Wednesday, 15 December 2010

Yemen looks to cash in on coffee

Source: Financial Times, By Abigail Fielding-Smith

A coffee stall in Hodeidah, Yemen: the country hopes to capitalise on a growing international espresso culture
Yemen, the poorest country in the Arab world, tends to attract attention these days because of an alarming array of problems, which include an al-Qaeda presence presence, looming water shortages and a southern separatist movement.

But when experts from around the world gathered in Sana’a, the capital, this week it was to talk about something altogether more benign: coffee.

More than 200 coffee farmers, importers, processors, and industry representatives met to explore what Gerald Feierstein, the US ambassador, called a “window of opportunity” to revive the fortunes of Yemen’s most famous commodity.

Al-Qaeda boasts of ‘bargain’ bomb plots - Nov-21France issues warning on UK travel - Oct-06British embassy vehicle attacked in Yemen - Oct-07Yemen as much a threat as Afghanistan, report says - Sep-29Iran fear triggers arms surge - Sep-20Yemen arrests eight al-Qaeda suspects - Jul-11The conference, sponsored by Yemen’s Social Fund for Development, a quasi-governmental body, and inaugurated by Ali Mujawar, the prime minister, aimed to raise awareness of the possibilities of marketing naturally processed coffee.

The event was attended by international development donors as well as industry representatives, eager to find ways of addressing Yemen’s soaring joblessness and economic decline.

Several hundred years ago, the jagged highlands of Yemen were the first place coffee was cultivated, and the beans were exported through the Red sea port of Mocha.

Over the past 60 years, however, exports have fallen from about 40,000 tonnes a year to barely 7,000 as the terraces have slowly filled up with other crops such as khat, a stimulant chewed by 70 per cent of the male population.

Now, however, global demand for the kind of intensely flavoured coffee that Yemen produces is expected to rise with the growth of international espresso culture, and the continued development of speciality markets.

Yemen produces Arabica beans, a higher quality strain of the plant. As an investment proposition, Arabica has performed well recently. The New York Board of Trade futures contract of Arabica due for delivery later this month has risen from $1.397 per pound in June to $2.1635 on Tuesday.

The lack of proper drying equipment, however, means that Yemen’s coffee samples all too often contain stones.

Yemeni farmers, like their counterparts in Ethiopia and Brazil, process the coffee cherries by letting them dry in the sun and then “hulling” them, that is separating the beans from the surrounding pulp, naturally.

The alternative is a more technology-intensive washing process.

While the natural method makes for a sweeter, heavier flavour, which is used for espresso blends, it is also less consistent.

Moreover, the quality assessment tools used by the industry are based on washed coffee processing, making it difficult to drive up the standards of “naturals”.

Some conference attendants felt that talk of reaching high-end markets was premature, given current production levels.

“We need to start with farmers in the field – phase one,” said Ramzi al-Hayat, a buyer and exporter based in Sana’a.

“Right now we’re marketing. But what are we going to be marketing in 10 years unless there’s help for the farmers?”

According to Samer Al-Otmi, an official at the coffee department of the ministry of agriculture, there are many reasons for the decline of coffee production, including water scarcity and the loss of traditional farming skills.

He admitted that although the government has supported some limited irrigation programmes, there has been “not enough effort”.

Khat is even more water-intensive than coffee, but, unlike coffee, it yields a regular crop. For many farmers operating on small margins, with little knowledge of the international market place, coffee seems more risky both to produce and to sell. Khat is at least twice as profitable per average hectare, according to experts.

One farmer attending the conference, Ali Hassan Ahmed Amer, asked: “If you want me to take out khat and grow coffee how will you ensure I will get a good price for this coffee?

“If everyone does the same there will be more supply than demand. With khat I know for sure consumption is there,” he said.

However, Matt Toogood from Raw, a Dubai-based speciality roaster, said that Yemen’s brand profile had such a strong appeal that investing in helping farmers to develop their product was an attractive proposition.

“Yemeni coffee is so distinctive,” he said. “There’s an opportunity right now [for farmers] to put their toe in the water for the end consumer – and we could be the link.”

Large-scale government or donor support is likely to be critical. Mr Mujawar described coffee as a top development priority, but the government is grappling with a budget deficit and multiple insurgencies.

Mr Toogood, however, was in no doubt about the opportunity presented. “These guys could make so much money; they don’t realise,” he said.

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