Friday, January 05, 2007

Basic Numeracy: The Price of Beans

As we blogged some time ago, we bought 3 hectares of coffee land in Coatepec, in the state of Vera Cruz up in the Sierra Madre de Oriente hills near the Caribbean Coast of Mexico. This is the first coffee crop since we bought the land. The harvest period is Christmas-New Year, and this year I have had to work over in Australia. That basically left it to Michele to organise the harvest. Neighbourhood networks kicked in in very interesting ways, as did the fact that the agent we bought the land from has kept the block next to ours for his own hobbying. Gabriel must surely provide the best 'after sales service' of any real estate agent on the planet. He set up a harvesting arrangement for us that would get the coffe picked and the beans sold at the market. Then we would get half the proceeds from the sale and the pickers would get the other half. In addition we kept back almost 70 kgs of the beans to process ourselves, which would ultimately yield about 8 or 9 kgs of roasted coffee beans. In the future we plan to process the lot ourselves and make a genuine hobby of it.

As it happens, this year is a very good harvest. Our 3 hectares yielded almost 400 kilograms of pure bean, for the first picking. There could be another picking later, but that would only be a fraction of the first. Now, the basic numeracy on this stuff is interesting because the crop on our land was probably a pretty good average for the area. Maybe a seriously managed lot would yield a bit more, but probably not a lot more. At the markets Don Antonio got 3.6 pesos per kilo for the raw bean. A week or so back the price was around 4 pesos a kilo. At today's rates 4 pesos is a little under 37 cents US and 47 cents Australian. So the entire proceeds from 3 hectares of coffee land for the first pick with a comparable harvest to our own would yield a grower somewhere around 1600 pesos, maybe as many as 2000 pesos if the yield was 20% heavier. If they pay the pickers between 1.5 and 2 pesos per kilo, that would them around 1000 pesos -- US$ 91 or Australian $117 -- for their 3 hectares of land. If we suppose they could squeeze $US 100 per 3 hectares at the market, they would need 150 hectares of land to get US$ 5000. That factors no production costs, rates costs, or transportation costs into the equation. It is the maximum they would be left with after the costs of picking.

It is little wonder coffee growers are simply abandoning the land, selling it for real estate if it is close to towns, and so on. We paid around US$32,000 for the land. At $100 per harvest -- per good harvest -- and assuming the seller of our land got $27,000 of that, it would have taken 300 harvests for the land to deliver in gross revenue for beans what they got from selling the land. You might get the equivalent of 3 good harvests every two years. 200 years is a long time. And 2007 was a good year.

It's no wonder coffee tastes good. Of course I am going to have to keep checking my maths on this, but I think it is pretty close. Our land had not been cropped for years. Now we know why. It will be cropped from now on, however. And the land will be fertilised and well maintained. But as a hobby. This is the kind of maths, of course, that can keep you awake at night, thinking about globalisation, privilege, and all the rest. About what it means to try and be a decent global citizen and do the right thing. I guess when all is said and done, Coatepec's future economy will have quite a lot to do with migrants buying former coffee land. Doing the math is easy. Balancing the citizenship books requires more thought. But thought well worth the giving.

Crikey! Interesting stuff. What other crops are grown in the area? What are economics of those 'other crops' we have come to know?
I reckon the story for sugar and bananas runs pretty much in parallel with the coffee, Scott. I'll give the sugar a miss, but will plant a few bananas about the place, and the odd papaya. Mind you, this seems like sheer fantasy from behind an office desk closing in on midnight on a Friday evening. Still, dreams they say are free.
We live between Coátepec amd Xico, just outside San Marcos. We have been here a year. The previous owner had chopped down all the coffee and we let it grow up, so we have small harvest this year for our own use. We are very interested in the whole problem of coffee. It is in the hands of the giant companies now, and is apparently second only to oil regarding the size of the business.
I have a blog, too, on our lives here. It is at
hello Esther, love your blog. It's making me even more homesick -- as I sit here in Cairns, Australia, earning my daily bread in an office with a cyclone warning just posted. You captured Christmas beautifully, I thought. Mexico has an uncanny way of turning westernized alienations inside out and providing intense experiences of how life can be. We're now in our 8th year of Mexican residency -- the last few have been tragically part time, but that is about to change. Was/is Ursulo Galvan a sugar mill? I am trying to place it on the way to Xico. You wind down to the narrow bridge by the old abandoned factory, right, and then up the other side. How far toward Xico from the little narrow bridge in the dip is Ursulo Galvan?
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