Farm: Series of small farms
Region: Possess, Minas Gerais
Farm: Finca Santa Lucia
Variety: Yellow Catuai
Tasting notes: Vanilla | Pecan | Caramel
The Posses group was paid an average price of 550 Brazilian real per unsorted bag.
The 2018 average market price of an unsorted bag of Brazilian coffee is to this point, 420 Brazilian Real. As a percentage, then, we paid 30 percent above the going rate for this coffee.
Our FOB price for this coffee was $1.70USD/lb.
Though this price appears low, we feel confident to say that based on the volume produced and the premium paid, we surpassed by significant margin the necessary price for these producers to meet their costs of production and to profit off their work.
What We Hope You Remember
We know it can be hard to read all of the information about every coffee — we don’t think you need to. However, we provide it all here for those who are interested. For those who don’t have the time, here’s what we hope you learn about this coffee.
Brazil is a massive coffee producing country, producing 45 million bags of coffee a year. A huge majority of this coffee is of low quality, and sold below market price as far as a year in advance to major coffee brokers and the companies they sell to.
The average coffee producer in Brazil will produce far more bags every year than the average coffee producer in major coffee producing countries like Colombia or Honduras. For example, a small producer in Brazil would be someone who produces 200 bags a year, while in Colombia this would make you a major producer.
All the Brazilian coffee we work with comes from sitios.These are small scale farms (by Brazil standards) that are largely overlooked by major coffee buyers because they must be hand-picked due to the hilly terrain and because they average a production of less than 800 - 1000 bags annually.
All of the coffee we buy in Brazil comes from the Serras de Minas micro-region. The vast majority of these producers are growing the tasty and robust varietals of Red and Yellow Catuai and all the coffee is natural or dry process.
Brazilian coffee producers are amongst some of the most well-protected and also empowered in the world. Due to their volumes, their able to garner a very liveable wage even when the market drops to a low price and if that price does drop very low, the Brazilian government offers a guaranteed price to all producers.
Despite that, we still strive to pay more than the going rate. Through our partners in Brazil, Legender Specialty, we pay a minimum premium per 60kg bag of unsorted coffee of 50-100 real plus a quality premium for our micro lots that ranges from 100-250 real per bag. For context, the average 2018 market price was ~400real per bag while we paid on average 500 real a bag.
Understanding Brazilian Coffee
Brazil has been a coffee producing powerhouse for over a hundred years, and sets the global standard for volume and as such, price, of coffee. For Brazilian coffee producers, this is a good thing — they’re highly protected as producers because the government recognizes the importance of coffee plays as an exportable commodity, and the industry is so broad that there is no shortage of buyers. In essence, the power rests with the producer — they can sit on their coffee and wait for the market to tick up before cashing in because there will always be a buyer, even for old coffee.
A large portion of coffee produced in Brazil is mechanically picked — meaning that large machines pass through flat fields shaking the cherries off the trees, rather than employing pickers to move through these fields picking manually. This can mean lower quality, but doesn’t always mean that. Mostly, this is another result of scale — because fazendas (large farms) can produce upwards of 2000 60kg bags a harvest, it’s unthinkable that this would all be picked manually.
As one of the largest producers of coffee in the world, besides Vietnam, the New York “C” market price of coffee is largely based on the production projections of these two countries. Notice the word “projections” however, as this is a Futures market, the price is constantly changing not in reflection of how much coffee there actually is, but how much coffee the market believes there will be. As such, it’s common practice in Brazil for larger brokers to set the price of coffee today for one year in advance, meaning that for many growers, they’ve sold their coffee before it’s even grown. Ideally, the grower would agree to a price that’s higher and that price stays high, but it doesn’t always work out that way.
Brazil’s coffee market is unlike anywhere in the world and is incredibly nuanced. There is no one way that it works or that is “best” per se. For De Mello, we believe in supporting small scale farmers as we believe we create stronger, more impactful relationships with these producers than with large fazendas. We also believe that the quality can be and is higher in the cup.
De Mello Palheta’s Tiered Purchasing in Brazil
Brazil is an interesting region for us, as the volume allows us to have a constant supply throughout the year, despite their being only one harvest cycle. By working with producers in the same micro-region, working with the same varietals and same environmental conditions, we’re able to ensure quality/flavour consistency and traceability, our two main concerns.
However, we are fully aware that this coffee market can a) be dangerous for Brazilian producers and b) also negatively effects coffee producers the world over, such as those in Colombia or Honduras or Guatemala who are also forced to sell their coffee at or near to the C market price which is set by countries who produce much higher volumes.
Our best option then is to work with Brazilian producers in a way that gives them maximum autonomy of their own coffee businesses, or as much as they can without it being a risk to them.
We does this by working with producers who have strong relationships with our Brazilian exporting partners — these producers have a baseline price much above going rate that they will not go below and we don’t ask them to “lock in” on a price a year in advance, but rather pay the going rate each time we make a purchase.
We’re also able to achieve our “tiered pricing” goals by purchasing the majority of our blended lots for Dancing Goats at one premium price while also allocating 15% of each purchase cycle to micro lots which we pay additional quality premiums for.
Even with these premiums, the prices we pay for Brazilian coffee are much lower than the prices we pay for coffee from Colombia, for example. However, through discussions with our producer partners, we’ve come to an agreement on a price that far outpaces going market rates and aim to increase our prices as we grow together.
Producing and Paying for Posses
This coffee is a blend of coffee produced by nine farmers around the town of Posses in the Serras de Minas micro-region. These farmers have all been working with our partners, Legender Specialty, for years and are fully committed to producing high quality coffee for premium prices.
This group of producers includes: Luiz Fernando Bernardes, Onicaldo Melo, Adriano Melo, Celso Mares, Paulo do Lago, Joao Borges, Rodrigo dos Santos, Jose Rosa, and Roberto Bernardes. They are all producing Yellow and Red Catuai around an altitude of 1200masl, and all their coffee is sun-dried on patios.
The Posses town group produces between 2-3000 bags total annually of unsorted coffee. In Brazil, due to the volume produced by each tree, less attention is paid to the picking of perfectly ripe cherries. For example, in Colombia, it’s more common to find trees producing an average of 1 pound of cherry per tree. In Brazil, this average is more like 6 pounds of cherry per tree. This is likely due to lower altitude, higher rainfall, and more robust varietals.
As such, producers use a mechanical hand (see photo) to strip the trees of all the cherries, regardless of ripeness, and then all these cherries are dried together. The bags are then sold unsorted to Legender, who will see a loss of 50 percent of the weight. This means that the saleable production of coffee for these producers is between 1000-1500 60kg bags annual, or roughly 200 bags each. This makes them very small scale producers, as far as Brazil is considered.
All of these producers are selling not only blended coffees but micro lots for higher premiums as well. In this current blend is coffee from Roberto Bernardes — he was the first producer near Posses to work with Legender in 2013 and since then, all of the rest of these producers have switched over.
They’ve done this because they are able to receive a better price for their coffee but also have the freedom to focus on quality because they know if they do it properly, they’ll be able to receive a higher price still for their coffee. This kind of system is rare in Brazil, where most people sell their coffee at market rates regardless of quality, and in some cases take even less than market simply to have a guaranteed sale.