Leading by quality example

honduras-coffee
Unlike other Central and South American coffee-producers, Honduras and its coffee are excluded from the specialty attention and specialty prices that good quality coffee deserves. But this is not because Honduras grows bad coffee.

It is due to something called “The Honduran Discount”, which is a “below standard price” set by the New York commodities market. This discounted price gets applied to all Honduran coffee that is traded through the commodities market, regardless of its actual quality, and translates into a negative perception regarding all Honduran coffees.

Cafe Solar challenges this negative perception with its high quality production and its “alternative” trade route, which bypasses the New York commodities market. Merchants of Green Coffee purchases Cafe Solar directly from Cooperative COMISUYL and pays the farmers a premium price based on the excellent quality resulting from the Cafe solar program.

The Cafe Solar program has established excellent growing and processing conditions for the coffee. It’s grown at high elevations in rich, biodiverse areas next to protected tropical forest zones and Cooperativa COMISUYL is the very first Honduran farmer co-op to own and control (for quality purposes) its own commercial processing facility, which happens to be the first solar-powered coffee processor in the world!

How the coffee commodities market works

All arabica coffee is traded through the New York commodities market; also called the Coffee, Sugar and Cocoa Exchange (CSCE). This institution sets the global price for these coffees based on what is known as the “Colombian mild”; the global standard.

So, when you hear someone say that coffee is trading at such-and-such a price that’s the price they’ve set for the Colombian mild, or the current price of Colombian coffee. It is used as the standard because of its stable and consistent supply.

Picture it like this: A group of New York traders are constantly speculating the world’s supply and demand of coffee in order to set the price of the Colombian mild. All other coffees are given a positive or negative value based on this standard, which determines the price that can be fetched for these coffees.

The reason Honduras suffers a discount

The standard coffee prices and value are set by buyers who treat coffee simply as an interchangeable commodity, based on the recommendations of researchers. Honduras has typically always suffered a discount due to its inconsistent processing practices. Unlike the more illustrious coffee-producing countries, Honduras has not received processing infrastructure investments that are required to increase the quality and value of their crop.

As a nation with a very low per capita income, coffee growers and farmer co-ops cannot afford to lay their own cement patios for sun-drying let alone build their own commercial processing facilities. The select few families and companies that control coffee processing in the country operate low-quality, inefficient dryers.

Hope for Honduras Coffee Farmers

Fortunately, the negative price and perception that is assumed and applied to all Honduran coffee, regardless of actual quality, can be bypassed by direct trade programs like Cafe Solar. When coffee is directly traded, bypassing the New York commodities market, the importer can choose to negotiate that coffee’s price based on their personal quality standards.

Cafe Solar coffee is of a truly unique quality. There’s no other Honduran coffee like it and no other coffee in the world benefits from its efficient, solar-powered processing technology. Its exceptional quality combined with the program’s initiatives to protect tropical forest and support environmentally motivated small farmer co-ops makes Cafe Solar a shining example of real quality change.