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Peruvian Cafeteros Find That Environmentally Friendly Farming Boosts Profits
The Tea & Coffee Trade Journal / April 2008

By Larry Luxner

CHICLAYO, Peru — José Olmedo Pérez Rodas, 45, has five children and has been a struggling coffee farmer for the past 15 years. But in the last five years, he's discovered that growing certified organic coffee can lift campesinos like himself out of poverty.

"We have learned that we can do things in an environmentally friendly way, and this will bring us additional income," he said. "Thanks to organic coffee, my son now studies agribusiness in Lima. That's something other farmers can't afford."

María Justina Llatas Muñoz, 44, was born in Cajamarca, Peru, to a family of potato growers. But Cajamarca — environmentally degraded by overpopulation and a proliferation of chemicals used in agriculture — offered little opportunity, so she got married and moved to Moyobamba, in the neighboring jungle department of San Martín.

Starting out with five hectares and buying more land in small parcels over a period of years, Llatas today owns 22 hectares (54 acres) of farmland, six hectares (15 acres) of which are dedicated to organic coffee.

"I've been able to do some projects already, thanks to organic coffee farming," she said. "I've built a new stable for 12 cows, and they are delivering milk which gives additional income. Since I have a well-run stable with concrete floors, I can collect the manure in a better way and this goes back to composting."

Pérez and Llatas are among 1,540 or so farmers benefiting from Pronatur, a nonprofit organization that promotes organic, shade-grown arabica coffee, based in the northern port city of Chiclayo.

"Through this organization, we've learned a lot of things," said Llatas. "As campesinos, we knew only to grow coffee, nothing else. But we've seen other members of the organization succeeding in having other alternatives and learing how to diversify into vegetables and other crops."

Jan Bernhard Riggs is general manager of Pronatur, an umbrella organization for 39 regional and sub-regional associations run largely by the campesinos themselves. The team consists of 22 full-time people including agricultural engineers, a sociologist, a "gender equity promoter" and field technicians.

"It's a private company that functions as a nonprofit organization," explained the 41-year-old Bernhard, who's half-Swiss, half-British, and was born in Spain and brought to Peru at the age of six months.

"I started Pronatur in 1994, approaching coffee growers and trying to motivate them to get together instead of selling to the 'coyotes.' In 1997, I registered them as a committee," said Berhard, noting that in Peru, farmers' groups are known as associations or committees, because the word cooperativa has bad connotations.

"Cooperatives were established by the military regime and reinforced by the communists," he said. "Most Peruvian coffee was sold to the Soviet bloc."

Bernhard said Peru exports close to 98 percent of its coffee production, in large part because Peruvians are the lowest per-capita consumers of coffee in Latin America. Some 95 percent of that production is grown by coffee farmers with fewer than four hectares of land. Another 4 percent is grown by farmers with four to 15 hectares, while the remaining 1 percent is grown on farms measuring 15 to 100 hectares. Virtually no one in Peru has coffee farms of larger than 100 hectares, said Bernhard.

"The legal monthly minimum income in Peru is 550 soles ($183) a month," said Bernhard. "An average coventional coffee farmer with three hectares will produce 40 quintales worth 830 soles ($277) at current prices. In our case, the yield and prices are better, so instead of 12-14 quintales per hectare, we get 17 to 20 quintales per hectare. This will yield 60 quintales, worth 1,400 soles ($467)"

Certified organic coffee production is around 600,000 69-kg bags a year, equivalent to 15% of Peru's total coffee production of 4 million bags.

"But 80 percent or even 90 percent of that is organic technically by default, because the people cannot afford fertilizer or pesticides," said Bernhard. "If they could afford to buy them, dragging them eight hours on a mule through the mud into the fincas would end up costing three times as much, so the return doesn't pay off."

Peru exports 60 percent of its organic coffee to Europe, and the rest to the United States, according to Raúl del Aguila Hidalgo, president of the Junta Nacional de Café (JNC), a Lima-based group that represents Peruvian coffee producers.

He says Peru alone produces 500,000 quintales (hundredweights) of organic coffee per year; Mexico is close behind at 400,000 quintales a year. Together, the two countries account for nearly half of the world's organic coffee production.

"What we're trying to do is share our vision of what organic coffee is, and what we can hope for in terms of production and marketing," said Hidalgo, noting that Peru has nearly 25,000 organic coffee growers.

In 2006, according to Bernhard, the country exported $507 million worth of coffee, of which $85 million was organic-certified coffee. Due to disruptions caused by bad weather, Peru's total 2007 coffee production is expected to drop to $350 million, of which organic-certified coffee is likely to be $60 million.

"There are no fixed prices, but depending on quality, organic coffee normally sells for US$0.10 to $0.30 cents per pound over normal coffee," he said.

The four departments producing most of Peru's organic coffee are San Martín, Amazonas, Cajamarca and Lambayeque.

Pronatur's growing area lies in the Altomayo region, on both banks of the Mayo River, and on the eastern slopes of the mighty Marañon River at an altitude of 1,300 to 2,000 meters above sea level.

"We're only talking about organic-certified, which means taking care of the environment, water sources and social economy," said Bernhard. "If small farmers are certified organic today, this doesnít mean only that theyíre not using pesticides. It's a whole complicated setup of environmental behavior and socio-economic development, which involves health-care, training and schools."

Bernhard says the average size of the farm Pronatur represents is 3 hectares. The organization works in tandem with Asociación de Productores Agroecológicos (APROECO), a farmers' association. Together they account for 50,000 hectares of Amazon highland rainforest belonging to ethnic communities, as well as 3,400 hectares of coffee, 200 hectares planted with mangoes, limes and other fruit, and 50 hectares of peas, beans and other legumes for export.

According to Berhnard, Pronatur's annual revenues total around $10 million, of which $8 million come from coffee exports. At least 90% of that goes directly back to the farmers, he said.

Once a year, Pronatur attends the Specialty Coffee Association of America convention but, he said, "we don't do any advertising. We have a website that we created ourselves. We even take our own pictures."

Bernhard says an alternative crops program recently funded by the U.S. Agency for International Development "was a disaster, because they gave everything to the farmers. When you give everything away, there's no incentive to produce."

He said Pronatur has succeeded in improving incomes in nearby communities "through efficient and transparent methods of production and marketing," and that the concept of fair trade continues to be Pronatur's guiding light.

Yet Bernhard doesn't have too many kind words for the Fairtrade Labeling Organization (FLO), based in Germany.

"We're fed up with fair trade, because they're putting plantations into the fairtrade system. How can a small coffee grower compete with all the new products FLO is coming up with? How can we compete with economies of scale?" he said.

"The initial vision and mission of the founders of the fairtrade movement was to help small growers and their products. These were the people who developed this very little niche market and found some buyers. But as this movement grows and demand picks up, transnationals come in and see there's a buck to be made."

Bernhard says big producers like Dole, Néstle and Chiquita "are misusing the investment made by small growers who have limited capacity to become big growers. There's a geographical burden which you cannot overcome. You cannot build a highway over the Peruvian mountains. You cannot get electricity where there are no waterfalls. We work with mules. There are serious limitations. Not a single small grower in Brazil will be able to compete with the large Brazilian plantations."

Despite the enormous challenges, Bernhard said the market for Peruvian organic coffee is catching up and regaining momentum.

"Peru's potential to maintain its No. 1 or 2 position in the world in organic coffee is very high. You just need to organize the industry properly and teach your people how to read and write. There's still a 40% illiteracy rate among women here," he said, noting that "paperwork is a big hassle. This [organic certification] requires a lot of registration and record-keeping of everything that comes into the farm and everything that goes out."

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