#68 | Re:co Podcast - Ted Fischer on Coffee and Values (S3, Ep. 3)

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Today, we’re very happy to present the third episode of “Value Chains: Transparency and Market Linkages,” a session recorded at Re:co Symposium this past April. Acknowledging that this isn’t the first coffee price crisis, this session brought leaders together to ask: How successful were the tools we employed previously? What new tools offer potential solutions?

If you haven’t listened to the previous episodes in this series, we strongly recommend going back to listen before you continue with this episode. Today’s episode takes a different look at the coffee value chain. Ted Fischer, a cultural anthropologist, studies how people give worth to things. Here, Ted explains how coffee acts as a vessel for all sorts of values - economic, yes, but also social, moral, and ideological - and how the coffee trade involves balancing different metrics of value. Building on fieldwork with Maya farmers, he explores how smallholders have benefited from the specialty coffee revolution, but lack the social capital to tap into the most lucrative segments of the market.

Special Thanks to Toddy

This talk from Re:co Boston is supported by Toddy. For over 50 years, Toddy brand cold brew systems have delighted baristas, food critics, and regular folks alike. By extracting all the natural and delicious flavors of coffee and tea, Toddy Cold Brew Systems turn your favorite coffee beans and tea leaves into fresh cold brew concentrates, that are ready to serve and enjoy. Learn more about Toddy at http://www.toddycafe.com.

Full Episode Transcript

0:00 Introduction

Peter Giuliano: Hello everybody, I’m Peter Giuliano, SCA’s Chief Research Officer. You’re listening to an episode of the Re:co Podcast, a series of the SCA Podcast. The Re:co podcast is dedicated to new thinking, discussion, and leadership in Specialty Coffee, featuring talks, discussions, and interviews from Re:co Symposium, the SCA’s premier event dedicated to amplifying the voices of those who are driving specialty coffee forward. Check out the show notes for links to our YouTube channel where you can find videos of these talks.

This episode of the Re:co Podcast is supported by Toddy. For over 50 years, Toddy brand cold brew systems have delighted baristas, food critics, and regular folks alike. By extracting all the natural and delicious flavors of coffee and tea, Toddy Cold Brew Systems turn your favorite coffee beans and tea leaves into fresh cold brew concentrates that are ready to serve and enjoy. Learn more about Toddy at toddycafe.com. Toddy: Cold brewed, simply better.

Re:co Symposium and the Specialty Coffee Expo are coming to Portland in April 2020. Don’t miss the forthcoming early-bird ticket release – find us on social media or sign up for our monthly newsletter to keep up-to-date with all our announcements.

If you haven’t listened to the previous episodes in this series, we strongly recommend going back to listen before you continue with this episode.

Today’s episode takes a different look at the coffee value chain. Ted Fischer, a cultural anthropologist, studies how people give worth to things. Here, Ted explains how coffee acts as a vessel for all sorts of values – economic, yes, but also social, moral, and ideological – and how the coffee trade involves balancing different metrics of value. Building on fieldwork with Maya farmers, he explores how smallholders have benefited from the specialty coffee revolution, but lack the social capital to tap into the most lucrative segments of the market.

Also, to help you follow along in this podcast, I will chime in occasionally to help you visualize what you can’t see.

2:30 An introduction to the types of values bundled together in specialty coffee: economic, social fairness, ecological.

Ted Fisher: Thanks, everybody. It’s really great to be here with you today, although I got to say it feels a little bit like going to Newcastle to talk about coal for me to come here and talk to you about coffee. But as Peter was alluding to, I’m a cultural anthropologist and I study how people create value, how we give worth to things. Now it’s interesting when we say value in the singular we’re talking about price, economic value and yet when we say values in the plural, we’re talking about ethical and moral and religious and political values and in my work, what I do is I try and bring together and understanding of all these different kinds of values to see how they influence market behavior because while we’re driven by the economic, that isn’t the only value that motivates us.

