Devouring profit - International Coffee Organization

Table 12. Main problems in coffee production, Ejido Sta. Rosalia.
Problems (not ranked)
Lack of economic resources
High transportation costs, due to distance between farm & selling point
Low coffee prices
Lack of government support
Mycena citricolor)
crop. A key point is that average productivity is only about 10.5 qq of parchment
coffee per hectare, similar to the national average. The density of trees per hectare
suggests the coffee production in this locality is intermediate (between traditional,-
1500 to 2000 trees/ha, and intensive, - at least 4000 trees/ha). Each year they
renew an average of 370 coffee trees per hectare (range 200 to 500), which demonstrates
interest in having new trees even though crop management is not intensive.
Regarding coffee varieties, they prefer the traditional Borbon and Typica, observing
that a coffee tree is considered old when it is more than 50 years old. In the case of
Caturra or Catimor varieties on the other hand, trees over 12 years are considered as
old and unproductive. We developed a work calendar with the farmers, from which
we estimated total labour needs at about 200 working days/ha distributed throughout
the year, presenting a peak in November due to the coffee harvest. Labour requirements
are significantly less than would be the case with intensive production.
They commented that the “coyotes” (private buyers) check the coffee and mark down
the price for poor quality. If the coffee farmer does not control CBB, price reductions
can be about 8 to 10%; moreover it can be further affected by a weight reduction of
around 2 kg in a 60 kg sack. In both cases this is a significant amount of money for
them to lose.
The role of the intermediary: Belisario Dominguez is the name of a village where
most local coffee farmers sell their coffee to intermediaries. In this place Mr. Juventino
Velásquez, a local coffee trader, was interviewed. He has been buying coffee for more
than 15 years; sometimes he also lends money to farmers. Normally he works with a
capital of $100,000 Mexican pesos, which can be distributed among 20 farmers, i.e.
an average of $5,000 per person (about US$500). The interest rate he charges is about
5% per month, which was six times the national Mexican inflation rate. At the beginning
of harvest, farmers often lack funds so they are more or less forced to approach
the intermediaries. But he is worried because since 1998-99 the people to whom he
sells on the coffee have been sampling the quality and make deductions for poor
quality.
The cost calculation he does is very simple: if the coffee price is about US$62.5/qq in
Huixtla 7 , the baseline price in Belisario would be around US$59 to 60. Intermediaries
7 Huixtla is in this case the nearest most important coffee market where all the
intermediaries of this locality sell coffee.
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