Complicated Cups

Above Image | Luke Copping DRINK UP: American's guzzle 3.6 billion ounces of coffee each year. While our thirst for coffee overall has dropped slightly in the last decade, we are drinking more "specialty coffee" (the industry term for high-end brow). It now commands more than half of the country's market share and is the only kind served at Gimme! Coffee where Liz Clark (above) oversees sourcing and quality control.

There are countless ways to get a great cup of coffee. But are you paying attention to what’s going on behind the beans—how they were grown and got from bush to cup? Here’s Barry Estabrook’s venti-size scoop on what’s really important.

By Barry Estabrook

To get from Costa Rica’s car- and truck-choked capital, San José, to the town of Santa María de Dota I had to travel over Cerro de la Muerte, or “Mountain of the Dead.” It’s well named. On one side, the land plunged away so precipitously that I averted my eyes. For two and a half hours, the Pan American Highway wound south.

Then, as if to confirm my worst fears, the road suddenly disappeared, forcing my driver to skirt an ugly gash of rubble and mud where an avalanche had sent a tennis-court-size hunk of the asphalt tumbling into the abyss.

We emerged onto the rim of a bowl-shaped valley. Jagged 7,000-foot peaks embraced it on all sides. Clouds and mist partly cleared to reveal rain forest interspersed with rows of the dark green shrubs that bear coffee. It seemed impossible that the vegetation could maintain roothold on the nearly vertical hillsides. Santa María de Dota, with its red rooftops and symmetrical grid of streets, was nestled at the bottom.

In the world of coffee, Santa María de Dota is a kind of Shangri-la, sustained by a new financial arrangement the industry calls “direct trade.” As the name implies, foreign roasters deal directly with individual farmers or cooperatives of small growers. Unlike Fair Trade, Rainforest Alliance or USDA Organic, direct trade is based on no formal certification program, but advocates claim that it’s much better than any of those for growers, roasters and consumers—good coffee in all senses of the word. The 800 small family farmers whose beans are prepared for export at Santa María de Dota’s local co-op, which is called Coopedota, get 40 percent more for their coffee through direct trade than they would if forced to sell—like oil and sugar—on the open commodity market. Even so, most of their plots are too small (five acres on average) to fully support a family. Producers need to supplement their coffee income with other crops or off-farm jobs. I spoke with Roberto Mata Naranjo, a grower who operates a modest 40 acres with six other members of his family and also serves as the general manager of Coopedota, and asked him where the town would be without direct trade. He slit a finger across his throat and said, “Dead.”

The Town That Coffee Built

Instead, Santa María de Dota’s quiet, litter-free main street is lined with boutiques, cafés and small restaurants painted in pastel blues, yellows and reds. Palm trees provide shade. A soccer field and an adobe-colored church dominate the town center. Tourists visit the valley to hike the trails of adjacent national parks and to spot the area’s more than 200 bird species: woodpeckers, warblers and the crow-size, rainbow-colored quetzal. Every scrap of rubbish is collected and recycled at no cost to residents. Clusters of schoolchildren, clad in white shirts, neckties and navy blue pants walk along the sidewalks on their way home for lunch. The town’s quiet prosperity goes beyond what meets the eye. The students have access to a wide array of sports programs and can take special technical classes at the high school specifically designed so that they can find well-paying jobs in the area when they graduate. The town’s senior citizens can retire to a home that resembles a well-kept inn. Coopedota pays for the trash collection, sporting teams, technical education programs and seniors’ home. The cooperative runs a store where farmers get agricultural supplies at discount prices, and also acts as an unofficial bank, making short-term loans to members that are paid back when the crop gets delivered to the processing facility. Santa María de Dota is a town that coffee built.

