Coffee Economics of JBM. Part 2

Coffee Economics of JBM. Part 2

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Economics of JBM. Part 2

A view over Kingston, on a rainy day; taken about 4,000 feet above the city.


The grower has picked a few boxes of cherry berries, and off he goes to sell them:-

The next part of the "rip-off": comes in 3 stages:-

At the start of the picking season, ( usually late August, for the earliest of the crop ) the buyers, announce a "price", for a box of coffee; in 2008/9 it was US$50 = J$3,500: in 2009/10 it started off at J$3,500: and then dropped to J$2,200 ( blamed on the world economic crisis ), the next season ( 2010/11 ) the offer is even lower, at just J$1,500 ( on the current exchange rate: about US$18.50 ) with a "promise" of around a J$700 bonus later in the year. As we start the 2011/12 season, the price is up again, to J$3,300.

The explanation, ( 2009/10 ) was that; due to the world economic downturn, the processors have not been given the usual "advance" payments for the coffee, and had lowered their offer price, considerably!! Then, with so much unsold stock, the price went even lower: and only now, are the consequences becoming clear.

Without the money to buy fertilizer, and insecticides; the 2011/12 crop is going to be considerably lower than previous years; and the infection rate of the coffee borer beetle, has been reported ( in some places ) as high as 31%, way up from the "norm" of around 4%.

Poor weather early in 2011, has also reduced the crop ( the weather was too "even"; instead of the usual heavy rains every few weeks, in between warm, sunny periods; it rained too frequently, which caused the coffee to produce few flowers, and many that were produced, failed to "set" ).

This was followed by a very calm "hurricane season", no hurricanes, not even a tropical storm: the lack of any storms, and the heavy rain that they bring, has given the coffee borer beetles, a "boost"; as they do not like really wet, stormy, weather.

The two biggest buyers, around here: pay a "first payment", a cheque you have to collect from them, for between half and 2/3rds the "offered" price ( cheque is there, within 5 working days: but with few of the locals being literate, and having a bank account: 5% fee to cash the cheque!! ). BUT: last season, there was often up to a six week delay in receipt of the cheque, and 2011, it has been an even longer wait.

It got so bad, that the Government had to issue "orders" to the processors, to pay the growers, with a very short time limit, to get the money paid!

Some 5 months later; a second cheque the "interim Bonus payment", appears: and 6 weeks later the "final bonus payment" cheque, well short of the "agreed" price!!

IF I sell my coffee, at a pre-agreed price, how can you call the secondary payments a "BONUS"?????

Then the last, part of the "rip-off": I have discussed this with several of the local growers, and they just accept it, as the way "t'ings a gwaan" over here: and just take the cheques, without question, with no analysis of the details, or what they actually got paid for their coffee. They don't keep the receipts, or check the figures ( it all comes as computer print-outs, and the "Great God";"Computer", can never be wrong!!! ).

The final cheque, is ALWAYS short of the original, agreed price!

Never having come across any "system" like this, before, there are just no comparisons I can make, to better explain it all!!

I pick some cherries, and each evening I deliver them to the buyer, they are measured, and all thrown into the back of a truck, along with, and mixed with, the coffee from dozens of other small growers: I get a receipt, for the QUANTITY, nothing on the receipt, to give any hint as to the QUALITY, of my delivered cherries. ( at this point: quality control, is a simple Yes or No: cherries: acceptable, or Not acceptable!! ).

Six months later, and I get the final "bonus" payment: and six months after delivery: they are able to "assess" the exact, quality of MY cherries, as I delivered to them!

AND, of course, they are mostly of "lower" qualities, and therefore, lower value, and lower payment!!!

The way this "assessment" is done, has finally, become clear: it is all done by a computer: programmed to "adjust" all the prices, to equate to the amount of money available, and has nothing to do, in any way, with the actual quality of the coffee. Two growers sell their coffee, at the same time, and have it all mixed up in the back of the same lorry, and 6 months later, one of them sold "A" grade cherries, the other sold "D" grade cherries!!

