Fincas La Providencia: Atitlán y Huehuetenango
For the past many months, we've been working hard to form new relationships with growers in Central America, and this month we are releasing 2 new beautiful relationship coffees from Guatemala. These coffees come to us from our ongoing work with Virmax Café, our exporting partners in Colombia, who have recently expanded their work north to Guatemala. One important bit of information to note about these coffees is that they come from farms with the same name, though are completely different! The farms are in different regions, owned by different producers and have different flavor profiles.
Coffee is traded at the base daily fluctuating price, and most specialty coffees are traded at a higher differentials. While our contracts for our high quality coffees are traded with much higher premiums on top of the C, they are unfortunately still tied to whatever the daily price is (ie. NY + $1.35). This means that while the producer receives a higher price for higher quality, prices that are even above the Fair Trade minimum, in the free market, there is still no way to protect them from falling prices.
So you can see that with coffee, like any market, speculation causes the daily price of coffee to either fall or rise. Relationship Coffee refers to the way in which we protect producers, and their investment in the costly production of high quality coffee, from the changes in market prices.
Relationship Coffee approaches buying from a 'different-from-the-norm' perspective, that is, we pay a flat price that is not subject to market fluctuations. These prices are based on production and transport costs, and also add a stable and truly fair margin for the producer, exporters and importers. If the daily price of the C contract falls, the sustainable price for Relationship Coffees remains the same. Producers maintain their position and are able to recoup their production costs, while also making a living. We, then, are able to secure the supply of high quality coffee and know that the price paid was not due to false inflation and speculation, but to real costs to the actual producers.
Finca La Providencia
Region: Atitlán
Juan Francisco Pira spends a lot of his time on his phone, or tablet, checking the position of the coffee market. It's kind of like a game, where every 10 minutes there is another exclamation of, "Oh, my gosh, guess where the prices are now?!" The compulsion is necessary for Juan, who owns 5 farms, 2 wet mills, and buys coffee from over 500 small producers in 2 different regions in Guatemala. A true market player for his commodity grade coffee, he is also 100% dedicated to producing high quality microlots at farm gate pricing, as he understands the differentiation needed to meet the demands of all types of coffee roasters/markets across the world.
At his wet mill in Santiago, Atitlán, Juan processes his own coffee from his 3 different farms in the region, but also buys and processes coffee cherry from over 300 small holder growers. Beneficio Santiago la Laguna is where, roughly 10 years ago, he first came across the coffee from a small farm not 10 minutes up the road called Finca La Providencia. Then owned by a lawyer living in Guatemala City, the coffee from La Providencia exhibited the potential for great quality, though serious attention needed to be given to the farm in order to achieve this. Over the last decade, Juan pursued the acquisition of La Providencia and was finally successful in 2010.
Juan's first action was to divide the farm into different plots and begin heavy renovations to each. He took inventory of all of the trees on the estate, factoring in the history of how each tree was planted, as well as the types and amounts of inputs that were given over the past many years. Juan tailored his renovation attack to the needs of each plot. Some plots need complete soil regeneration, others needed complete tree renewal, some others selective pruning. He began with a small 2 hectare section of the farm, whose coffee treeline ends just 50 meters shy of the stunning Lake Atitlán. This is the specific plot, producing just 15 export bags, from which our La Providencia Atitlán comes.
La Providencia Atitlán is, perhaps, one of the most transparent and clean coffees that I've had in my life. It is so delicate and mild, congruent with the general characteristics of the Atitlán region, and exhibits the type of perceivable citric acidity of tropical and stone fruits. I cannot say enough about how truly passionate I am about this flavor profile.
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Finca La Providencia
Region: Huehuetenango
Finca La Providencia is located in the municipality of San Pedro Necta, roughly 1,550 meters above sea level. The farm, which has been in the Palacios family since 1954,is a 34 hectare farm, producing mainly the Caturra variety. They fully wash and sun-dry their coffee, and mill off site. The cup is rich, syrupy and juicy, with flavors of apple, peach, cocoa and vanilla. This is the 'typical' profile of the region, so most of you that like more of those sugar browning notes in your mild-washed-Centrals will no doubt enjoy this coffee. It's a very solid cup.
Unfortunately, I have no anecdotes to share about Max Ariel Palacios and Finca La Providencia in Huehuetenango.Visiting the Huehuetenango region in northwestern Guatemala, is one trek I've yet to make. However, this is why we invest so heavily into our partnerships with not only producers, but exporters and project managers as well. So, perhaps I'll take this opportunity to talk about how that.
Relationship Coffee is not simply related to working directly with a coffee producer, but rather indicates that the entire supply chain is being utilized collaboratively, thereby strengthened, and fair compensation resounds. If you look on our website, you can see that our most concise definition of Relationship Coffee is this:
Relationship coffee is a model of coffee trading where roasters and producers work together to establish a long-term trading partnership. This relationship can continue over many years, and is insulated against the fluctuations of international commodities markets. The trading process is transparent; farmers gain bargaining power through knowledge, and receive a fair price that is not vulnerable to commodity market fluctuations.
I realize that this brief explanation might be a little confusing to those who don't know the way in which almost all coffee is traded, that is, daily on the Intercontinental Exchange. Here's how that works...
We usually refer to the Intercontinental Exchange as the Commodities Market, 'C' Market, or simply as New York (NY), as in "Today NY is trading at $2.xx for December." Coffee contracts are bought and sold months in advance of delivery. Typically, the daily price of those future contracts fluctuate based on the speculation of what the production output will be from a few big coffee producing countries, namely Colombia and Brazil. Speculators look to a myriad of external influences on coffee production, such as weather patterns, for these crop yield predictions. If there appears to be a shortage of coffee, the competition for contracts becomes more fierce, and thus the price for the contracts increases. Of course, it's more complicated than just this, but at least you can see how coffee prices respond to the basic principles of supply and demand.
Coffee is traded at the base daily fluctuating price, and most specialty coffees are traded at a higher differentials. While our contracts for our high quality coffees are traded with much higher premiums on top of the C, they are unfortunately still tied to whatever the daily price is (ie. NY + $1.35). This means that while the producer receives a higher price for higher quality, prices that are even above the Fair Trade minimum, in the free market, there is still no way to protect them from falling prices.
So you can see that with coffee, like any market, speculation causes the daily price of coffee to either fall or rise. Relationship Coffee refers to the way in which we protect producers, and their investment in the costly production of high quality coffee, from the changes in market prices.
Relationship Coffee approaches buying from a 'different-from-the-norm' perspective, that is, we pay a flat price that is not subject to market fluctuations. These prices are based on production and transport costs, and also add a stable and truly fair margin for the producer, exporters and importers. If the daily price of the C contract falls, the sustainable price for Relationship Coffees remains the same. Producers maintain their position and are able to recoup their production costs, while also making a living. We, then, are able to secure the supply of high quality coffee and know that the price paid was not due to false inflation and speculation, but to real costs to the actual producers.
It's a win-win situation.
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