Exportadora de Café California - Exportadora de Café California - Sustainable Food Lab
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Exportadora de Café California
Exportadora de Café California
Finance resilience in Coffee.
Mexico City. March 2018
Exportadora de Café California
Context – Café California and Mexico
Overview of the country value chain Exportadora de Café California
ECC 20%
Coops /
middlemen Other
companies
Domestic
Farmers Exporters market
Mexico Coffee
Market Share
•15 Puchase agencies
Wet and dry •1 Wet mill
mill •3 Dry mills
•9 Collection points
•8 Farms
•2 Sales centers
•15 Nurseries
• Mexico is the 7th largest coffee producer in the world, and
the biggest export of organic coffee.
• 2.5 million people in Mexico make a living of coffee. • ECC was founded in 1941 in Tapachula, Chiapas.
• In 2014-2015 the production decreased from 5 million of
bags to 2.3 Million. In 2017 the crop recovered to 3.4 • Our core business is to bring services to coffee industry and
Millions of bags(1 bag = 60 kg). farmers.
• The local consumption in 2016 was 2.8 millions of 60 kg. • We work directly with more of 8 thousand coffee
producers and 150 customers.
• Mexico has:
• 722,444 hectares of coffee production
• 527,662 coffee farmers with an average of 1.4 • We are coffee producers in Chiapas and Puebla.
hectares by farmer.
2
Exportadora de Café California
2014
Café California has always operated with a
The challenge high volume coffee set up, at the same
Production
time the crop was decreasing in a 50%.
• Coffee crops in Mexico were reduced from 5 m. of bags to 2.3 m. of
bags in 2014.
We got two possibilities:
• Old coffee plantations were prone to deseases because of climate
changes.
Demand
• Local coffee consumption increased by 3% annualy.
• México has the 3rd. biggest capacity installed of production in
roasted, soluble and decaf coffee.
Crop 2013/2014 million of bags
Option A Option B
• Reduce our • Innovate and
Local demand 2.6 company size and influence along
wait until coffee value coffee chain
Exports 2.4 production rises creating a
again. sustainable model
for small coffee
Total Demand 5.0 producers.
Production 3.2
Production deficit - 1.8
Bags of 60 kgs.
3
Exportadora de Café California
2014 action
Por Mas Café Program Main Challenges
• The model must be self sustainable. • Coffee production in Mexico has been hit hard for
• The success of the program must not depend on subsidies, the last four years by coffee rust (roya del café)
philanthropy or donations. • The regions with the highest percentage of area
• FINANCING should be the K-Detonator of the program affected by coffee rust are Veracruz with about
70% of total area affected, Chiapas and Puebla with
• We need other stakeholders. about 60% of total area affected
Agronomic • Farmers face a lack of agricultural know-how (e.g.
use of fertilizer, disease control, etc.)
Oriented to small coffee growers who want to:
• There is no access to technical assistance, input or
• Improve their livelihoods by finance
working their land
• The economic viability of coffee farming is low, due
• Acceptance of a sustainable to low profitability and productivity
agricultural business model,
• The average age of coffee trees is around 50 years
breaking down the
traditional agricultural Economic • Due to coffee rust and old trees, production has
welfare system. decreased from 4.5 million bags in 2010/11 to 2.2
million bags in 2015/16
• Understand that nothing is
for free, the program involve
a lot of work • Coffee farms are facing the consequences of
climate change with shifting weather patterns
(droughts/floods)
• There is a constant rural exodus of younger
generations as the profitability of coffee farms
remains unattractive
Social &
Environ- • Culturally, people are reluctant to rejuvenate
plantations as they are seen as family legacy, even
mental if the trees are no longer productive
4
Exportadora de Café California
Por Mas Café Goal
Goal Implement a supply chain system in which at least the 60% of our coffee needs come just from a
self sustainable model focused mainly in smallholders.
