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The Costa Rican coffee industry

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To explain the coffee industry today in Costa Rica we must first start with some history. Coffee has been a huge driver of the economy and growth of the country since the late 1700s when coffee was first imported by Spanish colonists.

The government then saw the potential of coffee and offered incentives for growers. In 1821, the municipality of San Jose distributed free plants to people, in 1825 coffee was exempt from tithe payments (a tax of 10% paid in kind) and in 1831, it was declared that anybody who grew coffee on redundant land for five years could thereafter claim ownership of the patch.

In 1933 IDECAFE (Institute for Costa Rican Coffee) was set up. One of the reasons was to help smallholder farmers who were struggling against millers, large farmers and exporters who had got together to price fix. These incentives encouraged growth and exports were sent all over the Americas, with the first export sent directly to England in 1843. The revenue from coffee sales helped modernise the country including building railway lines and improving roads.

In the 1960s small farmers started to form cooperatives, which enabled them to gain better prices which would otherwise go to the millers. Production was increased by using more machines at the mills for processing and using chemical fertilisers.

The creation of Costa Rica Coffee Research Centre (CICAFE) in 1977 (which later became part of ICAFE) carried out research in variety breeding and they formed a standardisation of technologies in plantations. In 1985 IDECAFE became the current day Coffee Institute of Costa Rica (ICAFE) and in 1988 it became law that only Arabica varieties of coffee could be grown in Costa Rica.

Today ICAFEs mission is to understand, preserve, and promote the coffee sector, and to act on behalf of Costa Rica’s smallholder coffee farmers (92% of all coffee farmers) for whom scientific research, experimentation, and data collection would be otherwise inaccessible.

Regulations

The Ministry of Labour along with Icafe set the minimum price of $2 per cajuela (12.5kg of cherry) which pickers can be paid. The cherry is measured out by farmers in a box which is provided by ICAFE to farmers to ensure that all measures are consistent and fair. Most pickers are migrant workers from neighbouring Nicaragua and Panama, they come because they are paid more for picking in Costa Rica than their native countries and they usually pick every year at the same farms.

Once picked, the cherry is delivered by farmers to the receiving stations or mill. The receiving station is there to collect the cherry and then at the end of each day truck the cherry back to the mill – this could be a cooperative mill or a privately owned one. Each mill is a different colour so the farmer can immediately see who they are delivering cherry too.

All mills have the same standardised container to measure out 46kg of cherry (see image below), which is again provided by ICAFE. The farmer receives a receipt which allows them to be paid the following day, and every 15 days the miller must inform ICAFE how much coffee they have received.

Each mill publishes a daily price on the front of their mill called adelanto (or advance) based on the market price, availability, local competition, forecast and quality of the coffee. The adelanto is a minimum price.

The final price the farmer receives at the end of harvest is called liquidacion and is paid to the farmer by the mill or cooperative who receives the coffee, once they have agreement from ICAFE. By tracking how much and at what price coffee is received at every step ICAFE are able to make sure the farmer receives 80% of the FOB price, which is law in Costa Rica. Further to this, each cooperative or mills’ prices are published in national newspapers for maximum transparency.

ICAFE is funded by a 1.5% tax on every pound of coffee leaving the country. As well as regulating coffee they conduct research into new coffee varietals and investigate technological improvements, making all this research accessible to coffee farmers. For instance, on the ICAFE website farmers are able to access an interactive map which shows recommendations for which fertiliser to use in their area of Costa Rica, interactive rain maps, reports which are easily downloaded with advise on how best to plant, grow and cultivate in which areas and much more.

 

Present Day

Today Costa Rica is one of the most politically stable countries in the region and the typical life expectancy is 77 (men) and 82 (women)*. They have not had a military since it was abolished in 1948 and in 2015 it generated the entire countries electrical power from 100% renewable energy sources on 285 consecutive days, pledging to be the first country to have zero net emissions by 2050 – something which Coope Dota have already achieved, becoming a carbon neutral company in March 2011.

What does all this mean for coffee? As with any developing country, prices are rising, people want to earn more, own more and have a stable income. So many farmers are finding their children want to move away from farming in favour of a life in the city, which is one of the reasons production is dropping year on year. However, some cooperatives are taking the initiative to teach their local community more about jobs in coffee as there are many more positions than a farmer or picker, and in the Tarrazu region production is still high because as the locals say “here, there is only coffee”. Read more about this in our trip report.

Coffee has certainly been a large driver in Costa Rica becoming the country it is today and because of tight regulations it is also a fair and efficient system, where farmers have access to the latest research and can obtain loans to fund planting and maintenance through cooperatives and banks. Of course, no country or system is perfect but Costa Rica as a county and as coffee growers are leading the way.

*as of 2016 

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