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As Crisis Persists,
Mexico’s Nayarit Coffee Producers’ Quest To Quality Continues


Still glowing from the early morning dew, the thick smoky mist has started uncovering one of Mexico’s best guarded coffee secrets. Leaving the red dust of the lowland plains on the west coast beaches behind, the drive takes us down a narrow road winding its way through pristine pine forests before getting deep inside the Sierra Madre mountains of Nayarit, one of Mexico’s smallest coffee producing states, where the land since long forgotten times have been cultivated by Cora and Huichol Indians and their ancestors. Introducing a bar code system for origin tracing, and using a portable cupping lab, the Nayarit producer are taking a major leap forward in quality control in an ever increasingly competitive market.

It's late into the black tropical night, and the roaring sound of the generators at the dry mill are still filling up the air. Under the sharp neon light, plant manager Humberto Ocampo confirms his concerns: The coffee crisis continues to take a toll on quality here in Mexico’s remote coffee mountains of Nayarit, and the result is a much higher share of broca-infested beans than he had hoped for.

Strategies are swiftly discussed with the workers at the plant just outside the state capital of Tepic, and with Jim Kosales the main buyer, importer and investor in the Nayarit coffee region of Malinal, who was visiting the operations. A debate on how to ensure that the customer receives the beans they were promised gets underway, because it’s clear that there won’t be enough broca-free prime quality beans to fullfill the deal, but quality, Humberto knows, cannot be compromised.

“We’ll just have to fill up the lot with all the Grade One we have, and offer the reminder of the lot to the customer with Grade Two beans, but we cannot compromise on the quality,” says Kosales, who started working with the producers in Nayarit in the mid-1990s.

Things weren’t always like this in Nayarit, one of Mexico’s 12 coffee producing states located a four-hour drive north of the beach resorts of Puerto Vallarta. When Kosales, president of Kirkland-based San Cristobal Coffee Importers, made his first visit to the remote coffee lands of this unknown producing state, the producers were puzzled by his strict demands.

“We have always worked hard in the maintenance of the fincas, tried to pick and process the mature cherries separately from the green, but when we started this project we realized that we have to work still harder to improve the quality. Sometimes this is really very difficult because the producers here have worked 30 years or more and always done things in a certain way. We had to show and make them understand that we are now living in a different time with a different market that before,” said Miguel Fregozo Patiño, president of the SSS Emilio Gonzalez Cooperative in the Nayarit coffee community of Jalco Cotam.

All the producers in the region agreed.

“At first, we thought the standards for quality were incredibly strict. For example to only pick the ripe and fully mature cherries, not a single green cherry could be in the lots, that meant a lot of extra work for us and many people simply wouldn’t adopt to the conditions in the beginning,” said Lucio Miranda, head of the coffee department for the Ejido Malinal cooperative.

“But then after a few years we started to realize that this way of producing coffee, even with all the extra work, is much better for us because we ended up receiving a higher price. Every year more and more producers have come and wanted to sell their coffee via the cooperative, rather than selling it at half the price to the middlemen,” Miranda told Tea & Coffee Trade Journal.

Growers who work and sell the coffee under Ejido Malinal directly to Kosales are paid 2.25 pesos (22 cents) per kilo in cherries, almost 50% more than the 15 cents/kg in cherries that the middlemen in the region pay other producers outside the cooperative.

The difference does not look like much in dollar terms for the outside eye, but in rural Mexico it’s a major difference. The difference between surviving the crisis - or being forced to abandon or bankrupt your land to migrate to the cities, or head north to the U.S. border to try your luck as an illegal immigrant.

For Mexico’s poorest families living in impoverished rural areas such as the mountains of Nayarit, the daily diet consists of corn and beans. A family of five on average consumes 2.0 kilograms daily of tortillas, a thin corn pancake, which sells at about $0.40/kg.

Small-holder producers, who own an average of 1.4 hectares of land only, make up 91% of Mexico’s more than 400,000 producers and cultivate 476,000 hectares of the country’s 761,000 hectares of coffee land, according to official figures. Mexico’s total coffee harvest yields in an average crop year about 5.5 million bags.

