In 2006, nine coffee producers in San Isidro de León Cortez decided they would start their own Micro-mill and founded Union de Cafetaleros de San Isidro (UNDECAF). The Mill and connected farms are located high up in the famous growing region of Tarrazú, correctly pronounced “Tar-rah-zoo”.
The small group consists of 9 producers from farms, close to the Mill. Twenty three families are working to make UNDECAF and El Roble into a community. All farmers are 100% dedicated to the cafe, their dream is to prepare the next generations for the coffee production. As most of the farmers were born into the coffee world, and it is hard to change paths, they aim for a long-term coffee business. UNDECAF has coffee education at heart. They receive visits from students to give small workshops and the group provides economic support for local schools. As a company they focus on education and support, concentrating on social aspects and environmental topics.
The Tarrazú coffee region of Costa Rica is also known locally as “Los Santos” because of its cantons (similar to towns) that are named after various saints. About a two-hour drive from San Jose, Tarrazú is filled with roads and coffee plantations that fill the mountainsides. The climate of Tarrazú is split into two well-defined seasons, rainy and dry season. The rainy period lasts for seven months (May to November) during which time the coffee plants are growing. Harvest time is the five month period from November to March that coincides nicely with the dry season. This well-defined climate pattern is ideal for growing coffee and results in high-quality coffee cherries that are uniform in ripeness.
Before 2006 the group delivered cherry to another Mill, until they could start the construction of their own Mill, El Roble. Now, at the Mill they receive cherry, process them by pulping, washing and drying them. UNDECAF employs workers from Nicaragua and Panama on the farms which are common in this region.
For the mill it’s important to build on the last season’s knowledge for processing. Many of the children of the farmers work on the Mill where they can learn about coffee processing and administration of the company.
The Coffee Quest team first cupped UNDECAF samples back in 2017 as a suggestion from our exporter. In 2019, we had the chance to see the operations personally when we were invited to the mill in Costa Rica by the farmers, who were happy to show us the processes.
The UNDECAF Mill is located quite high in the mountains creating a relatively cool micro-climate so you can feel the hard winds passing through the mountain side. UNDECAF’s high altitude lots have a lot of sweetness paired with a delicate complexity, therefore forming a great addition in The Coffee Quest’s Costa Rica assortment. The profiles fit in between the traditional Classic and super fruity Micro-mill lots.
Each year we have the pleasure to receive several UNDECAF single farmer lots processed together at the Micro mill. Each lot comes from a specific farm, where tests are done to see which part of the farm has the best potential for quality.
Even at the end of the season we were able to see a clean installation working perfectly to pulp the cherries. These beautiful Tarrazú lots are initially dried in raised beds outside and afterwards moved to the controlled environment of their greenhouse. Quality is guaranteed during the whole process, from picking only ripe cherries, well selected. To process with attention the requirements of each lot.
UNDECAF has seen many changes in the world of coffee. From updated qualities through different preparation options to new processing methods. Thanks to the hard work, change in the market and working with good partners they are also creating better qualities. Did you know that 25 year ago nobody had heard of Honey coffee before?
This season, we took a dive into the economics behind the bean, in our Quest for radical price transparency. Our origin researcher, Marian Osigna, set out to interview 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 meant to implement the law, and acts as police and 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 an export price. It is only when coffee is exported, that all stakeholder in the chain know it’s final value. Then they start counting backwards to determine what slice of the pie goes to who.
The farmer tends to the land, and grows coffee. He sells his red coffee cherry to a miller, and pays pickers and other staff that help him on his farm. When a farmer delivers cherry to a miller, the cherry is 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 cherry delivered, and has to wait for the closing of the export season, to see what the eventual value of his cherry was, after the miller has made green coffee, and the exporter has found a buyer that wants to pay a particular price. Eventually, the farmer will get around 80% of the export price (FOB) of the coffee.
The Miller, buys cherries from farmers and processes these into green coffee ready for export. They then export themselves, or sell to an exporter for consolidation with other micro mill lots. All producers on our list fall into this category. Miller registers amounts of cherry purchased, a declaration of production costs and sales proceeds to exporters with ICAFE. A miller can make a maximum profit of 9%.
The exporter buys coffee from a miller, and sells it to an importer like The Coffee Quest. The exporter consolidated shipments, does paperwork, and plans logistical movements. They make costs in order to complete the export, and declare export costs and revenues with ICAFE. Exporters can make a maximum 2,3% profit on the export price.
ICAFE’s role in the chain is very interwoven with all stakeholders. They help the farmer on various developmental theme’s, like: Agricultural production, quality, sustainability and economics. In collaboration with the farmers, they do soil analysis, suggest fertilizator schedules, they 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. Inorder 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.
Price transparency is a complex promise to make. It’s 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 it. If you buy coffee from a producer, who also processes, mills and exports, it’s more straightforward but this isn’t always the case.
In the Costa Rica context, it’s easy to get an FOB price which 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 micromill 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 setup a calculation which derives the contribution of The Coffee Quest purchases in Costa Rica, to the final liquidation price to the farmer delivering cherry to the micromill. To be 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.
UNDECAF aims to use renewable resources available in the area for the processes of the mill to minimize the environmental impact of their coffee production.
The Mill recently underwent a clean-energy initiative and as a result they installed 60 solar panels providing electricity to the facilities, as well as a small wind turbine to generate energy.
Over the years they have been implementing small changes. For example using soil analysis, to make sure the plant only receives what it needs at any time and to avoid over fertilizing. They also use environmentally responsible products and fertilizers with the goal of applying only organic products in the future.
UNDACAF has traceability at heart. As the whole process is done at the mill and the exporter, tracking the source of each coffee bean is precisely done and taken care of.
Discover other stories from Costa Rica...
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.