Improving Lives by Connecting the Coffee in Your Cup to the Farmer Who Grew It
Like nail polish, the monikers for coffee blends lean to the coy and clever: Hair Bender, Big Trouble, Giant Steps. Single-origin roasts often identify the bean’s initial home, but at Tiny House Coffee Roasters, the names of single-estate coffees don’t stray far from the people who produce them: Donaldo Cuadra, Pedro Ortez, Octavio Herrera.
“Our mission is to improve the circumstances for those that are growing coffee and to highlight the men and women that produce the coffee for those that are consuming it,” said Blake Thomas, a partner of the direct trade roaster based in Austin, Texas, describing the kind of business plan that’s hatched when three former Peace Corps volunteers put their heads together. Serving in Nicaragua, Thomas gravitated toward a co-op café with unlimited Wi-Fi and coffee, and began to befriend coffee farmers, visiting farms and mills.
“I started to really get the opportunity to see inside the lives of these people and the tremendous amount of work it took to create what we see as a beverage that wakes us up in the morning,” he said. “It’s a tremendous amount of work and not a tremendous amount of benefit.”
Despite a flat white’s $4 price tag, coffee is a commodity that trades between about $1.19 to $1.30 per pound. When a producer sells his coffee to an exporter, Thomas explained, he gets a little less than the traded price. But the cost for producing that pound of coffee—including expenses for labor, inspections, and transportation—hovers around $1 or $1.15, Thomas said. Experts have attempted again and again to accurately calculate the true cost of a cup of coffee, but while number vary, most agree small profits are skimmed off at each transaction point in a long supply chain.
“The margins are just razor thin when they operate in that capacity,” Thomas said.
What Tiny House hopes to do is cut out a number of those profit-reducing middlemen. Thomas, who has a master’s degree in agricultural economics, returned to Texas to do better by the coffee farmers he’d met in Nicaragua. With little start-up capital, Tiny House Coffee was able to roast beans from the 2014–15 coffee harvest by buying 2,700 pounds of beans on consignment from six farmers in Nicaragua. As their coffee sold, they paid the farmers $3.25 a pound for their coffee. The price reflects shared revenue of a value-added product—beans that have been roasted, housed in chic packaging, and sold at Austin farmers markets, grocery stores, and the kind of co-working space where freelancers will pay a premium for responsibly sourced products.
“We’ve already been able to pay back the farmers the total amount we told them we would pay them for this year,” Thomas said. “We wanted to do that to show them—yes, this system works, and we’re sincere about how much we want to pay you.” And the farmers seem happy; they’ve given the thumbs-up to send 10,000 pounds of coffee from this year’s harvest.
The downside for the producer, of course, is the wait. Just like Tiny House, their businesses need capital to keep the lights on. And coffee’s no cakewalk. Studies show coffee rust and climate change are severely impacting production and an already volatile market. So most producers will sell the majority of their harvest to an exporter, Thomas said, and view the 10 to 15 percent they allocate to Tiny House as a longer-term, higher-yield investment.
It’s too early to see the results of what more resources returning to the hands of the coffee producers will yield. Thomas hopes it will mean better standards of living, more environmentally friendly processing, and better coffee—but they don’t want to be heavy-handed in their interactions with the coffee producers or attach strings to the revenue generated.
“Our hope is that this model is going to show the true good this can do with community development projects that hopefully these guys take on themselves, and that we are able to show that to our consumers,” he said.
For its part, Tiny House Coffee Roasters has a new, larger roaster arriving any day now, the ink is still wet on their two-pound holiday sampler pack, and there are big plans for the new year.
“If we can shift the market to more direct trade partnerships between roasters and growers, I think there’s a lot of benefit to be be had for consumers and the producers of coffee as a whole,” Thomas said.