Jacob Frankel X Kaldi Interview

This interview can be found at:  https://www.kaldi.co/blog/2020/04/02/interview-san-cristobal-coffee-importers/

Kaldi:

Jacob - thanks so much for talking to us - could you let us know what you do at San Cristobal?

Jacob @ San Cristobal Coffee:

I work here at San Cristobal Coffee Importers in Kirkland, Washington. And we are the importing and U.S. market access/sales partner of a group of coffee producers in Nayarit, Mexico called Grupo Terruño Nayarita.

On a day-to-day basis, based off of which part of the year we're in, we are either focused on logistical importing questions of making sure that the harvest moves smoothly and successfully from Nayarit to our warehouse in the U.S., or we're working on getting coffee out of the warehouse and connected to roasters all around the U.S. and Canada. We're also working with data with our partners in Mexico, watching the coffee harvest coming in and sending weekly payments of pesos down into Mexico to finance the operation in real time.

One of the owners, Mr. James Kosalos, works in Mexico half of the year. So he's either here in the office with us or he's in Mexico working on data there and managing the group's main office in Tepic, Nayarit.

Kaldi:

And how many farms do you guys work with in Nayarit?

Jacob @ San Cristobal Coffee:

There are about 700 producers who are contributing to the group. It's a little tricky to say who is officially a member of the group because we have a two-year waiting period. If you are a farmer and you live in Nayarit, and you want to join Grupo Terruño Nayarita, you do two years of being part of the group and going to the meetings. And then, after two successful years of agreeing to sell all your coffee cherries to Grupo Terruño Nayarita and attending the monthly meetings, then you can become an official member.

So it makes the number a little bit tricky to say officially, but this harvest, which is going on now, there are 700 farmers. Of those 700, probably about 500 of them are members of Grupo Terruño Nayarita, meaning that they've been doing this for over two years now.

Post-harvest celebration with many of the farmers in Grupo Terruño Nayarita from a few years back. James Kosalos bottom row, fifth from the left.

Kaldi:

So what are the benefits for farmers joining the cooperative?

Jacob @ San Cristobal Coffee:

Grupo Terruño Nayarita is a cooperative, but it's larger than just one community. There are, I believe, six different communities where we work. And within each community, there are either one or multiple smaller groups of farmers. And by being part of the group, your group, say you and your extended family members, maybe 10, 15, 20 farmers who live in one part of the mountains here in Nayarit, you can have access to an entire coffee exporting organization.

So you and farmers in a community far away who you'd otherwise not have contact with are part of the same group. You're not competing with each other. You're not worried about how much those farmers in that community are getting paid for their cherries. You're agreeing to work towards something bigger and you have access to organic certifications and data and a quality management system, which is really, ultimately, the most powerful tool members of Grupo Terruño Nayarita have, is the quality management system that we implement and run.

Producer members of Grupo Terruño Nayarta review 2018 harvest data at a local meeting in preparation for the start of operations in the 2019 harvest. Presidio de los Reyes, Nayarit.

Kaldi:

What is the quality management system? Is that regarding processing or growing?

Jacob @ San Cristobal Coffee:

Yeah, it involves all aspects of the production chain and is called FincaLab®; essentially, a portable laboratory that comes with a sample huller and a sample roaster and a space for cupping. In addition to that, it's a series of software that one can use to analyze a harvest as it comes in and make strategic decisions about blending and about combinations of different lots from different communities and different producers to ensure that your final product is something that's the most valuable it can possibly be. (http://FincaLab.com/home.html)

Anybody who's in the system, any farmer who's contributing coffee to the group, knows that the final product, down the chain of command, will be as valuable as possible so they can earn the most possible for their crop.

Anybody who's in the system, any farmer who's contributing coffee to the group, knows that the final product, down the chain of command, will be as valuable as possible so they can earn the most possible for their crop.

In order to understand the relationship between San Cristobal and Grupo Terruño Nayarita and the way that the quality of this coffee is managed, there's this other party you need to understand, which is called CAFESUMEX. CAFESUMEX, or Cafés Sustentables de México, is our sister company in Mexico.

