This might be a sound strategy for protecting producers selling to exporters, but it doesn’t do much for helping small farmers enter the export market. I asked Anacafé why the capital requirement for a purchaser-exporter license was based on one full container, considering that no export license mandates a minimum quantity for each export (for example, high grade coffee is often exported by the palette, by air). The representative explained that it didn’t make sense to export in lesser quantities because the fixed costs of exporting were so high. I asked if it were possible for more than one exporter to share a container. The representative reported that it was possible. My follow-up, naturally, was to question why Anacafé required that each individual applicant prove they had sufficient funds for an entire container. She explained that it was because Anacafé did not know the applicant’s intentions at the time of application, so they had to assume the applicant was operating on its own. (For a future story I intend to interview more license applicants to learn if they were ever given an opportunity to discuss their business plan with Anacafé.)
Jorge’s cooperative of Antigua Valley farmers produce enough green coffee each harvest to fill just over one-quarter of a container. One way Anacafé could help this group of small farmers enter the export market is by lowering the capital requirement of the purchaser-exporter license. This would enable the students who are working with the cooperative, or other businesses with a similar model, to purchase and export the quarter-container of coffee produced by the farmers. The farmers, through their student representatives, could invest their additional profit, attained by reaching more lucrative markets, in production growth and thereby reduce per-unit exportation cost in subsequent years. Anacafé’s current licensing policy, however, does not allow the farmers to explore this option.
Another strategy the farmers could use to reduce per-unit exportation cost is to increase volume by processing fruit purchased from other farmers in addition to fruit they grow themselves. They could then invest their additional export sales profit in growing their plantations. But in order to export produced and purchased coffee, the farmers would need to apply for both a producer-exporter and purchaser-exporter license. The capital requirement for a purchaser-exporter license requires the farmers to have sufficient funds to purchase one container of green coffee, yet the farmers could achieve economies of scale through a combination of produced and purchased coffee. Again, Anacafé’s licensing policy does not allow the farmers this opportunity.
I asked the Anacafé representative to comment on the delay in approval of the Huehuetenango cooperative’s license application. She reported that applications were normally processed in one month. She suggested that the cooperative might be confused about the legality of purchasing and exporting coffee. Some cooperatives, the representative explained, try to apply for a license with non-profit status. Guatemala’s Inland Revenue authority, the Superintendencia de Administración Tributaria (SAT), which incorporates customs, does not allow this. She argued that other cooperatives, which have a license to export their own coffee, often misunderstand the different types of licenses, and think they can export other producers’ coffee under the same registration.
There is no doubt that some, or even many, cooperatives misunderstand Guatemalan business law as it relates to the coffee industry. This, however, was not the case for the Huehuetenango group. At the time of application, their cooperative was a for profit Sociedad Anónimo, and they had Q500,000 in capital. Evidently, further investigation is required.
Christian Rasch has served as Anacafé president since 2007. During his first year as president, Rasch also held the position of General Manager of El Hato, a specialty coffee farm, and was the director of Sierra Azul, a specialty coffee exporter. I asked Anacafé if Rasch still held these positions, but they did not respond. I also tried to find out if any of the other 19 Anacafé directors were coffee producers; however, the association does not publish the names of its directors and would not provide me with this information on request. So, for the moment, we are left to wonder at the possibility of Anacafé having a vested interest in how it distributes export licenses, and thus opens the market to new producers. If many Anacafé representatives are also large coffee producers, this may explain why the small producers interviewed for this article may believe that Anacafé, itself, is a coffee purchaser – when in actuality, the representative is offering to buy coffee fruit for his or her own plantation.
What we are not left to wonder about is the opinion of the supposedly most important constituents of Anacafé, the vulnerable small producers. Last year representatives of more than 30,000 small coffee growers throughout Guatemala petitioned for Rasch’s resignation.
There’s something to mull-over while you’re sipping your next latte.
Laura Shearer comes from Melbourne, Australia. After studying Psychology she realized she didn’t want to be a psychologist, and set off on the Aussie rite of passage: a year backpacking in Europe. She returned to Australia a more worldly woman and embarked on a master’s degree in communications and a career in corporate Australia. Four years later, she decided she wanted to do something more meaningful than make rich people richer, so she travelled Guatemala with the intention of spending a few months helping to spread the wealth. That was three years ago. Laura has spent the majority of her time in Guatemala supporting small coffee farmers in the Antigua Valley. This is her debut article for La Cuadra.