whole deal, is profiting from his/her work and is in a position to grow and evolve. We want to contribute to building a coffee industry where growing coffee is an attractive career choice. Where the children of coffee farmers will decide they DO want to continue the family tradition, and can make that choice without needing to be certifiably insane.

That might have been a bit too long winded, a bit too lengthy to divine the key points. In acknowledgement that this is likely true, here is a summary. In short, the prices we paid this year for our Kenyan coffees reflect:

- Big rises in costs of production at the farms in Kenya.
- A shortfall of volume and of quality coffee in the recent harvest, leading to greater competition over top quality lots.
- Our movement towards Direct Trade in Kenya and investment in the farming societies and in building relationships.
- The falling value of the dollar.
- Greater costs of production here in the US with the costs of everything from roasting, packaging, and transporting having gone up.
- A reworking of the quality pricing model to better estimate real costs of production and attribute appropriate value to exemplary/exceptional quality coffees
- And of course the coffee is among the best harvested the entire year in Kenya, so you know it is worth it, my brethren.

And with that, read even a bit more about Kenyan coffee, the subject of this week’s Nod.

As always, find our Nods at:
http://www.intelligentsiacoffee.com/origin/offerings.

Best,

Geoff Watts
VP of Coffee
Intelligentsia Coffee & Tea

Further:

• Intelligentsia Official Site
• Kenya- Gaturiri Auction Lot Fact Sheet

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Rock and Roll.

1st Things: Coffee Grinders + TSA = Kyle Glanville Takes 8th Place At The World Barista Championships

Back in May, Kyle Glanville of Intelligentsia was named the United States Barista Champion (read more about that here). This honor earned him a trip to Denmark to compete for the world title. It appears all preparations were going well…then Mr. Glanville had a run-in with airport security. I’ll let Intelligentsia’s VP of Coffee, Geoff Watts, take it from here:

“This year marks the second time in three years that an Intelligentsia Barista represented the United States in the world championship, which is an incredible accomplishment, I must say. The US competition is probably the most competitive of all the national events, with a very large number of qualified competitors who could all do well at the WBC.

This year our man, the inimitable Mr. Kyle Glanville, did his thing on the world stage. Despite some hitches (his grinder was torn apart and rendered completely inoperable by the TSA staff at the airport, so Kyle spent what should have been his practice time scrambling around trying to fix it) the performance was great and good enough for 8th Place overall. I do think (and yeah, I’m biased, I adore the guy) that his chops are among the best in the field, and he always manages to come across relaxed and at ease, fully in command of his craft. It is that charisma and confidence (on top of the hundreds of hours of practice refining technique) that I think gives him a tangible edge. And of course the coffee itself is exceptional, a Panamanian pulped natural micro-lot from Finca Santa Teresa. Look for him to again make some noise next year!”

2nd Things: Edelweiss- The Song and The Coffee, Not The German Flower

When my wife was little, her mom would sing the song “Edelweiss” to help her fall asleep. As a result, the song holds a special place in my wife’s heart and now a place in my heart…particularly as performed by The Innocence Mission from their album of lullabies, Now The Day Is Over. You can stream that song below.

This morning when I went to make a press of coffee at Everyday Joe’s, I was pleased to see that we are carrying Intelligentsia’s latest offering, Edelweiss Finagro Estate, Tanzania. Right now, I am listening to the song and drinking the coffee and enjoying both quite a little bit. You can read the full story and tasting notes for this mighty fine bean here.

Further:

• World Barista Championships Official Site
• The Innocence Mission Official Site
• Story & Tasting Notes for Edelweiss Fingaro Estate, Tanzania

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Hola:

I’m sitting here at the little café outside the Jomo Kenyatta airport in Nairobi, Kenya. Times like these are the dregs of my work, the most uncomfortable and least enjoyable part of being a coffee buyer. Just waiting and nothing more. Nothing to do and just enough fatigue to sap any will to try to make something of the time. I’ve realized that the act of waiting with nothing on the line, no tension whatsoever, is one of the most frustrating elements of life.

Years ago, when I first started traveling relentlessly, I was able to find pleasure in transit. New airports, new people to observe, and the anticipation of getting somewhere not well-known were enough to make the transit interesting in one way or another. Now those things have worn away from repeated use. I used to take a certain satisfaction and pleasure in explaining to friends that I never, ever got bored. Not once. For almost two decades boredom was a foreign condition. At the very least, there was always something to think about or some sort of meaningless distraction that would allow time to wash by unnoticed. I took pride in that.