San Cristobal being based in the United States gives us access to American banks and thus easier access to capital than a small company in Mexico typically has. We can send money to Mexico to run our sister company CAFESUMEX who is in charge of making sure that this quality management program is implemented. There's 10 staff in Mexico who work for CAFESUMEX. There’s a lawyer, an accountant, and a harvest manager and an agronomist, and a number of other folks who run the day-to-day operations and the dry mill. And they're in charge of implementing the quality management program.

So the farmers in the group, their job is to grow the healthiest possible coffee plants that they can and pick only the ripest cherries sequentially, and deliver those cherries when it's convenient for them during the harvest. At which point, the quality management sister company takes over and moves those cherries through our system, through the wet milling stage, the drying stage, transportation stage. And then, the dry milling and exportation stage. So I guess you could take a step back and say our goal here is to make a very, very, very efficient production of coffee for many producers who otherwise wouldn't have access to the specialty market.

Kaldi:

Awesome. And so, when James started the company, I think 25 years ago, what motivated him to work in that region? Was he just a coffee nerd, or what's the history there behind that?

Jacob @ San Cristobal Coffee:

James who founded the company, the story goes that he had gone down to Nayarit for the opening of a coffee roaster in Puerto Vallarta and it was a friend of his who was opening the roastery and he didn't know much about coffee. James got very interested in the different flavors of coffee in Mexico, because this roaster wanted to showcase the differences between, say coffee from Nayarit, coffee from Chiapas, coffee from Veracruz, coffee from Oaxaca. And one thing led to another, and 25 years later, what started with maybe a purchase of one pallet of green coffee air freighted from Nayarit to Seattle has now become a year by year multiple container quality management system that, as I just mentioned, involves 700 different farmers.

Kaldi:

Awesome. I'm just curious on some of the price issues coffee's had. Maybe you can talk about that. Or is that?

Jacob @ San Cristobal Coffee:

That's the focal point of our goal, right, is create the most value for coffee that we can. But coffee pricing is a very, very complicated situation, as most people in the industry, here in the specialty coffee industry are aware. We're faced on one hand with the brutality of the C Price, with the commodity price of coffee, which is extraordinarily volatile. And day by day changes, year by year, is not something that one can rely on for their income. If you're planning for your next harvest or you're planting trees for harvest five years from now, you don't know if a commodity value is going to be profitable at all.

On the other hand you have super specialty coffee and people looking to try new flavors and willing to pay premiums for strange and experimental new processing methods and varieties, which is risky within itself, because consumer habits in the specialty coffee world seem to shift season by season.

Our goal, as I mentioned is to make sure producers have the incentive to grow the healthiest coffee trees, and subsequently, the healthiest coffee cherries that they can, and pick those coffee cherries in a sequential manner where they're only harvesting the ripest, reddest fruit.

Our goal, as I mentioned is to make sure producers have the incentive to grow the healthiest coffee trees, and subsequently, the healthiest coffee cherries that they can, and pick those coffee cherries in a sequential manner where they're only harvesting the ripest, reddest fruit. And to do that, during the harvest, we pay per kilo of cherry at our reception stations, which are in the same communities where the coffee producers live, the going price for cherries, which is somewhat dependent on the harvest. This past harvest, for example, the going price of cherry was somewhere between seven and nine pesos per kilo of fresh cherry.

In addition to that, we pay a premium for how ripe the cherries are. The FincaLab quality management system includes a test conducted by someone receiving cherries from a farmer, where they take a half liter of cherries and they dump it in some water and they count out how many float. And they count out how many green, unripe cherries there are, and they count out how many semi-ripe or immaduros cherries there are. And they plug those three measures into a very simple calculation. You get a number and that number reflects the quality of the cherry. And so we pay a premium based off of that number and this ensures that a producer can earn a lot more by picking only the ripest, reddest cherries.

We try and create these premiums in such a way that a producer can double their income by always picking the best cherries. So if a producer consistently gets the highest category in our numerical system of measuring cherry ripeness, and they pick their entire harvest in that manner, they will earn double the running price of coffee, which as I mentioned last harvest was somewhere between seven and nine pesos per kilo of fresh cherry.

