In Mexico, our work is focused in Oaxaca
From afar, Mexico is a growing economic force, ranked 64th globally in GDP per capita. However, the coffee-producing states in southern Mexico face a very different economic reality. Oaxaca and Chiapas are the two poorest states in Mexico, with poverty rates of 60-80% and extreme poverty rates of 20-40%
Production yields have become dangerously low in these regions. Over the last ten years, coffee leaf rust disease and the lack of financial or agricultural means to tackle it has reduced production by up to 90% in some regions. The average yield in Oaxaca is now just 100kg of parchment per hectare. For context, in Colombia, the average yield is 2,400kg per hectare.
The vast majority of Mexico’s 500,000 coffee producers are smallholder farmers growing coffee on one hectare or less. The average annual production for many producers is just 100kg. Coffee farming is becoming more and more unsustainable. This is fuelling widespread migration to urban centres in Mexico and the United States. In short, coffee production is disappearing.
Romulo and Alejandro with Al and Miguel from RM and Shaun from Red Beetle Coffee Lab
Pedro Lopez Perez and Carlos Perez-Santos, producers from Tierra Blanca with Salomon in San Pedro El Alto, Sierra Sur.
Currently, the most common outlet for producers in Oaxaca is to sell their parchment to local intermediaries at a market-set price. We consistently pay upwards of this standard market price as a first payment.
Following this is a second, quality-based price that increases profit earned by 2.5 to 5 times.
This has been identified by producers as the most impactful role we can play in the short term. Paying in this way provides rapid, predictable returns on investments made by producers.
Breakdown of a typical price paid for coffee from Mexico through RM
Figures are displayed in USD/kg. All values have been converted to green bean equivalent (GBE) at 0,20 prep.
Currency assumptions based on rates as of 31/3/20, USD:MXN 23.8, USD:GBP 0.81. All data is based on the 2020 harvest, using our modal average coffee; the coffee we bought the most of.
This graph is typical, and represents an 84 point washed coffee. Costs and prices vary by region and by cup quality. Data is based on an average yield of parchment to green beans of 61%.
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Oaxaca
Southern Mexico
Highest elevation: 4,080 MASL
Our long term focus is on improving yields and production.
We work with several communities in Oaxaca. These partnerships help improve the overall profitability and viability of coffee production for producers. After improving the payment system, our focus has been building stable demand from specialty coffee roasters.
Currently, there is little support or formal coffee infrastructure in Oaxaca; Farms are isolated and widespread, and access to finance and agricultural inputs is extremely limited. Because of this, production yields are some of the lowest in Mexico.
Our long term focus is on improving yields and production. We aim to achieve this in ways that are low-cost, easily replicated, and that ensure the first-order upsides are captured directly by those most marginalised.
