YOUR COFFEE & HOW TO PROFIT FROM IT

Introduction:
The purpose of this booklet is simple. To teach you how to make more money from your coffee. We will do this in three ways; First, we will teach you how to increase your income from coffee and improve the lives of your children and families. This we will do by teaching you correct and modern methods of harvesting, and processing your coffee. These methods will enable you to increase the amount of coffee you have for sale, thus increasing your income. These methods will also increase the quality of your coffee, thus enabling you, and your coffee, get a better reputation in the market and thus higher prices, also increasing your income. Second, we will explain how the world coffee market works and its relation to the Myanmar coffee market. This will enable you to better understand and determine whether you are getting the correct market price for your coffee. Third, we will warn and inform you of bad practices and misinformation given you by some bad brokers that cause you to be cheated or get bad reputations for your coffee and thus less money for your families. Myanmar can produce one of the best coffees in the world, but at the present time our coffee is not recognized on the worlds markets because of a lack of systems, techniques, and perseverance. Also because of corrupt brokers. Im not telling you this without reason. Last year Mr. Gregory Love, the Director of our sister company J & D Coffee Imports introduced many of the same systems and techniques that we will be talking about in this booklet. As a result of these systems and techniques, along with hard work and perseverance by our company Golden Triangle Eco-Resources, we were able, last year, to export coffee from your region, that experts in the US, Europe, and Japan say ranks among the best coffees in the world. We have now proven it can be done. If we now work hard with perseverance and patience, applying the systems and techniques we will talk about in this booklet, and establish our reputation for consistently producing fine coffee you will soon, in the future, be able to be assured of receiving the best possible price for your coffee on the world market, and thus for your families.

Planting & Growing:

Regarding planting and growing, this is not really the focus of this booklet, as we will mostly be focusing on harvesting and processing. I do want to say that I believe that most of the coffee farmers have good experience in planting and growing coffee, as in truth you grow excellent coffee, and as Myanmar Agricultural Services Department of the Ministry of Agriculture has given and taught techniques about planting and growing coffee almost everywhere in the country. Some of you though might not have planted your own coffee trees, and your trees are ones that were planted by your parents and grandparents. I want to suggest that all of you obtain information from MAS and study how to properly plant, fertilize, take care of and prune your trees to get the maximum yield possible. We at Golden Triangle Eco-Resources, working together in cooperation

with the Ministry of Agriculture will in the future be preparing booklets giving you tips on planting, fertilizing, and pruning. We also hope to give Seminars on these subjects in the future.

Harvesting and Processing:

Correct methods of Harvesting and Processing are the most important steps in producing quality coffee that will obtain for you the most coffee to sell and the highest prices in the market. There is a saying among coffee experts That the Lord grows great coffee, it is only man using improper methods of harvesting and processing that reduces the quality of the coffee and thus the income from its sale. Harvesting, this is the first and most important step in getting high quality coffee. If your harvesting methods are correct you can get a world standard coffee, coffee that can easily be sold and will receive a fair price in the market. Thats why we say that this is the most important step. The coffee farmer welcomes. for harvesting, the season when there is no rain and it is the least troublesome. The harvest, according to our Myanmar seasons, we can say is after the Light Festival. The real beginning of the harvest though is when the coffee cherries are Red and Ripe. Only the Red and Ripe cherries can give us good quality coffee. It is very clear that green cherries are not ripe ones. Picking and eating unripe fruit is always bad, and coffee from green cherries cannot reach the quality of coffee from Red and Ripe cherries. With coffee, picking green cherries is even worse then with other fruit as the coffee beans from the green cherries destroys the harmonious size and quality of the coffee, and prevents it from getting a good price in the market. It also destroys the reputation of the farmers and country. Today, destructionist brokers, who only care about getting commissions, have convinced some farmers that any coffee, including green cherry coffee, is demanded. These farmers think they can sell coffee in any condition. This is because they dont know that this is driving prices down now in the market, and they dont realize how much they are losing by picking green cherries, that they have been encouraged to pick by greedy brokers. As you have seen though in the last two years more and more of the brokers are demanding red cherry coffee and even your local brokers won't pay the same price for green cherries as for red cherries. Lets now think about Red and Green cherries, and how much we are losing by picking Green cherries. At this time, most farmers in our country sell coffee cherries using Pyi baskets, which is a measure of volume. The first important thing to realize is that unripe Green cherries are small and almost half the size of large ripe Red cherries. In other words, as the Green cherries ripen and become Red they become larger and it takes much less of them to make 1 Pyi. Our research has shown that it takes an average of 2,400 green cherry balls to fill one Pyi basket. At the same time it only takes 1,300 Red and Ripe cherry balls to fill the same Pyi basket. In another way we can say that every 300 Pyi of Red cherries is getting only 170 Pyi of Green, or that Every 170 Pyi of green cherries will become 300

