Touching Southern Clouds - 25 Magazine: Issue 7
Over the past four decades, Yunnan – a place with a rich history and renown for tea cultivation – has quietly become one of the fifteen largest coffee growers, producing an estimated 130,000 metric tons of arabica in 2017.
Coffee Commune’s ERIC BADEN explores the impact volatile commodity pricing of both tea and coffee has made on Yunnan’s farming landscape in Issue 7 of 25 Magazine.
Clusters of shining white clouds pass majestic mountain slopes, wrapped in the green velvet of dense subtropical forests. The mountain springs sparkle in the sunlight as crystal clear water flows downward to nurture rice terraces, orchards, tea, and coffee plantations. This land of breathtaking beauty is Yunnan, home to a vast diversity of flora and fauna: a province in China’s far southwest, bordering on Myanmar, Laos, and Vietnam. It is also the birthplace of tea: at 3,200 years of age, the world’s oldest cultivated tea tree still flourishes in the Yunnan city of Lincang.
A modest village home, typical of the approximately 35,000 coffee-farming families in Yunnan. Most belong to one of the 24 ethnic minorities that call the province home.
When compared to its history of tea cultivation, coffee farming is new to Yunnan. Ever since the first coffee tree was planted in Zhukula village, introduced by French missionary Alfred Liétard in 1892, coffee trees have flourished in Yunnan’s mild winters and temperate summers. Today, there are approximately 35,000 coffee-farming families in Yunnan, most of which belong to one of the 24 ethnic minorities that call the province home, each with their own dialect, traditions, and culture. Coffee farming has been their livelihood for several generations.
Market Impact
Beginning in the 1980s, the momentum of coffee production in the region increased exponentially. The coffee market of the time, marked by rising coffee consumption and leaf rust afflicting Central American crops, led to the widespread planting of the Catimor cultivar, chosen for its high yield and resistance to fungal diseases. With a priority placed on volume, little attention was paid to the effect picking and processing have on quality, and ultimately on price. Although it had many positive qualities – good body and sweetness, medium acidity – it also had a variety of undesirable flavor notes. As a result of this, Yunnan coffee traded at a substantial discount from the C market price throughout the years.
Zhan Li (left) and Hei Bao Nong (right), both of the Lisu minority, monitor the progress of a lot out to dry.
Why did so many Yunnan farmers, who used to grow tea for generations, decide to uproot their mature tea trees and start growing coffee, an unfamiliar crop with no domestic market? Price volatility. The impetus for Yunnan’s upswing in coffee production was a compelling combination of a slump in tea prices, which wouldn’t recover for over a decade, and a strong commodity market coffee price, which peaked at US$2.14 per pound in the early 80s. Encouraged by the success of a coffee plantation program that helped Vietnamese farmers recover after the Vietnam War, the United Nations (UN) launched a coffee plantation program in Yunnan as a way to improve the livelihood of tea famers in the region. Those who converted their plantations to coffee experienced an unprecedented rise in income, prompting coffee’s popularity as a crop as a replacement for high elevation tea plantations. As coffee prices gradually eroded from the peak in 1986 – reaching a low of US$0.50 per pound in 1992 – Yunnan coffee farmers held out: tea prices had not yet recovered, either.
An established coffee plantation in Yunnan is uprooted to make space for new tea and orange plantations.
Since then, coffee prices have continued to oscillate sharply. Following a price peak again in 2011 (US$2.88 per pound), we have since seen a distinct downward trend that saw the International Coffee Organization’s composite C price fall to US$0.95 per pound this year, its lowest point in over a decade. Adjusted for inflation, this price is equivalent to the low seen in 1992. Tea prices marked their lowest point as coffee prices peaked in 2011, encouraging more farmers to convert their plantations to coffee, but the market continued to shift: tea prices began to increase again as coffee prices began their decade-long decline. As coffee and tea prices oftentimes defy the law of supply and demand due to the oligopolistic structures in the markets, farmers are tossed about like reeds in a storm.
Make no mistake: what may look like opportunistic behavior is actually a struggle for survival in which the farmers are left with very few choices. In Yunnan, most coffee farms are small land hold farms, i.e. farms smaller than three acres, operated by individual families with two to three generations living and working together. On average, one family produces about 1,500 kg of coffee in a year which, at today’s prices for green, yields a household income after farming costs of a mere US$5 per day. This is not enough to feed the family, pay for transportation to get the children to school all year round, and save a little for medical emergencies or improvements to their very basic village homes. When you have very little and your real income keeps declining year after year no matter how hard you work, you are bound to lose hope. Switching back and forth between coffee and tea is an act of desperation that only continues to make the farmers’ situation worse: it means starting over with less mature plants and vital know-how forgotten.
Li Xiu Zhen (left) and Yu Hua Mei (right), also of the Lisu minority, work to remove defects from drying green.
A New Hope
Care and attention are taken during processing in order to develop positive characteristics in the cup.
There is hope that the cycle can be broken, not only to release whole coffee-farming communities from their dilemma, but to also unlock hidden potential for quality coffee at a time when climate change threatens the world’s coffee supply. In January 2016, the Yunnan Provincial Government established the Yunnan International Coffee Exchange (YCE), laying a new course for the Yunnan coffee industry. Today, the goal is quality over volume. Through partnerships with the Coffee Quality Institute (CQI), the Specialty Coffee Association (SCA), and the International Women’s Coffee Alliance (IWCA), the YCE is working to systematically equip and financially support (and reward) coffees produced in the region that meet a newly established standard which emphasizes consistency and a clean cup.
Private initiatives in the region complement the YCE programs, aiming to produce micro-lots that will meet the approval of discerning buyers and roasters of specialty coffee in the American, European, and Australian markets. Feedback is key to developing the potential of the region: buyers and roasters from around the world can participate in preparing Yunnan coffee for the specialty market by evaluating samples from participating farms. In one specific case, structured, qualitative feedback was translated in intentional processing amendments, in order to match the preferences of buyers in different markets.
By raising the bar on quality and consistency, and by intentionally developing outstanding specialty micro-lots, these initiatives will afford buyers and roasters new, interesting, and even unique choices to craft innovative blends and single origin roasts. For the Yunnan coffee farmers, this means the hope of a new cycle: one of gradual improvement of their income, encouraging them to keep improving the quality of their coffee, and enabling them to invest for the next generation. ◊
ERIC BADEN is the Founder and CEO of Coffee Commune, a “full value-chain business,” in Yunnan, China.