Coffee was introduced to Santa María de Dota in the 1860s. Even though the region soon became known for the high quality of its beans, growers struggled financially, and were at the mercy of fluctuating international markets and distant processing companies and exporters. Coopedota was founded in 1960 by Mata’s father, who pooled his money with a dozen other farmers to scrape together an initial $250 investment to start drying their own coffee beans instead of shipping them away to a company who would scrape off more profit. Mata became manager in 1994. He realized that Coopedota’s members could retain even more profit if their crop was sold directly to foreign roasters, cutting out all middlemen, so he began searching for companies that would agree to such an arrangement. He persuaded a German importer to buy directly from the cooperative. At the time, it was a novel arrangement. Mata was a decade ahead of his peers in realizing the benefits of direct trade. Today, 80 percent of Coopedota’s coffee is sold through direct trade, including deals with Allegro, which is based in Boulder, Colorado and owned by Whole Foods Market, and Peet’s Coffee and Tea from the San Francisco Bay area. The rest is roasted and distributed to Costa Rican buyers. “If we had to sell at commodity prices, our yearly losses would be 20 percent,” Mata explained. “Direct trade supports nearly all of the 6,000 people who live around here.”

It was early afternoon and Mata, who is fit and athletic and looks a decade younger than his 60 years, was showing me around the co-op’s factory-like mill. The year’s harvest had just ended and hundreds of massive white polystyrene bags, each filled with 3,000 pounds of green coffee beans, were stacked two-high, awaiting export. A steel dryer that looked like an oversized laundry machine rotated slowly with a late-arriving shipment of beans. Two workers monitored its progress.

Mata led me into a laboratory-like room that smelled lusciously of fresh-roasted coffee. It contained a half-dozen circular tables, each set with several dozen small saucers of ground beans. “This is the cupping room where we taste each lot of coffee for quality control,” he said. Cupping is the coffee industry’s equivalent to vintners’ wine tastings. At one of the tables, a young man reverently sniffed at the saucers. He jotted notes on a form, dipped what looked like a soup spoon in a small cup of brewed coffee, brought it gingerly to his lips, and erupted with a long, loud slurp. He immediately spat into a pitcher. “That boy graduated from our coffee program at the high school last year,” Mata said. “He has a good palate and now a full-time job here.” The average age of Coopedota members is 53 and by funding the school program, the co-op hopes to provide career opportunities that will allow the upcoming generation to remain in the area. “We want them to be able to survive here. If not working the farms, then doing jobs at the co-op or as agronomists advising growers,” Mata said.

The Global Coffee Market

Coffee is a huge business. Consuming countries import about $25 billion worth a year, and the United States leads the pack by a wide margin, buying $6 billion worth, about one-fifth of the world’s total. Coffee is one of our most valuable food imports. About 125 million farmers and laborers in approximately 50 tropical countries on both sides of the equator earn a living from coffee. Coffee exports are the life blood of the economies for many of these countries. In Ethiopia, for instance, coffee brings in 30 percent of the struggling country’s foreign exchange. It is also Vietnam’s major agricultural export.

Unfortunately, the vast majority of the world’s coffee growers do not benefit from direct trade deals. Most sell on the volatile commodity market, sometimes through unscrupulous middlemen who pay them as little as half the commodity price. Although Americans love to grumble when coffee prices rise (President Eisenhower went as far as ordering the Federal Trade Commission to investigate coffee producers during a price spike in the 1950s), only a small fraction of what we pay reaches the farmers and even less trickles down to the seasonal harvesters. Research shows that only about $1 of a $13 bag of specialty beans from a U.S. store reaches farmers (see “Who Gets What,” page 81). In Ethiopia, where coffee originated, a worker makes only $1 a day. A Guatemalan harvester brings home more—about $3 a day—but not enough to feed a family. For some, the situation is more dire. The U.S. Department of Labor has found evidence of child labor in 14 coffee-producing countries. In Coopedota, by contrast, a coffee picker gets $3.50 an hour.

The Toll on the Environment

In addition to leaving producers in abject poverty, coffee production has also become a serious environmental issue. Traditionally, it was hard to distinguish between coffee farms and undisturbed stands of tropical forest. The arabica coffee variety has long been the industry’s mainstay. It evolved to live in the shade under the rain forest canopy in the mountains of eastern Africa and still grows best beneath trees. This is good for indigenous mammals, reptiles and birds. Tree roots prevent erosion. Decaying leaves fertilize the soil. The resident birds and bats devour insect pests, making chemical insecticides unnecessary. Today, arabica still accounts for almost two-thirds of global production.

