Coffee Production, Processing, and Marketing in Myanmar Experience and Prospects for Specialty Coffee

By Gregory Love (Golden Triangle Eco-Resources)

Introduction: My name is Gregory Love, and I am here today, on behalf of our company Golden Triangle Eco-Resources, to discuss our experiences, over the last seven years, with the processing and marketing of Myanmar coffee. I will be discussing the importance of training, and our establishment of extensive coffee production training programs for farmers in coffee growing regions throughout the country. We will look at the training format used, and the results obtained. I will also touch briefly on our belief, in the importance of growing "Premium" vs "Commercial" coffee in today's depressed market, especially if we wish to achieve a high price premium for Myanmar coffee. First though I wish to thank his Excellency General Nyunt Tin, Minister of Agriculture, U Tin Htut Oo, Director General of Dept of Agriculture Planning, Col. Myint Shwe, Director of MFE, and Keith Chapman of the UN FAO for their hard work and support for Myanmars coffee production program and for making this seminar possible. I would also like to express the great pleasure that I feel in being here today. For this is a personal dream come true. Over two years ago I started to search for a way to help Myanmar, MFE, and the Ministry of Agriculture get the technical and financial assistance necessary to help catapult Myanmar into a position as Asias leading producer of high quality specialty coffees. After numerous meetings and discussions with my friend Keith Chapman of the FAO, and then further meetings with helpful officials at the Ministry of Agriculture, an exploratory trip and survey by FAO of Myanmars coffee program was initiated. This has led to funding, and the full scale program, of which this educational seminar is a part. It is my wish, and belief that this is just the beginning, and that over the next few years Myanmar coffee will come to be deservedly recognized as among the worlds finest. I pledge to do all I can to help this effort. Golden Triangle Eco-Resources: I want to start by telling you a little about our company and our experiences in Myanmar. From there I will continue on about education and triaing. In 1998 during a trip to Myanmar I was shown some superb coffee that so impressed me that I took some home to be evaluated by experts in the US and Europe. Their analyses was basically unanimous that the base Arabica coffee grown in Myanmar was of a truly "Premium Quality" if it could be properly processed. With this in mind, and a determination to produce a truly great and exotic coffee, we began "Golden Triangle EcoResources".

In the beginning we started working with local brokers to purchase the best quality market coffee and then to grade and sort it for export. We quickly realized that due to improper harvesting, drying, crushing, and storage that the waste percentage was so high as to make it impossible to collect a sufficient quantity of high quality coffee economically. Also that the local brokers, instead of working with us to improve the coffee, would do anything they could increase the volume they sold us, even going so far as to mix old, black, and bad beans with the coffee. We quickly realized that the key to producing a superior coffee here was to control the entire process from cherry right through to green beans, where possible, and then to establish a training program for farmers in the more remote areas, where there was insufficient infrastructure to enable us to establish our own processing centers. To date the company has established 16 drying centers, 11 of which were established under a "UNDP Community Development Program for Remote Border Regions", and 3 company owned processing centers, one each in Northern and Southern Shan States, and one in Chin State. During the harvest season coffee cherries are brought by the farmers & local village brokers directly to our drying centers, or collected by teams of company buyers, working directly with the farmers in their villages, and buying at local market days. All cherries brought to the drying centers are first floated to remove diseased and bad cherries, and then the really green cherries are separated from the red cherries before being placed in the sun to dry. The cherries are all dried on bamboo mats on the ground, or on specially constructed drying tables, with all cherries being turned a minimum of 6 times a day by hand. After drying for an average of two weeks in the sun, the cherries are transferred to one of the processing centers where they are crushed, polished, and graded mechanically. After which they are hand sorted by teams of women, working on trays, to remove all defective or broken beans remaining. Please note that most of the methods just described are for Natural Sun Dried Coffees rather then Wet- Processed or Semi-Washed Coffees. It is our believe that the traditional coffee varietys grown here in Myanmar are ideally suited for this method, and in recent years there has been a resurgence of demand for this type of coffee, and some of the highest priced coffees today are processed using this method. Where WetProcessed or Semi-Washed Coffees can, and do produce excellent coffee, they need a much greater investment in equipment, and without a highly trained technician supervising and tightly controlling the processing, many mistakes can be made that will greatly reduce the quality, and thus the price received for the coffee. The Cause and Root of many of Today Problems: I believe that to understand the problems facing many of the commercial plantations today, and the importance of training, we first have to look at the how coffee has been traditionally dealt with here. The reason that this is so important is that most of the large scale coffee plantations, that many of you here today are developing, employ managers and workers from the traditional coffee industry.

