Regional Quality Coffee Program of Central America, Panama and the Dominican Republic

PROGRAM BRIEF

Strategic Focus

QCP participating countries

The USAID-financed Regional Quality Coffee Program (QCP) is increasing the capacity of the Central American countries, Panama and the Dominican Republic to compete in the specialty coffee market. It focuses on real market opportunities, identifies producer groups that have the potential to generate the product required by the marketplace, and subsequently supports producer group efforts through professional technical assistance and market intelligence.

Program Components

• Business-to-business opportunities

QCP works with a range of buyers (roasters, importers and exporters) in the United States and Europe. These buyers are actively increasing their participation in specialty coffee markets and have expressed interest in QCP's activities and support of producer groups in the region. The program identifies specific opportunities with buyers, and links these buyers with those producer groups who have the potential to deliver the right product. Technical assistance is then provided to producer groups to support development of long-term relationships with the new buyers. QCP interventions include development of product and marketing strategies, promotional efforts, negotiation skills and links to quality control and improved business practices.

• Quality Enhancement

Buyers benefiting from QCP establish the qualities and cup profiles that are of interest to them. The program then provides technical assistance to producer groups to help in the selection of coffees that meet those profiles and then consistently deliver those coffees to the standards required by the buyers. This technical assistance begins with the harvest and includes advice on wet and dry milling, cupping and cupping lab design and operation.

• Improved Business Practices

QCP works extensively with producer groups to maximize organizational efficiencies. Complete financial and administrative diagnostics are conducted with participating producer groups. The diagnostic identifies organizational strengths and weakness and highlights areas requiring technical assistance. All participating producer groups must demonstrate financial stability. Based on the results of the diagnostics, QCP offers technical assistance to strengthen business efficiency and cost effectiveness. Technical assistance offered depends on the specific needs of the producer group, but often includes business planning, financial management, personnel management and administrative systems and controls.

Participating Countries

Central America (Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica), Panama and the Dominican Republic.

The QCP Professional Team

Based in Guatemala, El Salvador and Nicaragua, the QCP professional team includes quality control, marketing and business development specialists. Technical assistance and training services are provided to selected producer groups in each participating country. Short-term technical experts provide specific services in areas that supplement team skills.

Alliance Partners

QCP works closely with its alliance partners, some of whom serve an advisory function while others complement program activities.

• QCP is guided by its Marketing Advisory Group, which includes industry stalwarts Sara Lee, Dunkin' Donuts, Green Mountain Coffee, Allegro Coffee, Volcafé Specialty, Atlantic Specialty, Diedrich Coffee, Timothy's World Coffee, S&D Roasters, Hill Holliday and other prominent companies.
• A broad spectrum of industry, governmental and NGO programs provide complementary services, including the Coffee Quality Institute, Technoserve, Rainforest Alliance, the United States Geological Survey, Transfair USA, World Relief, Catholic Relief Services, Lutheran World Relief, Sistemas Empresariales de Mesoamerica (SEM) and the specialty coffee associations of individual Central American countries.

Specific Alliance Partner Activities

• Star Cupper Program: In collaboration with the Coffee Quality Institute and the Specialty Coffee Association of America, QCP is training some of the top cuppers in each country on all aspects of the international coffee market. This program will establish a cadre of "star cuppers" designed to increase the quality of coffee produced in the participating countries.
• Certification: In collaboration with Rainforest Alliance and Utz Kapeh, QCP is enabling certifiers to develop the necessary auditor training and infrastructures to meet new certification demands. Such certification adds value and attracts premium prices.
• Cup of Excellence: QCP is supporting the Salvadoran Cup of Excellence program through NCBA/CLUSA in collaboration with the Consejo Salvadoreņo de Café.
• Central American Specialty Coffee Associations: Regional production and marketing strategies are being developed by the specialty coffee associations in individual countries. QCP supports these associations to develop production and marketing initiatives.
• Implementing Partners: QCP is administered by Chemonics International in collaboration with Prime International, J.E. Austin Associates and NCBA/CLUSA.

QCP is a three-year, $8 million program financed by the United States Agency for International Development and contracted to Chemonics International of Washington, D.C.

SPECIFIC ACHIEVEMENTS TO DATE

QCP has facilitated the export of 84 containers of specialty coffee, with price premiums ranging between $2 and $66/quintal and a weighted average differential of approximately $17/quintal. The total value of QCP-assisted coffees sold in 2003/2004 exceeded $1.8 million, of which over $400,000 represents value-added through the price differentials. Twenty cooperatives and associations in the region receive direct QCP technical assistance as our primary producer group clients. These groups represent 30,000 small and medium-scale growers and collectively account for 800,000 quintales of export coffee, comprising about 8% of the total of all coffee exported from the region.

Quality markets have been accessed through new buyer contacts. Nineteen new buyers demonstrated interested in QCP clients, of which 8 made origin visits to producer groups and 14 of which purchased coffee on a first-time basis. The potential and actual buyers represent major quality coffee companies in both the United States and Europe. Over 40% of the coffee purchased was certified by Rainforest Alliance.

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Businesses and Communities Working Together: Salvadoran Cooperative Succeeds in the Specialty Coffee Market while Improving Quality of Life for Community Residents

Las Lajas members at the farm carrying their coffee cherries to a collection point where the coffee is weighed.

