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The Cappuccino Effect

Quality Beans Revive Guatemala's Coffee Industry

By Mary Jordan
Washington Post Foreign Service
Sunday, October 17, 2004; Page A01

AMATITLAN, Guatemala -- When a global glut drove the price of coffee beans to a historic low five years ago, Julio Flores almost shuttered the hillside coffee farm that had been in his family for four generations. But today Flores's farm is prospering as soaring demand for premium coffee brings new wealth to the old fields of Central America.

"We fought and fought and focused on higher quality, and we have left the crisis behind us," said Flores, 49, wearing jeans and a straw hat as he walked around his leafy, seven-foot-tall coffee plants with beans ripening for a December harvest.

Farmer Julio Flores, left, has been hiring workers such as Rosendo Tubac, who was unemployed for two years after the farm where he used to work went under. (Mary Jordan -- The Washington Post)

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Flores said what saved his farm was a clearer understanding that First World consumers want only the best beans in their cappuccinos and lattes and that they are willing to pay for it.

So he stopped using chemical fertilizers and pesticides, planted avocados below the 4,500-foot elevation that is generally required for the best beans and tended more carefully to his mile-high coffee plants.

Now, instead of selling 100 pounds of beans for $42 as he did in 2000, he is raking in $115 for the same amount of higher quality beans. Better still, he said, if he is certified as an organic grower next year as he expects, he aims to earn $150 to $200.

"A revolution has taken place in five years," said William Hempstead, a director of the Guatemalan National Coffee Association, which has been helping farmers increase quality to further distance themselves from such mass producers of commercial grade coffee as Vietnam.

Industry analysts said the shake-out in the coffee industry has caused pain across the region, resulting in the loss of at least half a million jobs. The industry now employs about 1.2 million people in Central America, down from about 1.7 million five years ago, according to official labor statistics. Guatemala lost 250,000 of its 650,000 coffee-industry jobs.

Unemployed coffee workers have moved to already overburdened cities, and others have gone illegally to the United States looking for work. Families who have depended on coffee for generations have been displaced, and countless coffee farms have been abandoned.

But Hempstead and others said that rather than dying, the industry is now bouncing back with a greater emphasis on top-quality coffee. While that has not restored the industry to its former glory, it has brought rare good economic news to this impoverished region.

Analysts said the shift to high-end coffee had been supported by the United States government, which sees it as an opportunity to improve economic stability in its back yard. Conservation groups also are working with farmers to help them earn more money so that coffee farms survive, because they help the environment by preventing erosion and harboring wildlife.

Large U.S. coffee corporations, Central American governments, U.S. aid agencies and international conservation groups are working together to help the industry, said Charles Oberbeck, who is in charge of the region's coffee programs for the U.S. Agency for International Development.

"The unlikely bedfellows," he said, may all be working for differing reasons, but the effect is clear: Guatemala's coffee export earnings rose from $233 million two years ago to over $300 million this year. A similar rebound is occurring in neighboring Costa Rica, El Salvador, Nicaragua and Honduras, which all depend on coffee production.

"The crisis taught us that quality sells," said Henry Hueck, a Nicaraguan coffee farmer who sells his coffee to Bewley's Ltd., based in Ireland. "It used to be a given that people bought your coffee. Now all people are talking about is quality coffee."

Oberbeck said U.S. coffee companies are paying above-market prices to secure the world's best coffee because "they don't want to kill the goose that laid the golden egg."

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