Sourcing from Origin - A New Approach

As of September 2022, we now plan to source the majority of the coffees we roast at Machina, direct from origin. Making this decision has been the result of a lot of careful planning and consideration, which culminated in our first ever sourcing trip to Brazil in July.

This blog is the first in a series on this subject, seeking to outline the thought process behind this decision, along with an honest appraisal of the pro's and cons of this approach and why we have decided it would be beneficial for our business. 

A long held ambition to source from origin

The Machina roastery has been running for around 6 years now (10 years since we started the overall company). Ever since its conception, we wanted the business to move into sourcing coffee from origin (with support from key importers) to further our understanding of the product and the overall supply chain. We have always been keen to learn more about a number of things in the process including, the way the industry helps people earn a living, how it adds to foreign economies, the challenges the farmers and washing stations face, varieties grown and developed, the farming techniques in use, sustainability in practice and of course meet so many of the amazing people involved. However for all the positives involved, we have been also incredibly conscious that sourcing from origin comes with some potential pitfalls and negative perceptions. 

Creating a responsible and economically viable sourcing strategy

The volume we roasted for the first 4 years was not huge, so we never considered going to origin for sourcing, as we didn’t deem it a fair action.  Travelling across the globe because we bought 8 bags of a coffee from a certain country didn’t feel right, so we held off.  Fast forward to 2019 and we reached a volume that started to suggest that we needed to rethink our sourcing strategy, but we needed to do it in a responsible and economically viable fashion. Larger volumes, seasonal sourcing, exclusivity, and furthering knowledge were all things we needed to address.

Furthermore, buying coffees from an importers held position in the UK was proving expensive and the range of coffee on offer was limited, reducing any scope for exclusivity, plus making the sourcing of nano lots extremely hard (tiny lots of high-quality short run coffees), as they didn’t represent much in the way of profit to importers. Not only that but the information provided was not always as rich as we would have liked and we were simply taking supply chain information on someone else’s word.

Choosing the right origins to source from

First and foremost, we decided we would only go directly to origin where we think it’s fair. By that we mean, does the carbon footprint generated from travel really justify the volume we are buying?  Also, is going to a specific origin really required based on the quality and exclusivity we need from that coffee? Lastly, is there any scope for added value when travelling to origin? By this we mean price or possibly some form of socio / economic benefits. *See note below on this term.

Based on these three questions, we concluded that only five countries justified the travel, which were Brazil, Colombia, India, Honduras, and Peru.  Brazil is about achieving good pricing and quality at a large volume, identifying properly sustainable farms to work with, and trying to add on smaller lots that we may not be able to source otherwise.  The other origins we identified are more about identifying coffees we could not gain access to previously, gaining some form of exclusivity, forging relationships with the farmers, and looking to add some form of positive value at origin.

What do we mean by 'Socio / Economic Benefits'?

When we talk about to Socio / Economic Benefits, we are referring to the concept that we can add some form of value at origin that could benefit the lives of people in that country.  This could be the farmers themselves, the washing station they use, a local charity, school or an NGO that is involved with improving quality of life and / or working conditions / pay for those who need it most.

The reality is that our sourcing partner is much more aware and in tune with what can actually be done at origin to contribute towards such Socio / Economic projects, so in most cases, we would work alongside our partner to explore what value we could add by supporting the projects they know need help.  It could be that we choose to buy a regional lot from a small group of farmers over single estate farms, and offer a higher price point as a gesture. Or it could be that they are involved in the funding of a new washing station that will help smaller farmers process their coffee to a higher quality and as a result, help them achieve a higher price.

In the long term, we plan to look for specific education projects that we can get involved with and either offer classes and / or funding for equipment and learning materials.  This is part of a longer term vision that would see us connect up our education program here in the UK with projects we become involved with at origin.

1. How this model works in reality: 

Part of Machina’s approach to business is honesty and transparency in trading and business practices, so it is important for us to clarify these points, as we choose to be upfront & honest about what our coffee trading work involves and what role we actually play in it.  Maybe it’s not as sexy as others might portray the process, but we would rather just tell it how it is and feel comfortable with our actions.

