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Organic coffee: Why Latin America's farmers are abandoning it

Latin America produces an estimated 75 percent of the world's organic coffee. But the economic benefits many small farmers were promised if they converted to organic haven't materialized.

By Ezra FieserCorrespondent / December 29, 2009

Pretty, but costly: A Honduran farmer displays freshly picked organic coffee beans.

Reuters

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Guatemala City

Some 450,000 pounds of organic coffee sit in a warehouse here, stacked neatly in 132-lb. bags. It’s some of the world’s best coffee, but Gerardo De Leon can’t sell it.

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“This is very high quality and it’s organic. But ... the roasters don’t want to pay extra these days,” says the manager of FEDECOCAGUA, Guatemala’s largest growers’ cooperative, which represents 20,000 farmers.

Mr. De Leon is asking $2 per pound for the green (unroasted) coffee, about 50 cents more than the going price. But he says he’ll soon have to sell it as conventionally grown coffee, which sells for less.

That’s why many Mesoamerican farmers here are starting to give up on organic coffee: The premium price that it used to fetch is disappearing.

From Mexico to Costa Rica, at least 10 percent of growers have defected in the past three years, estimates the Center for Tropical Agricultural Research and Higher Education in Costa Rica (CATIE). Researchers say that each year, about 75 percent of the world’s organic coffee comes from Latin America.

Farmers have returned to the chemical fertilizers and pesticides that increase production, albeit at a cost to the environment. Although organic still pays a premium of as much as 25 percent over conventional coffee, it’s not enough to cover the added cost of production and make up for the smaller yields. For consumers, the defections threaten to make the coffee harder to find.

“This is a critical point for organic coffee. It was starting to make the conversion to the mainstream,” says Jeremy Haggar, who oversees the research for CATIE. If farmers continue to abandon organic coffee, “prices will definitely go up and it will return to being a niche product.”

'Promised economic benefits'

Under specialty “green” labels at places like Wal-Mart and McDonald’s, organic beans and brews have become cheaper and more widely available recently. Last year, North American sales reached a record $1.3 billion, a 13 percent increase from 2007.

Major retailers already struggle to fill demand. Seattle-based Starbucks Corp., the world’s largest coffeehouse company, said just 3 percent of its coffee purchases, about 10 million pounds, were organic last year.

“Our purchases of certified organic coffee are limited due to the limited quantities available worldwide and the constraints of the organic certification system for farmers,” the company said in a statement issued in response to questions.

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