Newly-launched US importer of Guatemalan coffees Tecolote Coffee announces its mission to reduce coffee producer debt. The company brings a number of strategies to the market to further this goal.
For example, Tecolote Coffee supports farmers in the development of marketing materials and access to specialty markets; supplies vital production equipment such as moisture meters and altitude meters; and, as part of their initiative El Mercado (Spanish for “the market”), offers 0% loans.
The company has identified a lack of cash flow as one of several factors contributing to coffee producer debt in Guatemala, along with poor access to specialty buyers, plant diseases, a falling C price, and a limited understanding of the cost of production. While paying the farmer several months after the delivery of the coffee is common practice among
green coffee buyers, Tecolote Coffee commits to timely payments to alleviate cash flow shortages. Additionally, the El Mercado loan program can be used for any investment of the producer’s choice, from coffee varieties to equipment and fertilizer, and repayment options are flexible.
Meanwhile, Tecolote Coffee also hosts country-of-origin trips at the coffee farms for roasters, along with fixed shipping rates and financing options, to improve relationships along the supply chain. The company has also pledged to publicly share transparency data relating to its coffee purchases, including FOB prices, SCA cup scores, lot sizes, and contract lengths.
Coffee prices are a pressing issue in Guatemala. Earlier this year, the USDA Foreign Agricultural Service published a report on the country’s coffee industry, stating that “With current low prices, even under the best yields and direct sales, a small farmer will still be losing money each year.” The report went on to indicate that coffee farmers are experiencing significant losses and that loan defaults are on the increase.
Yet, Guatemala continues to produce high-quality coffee. Tradeorganization Anacafé estimates that 80% of the country’s crop is SHB, and with over 320 microclimates, there is incredible diversity and exquisite cup profiles. The country is the fourth-largest supplier of coffee to the US and agriculture accounts for 13.5% of its GDP.
Danae Hendrickson, Tecolote Coffee Director of Marketing, said, “Our mission is to eliminate the factors that contribute to the cycle of debt so many farmers get caught in. We are a brand new company and have set big goals. Our goal is to work with the farmer and buyer and bring each to a place in the supply chain that promotes sustainability. Once we have
provided that support we move on and do it again and again. That could mean providing continued support, or ultimately eliminating us from the equation altogether. We are open and willing to be the cheerleader or helping hand that is needed.”
Tecolote Coffee Owner Blake Trafton said, “We’re not assuming that every single farmer in Guatemala is in debt. The problem is that there are 125,000 producers and a lot of them are in a bad financial situation. Debt recovery is going to be a multi-year process and there are changes that have to be made. You can’t cut corners. You have to invest more in order to get higher quality. Our goal is to make that possible, both by enabling better cash flow and providing the necessary training and tools.”