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82. Quality premiums at origin

I have posted references here to some of the great coffee-drinking experiences I have had in the coffeelands over the past year, making special mention of Viva Espresso and Ben’s Coffee in San Salvador and Café Palo Alto in Cali, among others.  Beyond whatever travelogue value these posts may have, they point to an underlying market trend that may make today’s tight markets for quality coffee even tighter over time — the growing market for exceptional coffees in producing countries, and the growing number of roasters willing paying premiums for coffee that makes the grade.

I moved to the coffeelands in 1995, when I went to live in the mountains of Nicaragua.  At that time, the specialty market in the United States was still establishing its own quality standards and it was next to impossible to get a decent cup of coffee in Nicaragua, where the best coffee was exported and locals more often than not drank instant.  Fifteen years later, a few visionary roasters and platoons of baristas have changed the landscape.  The number of truly great cafés may still be small, but it is growing, and the quality of the average cup is on the rise.  These cafés are both creating and responding to the growing demand for quality coffee in producing countries.
The emergence of robust national markets for high-quality coffees in producing countries is potentially a game-changer.  Imagine markets like Brazil’s (a population of nearly 200 million people) or Mexico’s (more than 100 million) or Colombia’s (almost 50 million) seeking differentiated coffees and willing to pay for them.  If there is as much evolution in these markets over the next 15 years as there has been over the last 15 years in terms of demand for quality coffees, then what happens in producing countries will likely influence the way U.S. roasters source coffee.
What if a farmer could earn the same price by selling into national specialty markets as into export markets for specialty coffee?  The chains are shorter.  This means less time to market, less risk, less cost, less carbon, and more contact with roasters and consumers.  Under those conditions, farmers may slowly begin to rethink the time-honored strategy of exporting the best coffees and roasting the rejects for the national market.  Without an expansion of the amount of quality coffee available, this could make markets very tight, indeed.

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