I remember fondly the arguments I used to have with Doug Zell (Intelligentsia CEO) about keeping track of time. Ten years ago, in our first Roasting Works on Cortland in Chicago when our production staff consisted of me and a handful of guys packing coffee, I walked in one morning and saw a gigantic clock hanging on the gray cement wall in front of the roaster. I took it down immediately. “What point is there in watching a clock?” I asked. It slows things down, causes one to start measuring time in an unnatural way, giving individual minutes an undeserved importance in the scheme of things. It makes the day feel longer. If I want to know what time it is, I’ll check. There are now clocks on cell phones, watches on arms, clocks on the computer, clocks everywhere. The last thing we need is to have one in our face, staring down at us all day and tempting us to look, almost forcing us to care about the steady progress of the little revolving hands.

A day after I took it down, I entered the office and there it was, back in place. Geez. I decided to hide it this time, so I stuck it behind a pile of coffee sacks where it could tick-tock all day and bother no one, entertaining itself in solitude. That’s when we argued about it, a silly exchange that danced between philosophic and metaphysical objections to the intrusion of regiment into our natural state of being and pragmatic reasonings about productivity, organization and time management. Funny stuff. I think we both had a point, but I’m not sure we ever found consensus. In the end we moved the clock to a less conspicuous location and let it be.

These days I have a much harder time staving off boredom during the transit times in my trips. Partly it is due to changes in the way I perceive time. Often I want the day to last longer with more time in the morning to wake up and gradually ease into full consciousness, more time in the afternoon to get things done, and more time in the evenings to unwind or indulge in hobbies or entertainment. Years seem way too short, as do months and weeks. More to do than there is time in which to do it.

Bicycles transporting coffeeFor this reason, I really begrudge time that I deem to be completely wasted. There are very few occasions when I hand out that designation. Sometimes I can watch TV for hours, gaining little of importance, but enjoying it nonetheless. Or idling in a coffeeshop, just chilling, just watching the world go by. That can be fun too. But standing in lines at airports, standing in lines at security, standing in lines waiting to enter or exit a plane… there is absolutely nothing to appreciate about that. Standing in line at immigration or staring at a moving belt hoping that my luggage will pop out is not fun at all.

But I think the worst may be layovers. 6 hours, that’s the most ruthless of them all. It’s not enough time to get into the city and back, not really worth the expense or effort, but it is more time than can be passed having a meal or wandering the airport. Just off a five-hour transit from Rwanda or Tanzania, most of it spent reading a book, I have no immediate interest in setting my eyes back on the pages. My friends and colleagues back home are still asleep, a full 8 hours behind, so there is no point in communication and the roaming charges are too steep anyhow.

It is those six hours that I loath, made worse knowing that another six hours are waiting for me in London Heathrow, when I arrive blurry-eyed at 5 AM tomorrow morning after another nine hours airborne. At 5 AM nothing is open and the airport is as sleepy as I am. And six hours from now I will step on another plane, ready to sit once again for a full eight hours on the way to Chicago. I will arrive as rush hour begins, so after waiting in lines at immigration I will wait in the back of a taxi, inching along I-90 on the way to my apartment. When I get home, I will sink into a chair with my brain not working well after about 30 hours without significant sleep. The evening itself will be wasted too because I’m not really wanting to go to bed for the night but I’m too blurry to really get much out of the remainder of the day. I will try to watch a movie, but will invariably fall asleep in my chair two-thirds of the way through, missing the resolution. When I awake tomorrow, much of that day will be wasted too, since the combination of jetlag and lack of sleep will reduce me to about 60% functionality.

Was that enough complaining for one day? I think so. Not much can be gained through complaint. But I did want to shatter the myth that being a coffee buyer is always sexy and exciting. It is great work, no doubt about it. But just like most anything else, it comes pre-loaded with plenty of significant drawbacks. Often I wish that NASA would stop sending people and plants and monkeys into orbit and focus their energy on making earthly transport more efficient. It might yield nothing, but then again I’m not so sure what we’ve gained in the last twenty years after trillions of dollars spent on endless, secretive, and obscure space programs. Why not put the money into education and get us a bunch of new millennium Einsteins who will transform our ability to manipulate Time?

