Monday, August 13, 2007

Keep Buying Cafe Lao...

It's been more than four months since the last post and, thankfully, I can say that we have made good progress. We have added new customers for the green beans, leased a new dry mill, and the micro credit program has doubled its loans. We are in the final stages of winning the NZ Aid contract and have seen the build out of the new washing stations funded by the French development agency. Most importantly, the staff is getting more training, more responsibility and more autonomy. I think we might be ready to scale this puppy.

We did ship two containers of coffee this year to California, but we had a french wholesaler, AlterEco, approach us asking for coffee after we had already shipped. After some consultation with Thanksgiving Coffee, we were able to send one of the containers on to France in June. We officially have two customers now, and we have received a commitment from a third and are waiting on news from a forth. The good news about Lao green beans is beginning to get out and now or biggest problem will quickly become keeping up with demand.

Last year we made about 55 tons of arabica green beans, with some sold in the local Lao market to our partner, Lao Mountain Coffee. This year we expect to almost double that production to over 100 tons, all sold at Fair Trade prices. If the robusta program has some success this year, then we can expect to add another 40 tons. This potential of 140 tons would make an enormous difference in the JCFC economics, easily covering our costs and improving an already high price paid out to the farmers.

Our old dry mill has been purchased by a Vietnamese company so we found a classic old rice storage building and we are building a processing facility next door. The Vietnamese, flush with money, are buying everything in sight in Laos, establishing large plantations on the Plateau. There presence will change the Paksong coffee farming community - more migrant laborers and higher crime rates on one hand, but maybe also a bit of technology transfer in farming techniques.

We are in the middle of the rainy season but the GM Ariya is out in the villages making loans against the coming year's harvest. We expect to make about $14,000 in loans this year, each averaging about $50 to over half of our farmers. Our goal is to reach all farmers by raising the credit facility to about $40,000 and reaching all 750 farmers we expect to have in 2009. Without question, this is one of the most important parts of the JCFC in the eyes of the farmers; money for food and school fees at fair rates.

The French funded development project on the plateau is building washing stations in 36 villages on the Plateau, including 11 of the original 12 JCFC villages. This is going to be an interesting experiment; Lao farmers tend to be a very independent lot. We will watch the participation rates closely and have our own washing station program in the villages as a backstop.

We still have a great deal of work to do with the farmers to determine how they want to use the processing stations and how they want to get paid for their coffee, within the limits of the JCFC's resources. The upshot is that it take a couple years to work out the kinks, but the overall quality of Lao coffee will only get better.

We are still waiting to hear about the NZ Aid funding proposal, but the latest word is that we have a commitment and are simply waiting on the contracts. Our partner in this effort is an NZ company called Bioglobal and they will provide all of the technical consulting we need. The money from this program will allow the JCFC to pursue organic certification, train up a new group of staffers for the villages, complete all of our equipment purchases and build out the washed robusta program, all over three years.

With the JCFC approaching the volume necessary to cover financing its own growth and the further support of the NZ Aid and Bioglobal, it looks as though our little home made development program might just hit the big leagues after all. I'm am due back in Laos in early September and then again in October for the start of the harvest - dragon boat races, farmer meetings, coffee processing, the end of the rains and a great time for trekking and riding dirt bikes.

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