Pyi of Red cherries if allowed to ripen. That you will get less money for the Pyis of unripe Green cherries is for sure.

Red & Green Cherry Profit Comparison

(300 Pyi Red Cherries) 1,300 Red Cherries = 1 Pye 2,400 Green Cherries = 1 Pye
Type # Cherries # Pye Kyats/Pye Total Kyats

Green Red

400,000 400,000

170 300

75 100

12,750 30,000 17,250

Money lost by selling Green Cherries

Lets calculate roughly. For example if you are getting 75 Kyats per Pyi of green cherries, you will get 12,750 Kyats for 170 Pyi of your green cherries. If you wait though and let those green cherries become red and ripen, those 170 Pyi of green cherries will become 300 Pyi of Red Cherries. Lets say that for Red and Ripe good quality cherries you can get 100 Kyats in the market, then those 300 Pyi of the same cherries that were green and are now Red will get 30,000 Kyats. Oh Ho! So you are losing 17,250 kyats by picking those cherries green and selling them. Not even half the price you deserve. You didnt realize that difference. See, if you just wait another few weeks for those cherries to ripen you would have an extra 17,250 Kyats profit. Now that could sure help your family! Many of you would now say that we must pick the green cherries for two reasons. One is because of difficulties, we need money for food, and our family is starving. Second is because of the stealing problem, we cannot leave the cherries on the trees to become red and ripen as the thieves will steal them. Ok. Then lets look at these problems as follows: Lets be honest, the first problem is not really a problem. When did you ever see a starving farmer during the harvest season? All of you have other crops and it is difficult to believe that any of you will starve, at that time of year, while waiting another two weeks or so for your green cherries to get Red. Regarding the stealing, this is a problem. We can look at it in two different ways. First you should think about staying in your plantation at night to guard your cherries and to save your money. If you cant stay as a night watchman, is there some member of your family who can? This is the cheapest way. Again its your money. If not then think of

hiring a night watchman, or join up with two or three of your neighbors to guard your coffee taking turns at night, or hire a night watchman and share the expense. Its probably cheaper to pay a night watchman then to lose the money from having your cherries stolen.

If you can really not find a night watchman then lets think in another way. Farmers tell us that in a normal year thieves steal 20% of their crop. Now thieves work at night and they do not differentiate between red and green cherries, but will steal whatever they lay their hands on. So now, lets look at our other example again of the 170 Pyi of Green and the 300 Pyi of Red. If in the normal season the thieves steal 20% of your harvest that you are picking green. This will be 20% of 170 Pyi or 34 Pyi. At a price of 75 Kyats per Pyi for Green cherries you have now lost 2,550 Kyats. This is what you lose now according to what you tell us. Let us now say that you wait another few weeks until the cherries are red. Now let us say that in this short extra period the thieves are very industrious and work hard to steal another 20% of your valuable red cherries. After losing the first cherries this would be about another 35 Pyi of mixed cherries worth maybe 85 Kyats per Pyi in the market, or 2,975 Kyats. Now remember, this means that if you originally had your 170 Pyi of Green cherries and had 20% stolen you would then have 136 Pyi which you could sell at 75 Kyats each for a total of 10,200 Kyats for the season. Now by waiting for your cherries to become Red and because you have very smart and hard working thieves we have calculated that between mixed and green cherries you will lose 2,550 Kyats worth of Green cherries and 2,975 Kyats worth of Mixed cherries for a total loss of 5,525 Kyats. This will still leave you with 253,650 cherries or 195 Pyi of Red cherries worth 100 Kyats each for a total of 19,500 Kyats. Since according to you, the thieves will steal anyways, wouldnt you rather have them steal more cherries but still have 19,500 Kyats at the end of the season by selling high value Red cherries, then 10,200 Kyats from low value green cherries. Again the best way to fight this problem is to organize your neighbors and take turns being night watchmen. If you catch a thief take him to the police and contact one of our representatives. Your Ministry of Agriculture and we promise to make sure he is punished. Now besides picking only red cherries there is another way to almost double your income from your plants and that is to pick the cherries properly. The ripening habits of the coffee cherries are not like other crops that usually ripen simultaneously. Coffee cherries actually ripen over a very long period of time, about three months between the time the first cherries are red and the time the final cherries are red. It is quite normal do get three harvest a year from your coffee bushes. It is a little like tea in this way, that you have a first, second, and third picking. After your first picking, if done right, you should get a second picking of about 75% of your first picking, and then even a third picking of about 25% of the first picking. Now you ask how to accomplish this and the answer is simple, pick the cherries selectively one at a time and never grab the branch in your fist and

