Wednesday, August 05, 2009

Not enough coffee, too much Ron, Chavez as a liar

Compared to previous days yesterday was a slow news day. Lina Ron was allegedly arrested though no images of her arrest were offered to the public. Is it not amusing to observe the public violence organized by chavismo when the arrest of an opposition figure is perpetrated in braod day light with the remarkable discretion of the rare occasions a chavista must suffer the rule of law? We have only the words of Chavez to trust that Lina Ron was arrested. As far as I am concerned, as long as I do not see her subjected to a similar treatment, such as the case of the police officers of 2002 who got unjust life sentences, I will not buy a single word of Chavez and will keep believing that not only he sent her to Globovision for dropping tear gas, but he backed out when he saw the unanimous rejection of the attack, even from his hired help at the OAS. Lina Ron will be removed from the public eye for a few weeks, just like it happened for the murderers of Marisa Ron in 2004 who are now free at large expecting a trial that will never come.

Thus, since I need to post something I use this respite to write on the latest lies of Chavez on the scarcity of coffee. Yesterday in some cadena I believe Chavez announced that he would nationalize the two main concerns that buy, roast, grind and distribute coffee across Venezuela. He bitterly complained that his government gave all sorts of benefits, subsidies, technology and what not only to find coffee sent to Colombia and brought back as if it were Colombian coffee.



I am sure that a producer here and there has actually done that, benefiting from the idiotic currency exchange control in Venezuela, as do a large segment of the new chavista boliborguesia who is getting rich on government financial manipulation. But this is at best only a portion of the causes that have created the recent coffee scarcity. In fact when you look at the government numbers you realize that the amount of coffee they claim went to Colombia is not enough to explain the coffee scarcity when compared to Venezuela's monthly consumption. An article in Entorno Inteligente gives you the real scoop: as always the problem is that production of coffee cannot meet demand (1). Thus, why?

I will tell you the story of one of my business partners. Mr. Coffee farm in a way reminds me of Isak Dinesen trying to grow coffee in Kenya a century ago: pure idealism and love of the country, eventually trashed by the reality of the natives and the bigger forces at play. Mr. Coffee bought a coffee farm two decades ago where he planned to finish his old age. He first started to clear up the brush and save as many of the old plants still available, very few it turned out. Soon he started a seedling garden and little by little started recovering the slopes that used to be covered with coffee plants in the XIX century. His objective was never to live off his farm, just to produce enough coffee to cover the costs of maintaining the farm and paying the personnel required. He even did pay of his own pocket the restoration of the old farm house which was in ruins instead of building anew which would have been cheaper.

Between 1995 and 2005 his production more than doubled and gave enough profits to buy some equipment to clean and dry off coffee beans and create good quality green beans, those that are sent to the torrefactors for roasting and grinding. His coffee was a good quality enough that he managed to avoid the big circuits and sell his small production with a small premium to smaller companies that used it to improve their overall product quality. During all of this time he never asked a penny of help from the state and ignored the programs to encourage small farms to grow coffee. He preferred to be his own man, even visiting Colombia growers at his own expense, contacting agencies to start creating an organic fair trade product, receiving favorable preliminary reviews.

The farm has enough capacity to double once again its production, to reach the magical output of filling up a small shipping container, the required amount to allow you to find a foreign distributor of specialty exotic coffee. Or to supply a best a small town like San Felipe for a few months. But this will not happen.

First, the clients of Mr. Coffee, even though they were small distributors started to feel the pain of price control and could barely pay Mr. Coffee the current farm prices. And with payments depending on their sales.

Second the government made it very clear that people like Mr. Coffee could forget forever about exporting high quality coffee: they did not care about that, coffee could be good or bad, it was all going to El Pueblo at fixed prices. Period.

Third, the wilderness that Mr Coffee bought two decades ago had become tempting for the villagers that never paid attention to it before, that never accepted to harvest coffee (Mr. Coffee had to hire folks from outside the area at harvest time, at fair wages by the way). Since 2005 his employees have been threatened, the farm house has been robbed, he had to hire a night guard on a permanent basis, he cannot spend his week ends regularly at the farm since he is under threat of kidnapping, etc, etc... And of course harvesters are now demanding a wage increase proportional to what Chavez offers while Mr. Coffee sees the price offered for his coffee actually go down!

As a consequence production is down by a third already, plantation has stopped altogether and only the accessible and easy areas are harvested. Clean up and maintenance is strictly limited to major fire hazards. Still, in spite of stopping investment and only working the high yield part of the farm, this one has stopped being self sustainable. Now Mr. Coffee's hope is that a chavista official will want to buy it off his hands. He is not too concerned about an "invasion" because the nearest village is 2 miles away downhill and the farm at a dead end road. What the natives are more interested in doing is stealing the crop once it is cleaned and dried. He is also afraid of a malicious fire being set up that would destroy the forest that he has actually improved through cleaning and plantation of native species to provide shade to young coffee plants. Also the Nazional Guard and other public "servants" are becoming regular visitors finding fault with anything and levying fines whenever they can even though none of them responds to the security threats, the bad shape of the roads, the inexistence of public services of any type, etc... (Mr. Coffee had to wire the farm at his own expense through three miles of woods and he rents a small tractor before rainy season to clear up the road to the farm of debris as neither the government nor the natives care if the monsoon could clog the drainages with these debris and block the road).

Now, Mr. Coffee has his own business and separate income. And yet he cannot make it work as a hobby. What do you think is the situation the Andes where small farmers depend fully on the coffee they grow for their livelihood and expansion? If there is not enough coffee today in Venezuela it is only due to a decrease in production due to the faulty policies of chavismo agricultural plans, price controls and currency control. Coffee is considered a right, a food stuff, not the luxury it should be.

When Chavez takes over Fama de America (whose owners I happen to know and who are fairly decent business people as far as I can tell) and Cafe Madrid he is only trying to hide yet another failure, trying desperately to hijack the coffee production to direct it to his supporters through Mercal. Folks like me shoudl go to Mercal if they want coffee. Well, I do not care, Mr. Coffee provides me with enough of his product at Christmas time that it lasts me for a year (I am a tea drinker, that helps it last). Still within a year or two Mr. Coffee is bound to lose his farm and I suppose that I will have to go stand in line at Mercal to get a little bit of coffee, a national beverage if any, in small amounts and of poor quality.

When there is no more coffee I suppose that I will need to drink "ron".

1) compare this article in Entorno with one of the lame offering of ABN who claims that the intervention of the coffee companies is to improve the lot of its workers...

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