Anyway, back to Rwanda. I spent the last week there, a glorious week, spending quality time with many good friends: coffee students, farmers, researchers, co-op leaders, development workers from various NGOs, and some local business people. This time I was also in the company of an admired peer and one of my closest buddies on the planet, the immensely talented Peter Giuliano (the buyer for another coffee company called Counter Culture). He and I work together in Rwanda, and it may strike some as odd that we collaborate so closely. After all, our companies are direct competitors in many ways and many markets. But there is tremendous value in this kind of cooperation. We always learn from each other, every single time we are together. And by combining our energies and insights we are able to accomplish a lot.

Development work (that’s what working with coffee in these countries is, really) is incredibly complicated. The puzzle is large enough and intricate enough to defy imagination. But the reward is almost inconceivably gratifying. Getting amazing coffees out of the mess that exists in many producing nations while helping to improve the livelihoods of those whose efforts makes these coffees possible is a hard-to-beat endeavor. I can’t think of many things I’d rather do. When Peter and I put our heads together on this stuff, we often make things move more swiftly more precisely and with more immediate results than either of us would probably achieve doing it solo. I am grateful for our friendship and professional alliance.

This past week we visited several coops that we are in partnership with here: the Nyakizu, Rusenyi, and Humure groups form the backbone of our Rwandan coffee mark Zirikana. First up was Nyakizu (Abakundakawa), located in the far south reaches of Rwanda, very close to the Burundi border. It is a small group and has been in a decidedly chaotic state for the last three years. They’ve switched Presidents three times, and the entirety of the cooperative management team has been in constant flux. Makes it hard to earn progress when the leadership turnover is this dramatic. The coop is beyond bankrupt, and they nearly lost their washing station last month as BRD (Rwandan Development Bank) made moves to repossess it in the wake of missed payments on outstanding debts. In total they still owe more than 150,000 dollars to the bank, and at this point anything they’ve been able to pay has been gobbled up by interest. No movement whatsoever on the principle.

Why is that? We’ve been paying great prices from the start…way over “market value” and more than we pay in many Latin countries, where economies are a bit more developed and labor costs are considerably higher. We’ve volunteered thousand of hours giving training and advice. The PEARL project (and now SPREAD, a follow-up project with a clever new acronym for a name) has spent countless thousands of dollars in the last few years on technical assistance and infrastructure to help build the capacity of the cooperative. RWASHOSSCO, the recently formed federation of cooperatives that helps the individual groups with export and marketing services along with countless other hard-to-measure types of assistance, pours loads of energy into helping these groups get on track.

The answer to that question (like the answers to most questions having to do with coffee) is not simple. A big piece of it is lack of reliable and competent leadership and management. Too often, elections (more accurately called “appointments”) are mostly political in nature. It is not the best educated or most qualified individuals given responsibility, but rather the most popular, the most outspoken, or even sometimes the most gullible—those willing to step into a role where failure is the likeliest outcome and who will later shoulder the blame when things go wrong. In so many instances the leaders are the ones who want to climb over the rest, who see the position as an opportunity for personal gain, and who are shameless enough to seek it even at the expense of their neighbors. There is this Latin story that Peter reminded me of which explains why it is so easy to boil crabs. You throw them in the pot, and as the water gets hotter they try to escape. Once in a while one will almost make it, getting a hook on the top of the pot after major effort. But just as it is about to get over the top, the other crabs reach up and pull it back in. That happens all the time in developing countries. So corruption or incompetence leads to financial mismanagement and loss of profit. The leaders change, the debt grows, and the cycle starts over again.

Next up on the list is interference from private companies or state-run coffee exporters who lure coop members away with “bribes” in the form of artificially high cherry prices that will probably cause the company to lose money on the business but will bring them farmers and help them acquire overseas clients. The coops lose out on coffee because the competition is rigging the game. What happens then? Not enough volume of coffee to sell means lower income, lessened ability to pay back debt, and an erosion of confidence among cooperative members. Soon enough the coop will crumble, the washing station is put on the auction block, and now the farmers have no other choice but to sell to the private company. Of course, those high cherry prices are no longer there at this point and now the exploitation can resume without resistance.