strip off the red cherries. What happens when you do this is that you strip off very small buds, which if given the chance will grow and quickly produce new cherries once you have given them space to grow by picking the red cherries already there. What you should be doing is taking the red cherries between thumb and forefinger and twisting them off the plant. In this way you make space for the small buds behind them, which can then get nutrition and grow to be red cherries. If done right you will, as previously stated, even be able to get a third harvest. In this way you will be able to double the number of cherries you get from a plant in a single season, and thus double your income. One last thing regarding the harvest period, remember Arabica coffee trees tend to drop some of their cherries after they mature if they are not picked. So, please pick your ripe red cherries every three or four days. You might want to think of putting pieces of cloth or mats under your trees to catch these cherries. Dont pick up the cherries from the raw earth though and mix them with you other cherries, as after just a few hours on the bare earth they can become diseased and when mixed with your good cherries they can pass on these diseases and destroy your good cherries also. Remember this! Dont destroy your good cherries by mixing them with bad cherries from the earth.

Processing:
Now lets talk about processing and taking care of your cherries so you can get the best price in the market. To get world-class high quality coffee the cherries must be properly processed. There are some differences between modern and traditional systems of processing, and these are very important as they make a large difference in the quality of the coffee after processing. And when the quality is different the price you get in the market will also be different. We must use the new methods and systems if we really want the benefits. I would say that one doesnt want to really improve his life if he knows that a new method will give him a much better profit and benefit to himself, his family, his reputation, and his country, and he doesnt accept it or try it. Mr. Love of J & D Coffee always tells us that we are not working only for food, clothes, and a living, but we are working to improve our lives and for a better future for our families and children. Today we can see some people living, eating, and wearing hats, but their lives are the same as twenty years ago. The one who wants to improve his life and get a better future life must work hard, learn, and accept new methods and change his old ones if he is to get ahead. All right, now you have gone out among your trees and collected a number of Pyi of Red ripe cherries. The question is how you can protect them and get the best price for them. The first thing that must be done right away is to float them in water to remove the bad or diseased cherries. What this means is that you put the cherries into a pot or bucket of water and stir them around. The good cherries sink to the bottom. A few cherries will float to the top. These should be removed. They are diseased or bad. If they are kept with the other cherries they could make them bad or diseased. Check for yourself. Even if the cherry is bright red and perfect looking, if it floats and you open it up I guarantee that you will find that at least half of the bean inside is rotten and spoilt. Now if you dont want to do the floating, you can also sell the cherries the same day to a processor and let him do

it. The floating must be done the same day though, as when the bad cherries that float are kept in direct contact with the good cherries they will quickly spread their diseases to the good cherries. We will usually pay between 5-10 Kyats more a Pyi though for cherries that have already been floated. We actually recommend to farmers that they sell the Red cherries the same day that they pick them. You can either sell them to one of our representatives in your village or take them all the way to the market and sell them there. Why is this? The answer is simple. Correct processing takes a lot of time, space, discipline, and machinery that is expensive. Now if you do want to dry and process your own coffee, here is what you must do to get the correct price in the market. First the Red cherry must not be piled up and kept in baskets or on piles on the floor. Red cherry coffee piled in a basket or on a mat will start to ferment after only 6 -8 hours and begin to go bad. They will get a bad smell that will affect the taste of the coffee, and they can start to develop diseases that will spread and destroy the good beans. I am sure most of you have the experience of having baskets or piles of cherries and after one day if you put your hand in the pile they are hot. This is the cherries fermenting, rotting and going bad.