Objectives
Turn farmers into Develop the capacities,
Improve the smallholders
agribusiness Renew coffee farms in labor and productive
organization, skills and
entrepreneurs Mexico enterprises of women
capacities
and young people.
Outcomes
Coffee-producing
Increased productivity due to renewal farms
communities overcome
Improved business case for farmers extreme poverty
Activities
Integrated model for social and economic development that includes access to inputs, planting material, technical
assistance, finance, and support for organizations
5
FINANCING
Extension services Input provision
• ECC provides technical assistance through extension officers that • ECC provides access to fertilizer and inputs to producers.
are specialized in every region/context. • ECC is not an ordinary input supplier but in its ability to buy inputs
• ECC constantly trains its personnel on state-of-the-art agronomical in bulk at lower costs, ECC offers producers access to high-quality
know-how and works with international coffee consultants to fertilizer, crop protection and other agro-inputs at competitive
continuously provide producers with the most updated prices.
knowledge.
Financing and insurance Renewal
• In collaboration with FIRA and Banco Ve por Más, ECC offers a pre-
• ECC produces improved planting material using selected varieties,
financing model and credit scheme for rejuvenation, inputs and
such as Sarchimor, Parainema, Obatá, H1, Robusta .
labor.
• These plants are rust- and nematodes-resistant plants, more
• ECC pre-finances farmers to facilitate a “grace period” of 2 years.
productive and have more adaptability to weather conditions.
• The service bundles also include crop insurance.
Verification & certification Organizational capacity building support
• ECC requires producers to be organized in groups.
• ECC offers support and technical assistance for 4C verification, and • ECC supports producers organize and finances any fees related to
for certification such as Organic, Fairtrade, Rainforest, UTZ, and the legal formation, when needed.
C.A.F.E. PRACTICES. • This service is NOT included in the service bundle offered to
farmers
6Exportadora de Café California
Co-funding
of program
Donors ECC
Domestic sale and export
Coffee
beans
First loss Salary, materials
guarantee and other costs
Financing for
farmers
Guarantee and
payback ECC processing
mills (dry and wet)
Input
Pre-finance Dry beans
(parchment/
pergamino)
Input suppliers Farm
inputs ECC purchasing agencies ECC nurseries ECC extension
and warehouses officers
Payment for Payment for Service bundle Organizational Payment for
service bundle in coffee after inputs: seedlings, Service bundle capacity
services: org. support
parchment discounting fertilizer, crop building in coffee
coffee service bundle Technical support
(pergamino) repayment over protection, other assistance and
the years inputs and certification
insurance
Farmers
Legend Flow of goods and services Cash flowExportadora de Café California
Results achieved
Farmers Renewal hectares Long term loans
Year Coffee plants (Ve por Mas Bank) 000 USD Technical assistants
In million
Year Accumulated Year Accumulated Year Accumulated
2015 2,474 2,474 1,034 1,034 3.0 $2,116 $2,116 11
2016 1,827 4,301 1,368 2,402 4.0 $2,590 $4,706 24
2017 1,564 5,865 1,650 4,052 5.0 $3,651 $8,357 41
2018 2,000 7,865 2,240 6,292 8.0 $6,272 $14,629 68
Farmers Hectares
10,000 8000
8,000
6000
6,000
4000
4,000
2,000 2000
2,474 4,301 5,865 7,865
- 1,034 2,402 4,052 6,292
0
1 2 3 4
2015 2016 2017 2018 1
2015 2
2016 3
2017 4
2018
Altos Project
+
Before Por más café Program: 3 bags per hectare.
After 4 years of work with Por más café Program : 22 bags per hectare.
Increasing more than 600%.
8Exportadora de Café California
Exportadora de Café California
Osvaldo Ortega Av. Framboyanes Lote 21 Manzana 6
Fracc. A y B
Cd. Industrial Bruno Pagliai
Veracruz, Ver.,
Telefóno: 01 229 989 42 00
osvaldo.ortega@nkg.coffee
www.eccmexico.com
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