What else? Electricity failing for long periods of time mid-crop and causing quality loss. Random and unpredictable weather events leading to more quality loss because farmers are not trained to deal with unexpected complications in the formula. Delays in payment due to export complications that can arise from a myriad of places (often a result of shoddy infrastructure) lead to further debt. Lack of cash on hand to pay for incoming cherry puts coops at a severe disadvantage versus privately funded stations and results in further loss of volume, which lowers total income and reduces economy of scale.

Next week I will tell you the second half of my story from Rwanda. And hang in there, OK? Rereading what I wrote, I want you to know that I am telling you all of this not to get you down, but to illustrate just a few of the challenges that face these new and fragile organizations. And to point out just how inspiring it is to see them endure against all odds, and to begin to show signs of real progress.

And speaking of progress, you might remember the story of Victoria Dalton-Diaz and her Matalapa farm. I said that we might have a Micro-Lot from her farm, and that’s just what we are featuring this week. This coffee met all the requirements for Direct Trade status and we are offering it as Los Inmortales, El Salvador Micro-Lot: Finca Matalapa. The coffee offers up delicate floral aromatics and a juicy citrus acidity. Please enjoy it while it lasts.

As always, find our Nods at:

http://www.intelligentsiacoffee.com/origin/offerings.

Onward,

Geoff Watts
VP of Coffee
Intelligentsia Coffee & Tea

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Intelligentsia Coffee & Tea is our blockbuster roaster of choice here at Everyday Joe’s, and they have released their blockbuster previews. Often, I find myself looking at Intelligentsia as our very cool and hip older sibling…and they’re kind enough to let us tag along and wear their hand-me-downs.Thankfully, the hand-me-downs are really, really good coffees.

This week, Intelligentsia’s “Nod” comes from Marc Johnson, their director of marketing. He has some exciting things to tell you about, so keep reading.

Greetings:

Geoff Watts (Intelligentsia’s Green Coffee Guru) is the usual author here, but even when he is in Chicago, he’s getting pulled in a million and one directions. It was really difficult to get him to do this on a weekly basis when we started this email three years ago (can you believe it’s been that long?), but he is pretty good about it when he is around. Today, sadly is not one of those days. Geoff is now in Rwanda and as hard as he works when he is there and as spotty as internet connections can be, I know not to expect anything. Of course, on the positive side, we’ll get lots of good information on African coffees when he returns.

Second choice? Doug Zell (Intelligentsia’s CEO) is always good for a post or two, but seeing how he just posted last week and was in New York working on a super-secret project for a while this week (we’ll tell you more when we know more), he gets a pass as well.

Third choice? Hmmmm, maybe KC O’Keefe? KC is our West Coast Director of Operations and he also does a lot of work sourcing coffee in Latin America and so always has something interesting to say about coffee. Well, I called LA this morning on another topic and was on hold for like 10 minutes, so I am going to assume our friends in LA are busy roasting coffee for both our Silver Lake coffeebar and the Wholesale Accounts on the West Coast.

Fourth choice, fifth, sixth? Kyle Glanville (winner of the United States Barista Competition and Manager of Espresso Research & Development) has written pages for me already this week. Sarah Kluth (Director of Quality Control) has also written a ton this week. Chris Hallien (our new Director of Roasting) does tons of work with coffee, but since this is first week, I am going to give him more time before I hit him up.

Where does that leave us? You’re hearing from the Marketing Guy.

Hey, don’t stop reading yet because we have a large number of really cool things coming up:

Intelligentsia In Season – I am not going to give away too much here, but let’s just say that no one is going to be able to offer any fresher, better tasting coffees than Intelligentsia. Keep checking www.inseasoncoffee.com for updates.

The Black Cat Project – Intelligentsia espresso is moving to a new and exciting place. Here again, details will be coming, but you should check www.blackcatcoffee.com for updates on our Black Cat Espresso and Kyle Glanville’s training for the World Barista Competition in June in Copenhagen.

New Crop Centrals – Today Sarah Kluth gave us the news that some old favorites will be returning to our coffee line-up in early June. Woo-woo.

El Machete, Panama – This coffee is a new Direct Trade offering that will be available in a week or so.

