M&M Micromill from Costa Rica

People

M&M…sounds sweet? It is! Managed by Coffee Veteran Roberto Mata and his son Michael, this Micro Mill draws on years of experience in producing specialty coffee. The Coffee Quest is happy to see such high quality coffees we are receaving being sold. Even in this strange and insecure period, good coffee is on high demand!

The Mill works to process the coffee from several family members in the Dota area, one of the famous coffee places in the mountainous region of Tarrazu (correctly pronounced “Tar-rah-zoo”).

In February ’19 we had the chance to visit the Micro Mill at the end of the harvest period. The Coffee Quest  was welcomed warmly and we were pleasantly surprised by the amount of raised beds on the terrain of the Mill. 

Product

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Roberto and his family all work together to get everything done throughout the harvest season. All processes are measured, and efficiently organized, leaving nothing open to chance. At M&M they are keen on standardizing with the idea to re-produce their specialty lots. 

Just behind their processing facility they have a small cupping space and beautifully organized sample cabinet. All of the lots are processed on raised beds, focussing purely on honey and natural lots. The metal tables and shadow nets provide the cover needed during the hottest period of the day. To create perfection in humidity, they use mechanical dryers to lower the last percentages of humidity to the correct level for export.

Price

The Coffee Quest builds transparent value chains linking growers and roasters. We supply only traceable and transparent high-quality coffee. In 2020, we dived into the economics behind the beans, in our Quest for radical price transparency. Our origin researcher, Marian Osinga, set out interviews with producers, millers and authorities, and led the way into how The Coffee Quest sees price transparency in Costa Rica.

Costa Rica has a “coffee law – law 2762”, which stands at the core of a unique governing system which provides price transparency and fair practice for all Costa Ricans. ICAFE is the sector organisation behind the law’s implementation, working as a development authority in the coffee sector. Through law 2762, ICAFE regulates transactions between farmers and millers, miller and exporters, and guarantees that the returns from coffee are fairly distributed between all stakeholders.

Fair distribution of coffee returns in Costa Rica starts with the export price. It is only when coffee is exported that all stakeholders in the chain know its final value. Then, they start counting backwards to determine what slice of the pie goes to whom. Click on read more to really dive into the topic.

Farmer’s perspective

The farmer is tied to the land and grows coffee. He sells his red coffee cherries to a miller and pays pickers and other staff that help him on his farm. When a farmer delivers cherries to a miller, the cherries are measured in “fanega”, which is a measurement of volume (opposite to for example kg, which is a measurement of weight). The farmer then gets an advance for the cherries delivered but has to wait for the closing of the export season to see what the value of his cherries was (after the miller has made them into green coffee and the exporter has found a buyer who wants to pay a particular price). Eventually, the farmer will get around 80% of the export price (FOB) of the coffee.

Miller’s perspective

The Miller buys cherries from farmers and processes them into green coffee ready for export. The coffee is then exported or sold to an exporter for consolidation with other micro mill lots. All producers on our list fall into this last category. A miller registers amounts of cherry purchased and delivers a declaration of production costs and sales. Then, it’s the turn of exporters with ICAFE. A miller can make a maximum profit of 9%.

Exporter’s perspective

The exporter buys coffee from a miller and sells it to an importer like The Coffee Quest. The exporter consolidates shipments, does sampling & paperwork, and plans logistical movements. The exporter will have expenses to complete the export, and declare the export costs and revenues with ICAFE. Exporters can make a maximum 2,3% profit on the export price.

ICAFE’s perspective

ICAFE’s role in the chain is very interwoven with all stakeholders. The organization helps the farmer on various developmental themes, like: Agricultural production, quality, sustainability and economics. In collaboration with the farmers, they do soil analysis, suggest fertilization schedules, help plant shade trees, and do research in new varieties and agricultural best practices. Through FONECAFE, it also maintains a security fund, in case coffee prices fall below the cost of production for individual farmers. In order to fund their activities, ICAFE charges a tax or contribution on coffee business, which amounts to 1,47% of the export price.

At the end of the season, ICAFE will calculate a “Final Liquidation Price” from the revenues of all Costa Rica coffee exports, and the costs declared to make that revenue. Thereby they determine nationwide, how large the coffee pie actually was this year. A financial settlement then takes place among all coffee chain stakeholders, including the producers.

The Coffee Quest’s perspective

Price transparency is a complex promise to uphold. The result depends heavily on the structure of the sector, the amount of data available and the amount of time a company has to research and provide in this. If you buy coffee from a producer, who also processes, mills and exports, it’s more straightforward, however, this isn’t always the case.

In the Costa Rica context, it’s easy to get a FOB price that is paid to the exporter, or maybe even to the exporting miller. But that still doesn’t say anything about the price the farmer who grows the cherry actually gets. 

The cherry farmer delivering to one of our micro-mill suppliers, will get 1 average price for his cherry as a result of the whole coffee season. The FOB price, The Coffee Quest pays to the exporter, will negatively or positively affect this average. We set out transparency ambition high at The Coffee Quest, and therefore that is exactly what we aspire to know.

Transparency is regulated by law in Costa Rica, and all internal prices and volumes as well as export prices and the final liquidation price per miller are published on ICAFE’s website. This means that we have been able to set up a calculation that derives the contribution of The Coffee Quest purchases in Costa Rica, to the final liquidation price to the farmer delivering cherry to the micromill. Being able to share this makes us incredibly happy! 

The method we use is based on data on our suppliers in ICAFE publications of coffee commercialization, which can be found here; ICAFE/coffee sector/final settlement benefit, and ICAFE/coffee sector/commercialization/sales per zone. The calculation results are validated, and costs are adapted according to interviews with millers and exporters. The result is a farm gate cherry price in Colones per Fanega, which we have translated for you into a price in Euro per kilo, in green coffee equivalent.

Planet

People visiting Costa Rica are often happily surprised with the abundance of nature and respect for animal life. Many farms, such as M&M Micro Mill, are committed to cultivating high quality coffee in a sustainable manner. M&M has the environment at heart and the family estate is working towards making their processes more environmentally kind.

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Driving through the regions such as Tarrazu or West-Valley show many new micro-mills on the side of the road. Hacienda Candelaria seems to be an excellent example of successfully reaching this point, as a result of a step they took some time ago. The family and estate are very involved in the local community and have sponsored a school and soccer field, among other contributions.

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