So, for the last eight or nine years, I’ve been examining coffee, I have been researching coffee at both ends of the value chain, working with Mayan farmers in Guatemala and with baristas and roasters, people like you. In fact, I’m doing fieldwork right now even as we speak, killing two birds with one stone. I’m also in the middle of writing a book about how coffee acts as a vessel for all sorts of values, economic values but moral values and political values, the whole range of values that we hold dear, we can think of these each as their own little value worlds – consumer value worlds, moral value worlds, economic value worlds, each with their own measures of success. Market value is easy, right? I mean, we have dollars and cents, pounds and kilos. We’ve got solid metrics to go by. But what about fairness, love, justice? These are harder for us to put a number on? What’s the number that you love your spouse? I want to ask you to raise your hands on that but what’s the number that ecological sustainability is worth for us? These are harder for us to quantify and yet we’re constantly having to juggle all these different value worlds and make trade-offs between them, translate between them, converting moral values into economic values, converting social values into political values, and this is something that we all wrestle with every day in our professional and personal lives.

Now think of the economic values that go into a cup of coffee. The price paid for cherry at the farm, the cost of beans bought by a roaster, what you might pay at your local coffee shop. That cup of coffee also likely has other sorts of values attached to it, maybe paying a fair trade premium to support a moral cause, maybe responding to claims about the values of terroir or a producer’s biography. There may also be emotional attachments, a comforting morning ritual. A moment of sociability shared with a friend and these kinds of values all come together in these value worlds and what I want to do today is connect the value worlds of specialty coffee with the value worlds of Mayan farmers. Specialty coffee has been a big boom in mini Mayan communities, fueling new sorts of dreams and aspirations. Yet as I’m also going to show, these small holding farmers mostly lack the sort of social capital needed to make the most of what they have, to convert their endowments into economic security. So, the question then becomes not only what values do we wanna pursue with our working coffee, but also whose values do we want to pursue with our working coffee. and how do we balance these, sometimes in commiserate value worlds and let me go ahead and cut to the chase and tell you my takeaway line. We may think of success as accumulating as much value as we can in any one of these realms, but really, the real power is in defining what value is.

6:30 How demand for higher quality coffee in the late 90s helped the Maya people generate value from their land

Ted Fischer: I’m going to come back to that point in a moment, but let me start with a story we anthropologists like to tell stories and my colleague Bart Victor and I one time along with two students, were traveling in search of where some of the best coffee in the world is grown. Our driver, Cesar, was fearless, which was a little bit scary, but it turned out to be a good thing because this part of Western Guatemala is largely controlled by the narcos drug traffickers who train ship the bulk of cocaine that enters the United States.

Peter Giuliano: Ted is showing a photo of misty mountain ranges carpeted in coffee trees.

Ted Fischer: Looking out at the landscape around Huehuetenango, it really seems way, way out in the middle of nowhere. Cresting a hill, the blue-green mountains extend north to Mexico as far as the eye can see. Looking a little closer, you can make out coffee farms, large and small in the canopy. The helicopters and black tinted SUVs of the narcos contrast with the grinding poverty of the vast majority of the region’s Maya population.

Half of all Guatemalans are indigenous, speaking one of 23 different Mayan languages and by any measure, income, life expectancy, literacy rates, you name it, the Maya are the most marginalized and impoverished members of society. Women and children are by the side of the road is we’re driving by with jugs of gas that they’ve smuggled over from Mexico that they sell. There was an unintentionally ironic sign pointing straight ahead to Guatemala and left toward La Democracia, this being a country with a long history of right-wing autocrats and dictators. Daily life hums along here. But there’s a palpable tension that the drug money and violence brings. It occurred to us that traveling in this white van with tourism stenciled on the side, maybe wasn’t the best idea. The road, it’s bumpy and steep. At one point, we had to get into the back of a pickup truck to make it over the last crest in the ready mudded road. The best coffee grows high up as you well know, and coffee farms tend to be off the beaten path. Even here, where the beaten path is a bit off the beaten path.

Coffee in Guatemala holds a particular place in Guatemalan history and the popular imagination. Historically, production was concentrated in the hands of a small number of large producers, many of them German, some English and some Spanish. No Maya among the so-called coffee oligarchy. The family-owned fincas depended on temporary seasonal labor to produce their high volume product and they sold equally large exporters and roasters to complete the first way value chain. Now, in Guatemala for much in the highland Mayan communities where labor was recruited, working on coffee farms was seen as the employment of last resort because of the low wages and harsh conditions. Now, in Guatemala for much of the 20th century, coffee was the top foreign earner by far. It’s been replaced recently by narco dollars in remittances from migrants but something odd started happening in the late 1990s. The volume of coffee exported from Guatemala decreased, and yet foreign revenues from coffee increased and it was a chart illustrating just this point that first got me interested in coffee some nine years ago.