The other thing I should note is that part of being in this Grupo Terruño Nayarita and having access to our quality management system is we're promising to buy your entire harvest worth of cherries. The good, the bad, the ugly, all of it. So you don't have to have any fear of not finding a buyer or experience pressure to pick everything all at once because the price is right. We're promising to buy the entire harvest, which is a significant risk for anybody.

Sra. Anacleta, treasurer of the local society of producers in the community of La Yerba, stands in front of a day's harvest. Each sack is filled with cherries from a different producer. They are arranged according to certification and quality. Sacks on the far right are women producer owned. And “Calificación”1, 2, and 3 refer to cherry ripeness quality.

Kaldi:

Are you then selling that subpar coffee too... I mean, let's say I come in, do they get kicked out of the cooperative if they keep doing lower quality production, or is that how-

Jacob @ San Cristobal Coffee:

Nope. Nope. So our goal is to make sure that the farmers have the tools they need to improve the quality of their coffee. Right? As I mentioned, can you have this brutality of the C Price on one hand, and we have this elusive fascination with specialty grade coffees on the other hand. And we're trying to help producers create quality coffee that they can sell, that we can bring to the U.S. and sell to roasters who are appreciative of it.

In order to do that, we know that the most important step a farmer can take is picking ripe red cherries. And that's why we have premiums. So, like I said, a producer can double their income by picking sequentially, as opposed to strip picking or picking early. But a producer's not going to be kicked out of the group if they are struggling to get cherries picked correctly or struggling with their land.

And farmers are generally part of the community. In this part of Mexico, the average farmer has maybe a hectare, a hectare and a half, maybe even half a hectare of land. And that's not that much coffee, all things considered. These communities tend to be very familiar in nature. Community members want to help each other out. If a farmer struggles for one season, the local cooperative is not going to vote to kick them out just because their coffee wasn't very good one harvest.

Kaldi:

Awesome. And then, is all the picking of the cherry done by hand or are they using mechanized processing? Or-

Jacob @ San Cristobal Coffee:

No, no, no. So here in Nayarit, the coffee farms are very difficult to reach places. They tend to be up in the mountains, on steep hills, almost always inter cropped with other fruits and vegetables, or in many cases, under the shade of the primary growth and natural canopy. And this is not territory where mechanized picking can happen.

Jacob @ San Cristobal Coffee:

In addition to that, given the small size of most of these farmers, the small scale that the farmers run on, no one has giant Brazilian picking tractors. It's all by hand.

Kaldi:

Cool. So, I mean, that also requires them to get paid more, I guess, and raise the ultimate quality for the price of the product, if you're competing against Indonesian or Vietnamese or Brazilian seed grade coffee.

Jacob @ San Cristobal Coffee:

Yeah.

Kaldi:

Are the farmers in Nayarit, I don't know much about Nayarit, but are they from indigenous communities or are they, what's the typical-

Jacob @ San Cristobal Coffee:

It really varies. As I mentioned, we're working in six different communities. Each of those communities is fairly far from each other. So our office, the office where CAFESUMEX is headquartered. Right, CAFESUMEX, our sister Mexican company, is in the capital of Nayarit, a city called Tepic. Tepic is a medium-sized Mexican city with a population of about 250,000 people. And there is a regional economy here. There are lots of offices and apartment buildings, and that's where the staff live. It's also the center of the state's agricultural economy. So from Tepic, you can drive two hours and reach any of the communities where coffee is grown. So even if communities are quite far from each other, Tepic is a centralized spot for them.

Jacob @ San Cristobal Coffee:

To answer your question, we have on the one extreme, a community that is very indigenous. The community is called Presidio de los Reyes and the people who live there, they speak the language Cora, which is similar but mutually indistinguishable from the Huichol language. And both Cora and Huichol are indigenous groups in this part of Northwestern Mexico.

Jacob @ San Cristobal Coffee:

The farmers in this community, many of them don't speak any Spanish. They just speak Cora and they live a very different lifestyle than farmers in a different community maybe three hours away from Presidio de los Reyes, who speak Spanish and don't necessarily identify as indigenous. And then, we have communities and farmers who, some of them speak a different language I mentioned, Huichol.