Traditionally the farmers of Myanmar, at the time of the harvest, would go out and pick all the cherries on their bushes as soon as the first group of cherries would turn red. As a result they would only have one picking with, on average, 80% or more of the cherries being green. This problem with improper harvesting techniques would appear to be the result of a lack of education about coffee, exacerbated by the practice of the local brokers to encourage the farmers to pick and sell them the coffee at the earliest possible moment before another broker could buy the coffee. It must also be remembered that the vast majority of farmers in Myanmar have never drunk coffee, as it is a tea drinking culture, and as such have no concept of what makes good coffee. As far as processing was concerned, this was another area almost totally disregarded except for the most rudimentary forms of processing. The farmers had no idea about floating the cherries to remove diseased or bad ones, and would quite often store the wet cherries in piles in their houses or storage sheds for days until they could get around to drying them. They would then put the cherries on mats or just on the ground in front of their houses until dry, with no thought or very little, to turning them or bringing them in at night. After drying the cherries would be kept in piles on the floor, or in old bags, often for months or even years, until they could get around to crushing them or until they thought the price was right in the market. When they wished to sell some coffee they would crush the cherries by hand using a mortar and a pestle. This of course caused the green beans to be split, bruised, and crushed. As a result the coffee brought to market was of a very low quality. There was also nothing to encourage the farmers to improve the quality of their coffee, as the local brokers would pay the same price for good quality coffee as for bad. At this time, other then a small amount of coffee sent to Mandalay or Yangon for local roasting, all the coffee was sent to the borders as border trade items in exchange for other hard goods. As can be imagined the value given to the coffee was very low. This is important to understand, as this the source, and root, of many of the problems facing you today, because most of most of you are business people, not farmers, and rely and depend on the local farmers for guiding and managing your plantations. Golden Triangle Training Programs: There is a saying in the professional coffee world that God grows perfect coffee; its what man does after that determines the quality of the coffee produced. This statement says it all. For coffee to be of a truly superior quality it must be harvested at the right moment, processed and dried in a timely and proper fashion, hulled and cleaned with care, and then stored under correct conditions. Each step in this complex process, when done incorrectly degrades the quality of the coffee, and thus reduces the price received on the world market. This why training is so important.