They "ripped" me off, for J$125 per box, and if you add in the value of MY money sitting in THEIR bank account, for 6 months ( Jamaican business interest rates, are in the 20%+ range ), put that money in MY bank account: and they have "swindled" me out of almost 10% of the value of the cherries I sold to them!!!

If I was illiterate, and without a bank account, like almost all the local growers, add another 5%, to cash the cheques!!

Might not seem very much, but when done over many hundreds of tons of coffee; adds up to a lot of money!!

It is only with my accountancy training, and keeping all the paperwork, that this becomes obvious!! The locals just moan and groan, and do nothing about it!! I try to explain it to them: just a waste of time!!!


BUT: with scenery like this, any rip-off by the coffee processors, just seems insignificant!! This yellow flower,

"Angels Trumpet" ( Datura ) is only a tad short of 12 inches in length.


Bromeliads and Wild Orchids


Mountains ( Telegraph hill )

There have been several articles published in the Gleaner, over the last few months:-

The two biggest coffee processors, are in serious financial troubles!! Mavis Bank, laid off most of their workers ( the girls who grade the beans, and pick out the bad ones ) 2 months earlier, than usual: rumours are that they have run out of money to pay them! But the usual bunch of brand new cars for the management, still appeared, on time!

Between them ( Wallenfords, and Mavis Bank ) have around 65 to 70% of the export market to Japan ( who take around 80 to 85% of the total crop ). They are both in deep financial troubles; The Jamaica Development bank ( owned by the Government ) now owns 100% of Wallenfords, and 80% of Mavis bank, and are desperately trying to sell off ( oops, I should say "divest" ) both processors.

Wallenfords have accumulated debts in the region of US$20,million, and have made a profit ( a very small profit! ) just once in the last 8 years: yet these incompetents, who run the Company, still get their new cars, and massive annual bonuses!! leaving the farmers/growers, to pay all the bills!!

Late in 2011, we hear that Mavis Bank Coffee Company, has been sold to a group of local businessmen: and that there are still no buyers for Wallenfords.

As we are approaching the end of the crop for this 2010/11 season, the processors are starting to give out their ( provisional ) figures for the seasons coffee crop: presumably they consider that all the growers/farmers who sell them the coffee, are illiterate, innumerate, and stupid!!! ( OK, some of them are! ) and never read the Gleaner Business section, where they publish the figures.

Just see if you can make sense of these figures:- [ apologies for the currency shifts!! ]

[ for Jan/Feb ]

Price per box of coffee, paid to the growers: J$1,500:

total payments made J$18 million ( J$1 = £0.08pence or US$0.12cents ) for 9,228 boxes of coffee:

equates to ( approx ) J$1,950 per box

so where has the balance of J$450 per box gone???

AND, over the season, to date ( these figures are from the Mavis Bank Coffee Factory; for the whole of the 2010/11 coffee season ): J$153 million paid for 93,338 boxes of coffee ( = J$1,640 per box ) but not a single farmer/grower has received more than J$1,500 per box: SO where has the rest of the money gone???

Then, in a separate article, some weeks later, we were informed that the sale price of the green beans has been reduced by 8%, and now stands at US$25.30 per Kilo ( US$11.60 per pound )

Using Jamaican mathematics: an 8% reduction in the sale price, equates to a 50% reduction in the "offer" price paid to the growers, for the coffee!

1 box of cherry coffee, will produce around 7 pounds of export grade coffee: and another 3 pounds of lower grade ( non-export quality ) beans:-

93,338 boxes at 7 pounds per box; sold at US$11.60 per pound: J$644 million

93,338 boxes with 3 pounds sold at ( say ) US$8.00 per pound: J$238 million


A total of J$882 million ( around US$10 million )

The Coffee Board, claim that around 45% of the revenue from the coffee sales, is paid to the farmers/growers.

Current predictions are that there will be a second ( bonus?? ) payment to the growers, of another J$700 per box, adding that into the equation, raises the payment to the farmers by J$65 million, a total of about J$220 million, THEN: using the unique, and highly specialised science of "Jamaican mathematics":-

J$882 million X 45% = ( the payment made to the farmers ) J$220 million!!!