Jacob @ San Cristobal Coffee:

I guess what I'm trying to say here is that the communities where we work, there are indigenous communities, there are non- indigenous communities. Each community has a different group of farmers who live there and their coffee tastes different, because of the different varieties that are planted, because of the different terroirs, because of the different elevations. So Nayarit, even though it doesn't represent a large portion of the total coffee produced in Mexico, there's still a lot of local diversity.

Kaldi:

Wonderful. That's cool. I mean, it sounds like a very rich region. What are the biggest challenges? I mean are therecrime issues? I mean, every time you hear about avocado farms and lime farms interacting with the Mexican drug cartels, is there any of that issue with coffee, or not?

Jacob @ San Cristobal Coffee:

No. This is certainly a region that, if you follow the news cycle, you hear about in this very negative manner. And certainly, there can be lots of violence in this part of Mexico. But our goal, and as you noted, San Cristobal has been working in this operation for almost 25 years now, is to stay out of trouble. And we keep a low profile, we don't drive fancy cars, and ultimately, we're doing good. We're helping farmers who live in these communities, where potentially this remote narcotic trafficking could be taking place. But we're not at odds with any of these groups. We're not interacting. We don't see anything that's worrisome or problematic. And I think that's mostly because we're helping farmers, right? All we're doing is we're an agency that's allowing farmers to have access to higher prices for their crops.

Kaldi:

I only ask because I know that in Colombia in certain regions, it's hard to get the people to grow coffee. They switch to cocoa or other potentially more lucrative agricultural products based on that. So I'm just, if maybe that has an effect or it doesn't in Nayarit, you know what I mean?

Jacob @ San Cristobal Coffee:

Anecdotally, I haven't heard of any farmer being fed up with coffee and wanting to plant ... of course, cocoa doesn't grow in… I guess growing poppy would be the equivalent narcotic that some farmer would grow here. And I have not heard any anecdote like that.

They have very small farms and they almost always, and we try and encourage this as much as we can, have more than one crop. We don't incentivize coffee growers to just grow coffee. We encourage them to grow as many crops as they can, because coffee is so volatile. If you rely solely on coffee for your income, you may have some great years, but you might have years that are seriously unprofitable.

So most of the farmers we work with, they're growing avocados. And in addition to that, they have coffee growing in the shade of their avocado trees. Or they're growing pineapples. And in the same space where they have pineapple plants on the ground, they have-

Kaldi:

They have coffee.

Jacob @ San Cristobal Coffee:

They have coffee growing. Or they have citrus trees or mango trees or banana trees, or some combination thereof, depending on the local altitude, right? Because bananas and mangoes are growing at a lower altitude, generally speaking.

Kaldi:

How do you guys work and going back, so let's go on the other side. On the roaster side, how do you guys work with the roasters then to promote these coffees from Nayarit? On the U.S., on the buying side?

Jacob @ San Cristobal Coffee:

Yeah. How do we work with the roasters?

Kaldi:

Yeah. How do you get them educated on your product? Do you always go to salespeople, obviously?

Jacob @ San Cristobal Coffee:

Yeah, we're trying, to the extent that we can, have the coffee speak for itself and have all the information you need to trace the coffee to its origin and learn about its origin with the coffee when you receive it. So we have this website called trackyourcoffee.com, which has been in operation since 2004. It's been recently renovated and looks much less like a mid- 2000’s website than it did in 2004. But we have bag tags that are sewn onto our 69-kilo henequen sacks in the dry mill in Nayarit, and on those tags have human readable barcodes and QR codes and a serial number. (http://trackyourcoffee.com/)

Jacob @ San Cristobal Coffee:

So a roaster who receives his bag, who buys a bag of coffee from Nayarit, from San Cristobal, can scan the QR code or enter the lot ID into trackyourcoffee.com and see exactly which sort of coffee they bought, and which communities in Nayarit contributed to it. And they can read stories about the mills in Nayarit and the farmers that are part of the societies in the areas where we work. So they have all the information they need to learn about Nayarit and learn about coffee production in Nayarit, and learn about Grupo Terruño Nayarita and the farmers therein, just by buying the bag of coffee, receiving it at their roasting space and scanning the QR code, or by looking at the website on their phone.