The cherries must be spread in the sun to dry immediately after picking if you dont want to sell them, but want to try to process them yourselves. To get the best quality coffee the cherries must be dried in a very systematic method. The cherries must be spread on mats, or on a dry concrete surface. They must never be dried on the ground, as this will cause them to become diseased and rot. We use 5 * 5 mats and place 3-4 Pyi of cherries on each mat. To dry properly the cherries must be spread out with the sun reaching all of them, not dried in piles. After a few days, as the cherries shrink from the sun you can place more cherries on each mat. Now, the most important part of the drying process is for the cherries to be turned 3 or 4 times a day at regular times. To get a good quality bean with good taste and good color that will bring a high price in the market, the cherries must be dried evenly with the sun reaching all parts of the cherry for the same amount of time. Without proper turning the cherries will produce beans with spots, uneven color, and bad taste. The cherries must be dried for between 12 14 days, depending on the weather, to reach a correct moisture level. This is important as if the moisture content of the dry cherry is too high the bean will rot and go bad. If the moisture content of the dry cherry is too low, the bean will be hard and dry without taste. The cherries must also be brought in every night, and put out every morning at the same times. This is so they will dry evenly.

Once properly dried, the cherries should be kept dry in bags. These bags should be jute, if possible. You can use the plastic penang bags, but they are not as good for the cherries. The dry cherries must never be left in the open in piles, as this will cause them to become musty and stale. I am sure that all of you have seen dry cherries that have become covered with a white film and smell like old rags that have been left in a pile in the corner of your house. This white film is mold and will turn the cherries bad. Moldy cherries will not bring a good price in the market. Also remember coffee beans are like sponges, they absorb all smells that are around them. Nobody wants coffee that smells like garlic or bullock dung. Coffee must be stored separately from any thing that has a strong smell. The next step in processing is to crush the dry cherries. Most of us have been using our grandparents method of crushing, which is to pound the dry cherry in a mortar with a pestle. We did it this way because in ancient times machines hadnt been invented to do this job. In truth crushing with a mortar and pestle does not work, as the dry cherries do not get crushed evenly. Many beans get crushed flat, split, broken and bruised. The coffee beans are like many other fruits such as bananas, melons, or papayas. If you drop these fruits or squeeze them too hard the place they were dropped or squeezed will become soft and bad. This is why the merchants in the market get so upset when you stand there squeezing their fruit to see if it is ripe. With coffee, when you pound the dry cherries to crush them the green beans get white spots where they are bruised, and then they will not roast evenly when they are roasted to make coffee. They also don't look as good, and just like you don't want to buy bruised bananas, melons, and papayas with soft and rotten spots the coffee brokers don't want to buy coffee with bruised white spots. The same is true for the crushed flat, split, and broken beans. They dont look good, and the buyers dont want to buy them. This again causes you to get a lower price in the market. To crush with a mortar and a pestle is also a tremendous waste of your time and of your money. Think about it. It takes between 15-30 minutes to pound and clean one Pyi of dried cherries. This means that you can only crush and clean 4 Pyi of dried cherries an hour at most. Now if you have a 300 Pyi it will take approximately 100 hours, or 12 full days of working 8 hours a day. Now we see to properly process, which means to dry for two weeks and then to crush 300 hundred Pyi takes almost a full month. And what do we get for this? When Red cherries are properly dried it takes approximately 4.3 Pyi of Red Cherries to make 1 Viss of good quality Green Beans. This means that if you have 300 Pyi of Red cherries you would get about 70 Viss of Green beans. Now if you sold your 300 Pyi of Red cherries for 100 Kyats a Viss you would get 30,000 Kyats. If the price for high quality green beans in the market this year is 525 Kyats, but you only get 480 Kyats because your beans are crushed and broken you will get 33,600 Kyats for your 70 Viss of green beans. This is only 3,600 Kyats more then if you sold your Red cherries, and it has taken a month of your time just to get an extra 3,600 Kyats. We all know that one can earn 200 Kyats a day or 6,000 Kyats a month. So, is it worth your time to spend a month just to earn 3,600 Kyats? Of course not! This is why we should think about how we spend our time. TIME IS MONEY. You all grow many crops and have better ways to spend your time. This is why we suggest that you sell your Red Cherries to professional processors like ourselves. In every country in the world processing is handled by coffee

