I’ve just come back from Sumatra. I went to witness the first batch of parchment coffee being bought and processed into export-ready green at our new mill — the Tiga Raja mill.
It’s at this point, barely a few sentences into this piece of writing, that I need to take a deep breath, exhale slowly and try and take control of the millions of things in my head that want to spew forth onto the page. I wish I was a better writer.
I’ll start with the nuts and bolts. We have a built a mill. It isn’t big by coffee mill standards, but it’s big enough to produce about 12 containers of spectacular, high quality, export-ready green a year. That’s when it’s working at full capacity, which is not what we’ll be producing — not at the moment, anyway. For the benefit of those ‘engineery’ types out there, the entire facility is half a hectare in size with the five greenhouses (for drying) covering 1,500 square metres. Most of the remaining space is taken up by the building which houses the production area, storage warehouse, power plant, cupping lab and living facilities (kitchen, bathrooms and bedrooms) for our employees.
I’m eager to jump straight in and tell you about the coffee, but first I really need to tell you a little bit about the farmers in order to give you some context.
We are buying coffee from a farmer group who are all members of one grower’s co-operative called Talenta. It has over 10,000 members; 7,000 members are coffee farmers and 5,000 of those members are attached to the Saribu Dolok office which covers the sub-regions of Silimakuta, Dolok Silau and Pematang Purba. These are the three regions from whom we will be buying our coffee.
Talenta is a highly organised group. They have a total of 117 active ‘komisaris’. Komisaris are members who live in the villages and are employed to collect parchment coffee from the local member farmers. They then arrange for the coffee to be transported to the mill. Talenta and Leo (a local farmer and our Tiga Raja GM … for more info on Leo, check out his blog article from a few months ago: Coffee Varieties in Sumatra) have handpicked 19 of these ‘komisaris’ (representing 400 farmers) to provide parchment for our new mill.
I want to highlight that this method of collection is very unusual for Sumatra and makes our situation unique.
This is because in Sumatra most coffee is sold through the local parchment markets which occur in different places and on different days throughout the sub-regions. The timing and location of the markets is planned to provide farmers across the region with access to their sub-regional parchment market twice a week. At the same time, this pattern gives buyers the ability to move from one sub-regional market on one day to another sub-regional market the next. A system like this creates a bit of a rhythm — farmers pick and process to coincide with the two days of each week they can get their parchment to their local market. It allows buyers to move systematically through the mountain ranges which circle the shore line of Lake Toba from one day to the next; they travel from market to market buying the volumes required to fill the exporters’ contracts.
At the markets, most professional buyers have well established ‘buying stations.’ Farmers gather around these stations, standing around, doing nothing, waiting for the first farmer to make their move and establish the starting price point for the day. This ‘Mexican standoff’ lasts pretty much all day, with the first deal often being done as late as about 3pm. Then it’s game on! Buyers need to meet quotas — one buyer in our region of Simalungun needs to buy about 100 metric tons of coffee every week just to meet his quota. The quota is the amount of coffee a buyer has been contracted to buy at a certain price and of a certain standard for a coffee exporter.
I actually believe that this quota system between the buyer and exporter is the biggest influence on the price and quality of coffee coming out of Sumatra at the moment.
Firstly, the standard. The parchment coffee buyer (yep, they are just another middleman in the supply chain) who sells to an exporter just has to meet a minimum ‘defect and cup’ criteria in order to sell his parchment. The standard required isn’t very high in comparison to the quality or the potential quality that some growers can and do produce. At the parchment market level, there is a parchment quality known locally as ‘super parchment’. It’s not an official name in the world of international coffee trading, but it’s the name locals have given to a type of parchment that is so high in quality that it can be mixed into tons and tons of ordinary parchment in order to elevate its quality to the point that it meets the minimum standard for exporters. At the market, this ‘super parchment’ does achieve a higher price, but it isn’t available in guaranteed volumes. Whilst super parchment could be produced in greater volume, the exporters aren’t willing to buy any more than the bare minimum they require to get their quotas across the line at the exporters’ warehouses. An oversupply of super parchment on any market day obviously has the effect of pushing the price down. Generally, the system encourages and rewards mediocrity.
The good news is that we will only be buying super parchment. But we won’t be buying much of it from the market. We will be buying it from the members of Talenta. It will be organised through the selected komisaris and from the farmers that have been chosen by Talenta to produce it for us — and we will be paying well for it. Our hope is that as demand for this specific quality grows, so too the number of farmers who are given the opportunity to sell their coffee to us will also grow in number.
It’s too early to tell how this will affect both the local coffee market in Simalungun and, in the long term, the Sumatran coffee market in general. It will definitely have an immediate effect on both the farmers who benefit directly from the sale of the super parchment to us and also on the members of Talenta (all ten thousand of them) who will benefit from any profit made at the mill. Talenta have not yet decided how they are going to use any money they make from the mill, but already the talk is of providing farmers with a resource base which will offer member farmers the opportunity to learn how to increase the quality of their crop. I’m also hoping for some financial management training for the farmers, to teach them how to better manage their farms’ finances, so they can get the best possible returns for their crops.
Now back to the mill. The first trial production runs were a success. I wasn’t really familiar enough with this specific plant to know what it was meant to look like when it was running well — but it didn’t take more than a second of looking around the room at the faces of the people commissioning the production facility and, more tellingly, Lisa and Leo’s faces, to know that it was a raging success. Their smiles were huge and the shared affirming looks and nods (it was too loud to talk) made me feel like I was in NASA’s mission control room when they first landed man on the moon.
This is a very exciting project for us. The harvest isn’t in full flight yet, but on Wednesday last week our truck rolled in with its first four metric tons of super parchment. There isn’t much more for us to do at this end other than to wait eagerly for the arrival of our first container. The Tiga Raja Mill on the other hand — well, they are going to be very busy.