In summer of 2018 I first visited producers that have been part of long-standing Nordic Approach quality-based premium programs – some for nearly a decade. The premium program Morten built years ago still benefits a growing number of producers and roasters (and other importers), so this year, 2019, I went to investigate how we could develop this project to serve the North American market, and apply what we’ve learned about developing specialty coffee supply chains in Colombia.
Premium programs in abundance
The opportunities for coffee producers to sell into premium-based programs in Huila and Nariño are many. For example, Nespresso runs a very competitive premium program that remunerates quality at prices sometimes above what most boutique coffee importers claim to pay. At Coocentral cooperative, one of our partners in Huila, producers have the opportunity to sell into a variety of both certification-based (Fair Trade, Organic, Rainforest Alliance, etc) and other premium programs (Young Producer’s program, Women Producer program, for example).
Premium programs need stable buyers
The challenge of many of these programs is that they are dependent on buyers — the premiums are not a given without a secure buyer, and if a corporate buying program ends, producers are left out. When buyers move on to new projects, little legacy is left to maintain the financial incentives they initiated. One of the most impactful and innovative aspects of the program we have with Coocentral is that the premium program exists at the level of the cooperative, meaning any buyer who comes can buy coffees from this program, effectively using our buying power and commitment to quality to benefit speciality coffee in general. By opening this premium program to the market more broadly, the premium program has seen a vast network of buyers paying great prices to members of Coocentral. By empowering more buyers with this program, coffee producers are less vulnerable to volatile market dynamics and the sometimes changing needs of high-end coffee roasters.
Maintaining long-term relationships with our producers
With a volatile C market, it’s even easier for big players to out-compete based on price in the market. Many buyer-based premium programs provide “bonuses” that are over and above the market price, but the market price is volatile and tied to the C market. As an example of how disjunctive and untenable this is, over this summer we have seen market prices in Colombia rise due to reports of low production in Brazil.
As the world’s biggest coffee producer, the Brazilian commodity market and currency exchange of the Brazilian Real to USD affects the C index in global markets. This means a bad year in Brazil can lead to sky-rocketing prices elsewhere. In Colombia, when market prices increase, topping up with premiums means that even Nespresso can be paying more for coffee than anyone else. This disrupts relationships and sends mixed signals about the best outlets for coffee.
Fixed price buying strategy
At Nordic Approach we select producers to whom we can commit to buying the majority of their production at fixed prices. While market price was around 850,000 Colombian Pesos (COP) per carga (125kg of parchment) this season, our prices started at 1,100,000 COP and go up to 1,700,000 COP. We also commit to these prices next harvest, and into the future, regardless of how the market price may dip. Our hope is that we show our long term commitment to building a roaster-producer connection that allows for transparent prices unaffected by the C, which never favors producers.
Growing with communities
Given our small size and segment of the market, the best way to make use of the Nordic Approach gateway is to focus on communities that that can grow with us, building relationships between roasters, producers and us as the importer. Identifying a small group of less than ten producers, Nordic Approach in the US is committed to buying the majority of coffee from producers in Pital, featuring the 87+ scoring lots in their rightful place among the best micro-lots coming to the US, and building unique blends like Pitayo that blend the bulk of production and is among the best municipal blends you’ll see anywhere in Colombia. All coffees are paid through the premium program at Coocentral, well above 1,000,000 COP, and receiving the full social and agronomic benefits offered by the cooperative.
Origin in focus: Pital
Pitayo – Situated high above the city of Garzón, overlooking the massive river Magdelena, Pital is a jewel of coffee production with consistently amazing coffees cropping up against all odds. The famous Finca Tamana is in Pital, and its neighbors see even higher altitude, rocky soils and old-rooted Caturra and Colombia trees that thrive with abundant harvests. Pitayo represents the essence of Pital terroir.
Maria Damaris Medina – María and her husband Wilson manage a 5-hectare farm that sits at the highest point in Pital, overlooking the town and valley. The farm is verdant joy old-stock Caturra, newly-planted Pink Bourbon, and boasts two beneficios, one producing micro-lots and the other top-quality blending coffees.
Oscar Ferney Olarte – Oscar descends from coffee-growing royalty in Pital. His grandfather, who lives a short walk from Oscar’s house, is known as “The Maestro of Pita” and has farmed coffee there since the mid-century. A decade ago Oscar inherited a single hectare of Colombia trees rooted in some of the rockiest soil I’ve seen produce coffee, and this plot consistently delivers a bright, fun cup. In 2015 he won top-honours in the Best of Huila, and has since acquired two more hectares of farmland.