Top: Jim Kosales marking the first barcodes which enable a buyer to track their coffee. Bottom: Lucio Miranda of the Malinal cooperative inspecting flowering.
“If you want real sustainability, you have to bring the social aspect into it too so we are trying to do that, and help where we can, the whole key point here is to limit the chain of instability from the intermediaries through working directly with the cooperatives. We started out with 40 producers delivering their coffee to us, and this year we had more than 100 producers who came to us. Nobody is getting rich but nobody is in the red either,” said Kosales.

“When we started the program here, the cooperative was paying the growers about 60% of the anticipated final price when fruit was accepted at the wet mill; the reminder being paid after each container was sold and the expenses were tabulated. Our business arrangement changes this so that the growers are paid immediately and directly, and so that growers can be paid a high final price at the time they bring in the cherries. We then reimburse the cooperative for all milling expenses. It is a transparent relationship,’ said Kosales.

Coffee first came to Nayarit about 150 years ago, when in 1860 a group of French families set up the first plantations in Malinal, the oldest of which still have a couple of trees more than 100 years old standing today.

Formed in the late 1980s, the Ejido Malinal cooperative has 70 members with a total acreage of about 300 hectares of land which produced about 500 (60-kilogram) bags of green coffee in the 2002-03 harvest. It is one of three organized groups among the department’s 260 producers, mostly small growers with an average 2-3 hectares per family with a total area under coffee cultivation of about 1,500 hectares of coffee.

Altitudes vary from 800 meters to above 1,200 meters, with more than 50% of all the Malinal coffee grown at altitudes above 1,100 meters, and production mostly made up by the Typica, Caturra and Borubon varieties.

“We still have the old typicas here so we get big beans, and all of these coffees are sweet, you get citrus and maybe some lemon, honey, floral and sometimes even they’ve got some chocolate in it,” marvels Kosales of the cup quality of the Nayarit coffee.

And that was where a personal adventure started for the Greek-American geo-physician, who at the time was building sonar systems for underwater mapping (which he, by the way, still does today). When Kosales on a visit to Puerto Vallarta had his first encounter with Nayarit coffee through Humberto (Beto) Ocampo Chacon, the plant manager of the dry mill operations just outside the state capital of Tepic.

“Beto had heard there was a guy down in Puerto Vallarta buying coffee and went down there to find us. We were like, ‘Hey, this is really good coffee,’ so I decided to go up and take a look, because it demonstrated a serious commitment to quality and I had for some time been talking to a friend about setting up a coffee business in Vallarta,” said Kosales. It was 1996 when Jim Kosales first set foot in the coffee mountains of Malinal. He still remembers how he - that first crisp and cool spring day - ventured up the little road which brought him through pine forests and smells of nature very similar to those where he spent summer holidays as a young boy growing up in the U.S. Midwest.

“It was right at the end of the great depression in 1938, my parents found 50 acres on a lake shore in North Wisconsin which my dad bought for $50. The summers I spent there gave me a tremendous appreciation for nature.

“In the spring of 1996, when I first went to visit the coffee producers in Nayarit, I was immediately reminded of that, the forests (on the way to Malinal) was just smelling really good, it was fantastic,” said Kosales.

It wasn’t until much later that he realized that the particular bountiful mix of strange varieties of pines he drove through that day, inside which the Malinal coffee cooperative is located, is part of a major protected Mexican nature reserve.

It’s the end of May, and it’s time for the pilgrimage of the Huichol Indians in Nayarit to carry out the annual rituals for their gods in order to ensure a plenty-full harvest of maize and peyote, a type of Mexican cactus used for a drug which can cause hallucinations.