New Coffee Releases this week – Black Cat, Single Origin Espresso: Anjilanaka, Organic Bolivia; Los Inmortales, El Salvador Micro-Lot: Finca Matalapa; Fazenda do Sertão, Brazil. When one week gives you a Single Origin Espresso, a Micro-Lot from El Salvador, and a Reserve Offering from Brazil, you consider yourself lucky.

And lastly, the focus of this Nod…

This week, we are proud to release our Black Cat, Single Origin Espresso: Matalapa, El Salvador – United States Barista Competition, 1st Place. This is the coffee that Kyle Glanville used en route to his victory at the USBC. It is now available to pre-order, it will be offered web-only and we will only roast it once: Monday, May 26th. Get it while you can!

As always, find our Nods at:
http://www.intelligentsiacoffee.com/origin/offerings.

Cheers,

Marc Johnson
Director of Marketing
Intelligentsia Coffee & Tea

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www.youtube.com/watch?v=eraEhQoV9g8

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Hola:I have the rhythmic whirr of the sample roasting machine in my head right now. The repetitive sound of beans spinning around in the barrel of the roaster punctuated by the staccato clicks of the fan belt as it revolves, round and round and round… It’s a comforting noise, grounded and consistent, the kind that drifts subtly into the background and eventually escapes notice as the mind pushes it aside to make room for other thoughts and activities that require full attention.

The green coffee samples themselves are here for their audition. This is a make or break time for most of them as the majority will get only one shot at making it into one of our flagship Direct Trade Intelligentsia marks like Los Inmortales, Flecha Roja, or Flor Azul. They’ve been prepped in advance by their handlers, and each sample has been meticulously hand-sorted to remove defects, screened to eliminate undersized beans, and packed in a small bag for the flight to Chicago.

Once here, they must first pass their physical. Our QC team inspects each one, sorting them to identify any visible traits that might give us insight into how uniformly they were fermented and dried. Imperfect beans are counted and tallied. Then they get screened to determine the distribution of bean size and the internal humidity is measured to ensure they fall within the 10.5% to 12.0% range where they have the best stability and greatest shot at longevity. Every sample is logged into our database for future reference.

If all goes well with the physical, the coffee gets in line to be roasted. These days it is a long line. We are receiving hundreds of samples from Central America and East Africa right now because the harvests have either just finished or are in their final weeks. But, like the Postal Service, the Intelligentsia QC Team pushes through. Lately we’ve been evaluating between 25 and 30 samples each day, a tremendous pace when one considers that on average it takes nearly 45 minutes for a single sample to get through the entire process.

The roasting process itself takes between 10-12 minutes per sample with a goal of absolute uniformity. It is of the utmost importance that we take every necessary step to make sure that when we taste the coffee we are judging strictly its intrinsic merits, mostly free of any roast-related flavors that can obscure or modify natural characteristics of the coffee itself. That would be unfair, thus the mantra: “While all coffees may not be created equal, each shall be treated as equal.” Until proven otherwise, of course.

For this reason we insist on blind cupping. Immediately after arrival each coffee sample is assigned a coded reference number that we’ll use to identify it. Over the years we’ve gotten to be very good friends with a lot of the farmers we work with and that can certainly influence the way in which a coffee is perceived. If I know, for example, that a particular Colombian sample came from Jair Garcia, I will have formed great expectations well before I ever dip my spoon into the cup. So to avoid bias or the possibility of being persuaded by something other than the taste of the coffee itself, we keep ourselves in the dark until we’ve finished the evaluation process.

Once the roasts are completed, we grind a sample of each and lay them out on a whiteboard. This allows us to visually compare the colors of the grounds and identify any roasts that have strayed from the target. The subtlest of changes in roast degree can have a profound impact in the cup characteristics, so we maintain a very strict approach to dealing with variation. If a roast is visibly lighter or darker than the control sample, or if we even suspect that the roast has somehow interfered with the essential character of the coffee, we’ll put it back in line for a re-roast.

After one day of rest (to allow the beans to settle down and de-gas) we prepare the cupping: eight to twelve coffees per table, three cups of each. Every sample is weighed out on a digital scale, accurate to 0.02 grams. The grinder is flushed between samples to clear out any residual grounds that could infiltrate the next coffee in line. Water is boiled and allowed to cool to between 97-98 degrees C as measured by a digital thermometer. Then the pouring commences and a timer is set so that we can allow each coffee its 4 minute steeping time before agitating the brew (“breaking the crust”) and evaluating the aromatic traits.

