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“Timor-Leste’s competitive advantages and disadvantages all point to one future: higher value from price differentiation or specialty coffee.”
— Andrew Hetzel, Timor-Leste Industry Association Analysis, for ADB
Issues
Over 90% of the country’s income comes from oil and gas, but this revenue stream is running out
Timor-Leste is not only one of the world’s youngest countries, it was also the most oil-reliant nation on the planet. That was however, until the oil reserves which surround Timor-Leste dried up. Coffee may well be one of the country’s largest exports, but it produces far less than it needs to if it is going to replace oil revenue. It is a race against time for coffee to become Timor-Leste's most profitable commodity.
Poverty is widespread
Following 25 years of conflict that claimed 200,000 lives and destroyed all infrastructure, Timor-Leste became the first new independent state of the 21st century. Today in Timor-Leste, poverty remains widespread; almost half of the children under 5 years old suffer from chronic malnutrition, a statistic that hasn’t improved in 20 years
Improving the coffee sector is of critical importance
Coffee is the second-highest earner for the country after oil, with over a third of households depending on coffee for a portion of their income. Productivity is currently unreliable and extremely low, standing at a fifth of the average seen in Colombia. The profitability of Timorese coffee is both low and volatile for all individuals along the supply chain; from pickers to exporters.
Low Production Levels
Coffee production is low due to many factors. One of the key elements is that Timorese coffee trees are old, which reduces the amount of fruit they produce. The other main issue is that the coffees sell for low prices, which fluctuate all the time.
Right now, coffee is not a crop that people can rely on. This is a damning prospect, as more than one third of Timorese people depend on coffee for income. And in Ermera where we focus most of our current efforts, one quarter of people said that 90% of their income came from coffee.
Timor-Leste is not only one of the world’s youngest countries, it was also the most oil-reliant nation on the planet. That was however, until the oil reserves which surround Timor-Leste dried up. Coffee may well be one of the country’s largest exports, but it produces far less than it needs to if it is going to replace oil revenue. It is a race against time for coffee to become Timor-Leste's most profitable commodity.
Poverty is widespread
Following 25 years of conflict that claimed 200,000 lives and destroyed all infrastructure, Timor-Leste became the first new independent state of the 21st century. Today in Timor-Leste, poverty remains widespread; almost half of the children under 5 years old suffer from chronic malnutrition, a statistic that hasn’t improved in 20 years
Improving the coffee sector is of critical importance
Coffee is the second-highest earner for the country after oil, with over a third of households depending on coffee for a portion of their income. Productivity is currently unreliable and extremely low, standing at a fifth of the average seen in Colombia. The profitability of Timorese coffee is both low and volatile for all individuals along the supply chain; from pickers to exporters.
Low Production Levels
Coffee production is low due to many factors. One of the key elements is that Timorese coffee trees are old, which reduces the amount of fruit they produce. The other main issue is that the coffees sell for low prices, which fluctuate all the time.
Right now, coffee is not a crop that people can rely on. This is a damning prospect, as more than one third of Timorese people depend on coffee for income. And in Ermera where we focus most of our current efforts, one quarter of people said that 90% of their income came from coffee.
Solutions
We are building new cherry processing centres each season, expanding a network of farmers now producing award-winning coffees, and exporting over 90% of the output at prices two to three times the national average.
This infrastructure converts coffee from a fruit to a seed, ready for export to coffee roasteries worldwide. The teams that work in these mills play a vital role in producing the highest quality coffee; and the results have been incredible. Every season so far, the teams have produced coffees that have won the national coffee competitions. There is more work to be done, but through specialty coffee, the future looks bright for Timorese coffee.
Community
Together, we developed a plan for a prosperous future through by systematically solving the diverse challenges laying along the path to selling in the specialty market; financial, legal, technical etc. The first steps included building a community wet mill. Today, hundreds of families connected across Ermera generate at least 75% more profit from coffee compared with selling the old way.
All designed in-house, these processing centres use gravity to move coffee through stages; no double handling, no unnecessary machinery. We drew upon our experience working in many other coffee-producing countries to combine elements that would most likely improve Ermera’s coffee quality given the unique set of challenges facing the region. Each section of the plans use materials that are local and readily available. We used only standard shapes and dimensions already found in the construction of the local houses, to make replication easy and likely.
Transitioning from gathering, to active farming
In early 2018, we met with groups of producers in villages across Atsabe to hear about how the coffee market has served them in recent history. Though there was no immediate consensus on the cost of production, most stated that the price they received for cherries was too low for there to be any profit for investment in coffee (pruning, fertiliser etc), that as a result, they were working in a gathering style rather than active farming.
Those with farms larger than 1Ha explained that the main cost they have each year is hiring help for a few days to pick cherries at a day rate of 3-5 USD. If they pay any more than that, the cost is higher than revenue. Along with volumes and a few more data points, this gave us a rough idea of the baseline cost of production to work from, and a target for profit improvement.
Knowledge share is a key tenet of improving the quality of coffee; and in turn its profitability for those who grow it. To cast this knowledge as wide as possible in Timor-Leste, we produced coffee production training guides.
This was a collaboration with the Market Development Facility and Asian Development Bank to produce a custom 11-part video guide, outlining coffee production best practices in both Tetun and English.
This format helps to educate people on specialty coffee cultivation, and isn’t dependent on a producer attending an event in-person. The videos aired on prime time television, to make good growing practices common knowledge!
Solar off-grid community hubs
We are building 100% solar powered coffee processing hubs in remote Timor-Leste communities, to empower those currently living off grid; through clean, efficient and sustainable coffee processing. This will lead to providing electricity all year round, to support existing industry, and facilitate future local services beyond coffee.
This project is a collaboration between Raw Material, Business Partnerships Platform, Engineers Without Borders Australia, and with support from the Australian Government. The project is aligned with the Timor-Leste Strategic Development Plan that aims by 2030, which seeks to achieve 50% of the country’s energy from renewable sources.
This project is a collaboration between Raw Material, Business Partnerships Platform, Engineers Without Borders Australia, and with support from the Australian Government. The project is aligned with the Timor-Leste Strategic Development Plan that aims by 2030, which seeks to achieve 50% of the country’s energy from renewable sources.
This project is multifaceted and seeks
to transform livelihoods both in and outside of the coffee sector. The three key areas of focus are as follows: to provide renewable solar energy all year round, to replant the land to increase yields and bring market access to these remote communities. Our project aims to improve household incomes through access to the specialty market, whilst simultaneously improving the environment.
Read the full project outline here
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