mills, which have the equipment, personnel, and systems to do the job correctly. Farmers never do processing any more, as it is too difficult, time consuming, and expensive to buy the proper machines and equipment just to process a few hundred or thousand Pyi of Red cherries. You grow wheat or sesame. Do you try to process it into bread or oil yourselves? Of course not! So why should you do it with coffee. Your time is too valuable. Either find someone in your village or market town with a crusher and have them crush for you, or sell the dry cherries to a professional processor such as Golden Triangle Eco-Resources.

World Coffee Price

At this point maybe we should talk a little about coffee prices. I will also explain how coffee prices are set on the worlds market and how this effects your todays market price. We will also look at the history of the coffee market in Myanmar so you can understand the tremendous changes that you have been experiencing in the last few years regarding prices, quality, and the best times to sell your coffee. The first thing you must understand is that the people of Myanmar can only use 10 15% of the coffee that Myanmar produces a year. This means that 85-90% of all coffee produced a year in Myanmar must be exported. What this means is that the price you are paid, here in your village, is totally dependent on the price that your coffee can get on the world market Lets now look a little at the history of coffee market in Myanmar. Traditionally Myanmar coffee was always a border trade commodity. It was first sold to local brokers who then sold or traded the coffee to Chinese and Thai brokers for low prices, and quality was not very important. During this time it was normal for you the farmers to dry and process your own coffee, and then to sell the green beans to the various brokers for eventual sale to China and Thailand. The highest prices for green beans were traditionally paid to you after the harvest, with the highest prices being received in the period between the end of Water Festival and the beginning of September.

All of this, as many of you know even if you dont understand the reasons, has changed completely during the last three years. For many of you, the last three years have been a roller coaster ride. Many of you made good money 2 and 3 years ago, and then most of you have lost between a little or a lot of money in the last two year. The reasons for this are both simple and complex at the same time, but basically they are based on two facts and they are as follows: 1.) With the opening up of Myanmar, professional international coffee brokers have entered the market with a completely different set of requirements regarding both quality, and time and method of purchase. 2.) World coffee prices in the last 3 years have gone from almost a 10-year high to a 20-year low.

Professional coffee brokers need to buy good quality, professionally processed coffee, this means professionally dried and processed, without black beans, white beans, broken beans and/or stones, shells, or other foreign matter. They are only interested in fresh coffee, and in order to get the required amounts of coffee for shipment they will only buy coffee during the height of the harvest between November and the end of February. They need to buy coffee in minimum quantities of 10,000 Viss at a time, as this is the standard amount that can be fit into one 20 ft. container for shipping. All coffee must be packed in new jute bags of between 40 60 Kilos. All coffee, in any 10,000 Viss shipment must be of an absolutely consistent quality. And all the coffee for each shipment must be delivered at exactly the time promised. What this means is that unless the processor, or the broker you are selling to, who is selling the coffee to the professional international coffee broker, are able to meet all of these requirements, the professional broker will not be interested in your coffee, and you will be either unable to sell your coffee or will get a very low price for it. The world market price for any coffee is difficult to explain, but basically depends on factors. They are as follows: 1.) The overall supply and demand for coffee on the world market at any particular time. 2.) The country and region where the coffee comes from. 3. The quality of the coffee. 4.) The reputation of the brokers, from a particular country, for consistent quality and on time delivery. There are two international coffee exchanges in the world, and these set the base price for coffee at any given time. One deals exclusively with Arabica coffee (the coffee primarily grown in Myanmar) and is based in New York, and the other deals exclusively with Robusta coffee and is located in London. The coffee prices quoted on the New York market are for contracts to deliver 37,500 lbs each, and are quoted in US cents per pound (100 cents = 1 US Dollar). Each day contracts for coffee are bought and sold for coffee to be delivered in either September, December, March, May, or July up to a year in advance. These prices are for an average standard quality commercial coffee. The price for any particular coffee is then quoted as a differential of + or a certain number of US cents a pound. This differential is determined by the above factors of supply and demand for coffee from that particular country or region, the quality of the coffee, and the reputation of the brokers from that country or region for consistent quality and on time delivery. Differentials can range from between 60 cents a pound to plus 80 cents a pound on average. For example coffee from Brazil is generally considered to be the base quality coffee and thus gets the base price. Coffee from countries like Indonesia, Ethiopia, Columbia, Guatemala, and Jamaica are generally considered to be Premium coffees and get prices from 10 80 cents a pound over the base price quoted on the New York market. Coffees from countries like Thailand, Vietnam, China, Uganda, Mexico, or Peru are considered Commercial coffees and get prices of between 10 60 cents a pound under the New York market. All prices quoted on the New York market are FOB (Free On Board), which means loaded on board a ship, in new jute bags, in a port in the country of origin, and with all taxes and export duties paid. Myanmar coffee on the world market, at this time, gets on average between 30 50 cents a pound under the New York price depending on the quality. This is primarily due to the

