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What’s wrong with the coffee market: or why do farmers rush to bankruptcy?

Murray Cooper was one of the most famous coffee specialty farmers in Ecuador. I use the past tense because it’s bankrupt now.

Murray did everything right: his farm was eco-friendly, he provided financial support to the local community, and the champion of the country took Murray’s coffee for the World Cup.

And he failed.

What went wrong? And what can you personally do to prevent this from happening to other farmers, such as Murray, if you are a coffee lover, barista or roaster?

View from the patio to the forest of Los Sedros. Photo: murraycooperphoto

From the activist to the farmer.

Murray was born in South Africa and left his home at twenty. He has volunteered in the Ecuadorian rain forest of Los Sedros for over a decade, managing the science base. “It was hard,” he says. -I had no energy, no light, no music … nothing. 11 years with candles ”.

Its activities are extremely important: since 1990, Ecuador has lost more than 20,000 square kilometers of forest , accounting for 14% of its total area. Mining is a major problem because of its strong impact on the entire ecosystem.

While in the jungle, he takes photos to help raise funds for the Los Sedros Reserve. “People noticed that I had a knack for this business […] They often wondered, ‘Wow, how do you do that?'” And I said, “If you spent five years sitting in the jungle trying to get a picture, you probably would have done the same shot too. ”

Murray becomes one of the most famous bird photographers in South America, his stunning images appear in National Geographic.

He also finds love. He meets Patricia, an Ecuadorian, and she moves to Murray in his hut in the rainforest. “I fell in love with the jungle …,” says Patricia. -You feel like you are going back in time. “

But finally, they decide to expand the family and leave the jungle for the sake of a 27-acre farm.

Different bird nests can be found on the Murray coffee plantation. Photo: murraycooperphoto

Growing a coffee speshelty: a doomed career?

In 2011, Murray made the mistake of planting his first coffee tree.

Ecuador is an expensive country for coffee producers. It is better to be a farm worker here.

Ecuador has high labor costs compared to its neighbors, Colombia and Peru. This is partly due to the Government’s initiative to raise the minimum wage and social security in 2015. 35% of rural workers still live below the national poverty line, but the situation of farm workers is improving.

“Some of these people may even buy a car for the money they make for collecting coffee, which is very different from the situation in other countries,” said Juan Carlos Vega, senior technical consultant.

Murray goes even further for his local community. “I always paid above the standard wage, about $ 100 more,” he says. “It was another reason why my coffee was more expensive, but it was part of my mission …”

“There was a family that started working with me and their kids didn’t even go to school because public school costs $ 30 a semester or something like that. But they just didn’t have the money because there was no work here. Now this family has a motorcycle, they have repaired their farm and their home. ”

And higher wage costs help Ecuador overtake Colombia  in high school. In 2012, they were at the same level – 79%. Now Ecuador has reached 88% and Colombia – 78%.

As for the environment, Murray was an environmental activist and found a healthy balance between ecology and productivity. “We didn’t use insecticides,” he says. And they used grass-cutting equipment, not herbicides, such as Agent Orange.

Murray’s farm was the epitome of everything the industry speaks of: socially and environmentally visionary. In addition to all of the above, the coffee was excellent. Murray’s coffee was noted by the best roasters in the world, culminating in the appearance of his coffee at the Ecuador World Cup.

And that’s where the problems begin.

Gladys overheats coffee every two hours. Photo: murraycooperphoto

The lack of cash stifles coffee farms.

Murray is in crisis.

He was not ready for it because he thought he had insurance in the form of a photograph. But the network was broken. “The whole photography market has fallen locally, and the Ecuadorian market has gone down, so I’ve lost business.”

There were several other options. To take a loan from a bank, which is notoriously difficult to do in Ecuador – it ranks third from the bottom in the international ranking of “ease of access to credit”.

But wait a minute: Murray sells coffee to world-class roasters around the world. Where is the money from coffee sales?

Imagine that the fryers have just received grain samples from their suppliers. Before them on the table: coffee from Ecuador with 86 points, and about half the price, Colombia with the same 86 points.

“Ecuador’s coffee is of the same quality, but more expensive, so obviously buyers will say, ‘No, I can’t buy your coffee,'” the supplier shares.

Traders, in turn, are also under pressure. “[In Ecuador] we pay crazy prices, to be honest. We take great risks, ”another confesses.

In order to survive the crisis, Murray must set high prices and receive payment without delay. Brokers do buy his coffee, but because they feel the pressure of the circumstances, they can either pay him well or quickly. Both options are impossible.

Murray is now bankrupt.

Katurra berries are almost ready for harvest. Photo: murraycooperphoto

How much responsibility is left on the fryer?

While Murray sells his farm, his coffee is roasted all over the world. It is sold in coffee shops and is profitable. They grind it, brew it and enjoy it.

Did the fryers know the truth?

Did they know that a higher salary at Murray helps his employees send their children to school?

Did they know that planting  coffee in Ecuador helps conserve biodiversity while mining continues to destroy tropical forests? ( Even Los Sedros is threatened again ).

Did they know all this? Why not, some of them even visited the farm.

If they knew why they couldn’t support him, paying as much as they needed, and quickly, and leaving a good review about him?

This is not the only bankruptcy story. “We see other manufacturers experiencing the same problem – they are very desanimados –  upset …” – says the buyer. “They started this business thinking that they would make good money, and perhaps they did not realize how high the costs would be.”

I ask one manufacturer what will happen if he continues to receive the same payment. “I’ll have to close the farm …” he sighs. “The people who work for me will have to be fired, legally or otherwise. And especially it will be felt for women who will lose extra income. “

Can these bankruptcies be avoided? What can be changed to prevent other manufacturers from being in the same situation as Murray?

Homogeneous and ideally collected cherries from the Murray farm. Photo: murraycooperphoto

How to support Ecuadorian producers?

If you want to promote coffee from farmers like Murray and support Ecuadorians, here are seven starting points:

  • If you are a coffee shop owner or coffee lover, ask your roaster to pay more for Ecuadorian coffee and be prepared to pay more on your own.
  • Find the farmer’s name on Google (many large farmers are active in social networking) and contact him. Ask him for his opinion on coffee prices. Are they sufficient? Do manufacturers make enough money in the market of speshelti?
  • If you are a roaster, do not assume that Ecuadorian farmers pay well because their coffee is more expensive.
  • If you own an institution or a roaster, pay more for Ecuadorian coffee and tell your customers why.
  • Tell your farmers how much you paid for their coffee and what percentage the supplier picked up. Information is power.
  • Share risk with manufacturers by working with alternative suppliers. Look for shorter supply chains and greater transparency.
  • Make sure to buy grain from one Ecuadorian farm every year, regardless of your circumstances.

If you are not concerned about the farmer’s fate, you need to act now. 

Posted by James Harper with the support of the Filter Stories coffee podcast . You can hear more about Murray’s story in  episode 2: The Scout.

The views presented in this article are those of the guest author. Perfect Daily Grind believes in maintaining discussions on topical issues in the industry and is therefore keen to present the views of all parties.

Translation: Anna Polstiankina.