The cupping lasts about an hour. The first ten minutes are all about aromatics, both the dry fragrance and the wet aroma. Then comes the tasting, the moment of truth or, more truthfully, a “series of moments taking place over time, combined and compressed into a single score that reflects the relative quality of the sample.” That is to say, no snap judgments allowed. First impressions are nice, and certainly valuable, but they do not tell the whole story. By tasting the coffee over a period of about 30 minutes we can study it, see how it evolves as it cools, see what characteristics hold steady and which fall apart. Oftentimes there are a few sleepers in the mix, coffees that don’t impress all that much initially but yield gorgeous and delicate flavors as they cool that allow them to rise above the pack. And there are of course plenty that seem quite delicious at first, only to reveal subtle flaws later on that weren’t noticeable on the first look.

It is critical that we have at least two Intelligentsia-certified tasters at every cupping, so that we have a balance of opinion and some checks and balances that can help overcome human error. Every coffee cupper, no matter how experienced, is fallible and likely to get overly excited once in a while about a coffee that may contain a slight imperfection or to overlook a great coffee that got lost in the shuffle. So we cup together as a group, and once everyone has finished scoring, we engage in a discussion, coffee by coffee, to compare notes and argue the merits or failings of each. Most of the time we are all very well calibrated and close in our scores, within two points of one another, which comes from having spent so much time tasting together. But now and then there is some disagreement, and when that happens we take the time to revisit the coffee, discuss it, and try to come to consensus about how we ought to score it.

By the end of this process, we’ve landed on a score (out of 100 points), which reflects our collective opinion about the real quality of the coffee. The best are selected to be sold as our Direct Trade Intelligentsia marks, and they are indeed the cream of the crop.

Once a coffee is fully put together, we then discuss the results with the farmers, looking to establish some cause-and-effect relationships between things that happened at the farm or mill that may have led to particular tastes in the coffee. It’s not enough to know that a given sample is Good or Bad or Great; the farmer is looking to know WHY, and we share a responsibility to try to understand the variables and figure out how to replicate successes and avoid failures for future harvests.

Then comes the wait. Even though we’ve already identified these great coffees, it will be at least two months, perhaps three, before the coffees arrive in Chicago after milling, export preparation, shipping, and customs clearance.

It’s a detailed and exhaustive process, but it is worth it. At the end, we are able to sell coffees that really sing in the cup and are examples of what coffee can be when grown, processed, and sorted with the highest level of care.

At the moment we are chin-deep in Central American coffees: Los Inmortales, La Tortuga, El Cuervo, Flor Azul. All of these are in the final weeks of the construction stage and will be making their way to our Roasting Works sometime in late May or early June, ready to impress. During this part of the year, the QC team is usually working long days in order to make sure every coffee sample gets thoroughly tested. Sometimes the massive amount of effort that gets put into the selection of our coffee goes unrecognized, and I’d like to take this opportunity to give a big-time shout out to Sarah Kluth and Chris Kornman, the two QC staff who make it all work. You are superstars!

And since I did mention Jair Garcia earlier, let’s revisit Tres Santos, our Direct Trade offering from Colombia. Also be looking for two new coffee releases next week: a spring blend (name TBD) and Finca Matalapa, El Salvador. More information coming soon.

As always, find our Nods at:
http://www.intelligentsiacoffee.com/origin/offerings.

Good luck to all of us,

Geoff Watts
VP of Coffee
Intelligentsia Coffee & Tea

Further:

• Intelligentsia Direct Trade explained
• Intelligentsia official site

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At Everyday Joe’s, we brew the beans of Intelligentsia Coffee out of Chicago. We made the switch to them about 9 months ago, and haven’t regretted a minute of it. Much of our delight is due to their beliefs about the way coffee farmers should be treated. Read below for more in this short essay by Geoff Watts, Intelligentsia’s VP of coffee.Hola:

With all the activity in the coffee marketplace these last weeks, I think it is a good time to reflect a little bit on the industry and coffee valuation.

Let’s start with a quick history. Coffee has long been an important crop for international trade as far back as the 19th century, and many countries around the world still depend on coffee as their principle source of agricultural export income. By the early 1900′s coffee had come to represent more than half of the total exports in places like Brazil, Guatemala, El Salvador, and Nicaragua. Today, it is one of the most heavily traded commodities on world markets.

