Take a good look at the picture above, can you tell who is a Coyote and who is a grower?.
That is exactly the problem, the grower many times is also the Coyote, which makes it very hard to know who you are dealing with when negotiating pricing of coffee at origin.
The root of El Coyote is in many ways vital to the life of the grower not because he is not able to sell his coffee to an independent client but because growers in general do not have the know how or the infrastructure need it to sell their coffee independently or export to the international market. The growers in general have not even ever tasted their own coffee, they sell every single bean that they produce. So how does the Coyote really work.
You have 3 types of Middle Men or Coyotes I will describe each one of them and how they work with in the market.
The first kind of middle men might be a leader of the Ejido or group, he is usually better off financially and has a lot of ties with in the community. If a grower finds him self needing money in between harvest he goes to this men and ask him to borrow money and he will pay the money with his coffee, the coffee price will be payed at a much lower price then the market but since the grower needs money quickly he usually is persuaded easily. Then the middle man during harvest time receives all the coffee from the growers whom he lend the money and he resells the coffee at market price or a bit bellow depending on his customer. The problem with this is that the grower is in a hard cycle to get out of depending on how much the loan is for and how much he agreed to sell his coffee back to the lender or middle men. That means that part of your harvest is already compromised and what ever else is left you will sell at a bit better price but since the money he owes is usually a lot more than what he will make with the coffee that is free of debt, yep, you guess it right he will go for another loan before the next harvest.
The second kind of middle men is the one that works for the big companies that export internationally this Middle Men is also a grower but is mainly on a smaller scale his main bread and butter is by stimulating the rest of the growers in a community to sell their coffee to this major companies and they get a commission for every grower who sells the coffee to that company. The way that this middle men works is by letting the rest of the growers know the offers of this companies to buy their coffee, what he usually does not tell the grower is that the exporter will not give them the high price that they where told and that they will get a "factura" or invoice for less than what they bought from them, this is important because the government will pay the grower an extra commission for each bag that they sell but they have a limit as to how many bags they invoice for that commission. So the grower still does not get a fair deal.
The third and last one is the one that purchases the coffee from growers at almost nothing by laying to the grower as to the quality and type of defects that their coffee has, and purchases large quantities of coffee for the export companies with out any care for quality or price to the grower this middle men is very aggressive in country's where the price can be manipulated for higher or lower they are the ones who work for the huge coffee companies or exporters who I wold love to name but I will not for the security of my team and my self, but they are payed by this companies and could care less about the growers or the consumer they are in the payroll of this big giants who only care about volume.
What would a grower need to do to sell direct to a small roaster or an international client?
When a roster sells their coffee to a group, coop or a coyote usually they bring it in parchment and in sacs that weight 57.7 kilos per bag. In order to sell this coffee internationally it has to be clean the parchment has to be removed and it has to be put in a bag that has all the export markings and weighs 69 kilos. Not to mention having the FDA permit and the exporter permits which cost a lot.
To do all of this to the coffee is extra cost for the grower and a lot more work that they are able to do there fore they opt for the easy route to sell to the middle men or join a coop who would facilitate this work for them.
The problem with the grower not able to do a lot of this work is that a lot of the high quality coffee is being lost in the tons and tons of coffee sold to volume there fore even do the price of coffee is at the highest in history it does not mean that the quality is getting better.
The higher the pricing of coffee in the market is the more good quality coffee we will loose since the middle men or coyotes are getting much more aggressive in the market. The false reports from the media as to the lack of coffee produce world wide and the giants pushing the pricing in the market higher is making for a nightmare coming soon to the small independent roaster and for the consumer. Why? well the fact is there is in off coffee growing for the market but by squishing the market to believe there is less production the giants who manipulate the market can make a ton and I mean a ton more money, not only in the NY stock and with the UK but also in the shelf at the consumer level, since this giants also are the ones that have the majority ownership of the piles of coffee that means less high quality and independent roasters will not be able to be competitive to purchase coffee and to sell their coffee. The relationship coffee programs that where vital in preserving high quality coffee from small growers and that independent roasters had the chance to purchase will be hard to salvage with such volatile market.
It is unfortunate the amount of casualties that this high prices of coffee will result in not only with coffee shop owners, small roasters and growers but it will be almost impossible to try to put in place projects that preserve and encourage high quality coffees in the world.
Is this another bubble that sooner or latter will crash? Not for a wile every one in the industry sees the coffee pricing getting higher and in my humble opinion what would help rescue the specialty roaster and coffee shop owner will be to start forming groups where they invest in the permits and the extra work that the coffee grower needs to have done to their coffee, and come in agreements with them to purchase their coffee at a fair price for them and for the grower.
Is this possible yes but it will take courage and the passion of all independent specialty coffee professionals to work together. Unity makes us stronger.
What is important to learn from the middle men is that we like them need to become vital to the international coffee market, to the grower and to the consumer. If we can team up to rescue and purchase high quality coffees, to become a independent force in which growers can come and have a voice and power to sell in the international market then we have a better chance to survive.