Part 1: Partnerships are an essential part of sourcing from origin:

Firstly, we work closely with a key coffee partner that provides us with access to certain things that we need for sourcing, that are either not our core skills and / or beyond our reach.  These kinds of partnerships are key to sourcing coffee and in our view, when utilising them does not represent actual direct trade.  These are:

• In depth knowledge of coffee options at origin.
• Longstanding business relationships with coffee growers.
• Samples provided pre and post shipment.
• Logistics & storage.
• Finance.

In theory, we could source finance and manage the logistics and storage ourselves, but it would be very unwise to do so, as we are not experts in either area. There is so much potential for things to go wrong such as mouldy coffee, lost in transit, quality being different from origin samples and landed and numerous others. It’s essentially a minefield of unknowns that represent huge risk that would be crazy to take on.

 

Part 2: Clarifying the meaning of Direct Trade as part of the sourcing debate

Direct Trade is a much confused and sometimes abused term, which again we think is important to clarify. What is often coined as ‘direct trade’ is more suppliers setting you up with the opportunity to visit producers and gain a little more knowledge about their practices (Sustainability, employment, farming methods etc) than you would have previously had access too, so it’s not really ‘direct trade’ as such, it’s more meeting people in person to get more exposure to the operation and put a face to a name.

Some roasteries choose to use the loose term ‘Direct Trade’ to imply they are managing the whole supply chain and adding value at origin, but the reality is they are just buying through a third party but choose to remain vague about the real structure and make out they are some kind of world adventurers / philanthropists. We prefer to be straight about this issue.

*Direct Trade in it’s true sense would be for us to have a direct relationship with the farmers (with the goal of forming an ongoing working partnership), visit them in person on a regular basis, agreeing price, quality etc, and paying them directly (usually a higher price than standard), and potentially us managing the logistics and storage etc.  In reality, this rarely exists in Speciality Coffee, as the scale is not there, and you need to work with third parties for quality, logistics and insurance purposes. This is the reality, and upon basic research, core sources will confirm this view. See below for commonly accessed resources.

https://en.wikipedia.org/wiki/Direct_trade

https://perfectdailygrind.com/2018/01/what-does-direct-trade-really-mean/

Choosing quality & social / economic benefits over status:

Our approach is to buy coffee based on quality / profile, not the image or reputation of the importer or farm.  This means if we can do it, we will choose coffee from a regional over a single estate if we think it’s better coffee taste wise, as doing this provides the opportunity to add value at origin (By supporting less affluent / prestigious growers). We still buy high quality / premium lots from single estate farms when we think it represents clear differentiation as a premium, but this is not the basis of our buying strategy.

A note on Single Estate Vs Regionals:

Specialty coffee businesses are fairly obsessed with talking shop about how exclusive or traceable their coffee is, but this obsession is a little skewed when you consider the fact that this industry is supposed to be built on positive values, ethics, and sustainability.  Surely this means as well as aiming for quality, there is also the focus on being ethical and kind - through supporting the people who need help most?

The majority of coffee that comes from single estate farms are owned by people who are relatively wealthy (There are exceptions).  The majority of Regionals (Blends from areas / regions of countries with a similar profile), come from a collection of smaller farmers / growers that can’t afford to grow / export / trade by themselves, so they group together and achieve it collectively.  These types of farmers are the ones that often need the support and financial aid that can make a difference.

*Again, there are exceptions to this rule of regionals.  One such example is Brazil, where already large farms have their collective coffee at a certain grade blended together to create regional blends geared for volume purchasing / markets.  Another is that sometimes coffees get blended together to achieve balance and and certain price point for specific markets.

In the eyes of the specialty coffee fan, regionals may not be quite as sexy as fully ‘traceable’ or ‘story’ coffees, but we view this as quite the opposite.  Regionals offer so much more in terms of creating positives when it comes to adding value at origin (socio / economic), often provide amazing flavour profiles as farms are so close together that they are often as good as being from the same farm and the story they offer is arguably even more interesting, hearing about how farmers have come together, how they overcome their collective challenges and helped to change the lives of those involved.