But in the 1970s, according to University of Texas researcher Shalene Jha, agronomists began urging farmers to plant new hybrid coffee plants of the robusta variety. Robusta thrives in full sun. It provides huge yields of lower-quality beans that usually find their way into instant coffees and most of the preground canned offerings on supermarket shelves (canned arabica grounds say so on the label). Growers around the world started clear-cutting forests and planting monoculture fields of robusta, as treeless as any Iowa cornfield. The hardy plants grow well, but demand massive applications of chemical fertilizer and consume enormous amounts of irrigation water. The result is rampant pollution and habitat destruction. Between 1996 and 2010, shade-grown coffee dropped from 43 percent of the total production to 24 percent as swaths of robusta took root in nations like Brazil and Vietnam. Today, coffee production is contributing to deforestation in 10 of the 11 most threatened world forests, according to the World Wildlife Fund. In Central America, a critical overwintering ground for migratory birds, 2.5 million acres have been cleared. The results are staggering. “Over a third of migratory bird species in North America have significantly declined in the past 40 years,” Pete Marra, head of the Smithsonian Migratory Bird Center in Washington, D.C., told me. “Habitat destruction is a key factor and agricultural development is a big contributor to that. It’s critical to do anything we can to preserve bird habitat.”

Growers of finicky arabica bushes also face a threat: climate change. Although arabica is a tropical plant, it suffers when the temperature becomes too hot, especially at night. Arabica is comfortable at the same temperatures we are—between 65° and 70°F. Alessandro Craparo of the University of the Witwatersrand in South Africa recently published a study showing that if nighttime temperatures rise by slightly less than 2°F in the farming regions of Tanzania, the typical smallholder’s yield will be cut by 30 percent. Craparo chose Tanzania because coffee is the country’s most important export crop and also because the climate in its highlands is similar to that in other coffee-producing countries. “Attention should be drawn to the arabica-growing regions in Brazil, Colombia, Costa Rica, Ethiopia and Kenya” as well, he wrote in the study.

The Economics of Direct Trade

Taken together, these factors add up to a lot of ethical problems to address before you are fully awake in the morning. Several well-intentioned groups have established certification programs to simplify your decisions (see “Who Is the Fairest?” right). Unfortunately, each of these organizations focuses on a specific problem with coffee production and they all share one major flaw. “These organizations may help producers and conscientious shoppers, but because they don’t include quality specifications they do nothing for a consumer looking for a delicious cup of coffee,” says Dan Cox, president of Coffee Enterprises, a Vermont-based industry consultancy. And none offer one-stop shopping for those hoping to buy beans that are good for producers and the environment—except direct trade.

“Direct trade is not a certification,” Coopedota’s Roberto Mata explained. “It’s a market-driven relationship. We become partners with the roasters and agree on price levels that work for both of us.” Mata said that the direct trade price is considerably higher than what he would receive through Fair Trade. “With Fair Trade, you still have all those middlemen.” Coopedota is certified by the Rainforest Alliance, but that brings in only about 10 cents a pound extra. Growers of organic beans get about 15 cents more. However, none of the certification programs alone provide enough of a premium to make production financially viable in Costa Rica, where the cost of labor is higher than in most other coffee regions.

I was introduced to Mata by Geoff Watts, who directs sourcing for Chicago-based Intelligentsia Coffee. Watts is an intense man with short hair that’s just beginning to gray. In a typical year, he and other Intelligentsia staff spend 220 days on the road to meet with the 60 farmers and farmer cooperatives the company works with in 17 countries in Latin America and Africa, making inspections and sharing advice on how the producer can improve his crop. Intelligentsia, along with Counter Culture Coffee (based in Durham, North Carolina) and Stumptown Coffee Roasters (of Portland, Oregon) are credited with introducing the concept of direct trade to the United States in the early 2000s. “Before that, we were buying a lot of Fair Trade coffee,” Watts said. “But we learned that there was a lot more we could do.” He says the opacity of most traditional coffee contracts is the reason farmers get exploited. In direct trade, the farmer sees how much everyone in the supply chain receives. The contracts remain in force when coffee prices are low and when they are high. “Good times and bad. It’s a bit like a marriage, in that way,” said Watts.

