COVID-19's affect on Producers and Khomanta

by Khomanta

It is no secret COVID-19 has been wrecking many industries and the coffee industry is no exception. We've been fortunate to be small enough that we’ve been able to stay on track for the most part and have kept growing little by little. Producers are a bit of a different story. They're having a tough time and it is going to get worse for them as harvest season is arriving/occurring in Peru.

Problems at the farm

Peru’s response to COVID-19 has brought in new protocols for farmers and the transportation of coffee—at the expense of the producer. If you’re new to the inner workings of the coffee industry, the majority of coffee producers live below the poverty line. They live on the bare necessities for the farm and family and survival is a day by day process—any additional costs put on the producers is detrimental to their livelihood.

Fertilizing, pest control, farm enhancements
Due to Peru’s lock down producers are unable to purchase the necessary fertilizers and pest controls to help their crops grow resulting in a direct impact on cup quality and value. Most farmers are now relying solely on their own farm’s compost and natural fertilizers which are generally nowhere near enough to sufficiently provide the coffee plants the required amount and types of nutrients.

Each harvest producers typically hire temporary workers to help with the laborious job of hand picking, selecting, and processing of the coffee cherries. This requires numerous workers and days to complete the 2-3 harvests that will occur over a one to three month period. With the new safety protocols producers must provide personal protective equipment (PPE) to anyone entering their farm to work. There are two issues with this:

  1. Adequate face masks and other PPE items are impossible to find in Peru due to the high demand.
  2. PPE is a luxury for many in Peru—it is priced so high producers cannot readily afford it.

Even if the producers can provide PPE the temporary workers must enter the coffee regions which are being blocked in many areas by locals as an attempt to protect their families and communities from outsiders bringing in COVID-19.

Peru’s lockdown also means a severe shortage of transportation services to move coffee from the farms to associations, coops, or ports for sale and distribution. In the specialty coffee industry raw samples are sent all over the world for importers and roasters to test and ultimately decide on purchasing. With mail services being extremely limited/stopped samples will have an issue leaving the country. For purchases there is currently no way to get the coffee from producers, to the processing plants, and then to the ports (which are only working half days) for shipment.

The only thing we know right now is we all have no other option but to wait and see how it all plays out and hope that the Peruvian government is able to formulate a plan for the 200,000+ coffee producers that are affected by COVID-19 and new protocols.

COVID-19’s affect on Khomanta

As we stated above, we’re fortunate to be small enough that COVID-19 has not really impacted our sales much—if anything we’ve been steadily growing. We will be impacted though in the upcoming months due to the nature of our business model which we’ll have to bend a bit this year.

Sourcing coffee
Last year we were able to cup an amazing amount of coffee during our stay in Peru. We worked closely with a friend in Lima who is an excellent roaster and Q grader which we will be leaning on 100% this year to perform all the sample roasting and cupping due to the logistical difficulties.

Questionable arrival of shipment
Currently the ports of Peru are working half days and previously were completely shut down. This means extended shipping times even if we can get the beans to the port. Months ago while planning we expected a new shipment of beans to arrive around Sept/October if everything went well, but it may be well beyond that at this point and we may have to ship via air freight which is much more costly.

Bringing on another producer(s)
We plan on bringing on an additional one or two producers this year, though not as we imagined. We set our business model up to only work with producers we have met in person, making sure they are eager to grow alongside us and want a relationship with us. Due to COVID-19 we most likely will not be able to meet whomever these new producers will be until well after the harvest is over, if even this year.

How we’re helping

We’re coming up on another profit sharing payout at the end of June. Up to this point the payouts have gone towards the interest free loans our producers took out with us, but this payout we’ll be sending 100% of the payout to the producers.

We’ve forgiven the loans
We’ve decided to consider both of our producer’s loans/lines of credit as paid off at this point which means the remaining balance (around 50% on both) is now 0. All future payouts will be going back to the producers until they open a new loan with us. With our year two producers, payouts will be split between loans and direct transfers giving them the between harvest relief which is one of the main goals of the our profit sharing program.

These couple of changes should help out our producers quite a bit and give them a little more peace of mind. Until the pandemic has quieted down there isn't much else we can do to directly impact their lives but we're still brainstorming and if you have any ideas send them our way!