Low coffee prices are having a heavy impact on the business profitability of many cooperatives in the Central American region. Many such producer groups have fallen into heavy debt, resulting in loss of control of their finances and assets to lending institutions. The Cooperativa Las Lajas in El Salvador was one producer group experiencing such problems. To overcome them, the cooperative attempted to sell into the specialty market, but had managed to sell only one of thirty containers in the 2002/2003 harvest as specialty coffee.

The USAID Regional Quality Coffee Program initiated operations at the beginning of 2003. It focuses on market opportunities for small producer groups, assisting them to connect with serious buyers of specialty coffees and then providing technical assistance to meet buyer quality demands and improve business efficiencies. The story of Las Lajas is a very good example of how the program is helping small producers become successful. USAID alliance partners Chemonics International, Sistemas Empresariales de Mesoamerica (SEM) and Rainforest Alliance committed to helping the Cooperativa Las Lajas tackle this difficult situation. An extremely progressive local exporter, Exportadora El Volcan, also committed to supporting the producers' efforts by adding a sustainable professional face to the business chain. Together, the programs helped the cooperative connect with serious buyers who were interested in small producer coffee with Rainforest Alliance certification. The buyers made it clear that if the cooperative could produce the quality and maintain certification, they would not only pay higher prices for the product but would also invest in the local communities.

A Las Lajas member picks only the ripest coffee cherries on her small parcel of land.

The 2003-2004 harvest season has been a clear success. Cooperativa Las Lajas has found a sustainable way of doing business through Exportadora El Volcan, and the alliance partners are supporting the process through technical assistance as required. To date the cooperative has sold five containers to European roasters at an additional value of $51,500. This has enabled the cooperative to cover their bank repayments for 2004.

Cooperativa Las Lajas is located in a small community within the Municipality of Coatepeque. With assistance from Exportadora El Volcan, SEM and Chemonics, this community identified the need for a mechanism to collect water in the rainy season in order to ensure a supply of clean water for use in the dry season. One of the buyers has agreed to provide a $20,000 donation to finance a community water collection tank, and shortly will begin disbursing funds for this purpose. Five hundred residents of the community in which Cooperativa Las Lajas is located will benefit from a renewable supply of clean water during the dry season, a luxury heretofore not available to them. Once completed, this new source of clean water will help mitigate the water-borne health problems, particularly diarrheal diseases that have afflicted community residents in the past. The cooperative's efforts have also provided other services to members, such as access to credit, two teachers for the local school, better health care, and electricity.

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Doņa Paula improves the quality of her specialty coffee through competitiveness and assistance from the USAID Regional Quality Coffee Program

Doņa Paula Antonio Ortíz, a member of the Cuidad Barrios Cooperative of Coffee Producers in El Salvador, was recently encouraged by a technician of the cooperative to enter her coffee beans in a regional competition. While Doņa Paula was pleased and accepted the offer, she admitted that she did not understand why she was invited to enter her coffee in the competition. The cooperative's technician advised her about the USAID Regional Quality Coffee Program (QCP), assisting local communities to improve the coffee quality through training and technical training activities.

The Cuidad Barrios Cooperative of Coffee Producers is located approximately 180 kilometers east of the capital San Salvador, in the department of San Miguel. The cooperative was established in 1973 and currently has 960 members comprised of small and medium scale producers.

Fifty-two year old Doņa Paula Antonio Ortiz owns of a small (6.6 acre) coffee farm, Finca La Antena, which produces several types of coffee beans that include the coveted Bourbón and Arábica varieties. All of Paula's coffee plants are located on the steep slopes common to the Cordillera del Cacahuatique area and are well-shaded by various native tree species. The average age of her coffee plants is 30 years.

According to Doņa Paula, all production activities on her land are done by the family. They typically begin harvesting beans during the last two weeks of December and finish in January. Doņa Paula and her husband oversee the entire processing procedure, paying particular attention to the quality of the beans that are to be washed and dried. Dona Paula and her husband learned to produce quality coffee during training workshops financed with USAID support with the Cuidad Barrios Cooperative of Coffee Producers. They send their coffee to the cooperative to be processed correctly so that bean quality is not negatively affected. They are regularly congratulated by the cooperative for consistently supplying superb beans. Consequently, they are paid a higher price for their coffee by the cooperative because international coffee buyers are willing to pay a higher price for the better quality Doņa Paula produces.

Doņa Paula's family attended the coffee competition, sponsored by the cooperative and USAID, where her coffee was awarded fifth place among the more than 100 coffees entered. Indeed, her coffees are now considered to be among the highest quality produced in the Cacahuatique region. Before the competition, Doņa Paula believed that high quality coffee beans were only produced by large-scale farmers who used copious amounts of fertilizers and pesticides. Her family uses only discarded coffee pulp for fertilizer and performs only seasonal trimmings. She was not aware of the simple fact that the manner in which she produces her coffee not only results in high quality, but also does not pollute the water. She is now well-aware, thanks to QCP training and technical assistance interventions.

The Ortiz family is able to obtain a sustainable income through the cultivation and processing of the coffee on their farm. Nevertheless, Doņa Paula dreams of having a cellular phone so that she can check daily coffee rates and be in better communication with the cooperative. With more information, Doņa Paula believes she can earn higher prices for her coffee and also admits that she hopes to further improve the quality of her coffee so that she may again win in future coffee competitions.

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