Expanding Jamaica Blue Mountain Coffee in the EU

Getting Serious About Supply

Expanding Jamaica Blue Mountain coffee in the EU Windward Commodities 30th June 2022

7.2. Production and Price A key challenge highlighted by buyers is establishing a uniform and meaningful way to talk about Farm Gate Price (FGP) to customers, and how this helps to support a living wage. This is complex as there are a number of factors at play, but needs to be fully understood going forwards. Jamaica’s few vertically integrated producers are ‘price-setters’ informed by quality and available supply. Coffee Traders Ltd and Mavis Bank-Wallenford, as the two major buyers, set the price of cherries depending on demand, supply and quality factors, with significantly lower prices being paid at the start of the season from the first harvests of lower altitude crops. Prices across the season vary from J$3,000 (US$19) per 60lb box to up to J$9,000 (US$58) per box for higher altitudes. However, the dynamics are complex: Smallholders are price-takers, needing cash to fund living expenses and pay pickers daily - not hold back supply until the price increases. Many smallholders do not know their cost of production and are not in a position to say, ‘I cannot afford to produce and sell at that price’. Similarly, pricing agreements are opaque, with base prices being paid at collection depots that are not always tied to quality (all beans are amalgamated), and ‘final prices’ based on the quality of the estate at the end of the season. This does not provide motivation for quality improvement. EU speciality buyers expressed the concern that the Jamaican coffee industry benefits large processors at the expense of small farmers. Publicity surrounding Wallenford’s eviction of farmers who would not sign new leasing arrangements does nothing to waylay these fears. Large producers counter-this with evidence of many multiples of the ‘market price’ they pay to smallholders in the peak of the season – no other origin pays US$53 per 60lb box of cherries at the volumes that are purchased in Jamaica – and argue that it is yields and not price that are the problem. All arguments aside, the need to fix the problem is multi-faceted. At a human level, the ability of smallholders to meet a living income is paramount; ideally coffee is seen as a lucrative crop that motivates the next generation of farmers to continue farming and/ or enter farming for the first time. From an industry supply perspective, there is no future if smallholders continue to leave the industry or invest in cash crops and let coffee production decline. From a buyer’s perspective, being able to demonstrate that farmers earn a living wage and be able to talk about Farm Gate pricing in this context is becoming more and more important. • • •

40 | Time to Wake Up and ‘Cup’ the Coffee