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Green coffee summit 2023 Part 2

Value in sourcing system.

 

Today we are reviewing another part of Green coffee summit 2023 https://green.sca.coffee/ session with two speakers who share their thoughts and observations on sustainable sourcing topic.

 

These coffee professionals represent two sides of the supply chain and have a story of successful partnership, which let them share their experience, discuss problems they were facing, but what more important,  give us a vision of how to build the proper relationship between producer and green buyer despite the obstacles.

 

The first participant of the session - Michael Sheridan. He recently joined a Coffee quality institute, organization I never heard about but looking forward to explore and encouraging you to do the same (https://www.coffeeinstitute.org/education/education-resources). He has a background of a green buyer specialist in Intelligentsia Coffee (https://www.intelligentsia.com) and is known for many publications in coffee industry sources such as Standart, Roast Magazine, Sprudge, Daily Coffee News, and the CRS Coffeelands Blog.

 

Michael starts his speech with a pricing topic, which has been raised many times year after year. He speaks about necessity of paying adequate price for high quality coffee and mentions the auction system as one of the practices that  is applied to maintain the prices but this is not the most efficient way, from his point of view. As he refers to the book "Winners take All", Michael underline the idea to "do more good" but in slightly different manner, rephrasing it as "do less harm", and the according approach finds reflection in the book he mentioned, by revealing the real harm the "winner" does to the market.

 

What we learn further from speaker is an approach to deal with 4 main categories of risks for coffee growers and buyers (prices, climate, market and currency exchange)

 

From the pricing perspective Michael encourage us as buyers to think more about average price we are paying than the highest one, which usually refers to a small percentage of turnover  to contribute in real sustainability. Trying to source and pay fare price for every coffee lot in your stock will be more efficient to shift  the trade line and provide more confidence for growers to keep the level of living and improve the farming practices, thus improving the sustainability.

 

Continuing with the market risks, speaker highlights the lack of transparency and communication issues within supply chain. He regret for the tendencies of suppression and taking advantage  of the partners instead of sharing the risks and knowledge and committing long term partner relationship. Michael encourage buyers to change the paradigm from competing within the supply chain to compete with other supply chain, making no or at least less harm to our direct partners. He sees the solution in building the reliable framework for quality communication and taking responsibility by sharing risks with growers, referring to an example of innovation support by committing the purchase no matter what is the outcome. Taking the responsibility with caution and awareness of the risks of innovations we may step closer to better coffee.

 

Regarding the climate risks Michael also stays on necessity to build a long term relationships and provide the grower a support for such cases. We take into consideration the weak spots of our partners, it generally reminds us building a human relationship as a couple, it required courage and understanding as we have an intention to go further hand by hand.

 

The next speaker, Jose Rivera, who is originaly from a coffee growers family, although  was not supposed to do coffee, but now he is passionate about it and happy that the circumstances  had led him to this path. He is a director of sourcing in Origin Coffee Lab company http://www.origincoffeelab.com/.

 

Referring to his childhood at his birthplace - Peru, hi finds strong attachment to the land and gentle nostalgic tender which he incorporate and express in his work as an underneath foundational layer of ethics and equity.

Jose is saying that he avoids to use the term "value chain", rather "supply chain" he uses thus underlining the fact of lack of even value distribution.

 

Starting the speach with the most rigid challenges producers face with, speaker highlights the education and identity issues. Many farmers from his region don't even finish elementary school and are supposed to manage a production. Another  struggle people meet - the identity. Jose talking about the deep roots of mental health problems, anxiety, low self esteem and lack of motivation as a consequence of  losing the identity, which is actually a problem of a modern people in general but hits so hard in this case.