Jim Kosales and Humberto Ocampo make a final inspection of the data before placing the bar codes on the Malinal coffee from Nayarit.
It is also time for inspection of the first round of flowering, which has just swept through the coffee regions of Nayarit with the first seasonal rains a few weeks earlier. In a farm plot under the Malinal cooperative producers, Lucio Miranda is looking after a sizable amount of coffee from the past 2002-03 harvest that has been left unpicked on the branches. Kosales immediately raises his eyebrows while considering what the reason is for leaving this much coffee unpicked. Although there is no signs of broca at that particular spot, with the new flowering now starting to develop into green beans, and the onset of the rainy season, left over cherries are a curse as they create an ideal landscape for the broca flies to nest in.

But the answer from Lucio is exactly the one Jim Kosales wants to hear. After seven years of working directly with the producers in Nayarit, the investment in human resources is paying off. Jim’s face lighten up in satisfaction to the reply: “No, these trees were not left unpicked for not being worthwhile harvesting, the beans were left unpicked because they were from a late flowering, and all green and immature when the rest of the crop was ready for harvesting, so we are collecting them now.”

But despite such small victories for quality coffee, even growing good quality coffee and receiving a reasonable price doesn’t mean that life is easy. Small gains in diversification of the lowest altitude coffee lands not fit for quality production all went in vain when Hurricane Kena swept through the region in October 2002 and flattened 200 hectares of coffee, avocado and mango fields.

“Everything here used to be coffee,” said producer Maria Délia, pointing to the vast, empty piece of land in the valley in front of her. “The hillside was completely damaged by the hurricane and now with coffee prices where they are it’s just not sustainable to grow coffee at 350-500 meters altitude, it’s not economically viable and people are starting to plant other things, like avocados, mango and jackfruit.

“Before, this land was all coffee, and only coffee grown under shade, but now after the producers started growing avocados, the earth is getting much more dry as is happening in the entire world. The world is drying out and as the roots of the avocado are deeper than those of the coffee, the avocado is taking all the water away from the coffee,” she said.

Furthermore, the coffee pest broca - as witnessed across large parts of Mexico, Central America and Colombia - has taken a heavy toll on the Nayarit production. Nayarit has seen the little broca larva eat into the cherries and cause total output for the state to drop to just 25% of the volume produced in earlier times, according to Salvador Esquivel, the local representative of the Mexican Coffee Council in Nayarit.

“The 2002-03 harvest was the lowest in ten years with production closing at just about 30,000 (46-kg) quintals, which compares to 110,000 quintals in the 1997-98, and our record in the mid-1980s where production reached 130,000 quintals,” he said.

In Jalco Cotam, where a total of 78 producers with combined annual production of about 600 bags of coffee from 600 hectares sell to Jim via the Jalco #1 wet-mill under Fregozo’s management, only a minimal part of the coffee was picked.

“This year (2002-03) not a single one of the 78 producers in the coop picked as much as a single ton of cherries. We have only seen 5% of the normal harvest being picked this year. Many of the producers have simply left, mostly for United States, and several of the wet mills have been forced to close for business all together, half of the twelve mills here in Jalco have been closed during the last harvest because of the prices,” said Fregozo.

Together with three other cooperatives in the region total production in Jalco Cotam can potentially reach 3,000 quintals from the total cultivated area of some 2,000 hectares. “This year we were expecting about 1,200 quintals (46-kg bags) but we used to get up to 3000 quintals, now because of the lack of farm maintenance and the desperation caused by the low prices, broca has affected up to 60% of the coffee.

During kilometer-long stretches of coffee fields, cherries have been left unpicked on the trees. Surprisingly, several random samples show that due to the unusually dry weather this season the beans have dried up to make perfect natural arabicas, just what one of San Cristobal’s clients is looking for from Nayarit.

But with the mass migration of both small producers and workers’ families from the coffee areas, the possibility of finding manual labor this late into the crop cycle is dim.

“In dried cherries you need roughly 30 metric tons in order to get 300 quintals in green which would give you one full container,” comments producer Jose de Jesus Pineda. “But if you could find a way to harvest just 10-15 tons of cherries, you would get half a container, that would be acceptable,” says Kosales.