Many months later, and we get a second set of figures: the second "bonus" payment, quoted to be a total of J$81 million ( = J$814 per box ) which, as usual, in Jamaica, "partially evaporates", on its journey to the growers hands, and turns out to be just J$700 per box!!!

I can find little information about their actual sales figures, but from those that I have found, clearly indicate that sales are reasonably good, and there is no great stockpile of coffee, awaiting a buyer.

All these figures are saying to me is: "We [ The Jamaican Development Bank ] can artificially inflate the profits of the 2 processors that we are trying to sell off!! The growers will survive, somehow, and can look forward (??) to better prices in the future!

Recent report in the Gleaner, that some 56 tonnes of coffee has gone "missing", from inventory held ( presumably ) at the Coffee Board, warehouse. Also mentioned in the same article, is that the new management of the Mavis Bank coffee factory, have made a profit of J$37 million, in just the first 3 months of taking over the ( bankrupt ) company. [ J$37 million is a little over 1/4million GBP or US$400,000 ]

Nothing strange there, is there?? Until you do a little calculation: convert 56 tonnes of coffee, into pounds, and divide that number into the $37 million dollars: and like magic the answer comes out to J$300, exactly J$300, with a difference of 0.0001% ( a single cent in $100, or about 1/3rd of a coffee bean in each pound ) which is the "rounding-up" tolerance on using only a 4 decimal point conversion of kilos to pounds.

World coffee trading is all done in Kilos; but internally, in Jamaica, it is still all done properly, in good old English pounds!! SO:- it takes a really "warped" mind ( like mine?? ) to spot the "coincidence" in the numbers!!

The "best theory" available to date; is that this coffee was sold to Mavis Bank, at a J$300 per pound discount, before being shipped to customers, against confirmed orders: and the only losers are the coffee growers, who are ( were ) the legal owners of the coffee, as they only get paid after the coffee is sold and the cash received.

It HAS to be a pure coincidence that the new CEO of Mavis Bank, is also a Govt. Senator, and one of the few people with the "authority" to make such "deals": but, of course, he flatly denies any knowledge of the matter!!

The chairman of the Jamaican Coffee Growers Assoc. one of the members of the board of the Coffee Board, is more than just a "bit" upset, as this money rightfully belongs to the growers: so he is asking all sorts of questions, and of course, is getting no factual answers, just an accusation of having "confused" separate issues.

As a tiny bit of that money should be mine, I contacted him, and gave him the above calculation, to say he was "interested" would be a gross understatement!!

Awaiting further info/feed-back!!

SO:- do you still feel the "urge" to grow your own JBM?? The scenery is wonderful, but the "profits" are poor!!

Best wishes to all, my readers.

Robin Plough, friend of

For questions about JBM, mail to: Этот e-mail адрес защищен от спам-ботов, для его просмотра у Вас должен быть включен Javascript

See also:
A New Year on the Plantation
A Visit to Paradise
A year in the life..What makes JBM, the 'legend' of coffee?
Assessing your coffee (part 1)
Assessing your coffee (part 2)
Assessing your coffee (part 3)
Economics of JBM. Part 1
Everything you wanted to know about the Coffee Board
Growing a coffee plant at home
Growing Coffee. Part 1
Growing Coffee. Part 2
Growing Coffee. Part 3
Growing Coffee. Part 4
Growing Coffee. Part 5
Growing: Part 1
Growing: Part 2
Jamaican food (part 1)
Jamaican food (part 2)
Jamaican food (part 3)
Jamaican newsletter
Living in Paradise: Part I
Living in Paradise: Part II
Living in Paradise: Part III
Processing our coffee (part 1)
Processing our coffee (part 2)
Random thoughts on the end of the world
Random thoughts on the end of the world (II)
Special Report: Coffee Leaf Rust Fungus Part 1
Special Report: Coffee Leaf Rust Fungus Part 2
SPECIAL: Coffee borer beetle in Hawaii
Trivia and other ramblings: part 1
Trivia and other ramblings: part 2
Tropical Storm Nichole
see also

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