Kaldi:

Yeah, awesome. I was actually playing around with it and it was amazing to see the pictures of the farmers and the mill and the huller and the dry mill. And I think it's pretty awesome.

Jacob @ San Cristobal Coffee:

One really cool note about trackyourcoffee.com and the pride that we have in our traceability program is that this project and the data that goes into it is really the result of the quality management system. It was not the goal. We were trying to make the coffee better in that area.

In order to do that, we needed to figure out exactly who's part of the group, what their names are, what local society they're part of, and how many kilos of cherries they’re harvesting during the year. How the cupping scores, later down the production line, those farmers have, and what flavors are in them and how to mix them together. And then, how to pay the farmers based off of how much they contributed to the lot, and all that data and all the work that goes into creating a system that can carry that data forward all the way to export, so you can pay farmers fairly. That data was so vast and useful that we were able to create the trackyourcoffee.com project with it to showcase all the work that went into creating good quality coffee for export.

Kaldi:

No, it's awesome. I saw you guys doing the cupping as well with the, I think there's an intern from Ethiopia, I think. And you, and I think there's a Mexican guy, I saw that on the website as well.

Jacob @ San Cristobal Coffee:

Yeah.

Kaldi:

So it's awesome.

Jacob @ San Cristobal Coffee:

Yeah, and that's another point is that, FincaLab, the quality management system, it's goal is to be replicated in different coffee producing organizations to use the same strategies and mentalities that we have implemented successfully in Grupo Terruño Nayarita in other parts of the coffee producing world. So we've had interns come from Ethiopia. We've had interns come from Peru. We currently have an intern from the Czech Republic. Though, in the case of Peru and Ethiopia, the interns come from families that are part of coffee producing communities, or coffee producers themselves, and are trying to bring back strategies to improve their quality. Yeah. It just shows our goal here to spread efficient quality management for coffee production, not just throughout Mexico, but throughout the coffee producing world.

Kaldi:

And obviously, for the roasters, it helps them sell higher priced coffee as well to consumers who might not understand why a bag costs $20 or, et cetera.

Jacob @ San Cristobal Coffee:

Yeah.

Kaldi:

It's interesting because there's some farmers here in California who've been growing coffee, which is extremely expensive, and Hawaiian coffee in the U.S. as well. But the level of data you guys have is incredible, actually, if you compare it. You know what I mean? So it's really interesting and welcome, I guess, in 20 years of experience.

Jacob @ San Cristobal Coffee:

Right. We certainly appreciate that observation. And in an era when there's so much fascination and intrigue around coffee traceability, we've been doing this for so many years and we're trying to get the word out about what we've been doing successfully for so long. And it's hard, because roasters, they're very proud of the coffee they have. And lots of people are out there who want it, want to showcase the coffee that they're producing or they're bringing into the U.S. or other countries. The focus is definitely on traceability, which is exciting. And it's definitely interesting to see the industry looking at traceability as an added value, as opposed to something that maybe just was interesting to a few people.

The focus is definitely on traceability, which is exciting. And it's definitely interesting to see the industry looking at traceability as an added value

Kaldi:

Have the farmers been able to enjoy ... have their palates changed, you've found, with more education? Because we have a funny story of someone who went to Panama. He's a coffee PhD botanist and he was in Panama educating some geisha growers on certain things. And he's like, "This is incredible $300 a pound coffee. We're going to sell this in Japan." And all the farmers there just were, they'd loved Nescafe. They thought that was the pinnacle of ... They had-

Jacob @ San Cristobal Coffee:

I've heard similar stories and more anecdotes a number of times. Definitely, it takes so much to set up a cupping space and a sample roasting space in a coffee producing part of the world or in a community where a lot of small farmers live. But we have, over the years, offered classes to farmers, and certainly, those farmers who are interested in cupping have taken classes and learned about the quality of their coffee.

One future concept that's in the works right now with CAFESUMEX and Grupo Terruño Nayarita is having a roaster in Mexico in Tepic so we could showcase a production roast of the coffee that we're producing and exporting there, within Nayarit. And they're showing interest for that. And hopefully, that project will come to fruition soon. We've actually had great success recently selling coffee in Mexico. So this past year, a big chunk of the specialty coffee that normally was exported to Europe or Australia or the United States went to roasters in Mexico.

