Coffee Works

Coffee plant

This is coffee when it first starts – up in the beautiful and verdant Western Ghats of India, almost pristine, in harmony with its biodiversity, its rivers, its wildlife, its trees and  hills, sacred  groves, (Devara Kaadu) local deities and farmers. Under a high canopy of shade trees, coffee in India grows gloriously alongside pepper, cardamom, oranges and arecenut.

The coffee flower smells nothing like what it taste - the flowering of the coffee plant, gives a sweet fragrance, intoxicating the entire landscape.The blossom of the coffee plant transforms the landscape to appear like a white, fragrant laden sheet – its smell sweet, the air  gentle. This rousing lasts ,sadly, for just a few days before the coffee flower matures to become the  coffee seed and ready to be picked.

Coffee blossom

She is then gently handpicked and and mostly sun dried . Sometimes sent to a local Curing Works. Once dried, she is put into sacks and stored -usually in the store room of the residence of the coffee grower. She awaits the agent.

  

Coffee grows only in tropical countries and grown mostly by small farmers as a cash crop. Due to the predominance of small coffee growers in India, (according to The Coffee Board of India almost  98% of coffee is grown by marginalized and small farmers) , coffee is sold through agents – this buying and selling happens at the “gate”. The agent offers a price and farmer takes what he gets – because some commodity trader sitting in a glass office has decided the price of this precious bean.

A coffee farmer sun drying his coffee

Coffee seeds  are  dried, roasted and powdered to make coffee powder.Sometimes the coffee goes to towns and cities for further trade and household consumption- as filter coffee, in South India, or as ghastly instant coffee that is produced by the likes of Nestle.Some find their way into cafés to become  the classic espresso, or  cappuccino or other high street coffees - for which there are millions of consumers who are willing to pay a couple of dollars a pop. In the multibillion coffee industry, the profits go mainly to the shippers, the roasters and the retailers.

 But if you are a traditional coffee drinker and relish your coffee, you avoid the Starbucks and Café Coffee Days - instead you would go to an unpretentious hole in the wall –  "Gayathri Coffee Works" for   example- and buy premium Arabica coffee, freshly grounded for about Rs. 360 a kilo.

Gayathri Coffee Works, Mysore

After Revathi, Rohini did not come

After Revathi, the monsoon laden Rohini did not come as she usually does.
Her arrival in June after the Indian summer is life line for all those living in the Malnad and for 150,000 coffee farmers.  The warm Indian summer dries up tanks and springs, but when Rohini arrives, life is back. Springs are activated, tanks are recharged and rivers start to flow.

But this year, Rohini arrived late.Like Rohini, the other rains also arrived late  - Bharini, Kritika, Pushya . They were all late.. Not only were they late, they were not  accompanied by the usual strong winds  -the rains did not get distributed evenly and some  parts of the Malnad received very heavy rains and their were unseasonal downpours. The rains and winds are all changing  in their  patterns. In fact, the beauty of the monsoon pattern  in the shade growing coffee regions is in  its distribution, according to Dr Anand Pereira, an eco friendly coffee planter in Sakleshpur.

According to India Meteorological Department (IMD) data, monsoon rains from June to August 8, 2012 have been deficient in North Interior Karnataka by 33 % , South Interior Karnataka by 34%  and in Malnad it has been upto 44% . For a crop that is so dependant on the monsoon and for the 100,000  coffee farmers in Karnataka, mostly small holders , this spells disaster. What is often not known is that most of the coffee farmers are small farmers. According to India's Coffee Board 98.8% of the farmers are small holders - this is the story of coffee cultivation - not just in India but globally, from Africa to the Americas - coffee is produced by  small farmers - some who own hardly 20 to 30 coffee plants. One drought, or one season of incessant rain can wipe them out. And unlike tea, the countries that produce coffee, are countries often too poor to drink it - with the exception of Brazil that consumes 40% of what is produces. The flow of coffee is from developing countries to developed countires - where coffee is produced at the lowest possible  price .The top producers are Brazil, Vietnam, Colombia ,Mexico and the top consumers are  United States, Germany, Japan, France.India is about 5th/6th in coffee production .

So while our farmers who wait and pray for rain, who invoke the rain Gods so that their crops survive  and they get a good harvest, so they can send their kids to school, urban India  awaits the arrival of  its first Starbucks store.

From Markets With Love

The carbon super market may just get another goodie

At the Carbon Expo, carbon traders are discussing the launch of the Green Bond or International Carbon Bond.
Like the Clean Development Mechanism (CDM)  that pays developing countries to reduce GHG emissions , the Green Bond will do just the same.

To the uninitiated, the CDM is the principal tool for engaging with developing countries on mitigation policy. This allows developed country governments and companies to meet emissions reduction targets in part by purchasing certified emissions reduction credits (CERs) which they receive in return for financing projects in developing countries which reduce emissions. This is also known as “offsetting”.

India and China are the leading countries in CDM projects but recently China has over taken India. While India entered the CDM market in 2003, the size of projects is small – largely driven by  mid-sized companies. However this could change, should some of the Indian Public Sector Units chose to enter the carbon markets.

 Like some  bonds, including Daniel Craig, this is also hot .And here is why.
                                   

Unlike the CDM process where there is a lengthy review process, with the Green Bond, the money is paid up front by investors and the returns guaranteed to the investor. The Investor then would be free to trade the bonds in international market. And governments will earmark funds exclusively for carbon abatement programmes.


And here is the sweet spot.It would be like a sovereign debt.So if the project fails and there is no reduction in emissions,the investor is protected as the bond is backed by the World Bank or some such financial institution.


So if you want to make some quick bucks, watch this space and keep in touch with your investment banker - he is very likely to sell you the bond and not the sun.

 

Summertime and the fish are not jumpin

While mercury soars across the sub continent, parts of the wettest state, Kerala, suffers from drought. This is unusual for God s own country. It is also unusual for the garden city, Bangalore, to touch 38 degrees centigrade. It is unusual that there are no glaciers in the summer months, even 40 km around Srinagar's east-side mountains. While Rajasthan is known for its desert heat, it is unusual that many of its districts are experiencing about 6 degree centigrade temperature increase.

But this is not about an unbearable summer where everything and everyone seems to wilt away and there is general listlessness. This is really about some myths and reality.

The myth is that climate has always changed so this is normal. The reality is that the climate is changing at a speed like never before.
The myth is that we can wait. The reality is that we have no time.
The myth is that climate change action is costly. The reality is that inaction will cost us more.
The myth is that money grows on trees . The reality is that it actually does.
The myth is that we can change – the reality is that we can t change fast enough.