Peter Giuliano: Ted is showing a graph of Guatemalan foreign revenue earnings plotted against coffee export volumes from 1990 to 2011.

Ted Fischer: I was meeting with Bill Hempstead, the preeminent spokesman of Guatemalan coffee and a former recipient of the SCA lifetime achievement award. We were in a conference room at Anacafé and Bill was telling me a surprising story about the changing nature of coffee production in Guatemala and the role of smallholding farmers in that.

Now, most academics myself included up to that point associated coffee in Guatemala with this history of labor practices and the concentration of political power and yet Bill was telling me that’s not the case anymore and to illustrate his point, he pulled up a version of this chart, and he explained the apparent paradox of falling volume and rising revenues with reference to this chart.

Peter Giuliano: Ted new graph plots Guatemala’s output two coffee types from 1962 to 2010. The two types are higher value Strictly Hard Bean coffee, which trends up, and lower value Prime coffee, which trends down.

Ted Fischer: which shows a decline in the volume of lower altitude primes and extra primes and an increase in the higher altitude, higher value add strictly hard bean coffees. Now, this is of major economic and political and social significance in Guatemala. The old traditional plantations were on lower altitude lands mostly around Cobán, many of them producing extra primes and yet the turn towards specialty coffee moved production up into the highlands, where the strictly hard bean coffees were produced.

Now, what this means is that the land to which the Maya had been relegated for centuries, the land that nobody wanted for so long turns out to be perfectly suited for growing specialty coffee and this has resulted in a rapid proliferation of new producers. We estimate that 50,000 new producers came online in Guatemala, mostly Maya, in the last 20/25 years and this has radically changed the face of Guatemalan production. Bill Hempstead calls this the largest transfer of wealth in the country’s history adding slyly for his academic interlocutor that it was neither the guerrillas nor the government that achieved this, but unwittingly fluid consumers in the north. So this radically changed picture of coffee production in Guatemala and we have to give credit where credit is due. Hempstead in his vision and Anacafé, they were pioneers in the quality turn in the 1990s including developing their eight regions, eight cups program and this radically changed the way in which coffee was viewed and seen in Guatemala. So, we have the situation of coffee changing, but we wanted to check out this story and the story Hempstead told was largely borne out by the data.

In 2014 my colleagues and I did in-depth interviews with 397 coffee farmers in 14 different coffee-producing communities, mostly Maya and all smallholders, an average landholding of less than one hectare. What we found is that coffee has seen is a huge benefit in these historically marginalized communities. The income that it has brought into these towns has changed many lives but just as important is that coffee production feeds into local value worlds, local cultural value worlds. It allows farmers to retain control over their land and this is important not only for economic security, but there’s a cultural dignity that goes along with owning and working one’s own land. Specialty coffee also supported cooperative forms of organization, which these Mayan farmers highly value. So, we have these coffee farmers switching to specialty coffee and making some money off of it and being able to live the sort of lifestyle that they value. So it’s been a radical shift in Guatemalan production.

14:30 However, smallholder Mayan producers are excluded from third wave micro-lot coffees because they lack scale and social capital

Ted Fischer: But now we have the third wave and many of these coffee producers are trying to deal with the changing conditions in Guatemala around third wave coffee. The third wave, what are the values that go into a cup of third wave coffee? There are the material properties. There’s the influence of terroir and processing and roasting and brewing methods, the science of it all that I’m learning a lot more about here today. But there’s also a new level of art involved as well. The poetic language of descriptors, the narrative of producer biographies. This is a consumer value world based on the ideals of excellence, of artisanal authenticity of a connection with the provenance of production and the lives of these farmers and faraway places presumably likewise committed to the art of quality coffee. And so, we have the situation where terroir becomes more important and this should be great for farmers that own their land and narrative becomes more important and this should also be great for Mayan farmers with their rich cultural heritage.