The Golden Triangle Training Programs were established with three primary objectives in mind. The first was to teach the farmers correct methods for harvesting, processing, and storing their coffee. The second was to educate them as to the requirements and needs of the export buyers, so as by satisfying theses requirements they could get a higher price and derive a better income for their families. The third was to inform them of how the world market works, how the price for coffee is determined and the importance of quality, and what are the costs involved in processing, sorting, packing, and transporting coffee for export. In other words, what are the costs, other then coffee, that determine the FOB prices quoted on the world market. The purpose of this is so the farmers can understand and determine for themselves what is a fair and reasonable price for their coffee so they neither get cheated by the brokers or have such unrealistic expectations that they end up not being able to sell their coffee at the end of the season. This is equally, and maybe even important for you, the owners and managers of the new large scale plantations. When developing the training program we took a pragmatic rather then theoretical approach to the different subjects. We strove to show the farmers, for each topic, whether it would be the method of harvesting, or storage, or drying what would be the economic effect if it would not be done correctly. For example, rather then just tell them that they shouldn't pick green cherries, or that you couldn't make good coffee from green cherries, we showed them how they would get much more money if they picked red cherries. See, in Myanmar the farmers sell the cherries by a volume unit called a "Pyi". Now it takes 2,200 unripe small green cherries to make one Pyi, but it only takes 1,300 large red cherries to make one Pyi. When you consider the lower market price for green or mixed quality cherries, combined with the greatly reduced number of Pyi they obtain if they pick green or mixed cherries, they used ton lose over 60% of their potential income. Another example would be that if it takes a women an hour to crush one Pyi by hand then it takes maybe 1 - 2 hours to crush and produce 1 Viss (Myanmar weight unit equaling 3.6 Lbs) of green beans, and when they crush by hand they end up splitting and crushing the green beans and then they get a lower price in the market. Well when the price for green beans is only a few kyats more then for the equivalent amount of cherries, then they are losing time and money by trying to crush themselves. We constantly try to teach them in the trainings, using charts, facts, and examples from their own life's, that if they will follow and adopt new methods they will both make more money, and have more time to pursue other income producing projects. Another important aspect of the trainings is to explain the workings of the worlds coffee markets and the needs and requirements of the exporters and roasters. We have found that the more the farmers truly understand the reasons why we tell them to pick one way or to process another way, and the more they understand the impact this will have on not just on today's price, but on the future price they will get for their coffee the more responsive they are. In organizing the trainings we first met with the local village and community leaders to explain what we were trying to accomplish. By gaining their understanding and trust the trainings become more effective as these community leaders actually encourage the people to attend and really listen to us. We also work very closely with the monks in the village monasteries for the same reason, as the people look up to them as teachers and will listen to them.

For the trainings to be truly effective we have found that they must be conducted on an ongoing basis. Each year you want to go back to the same villages, or work with your same workers to repeat the trainings. We have found that in subsequent training sessions we get many more farmers, as the ones attending the first sessions tend to tell their friends about them and thus attendance is better. Also in subsequent training sessions there are farmers who have attended the earlier sessions and who have adopted, and had success, with the systems and methods in which we have instructed them. We ask them to speak of their experiences and we have found that the success of their peers and fellow farmers have a large influence in getting other farmers to follow the suggested methods. Based on the reactions from farmers, and the changes we have witnessed in the market place, we believe that a proper educational program is, and will be, a key element if Myanmar wishes to become a leader in the production of Speciality Coffees. When we began the training programs, almost all coffee was processed by the farmers directly, and the wet cherries that were offered in the market were on average 70-80% green. Now in areas that where we have been conducting the trainings for a few years we are receiving on average 95% red cherries and even most of the market coffee produced by the farmers themselves has gone up greatly in quality. Now this type of training is equally, if not more important for the large scale commercial plantations that many of you here today are involved in. Experience has taught us that the more the workers understand the reasons, and the importance, of working conscientiously the better they work. They must understand the impact of their actions on both the quality of the coffee they produce, and on their own income. We have also, in our own operations, found it very helpful to institute a incentive and bonus system among the workers. One where they are paid not just for their work, but for work done correctly. Quality: Before concluding I wish to touch on the subject of quality and the varieties of coffee produced. We all know that coffee prices are at or near an all time low, but why? Well the answer is really very simple. "The world is suffering from an enormous overproduction of cheap and very bad coffee" (Pierre Leblanche). Why is this? We at Golden Triangle Eco-Resources believe and agree, as do many other experts, with Timothy Castle who puts the blame on "The ongoing popularity of many of the catimor hybrids, which produce a coffee no experienced and discerning cupper would willingly drink". In today's coffee world it seems that almost everyone is looking for high yields and good disease resistance. While it is true that the catimor hybrids produce higher yields and are resistant to "rust" disease, what good are 10 15% higher yields when the coffee, as a commercial coffee, gets a 25 50 % lower price then a Premium coffee, especially as they usually take a higher input of fertilizers and other growth agents. It is for this reason that we believe that it is imperative for Myanmar, and you the producers to focus on high value specialty varietys, so of which can be Specialty Catimors, and many of which are being introduced here today by your Ministry of Agriculture, MFE, and UNFAO. I thank you for your time and will now throw the floor open for question. If any of you wish to contact me, our company Golden Trainge Eco-Resources also acts as the agent for Pinhalense Coffee equipment from Brazil, and develops custom training programs.