 

Gowing further he points out is that nowadays coffee industry is pretty tough toward the producer, it often dictates to farmers what they should do and how to react. Jose frankly reveals this dark abusive side of "relationship". Saying about the extrinsic attributes such as environmental friendly, farming practices and treating workers fairly,  he refer it to an idea of selling a coffee + emotions which works pretty well. What I saw in this ambiguous line (i might be wrong here) that he sees this just as a trend in the industry and considers it more as a tool for marketing but less as improvement, as the farmers who do not incorporate all these extra valuable practices are considered to be off  the game. Now things got really tricky  as we see quite another view on the market and extrinsic attributes of coffee from the perspective of a producer, who sees some cons and exploits in the sustainable coffee "game".

 

Continuing with the brilliant comparison of hunter vs buyer, Jose declare the toxic relation of those sourcers who aim for a onetime purchase and refuse to commit the future partnership. A strategy of an one-eyed hunter is to find  more unique  and trendy offer on the market next time and do not have any responsibilities or bonds. It gives a nice analogy of individual maturation which emerges with higher conscious  attitude to people around, mindset of long term investment prior to easy and fast superficial affairs. What Jose is trying to say, to my mind,  is that industry is still affected by immature attitude of so called "hunters" and is exploited despite the strives of SCA and all sustainability idea.

 

Going deeper into pricing topic, speaker articulate the  real, from his perspective, problem, which occurs to be not so much in necessity to pay a higher prices but to make the price reasonably high and ensure that value distribution and equaty is taking place properly reaching the most vulnurable parts of the supply chain -  the farmers and producers.

Also Jose stays for the idea that good pricing apart of the long term commitment make particularly  no sense.

 

Another aspect of today's struggles for producers, is a strong  preference trends from the sensory perspective, dictated by a market. Even though we have a quite diverse market but still industry is very picky and tend to discard coffee lower than the q-score threshold or having any "doubtful" flavors like cucumber or something, which seems to be quite obsessive for Jose. The variety issue is what he is making fun of in the following mem.

 

 

What Jose is trying to underline here is the lack of understanding from the buyers and roasters of what are the real issues in producing on a farm. By closing eyes on the problems of producing sector we are losing the opportunities to keep coffee industry sustainable in front of upcoming changes as global warming etc

 

The reality is that today due to climate changes farmers have to go higher in altitude and adapt to the new conditions.

 

The costs of production in such cases rises up and still they can not guarantee that the same variety will deliver the same quality or flavor impression with these new conditions. This is what we should consider making the trend for geishas and pink bourbon as an example.

 

To conclude what Jose is trying to convey to us is, basically, the necessity of understanding what actually is happening in the fields and encourage traders to make real long term commitments to support the supply chain but not to take advantage of it.

 

Discussing further the specifics of starting and maintaining long term relationships Jose and Michael mention the following:
So Michael pointed out that the initial alignment appeared during the first meeting with Jose when they spoke about coffee quality and what values it represents for each of them. Finding much in common in their thoughts the first commitment was made for some amount of coffee and then grew from one lot to a few containers. The important part of their partnership was the contract basis that helped the producer to get credits for maintaining and improving farming practices. This is what helps to grow together.

 

Jose emphasizes the necessity of trust and transparency of information flow  in both directions for the producers and buyers. From his point of view it is important to understand how the production is built to be able to set up realistic goals and limitations. Also he encourages buyers to be more supportive to producers they know well, not to be afraid of getting experimental and new lots, considering it  like investment in innovation and building a sustainable partnership.

In the end I would like to share a few thoughts about this  session.

Firstly, the fact of discussing and raising the problems in industry always gives a deeper understanding of what we are doing and where the path we've  chosen leads to. I am grateful for such an opportunity and some arriving understanding of the true situation.

We spoke a lot about sustainability and value in previous posts but had a lack of producer's perspective and here Jose clearly shares with us all the concerns and indignation about industry realities.

And I even saw a tension between speakers, although they are the partners but still are on different sides of the chain and not all the goals are the same for them, which is true but left unsaid in these conversations.

The lesson from that, for me particularly,  is very clear -  find the people you share the same values and get to know and understand them better, build relationships with trust upon that and you will be rewarded.

 

Source: https://www.youtube.com/watch?v=mXL4YVeGHIM