Kaldi:

Yeah. No, there's so many great roasters in Mexico city and I think in the major cities now coming out of Mexico, all over the world. So that's awesome.

Jacob @ San Cristobal Coffee:

Yeah. One particular roaster who bought some of Grupo Terruño Nayarita's harvest was in the city of Morelia in Michoacán called Cafe Europa. And they were really excited and we worked with them to blend a lot that met their flavor profiles and interests. We showed them what coffee we had in inventory in the dry mill and which communities it came from, and they decided they wanted a washed coffee and they wanted to have certain citrus characteristics. So we worked with them to blend up 10 bags and shipped it to Michoacan. And stuff like this, I think there's going to be more and more of that in the coming years. Internal Mexican demand for specialty coffee.

Kaldi:

Awesome. As we wind down, what are some of the most exciting things you guys are excited about, and then any challenges you are really working on, or?

Jacob @ San Cristobal Coffee:

Our next harvest, we're probably between four and six months away from actually bringing it in. But here we're, of course, always excited for what the next harvest is going to be, how it will differ from the last harvest. The next harvest is being picked now, and it is a very cold harvest and the days are unusually overcast, which means that the cherries take more time to ripen on the plants, which seems to be affecting the flavoring and making the coffee a little bit sweeter than we were used to. And so, I'm excited to see how a colder harvest will affect the taste of the beans.

Kaldi:

Awesome. And then, what are some roasters you guys are working with here in the U.S. that people can get and explore these coffees with?

Jacob @ San Cristobal Coffee:

We have a number of roasters who we've been working with for a long time and we have roasters that are fairly new to us. Off the top of my head, here in the Seattle area, Velton's Coffee has been showcasing our natural process coffee from Nayarit for many, many years. And he does a great job roasting that.

http://www.veltonscoffee.com/mexico-nayarita

Over in Florida, the other side of the country, Strong Tree Coffee Roasters in Gainesville does a great full-city roast of our organic washed coffee from a couple of communities that produce organic coffee in Nayarit.

Recently over in North Carolina, Little Waves Coffee Roasters. We donated a bag of coffee to the Grounds for Health auction, if you're familiar with that. A women’s-produced natural from the community of La Yerba. And Little Waves Coffee Roasters bought that and then they ended up procuring the entire lot for themselves.

https://www.kaldi.co/coffee/6574/tierra-de-mi-padre/

So those are three roasters off the top of my head that would be great starting points to explore the coffee.

Kaldi:

Great. Jacob, is there anything else you'd like to add?

Jacob @ San Cristobal Coffee:

Certainly, I should mention that in addition to bringing coffee into the U.S., we work with importing partners in Australia and in Europe. So each year, Grupo Terruño Nayarita sends a couple containers to those two continents as well. At San Cristobal, here in Seattle, our goal is to both facilitate those container sales for Grupo Terruño Nayarita and to do the direct roaster market access for everything else that we bring into the U.S.

Kaldi:

Nice. And then, Jacob, how do you usually drink your coffee?

Jacob @ San Cristobal Coffee:

Ooh. Good question. You ever heard of the Cowboy Joe coffee brewer?

Kaldi:

Maybe describe it and then I'll know what it's like.

Jacob @ San Cristobal Coffee:

My favorite way to make coffee is on the Cowboy Joe. It's similar to a V60. You use a filter and it's plugged up and then you brew it for a couple minutes…

Kaldi:

Oh it’s like a V60, but it stops and then you pull the plug to get it out. So it immerses it a little bit longer? Nice.

Jacob @ San Cristobal Coffee:

Yes, exactly. I mean, I'm always changing how I'm brewing my coffee, but it's the current brewing method that's in vogue for me.

Kaldi:

I really appreciate your time. I think people underestimate how much work coffee is to grow, and I think it's awesome that you guys are full circle helping the farmers, helping the roasters. Quality is always in vogue, and the higher the quality, I think people are always willing to learn and spend on that. So I think it's important to share that story. Thanks again!