“But even if the coffee is there, the question is if we can find the labor to pick it. You would have to pay at least 2.50 pesos/kilo (24 cents), but the most efficient workers are already starting in the mango season now, where a worker can earn a minimum $11.50 a day, and up to 300 or 400 pesos per day ($29-$39) for the most efficient, so it’s going to be hard competition for the coffee,” said Pineda.

Working our way through the cost chain, we get to the rough calculation that the labor alone will cost you 25,000 pesos ($2,430) in order to pick 10 tons of cherries, 24 cents/kg more than the actual market price of the coffee. This means that the client in question would be able to get his half container pulped naturals for a premium at 22 cent per pound.

Kosales agrees that if the quality of the naturals currently left unpicked on the trees is up to standard, the 22-cent-premium actually wouldn’t be outside reach for his client in the specialty market, and it would in deed be feasible to pay for the additional labor expense. He asks Pineda to figure out if someone can pick a sample of sufficient size to grade and cup it at the dry mill.

Back at the dry mill in Tepic, it’s time for cupping a very special lot using a “portable cupping lab”, another creative invention of Kosales. An investment he calculates cost less than $1,500 yet “producing the equal quality of the grading and cupping than any formal cupping lab could do.”

“The main problem in producing quality coffee is how to help to get the wet-mill to identify quality. You cannot build cupping labs at all the wet mills, so we ended up doing this instead, building a potable cupping lab which we take around to the wet mills, to which coffee from hundreds of small washing stations are delivered.

“There are lots of producers who deliver tiny lots of fully washed coffee. If we could find real good coffee at this early stage, we would separate it and sell it with the name of that producer on the bag. But we have to qualify the lots before it is processed at the dry mill, so we hull it, clean it, sort it by screen size and for defects, grind it, roast it and cup it.”

This was where Kosales’ background as a geo-physician came in handy.

“We tried with a number of hand blenders for the hulling, until we found one which didn’t do any damage to the beans, because most hand blenders are breaking the beans by the way it’s driven by the shape of the blade,” said Jim, showing how only one single bean in the 200gr-sample got sliced into 2 halves by the blender.

Following the hulling, the milled parchment is removed by using a vacuum cleaner with a pressure regulator made out of an empty milk plastic bottle with holes in so that it is allowing for the hulled, green beans to stay while only the parchment is cleaned away.

The difficult element for the cupping lab was the roaster.

“We couldn’t use these little air-roasters designed for home roasting, where the beans sprinkle and spring. You have the risk of not getting the beans stirred sufficiently and that does not work for the kind of precision roasting I need to ensure the consistency for cupping samples, so I built a little roaster fit for a 200-gr sample. The beans need to be heated and stirred very consistently, otherwise you won’t get a good roast. So there was a lot of work going into determining the best form in a way which could be manufactured as well. It had to be made by one single piece of metal in order for the stirring mechanism, which is the critical component of the roaster, to work,” said Kosales.

The lot on the cupping table today is a bucket of about 10 kilograms of re-washed Jalco Cotam coffee grown at 1,200-meter altitude. An idea which originated from the Kenya-born quality assistant at San Cristobal Coffee Importers’ headquarters in Kirkland, who remembered how in the old days at the farm in East Africa a “re-washing” technique would be applied to the coffee. “This was done in Kenya years ago but which is not done anymore today because it’s too expensive, time wise as well as for the additional fresh water use,” explains Kosales.

“In the Kenyan case, you would take the washed coffee ready to go to the patio and let it sit under water for another over-night treatment. As the sugar which would normally ferment the coffee is already gone we are simply just washing it a 2nd time and it supposedly gives a more in-depth flavor and a more clean pallet. Beto thinks it’s a mistake but we’ll see,” said Kosales.

And what an amazing 10-kg bucket! Using the portable cupping lab, not only is the cup judged as a strong body, deep rich flavor and an almost unusually clean pallet, but with a nice uniform green color - 19.3% of the 280-gr sample have come out as screen 19, while 41.4% made screen 18, and only 0.7% consisted of black, broken and other defects.