The way coffee has been valued over the years, however, has changed dramatically. In recognition of the importance of this product, a commodity exchange was set up to trade coffee futures in the early 1800′s. From the early Arabic coffee monopolies in the 17th century to the Brazilian land barons of the 19th century, there have always been individuals or organizations on the supply-side whose activities have had a huge global impact on pricing, but the tension between supply and demand generally kept it in balance. This situation continued unimpeded until the 1950′s when a huge and unprecedented price spike led to an over-planting of coffee trees. This excess supply then caused a major shift in the supply-demand equation. Prices dropped because of over-production, and in 1963 the International Coffee Organization came into being as a way to regulate the trade.

In the early sixties a quota system was established that induced producing countries to withhold supplies and limit production whenever volumes rose. The idea was to keep prices relatively stable and to avoid years of massive over-supply that could cripple the economies of the developing nations who relied on export income from coffee. Some say that US participation in the agreement (at the time the most important coffee-consuming country in the world) was motivated in part by Cold War fears and the belief that economically struggling Latin American countries could be pushed towards communism. There could be some truth to this as the US coincidentally withdrew its support for the agreement in 1989, just after the fall of the Berlin wall and the “end” of the Cold War.

The quota system did help keep the market fairly stable, but it was still subject to some significant ups and downs despite the price regulation mechanisms. In 1973 prices rose dramatically, and the quota system collapsed in the face of a rising market. In 1975 the famous Brazilian “black frost” drove prices through the roof, again leading to more intense planting in the following years. Predictably, supply went up again several years later and the market crashed, leading to a reintroduction of quotas in the eighties. At that point a trigger system was established whereby the quotas would turn on and off at certain pre-selected world production volumes. In 1986 the upper level trigger went off and quotas were again dropped, only to be reintroduced at the end of the year. They stayed in place until the US withdrawal in ’89.

Here’s a look at the International Coffee Agreement from 1983:

“…a system of export quotas operated when necessary to secure price stability within ranges agreed annually by exporting and importing Members at meetings of the International Coffee Council. Quotas were suspended if prices rose above certain levels and subsequently reintroduced if prices fell. The quota system operated in such a way that consideration was given, in setting individual quotas, to past export performance and to the stocks of coffee held in exporting Member countries. The export quota system was supported by an obligatory system of controls.

Each export by a Member was covered by a Certificate of Origin. Importing Members did not admit coffee from Members unless the Certificate was validated by coffee export stamps issued by the Organization. When quotas were in effect, importing Members were required to limit their imports from non-members and exports to non-members were closely monitored. Carry-over stocks of coffee in each exporting Member country were verified annually, involving the physical counting of stocks in many hundreds of warehouses scattered throughout the territories of producing countries.

The verification took place at the end of the crop year of each country. The Council was required to coordinate national production policies to achieve a reasonable balance between world supply and demand, and there was a Fund for the promotion of consumption financed by exporting Members. Promotional campaigns were conducted in the major importing countries in cooperation with the trade and the resources of the Fund were used to sponsor research and studies related to the consumption of coffee, especially in the United States of America and Europe. The Promotion Fund financed coffee centers, scientific research and training programs to help improve the quality of coffee and its general image. In the 20 years during which promotion activities were financed by a Fund, exporting Members contributed some US$100 million.”

You can see that everything revolves around supply and demand issues and price controls. A lot changed in the ensuing years, and here’s a look at the 1994 version of the agreement that came into being after the quota system was abandoned completely:

“…encouraging Members to develop a sustainable coffee economy promoting coffee consumption; promoting quality of coffee; providing a forum for the private sector; promoting training and information programs designed to assist the transfer of technology relevant to Member countries; analyzing and advising on the preparation of projects to the benefit of the world coffee economy.”

The coffee trade moved along in the 90′s and the market began to change dramatically as Specialty coffee took off and the world got to know Starbucks. Prices went up and down a lot as the market became more volatile during a period of changing consumption patterns and changing political economies at origin. Then in 1999 the collapse came, known today as the “Coffee Crisis”. Ups and downs had become normal, but this was the first time the depression was sustained for so many consecutive years. It crippled the industry. Many farms went out of business, coffee quality diminished, and we saw all sorts of reactions from the increasing popularity of certification systems like Fair Trade to new hedging strategies and increased interest in the futures market on the part of fund speculators.