fact that Myanmar coffee is unknown on the world market and as such there is no real demand for it, the coffee is poorly harvested and processed, and most of the local brokers deliver inconsistent quality and are usually late. This brings us now to a very difficult subject, and that is this years prices. As mentioned previously coffee prices are at a 20 year low. This will change, but for the last 2 years, as you know, coffee prices have been steadily going lower and are expected to go even lower for this season before starting to go up again. This is especially true for low quality, poorly processed commercial coffee, the type presently being produced in Myanmar. At Todays Prices coffee cherries will probably only get between 55- 80 Kyat a Pyi, and green beans not more then 250- 325 Kyats a Viss. The higher prices will only be paid for ripe Red cherries or well-processed coffee. This is going to be very difficult for all of us, as there will be very little profit at these prices for any us, and this includes us. All we can do is have patience, as the coffee market goes in cycles, and should start to go up again after another year. At the same time it is even more important that we work hard together to produce the best quality of coffee that we can, using the techniques and methods being taught and discussed here today, so that we can increase the reputation for Myanmar coffee on the worlds market and get the higher prices that high quality Premium Coffees get. Finally we must be very careful to work only with honest brokers, those who will work to process your coffee correctly and thus increase the value of your coffee so that your coffee can get the reputation and the higher price it deserves on the worlds market.

Brokers:
This brings us to another very difficult subject, your local brokers. While it is true some of the local brokers are your friends and very honest, the vast majority of the coffee brokers in Myanmar could care less about you or your coffee. They dont care about the quality of your coffee, as they will get a commission on every Pyi or Viss they buy and sell no matter what the quality. These are the brokers who tell you that it doesnt matter whether the cherries are Red or Green, as they just want to buy your coffee from you first before you sell it to another broker. They also dont care whether the beans are broken, bruise, or bad, as they will get their commission no matter the quality. The truth, as many of you know or have heard, is that many of the brokers actually take your good coffee and then add broken beans, bad beans, and even small stones or other foreign matter to your coffee just so they can sell it more cheaply and quickly and get their commissions. They dont try to get higher prices for you. It is mostly because of these brokers that Myanmar coffee has such a bad reputation on the worlds market and why you, the farmers, are getting lower prices for your coffee then you deserve, when actually you are growing good coffee. So what can you do? First and most importantly try to deal directly with Processors like us. These are people who are working for you to improve the quality of your coffee. If you want to work with local brokers then only deal with brokers who tell you the truth, and show you they care about the quality of your coffee. Brokers who dont try to encourage you to sell green cherries and tell you its not important and that it doesnt make a difference whether your beans are broken or white. Also, try to

only work with brokers who can prove that they are working directly with professional processors who work to improve your coffee, not brokers who are just selling to other brokers.

Conclusion:
Myanmar in truth grows a superior quality coffee. If you the farmers will only sell good quality cherries, and only deal with professional coffee processors and honest brokers, in just a few years Myanmar coffee should be able to get a + differential on the world market. This will mean greatly increased profits. If you continue to deliver the quality of coffee presently found in the market, and continue to deal with brokers who dont care about you or your coffee, then Myanmar coffee will continue to get differentials of between 30 40 cents a pound under the base New York price.

The difference is up to you!

If we at Golden Triangle Eco-Resources can assist you with your coffee in any way please let us know, or if you would like to sell us your coffee you can always contact us through our local representatives, or at our office in Pyin Oo Lwin at 085-21107.