Although some experts today debate whether the re-washing actually ever happened in Kenya - or whether the extra washing really just removes impurities in taste from a coffee not sufficiently cleaned in the first place. Although Beto remains skeptical, the Jalco Cotam cup is indeed notably better from the normally washed lot.

To further ensure strict quality control, Kosales is now in the process of introducing a ‘Bar Code System’ for origin tracing, for what is one of the first experiments as its kind in the market

“All the coffee we have is identifiable to source. We’ve gotten really strict about qualifying patio lots, you have to understand how every lot look and taste like before you bring it into the dry mill for processing. Each lot of coffee is milled by hand with the portable cupping lab, it’s cleaned, screened and you grade it by screen size, and from that you can estimate what quantity of grades you will get at the dry mill. Then you roast it and cup it.

“If you are going to produce specialty coffee you have to know it before those coffees are brought into the dry mill, how and which ones you can mix on location, like the coffees which have been cupped and taste the same,” said Kosales.

Once at the dry mill, following the initial classification, samples are taken every hour of the coffees as they are being bagged and in the end the barcode holds the name of the company, the container number, the lot number in that container, and the bag number in that lot in that container. It will also tell from which producing zone the coffee comes from; whether a coffee is washed, natural or de-pulped; what type of bean it is, peaberry, other or both; and the number quality grade it has according to the Specialty Coffee Association of Ameerica (SCAA).

“To have the ability to trace the coffee to the source is a basic tenant to quality control by knowing where your components come from, which essentially is what is demanded in order to qualify for ISO-9000 certification, which we are now in the process of doing,” said Kosales.

With specialty coffee, broca, migration and long-term sustainability, confronted with the multiple complications that remain a challenge which coffee producers have to solve on a daily basis, will Mexico’s Nayarit producer continue to grow coffee for the world of consumers in the future? Will their children take over from them?

“I am a coffee producer and I will continue to be a coffee producer, but what I really want to, is to get into the roast and ground market for the local consumption, where there is much higher returns. My daughter Arcelia is eighteen now, and she is studying engineering. I really aspire for her to continue this education. I encourage her to not give up, to study hard and to not get married too early, to wait a few more years in order to learn more so she can make something more of herself. So far she has taken on this spirit and I think this is how we have to change our attitudes here among us,” said Fregozo.

The impact of the direct buyer relationship and access to the U.S. specialty market is a startling reality check for the coffee industry of Nayarit. For the more than 100 producers who benefit from the premiums paid for quality coffee there is a safe market and hope for a sustainable future.

But for the state’s remaining 5,000 producer families all hope is gone and most have already headed for the U.S. border to seek job opportunities as illegal migrants. “The world has changed and if we don’t change with it we won’t be able to continue with the coffee cultivation. I’m son of a coffee producer and I am a coffee producer and most importantly, we have a save market more or the less, the producers receive the money directly from Jim, he offers us a save market,” said Beto.

So what happens if Jim suddenly disappears from Nayarit?

“You basically set up a virtually integrated monopoly through strong contracts and fixed minimum prices, to survive it got to be a partnership strong enough to survive even if losing one of its members,” said Kosales. He adds, “It’s not one person - it’s one coordinator who links these producers to more than 40 buyers in the U.S., some of which are very small, some of which are very substantial, but all of whom are very supportive of these producers.”

Maja Wallengren started writing about coffee eight years ago when she lived in South-East Asia and has continued to specialize in coffee during her travels as a reporter in East Africa and Latin America.

Born and educated in Denmark, Maja Wallengren is fluent in six languages and today lives in Latin America.

Her writings, articles and photos of coffee have been published by leading industry magazines such as Tea & Coffee Trade Journal, Tea & Coffee Asia and The SCAA Cronicle. She is increasingly regularly being invited as speaker to conferences hosted by the coffee industries across Latin America, the U.S., Asia and Europe.

Tea & Coffee - August/September, 2003


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