For four more years the prices stayed in the gutter and producers scrambled to survive. Many abandoned their farms and moved to the cities. Bank foreclosures were common. It was a terrible time to be a coffee grower. A big part of the problem was the introduction of cheap Vietnamese Robusta coffees. That country received a lot of donor money and loans to rebuild after the war, and it invested hugely in coffee production. The US lifted their trade embargo in 1994, and the flood of cheap, low-quality coffee started to arrive. The supply-demand ratio tipped over completely and things got weird.

Intelligentsia was still very young at the time, and we saw both the highest and lowest markets in centuries within the space of a couple of years. It became very clear, very quickly that something had to change—and that the relationship between coffee quality and coffee prices would have to be radically redefined if there would be any hope for great coffee in the future. If quality is to be maximized, producers need stability and profit. It costs more to produce better coffees, yet as I’ve mentioned a hundred times, it is a long-term process. Investment in quality on the producer’s side starts a whole year before the coffee is ready to sell, and so it becomes a risky proposition to spend cash on trying to improve the coffee if there is no guarantee that it will come back to the grower in the form of higher coffee prices that reward the better quality.

We’ve been evolving our Direct Trade buying model every year in response to producer feedback and impact analysis. It can be complicated. We must always push forward, driving prices to a level where they are legitimately enough to encourage and pay for maximum attention to detail at the farm level. You get what you pay for…that’s the mantra. If quality is expected, it must be awarded prices based on its real costs of production and its value as a Specialty coffee, not as dictated by a global commodities market that can drive prices up and down in an almost whimsical fashion. Escape from the New York “C” is the name of the game, and it is what most producers of high quality coffees really want.

Interestingly, as I write this the “C” is reaching its highest sustained level in the last decade. Some say this is due to increased activity among fund traders and speculators who have started gambling on commodity futures including coffee, wheat, and corn. Some say it is increasing consumption in Asia and Eastern Europe, combined with low productivity from many coffee farms due to minimal inputs and erratic weather patterns. Most likely it is all of the above. The good news for growers is that most signs point to sustained levels of higher market prices, which will drive prices upward across the board for both commercial and Specialty coffees.

I like a market like this one because it makes it much harder to get great coffee at a bargain basement price. Roasters and importers can really take advantage of producers in low market periods and get decent to good qualities for less than what they really should as measured by costs of production. It puts growers in a terrible position, with little bargaining power and with limited options. Once the market goes up a bit, the whole system gets healthier as the bargain shoppers get priced out of the marketplace and end up reducing their quality, exposing their purchasing models as opportunistic and inequitable in the face of a more balanced market scenario where producers have some chips to work with. The high-quality buyers find more competition for the top lots since growers tend to consolidate coffees and ship in bulk at the earliest opportunity in good markets. The good get better, the bad get worse, and the ugly find themselves with nowhere to turn.

Just as a point of interest, here is a look at the ICO’s current mission statement, as of 2007:

“…enabling government representatives to exchange views and coordinate coffee policies and priorities at regular high-level meetings; improving coffee quality through the Coffee Quality-Improvement Programs and specific projects; increasing world coffee consumption through innovative market development activities; initiating coffee development projects to improve quality; marketing encouraging a sustainable world coffee economy; working closely with the private sector through a 16-strong Private Sector Consultative Board, which tackles issues such as food safety; providing objective and comprehensive information on the world coffee market; and ensuring transparency in the coffee market through statistics.”

Sounds like some good strategy. No matter what the next 10 years look like for world coffee markets, I am certain that greater separation between “commercial” and “Specialty” coffees, in terms of both taste and value, is the key to success for the producing world. That’s why we’re so obsessive about quality in our selection process and so proactive with regard to paying growers prices that reflect what the coffee SHOULD be worth, regardless of what happens with the commodity markets.

Whew, that was a long one this week. If you would like more reading, check out the information on Tres Santos, our Direct Trade Offering from Colombia.

As always, find our Nods at:
http://www.intelligentsiacoffee.com/origin/offerings.

Good luck to all of us,

Geoff Watts
VP of Coffee
Intelligentsia Coffee & Tea

Further:

• Tres Santos
• Intelligentisa official site 

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