Now on that trip to Huehuetenango in 2015, we conducted another study, and what we did was we identified several Cup of Excellence placing farms and then we mapped out smallholders in the area around those farms and we went around and we interviewed these smallholders. We collected price data, and we bought samples of coffee from them. We took that coffee to Anacafé, the Guatemalan National Producers Association, and we had them roasted and blind cup it, and the results were somewhat surprising or maybe not. Over 75% cupped above 80 and over 58% cupped above 85.

Now, on the one hand, this makes sense, right? It’s the same altitude. It’s the same micro-climate. They’re the same conditions of production more or less. But looking at the price data, the Cup of Excellence farms were selling their washed Arabicas for $4 a pound on average farm gate and yet the smallholding Mayan producers were selling their coffee for about a US$1.25 a pound farm gate. Now, these small holding Mayan producers are excluded from this micro-lot third wave high-value market because they lack the scale and that’s important. Transaction costs are significant here, but also crucially, they lack the social capital, the language skills, the social networks, a familiarity with cosmopolitan taste and international markets. The bigger, more established non Mayan farmers in the area speak Spanish and often English. They know better what the specialty market is looking for and they’re able to convert this knowledge and social capital to command a premium for the coffees that they sell. Now, the most savvy of the smallholding producers are catching on with the symbolic aspects of third wave coffee. I recall Raymundo, a 60 something-year-old Kʼiche’ Maya man, telling me that his buyers are looking for real quality and reflecting an appreciation for the importance of the narrative and authenticity. He tells me when you talk to these buyers, you need to be earnest and sincere and tell them a story. But, he adds, in the end, in the final analysis, they still have all the power. They come here and tell us what the price of coffee is like it or not.

Peter Giuliano is fond of saying making coffee better is our goal. Better quality, but also better for everybody at both ends of the value chain and that means taking seriously the values of people that we want to help in doing this and coffee is a great example. You guys, the SCA and the specialty coffee sector, in particular, have done this. The whole idea of fair trade started with coffee and has produced some amazing results. Even if we see more and more unintended consequences. The quality turn promises to be a more sustainable solution for these producers, and it too offers lots of promise, but there are also unintended consequences. For example, always chasing the latest new flavors, the craziest flavors bubble gum and rosewater. This disadvantages smallholding producers who lack the social capital to speak that language. It takes power away from them and gives it to you the tastemakers

Maimonides was a twelfth-century Talmudic scholar who wrote about levels of charity. He said the lowest level of charity is tossing a coin contemptuously at a beggar who asked for it and the highest level of charity is giving anonymously to someone who then gives anonymously to the needy so they’re no obligations involved. But my Maimonides said even more important than charity is partnering with the people that we want to help. Taking seriously their values and engaging their value worlds. Now again, coffee offers, lately we’ve seen a number of initiatives where coffee is offering some solutions. The Coffee Core Program seeks to transfer knowledge but also social capital.

A number of producers, Sweet Maria’s where this photo is from, but a number of producers have established relationships with smallholding producers. For those of you who have experimented in this line, you know it’s not easy work. It takes a long time. It’s really difficult. There’s money on the table. There’s cash on the table. Farmers are selling quality coffee for commodity prices but it’s difficult to make that connection and to make it happen but the potential exists not only to maximize economic value using this but to simultaneously maximize all sorts of values at once. And so, let me leave you with this. Raymundo was right. You have the power in this situation, you have the power to convert the material qualities of beans grown in places like Guatemala into the narratives of consumer value worlds. You have the ability to make different into better to create new value and I hope that realizing that you have that power can help you use it wisely.

Thank you very much.

21:30 Outro

Peter Giuliano: That was Ted Fischer at Re:co Symposium this past April.

Remember to check out our show notes to find a link to the YouTube video of this talk, a full episode transcript, and a link to speaker bios on the Re:co website.

This has been an episode of the Re:co Podcast, brought to you by the members of the Specialty Coffee Association, and supported by Toddy.

Re:co Podcast, ListenSCA StaffSeptember 2, 2019

#68 | Re:co Podcast - Ted Fischer on Coffee and Values (S3, Ep. 3)

Special Thanks to Toddy

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