For coffee growers who dealt with Intelligentsia, 2016 is one of the good times. The market price of coffee is hovering around $1.20, and Fair Trade is paying $1.40, but Intelligentsia is paying a basic price of $3 and up to twice that for coffee of extremely high quality. “The simple truth is that most coffee producers in the world are not making enough for the business of growing coffee to be sustainable,” said Watts.

For their part, the farmers agree to work with Intelligentsia to steadily improve the quality of the beans they grow, which increases their retail value and adds to the profit margins of both producer and roaster. They also commit to what Intelligentsia calls “healthy environmental practices” and “sustainable social practices,” although the company doesn’t outline what, exactly, those terms mean.

Much like the term “local,” the words “direct trade” carry no guarantee—you have to trust the company that you’re dealing with, just like you trust the vendors at the farmers’ market or the chef at a farm-to-table restaurant. “My advice to customers is to look for detail. Is the roaster’s buying philosophy clearly spelled out? Are there detailed descriptions and photographs of the farms? Where are they, what’s the elevation? What is the coffee variety? The more details that the description of a coffee has, the more likely it is that whoever is selling that coffee has truly engaged with the grower,” said Watts.

Coffee’s Future?

Today, direct trade provides little more than a drop in the ocean of coffees, lattes, espressos and other coffee beverages consumed, and its environmental and economical benefits reach only a fraction of the world’s producing areas. But that is changing, according to Watts. He says that much like the beer industry, where large corporations are waking up to the success of artisanal microbreweries and adopting their strategies (or buying the smaller brewers outright), international coffee companies have created specialty coffee divisions that use direct trade practices—such as purchasing beans from farmers and putting their names on the containers consumers buy—promoting quality and sustainability to differentiate these coffees from the rank and file.

Growers are also becoming more market savvy. Throughout Central America, where farmers are relatively well- connected to each other, word about the advantages of direct trade is spreading. Producers have begun to look beyond their traditional buyers to establish relationships with foreign buyers. No longer beholden to secretive middlemen, they have a clearer idea of what their coffee is worth. Once a rare sight at international coffee trade shows, farmers are showing up in increasing numbers and meeting face-to-face with the baristas and roasters to establish ties. “Direct trade could eventually have a substantial influence and compel consumers to think more conscientiously about coffee and change their relationship to it,” Watts said.

In the future, the Coopedota farmers will need the benefits of direct trade even more than they do today. The climate in the area has warmed dramatically. Formerly, coffee there was grown at elevations between 5,000 and 5,500 feet above sea level. Hotter weather now requires farmers to grow it in fields as high as 6,500 feet as yields at lower levels are declining. The warm weather has allowed a fungal disease growers call rust to spread from Brazil and Colombia to parts of Central America, including Coopedota. “Preventing and catching rust costs money, plus productivity drops,” Mata said. “We are treating it with chemicals that are less harsh than ones others use because they are better for the farmers and the consumers. But they cost more. The roasters we deal with understand this, so they are willing to pay.”

I picked up a bag of beans before leaving Santa María de Dota. After my return, I made myself a cup every morning. It had a sweet, clear flavor with hints of spice and, sipping it, I felt connected to the little town in the Costa Rican mountains over 3,000 miles away. Drinking coffee that’s good in all ways is worth a little extra effort. And money. Based on the price of a pound of Coopedota and the number of cups I made from it, the cost of enjoying my morning cup of some of the world’s finest coffee came to about 40 cents a day.

BARRY ESTABROOK is a three-time James Beard Award- winning journalist. His most recent book is Pig Tales: An Omnivore’s Quest for Sustainable Meat (W.W. Norton, 2015).