Example of this from our previous coffees include Honduras – Capucas, Colombia - ASMUCAFE and Ethiopia – Beloya - all amazing coffees that are not single estate farms.  Current and future coffees include our Colombian – Totoro, our Honduran – Lepatrique and Kenya – Kiangoi.

Being wary of how origin trips can sometimes be perceived. 

We are always a little concerned with how roasters going to origin is perceived by people out with the bubble of speciality coffee, in the sense that it could be viewed as ‘poverty marketing’ (photos with farmers and pickers etc) by the more cynical or going for a jolly and running up a huge carbon footprint in the process by those with a little more conscious than others.

We are not massive fans of coffee businesses using images of farm workers at origin, especially if they have not given approval to do so.  Further, we don’t generally think it’s OK to travel to the other side of the world to ‘check out a farm’ if you are not buying the kind of volumes that justify it.  Others have a different view, but this is ours.

-------

Conclusions

There are variations on this, but based on the origins we are working with and the model we want to pursue they fall into two main categories:

1: Relationship building and access to better quality / exclusivity

Some countries coffee production is predominantly large-scale businesses, such as Brazil, or medium sized farms (examples being Panama or Costa Rica) that are run by people who earn a good living and are simply businesses that are being run to generate a profit - usually a very good one!  They often come from generations of coffee farmers or are simply people with a focus on growing high end coffees for prestige and / or profit. There is nothing wrong with this; we are just highlighting their situation to demonstrate the differentiation from these types of growers and others who are in a very different situation. 

 

The common theme is that they are run by affluent people that don’t necessarily need our support in terms of a better price per KG to improve living standards or other potential philanthropic gestures that we could engage with.

Brazil produces a huge volume of coffee (46.9 Million Bags in 2021/22), so the farms are large scale and commonly run by affluent land owners. The coffee volumes per farm are large so are divided up into different lots for Regional Blends (Lower quality) and Single Estate (Higher quality). The majority of their coffee is named after their farm are often a single varietal and have full traceability to that specific location, which is information that has become expected in the world of speciality coffee roasters and cafes. Yes they have a specific name, and yes they are a single varietal with very specific processing, but they don’t often come from people who need any form of support from buyers / roasters.

In these scenarios there was nothing we could add in terms of socio / economic benefit, as the farmers had total control and were generating fair profits.  What we could add through a trip to Brazil were things like creating positive relationships, knowledge of their farming practices, potential exclusivity, access to smaller exclusive microdots that don’t usually make it to the UK, and improved quality from being on the ground.

2: Supporting smaller farmers and collectives by paying more, shining a spotlight on their work and investing communities through key partners.

Other countries coffee production is the polar opposite to the likes of Brazil, in that there are huge volumes of small producers that are too small to individually grow, process and export coffee, so they group together to form an alliance or collective of sorts and have their coffee blended together, usually at the washing station they use, resulting in a ‘regional lot’ that can ten be exported (Which is often named after the washing station, or the name of the local area). Common examples countries are Honduras, Colombia and Ethiopia.  These types of coffees are often referred to as Regionals, meaning they come from a region of a country or a group of local farmers (Often neighbours) that have a common or very similar flavour profile, so collectively they make up a coffee release.

In many cases, this is where we feel that we can add real value, by supporting those who struggle to actually make a fair living from their work - possibly though paying a higher price per KG, investing in local communities, investing in setting up new washing stations, or improving farmer knowledge to drive quality and improve pricing over time. While we are buyers can simply pay more for the coffee, working with key partners such as Volcafe sees the other areas achieved through ongoing investment and support.

------

This blog has been created to try and show our approach and strategy to coffee sourcing in the current climate. All the views within this blog are our own and not necessarily the views of others.  We welcome views and discussion on this subject and hope you have found this both interesting and honest.

 

If you'd like to learn more about our approach to coffee sourcing or speak to us about wholesale coffee and equipment supply, get in contact at info@machina-coffee.co.uk