By DAVID RUMBARUMA
General Manager
Awute Coffee Producers
This year the coffee industry is doubly blessed with a 14-year high coffee price and a huge crop never seen for many years.
These blessings are literally very good for the multitude of the coffee growers and many small village-based ground buyers.
Many of them have never ever held in their hands a thousand Kina at any one time in their lives.
This year, once in their lifetime they are able to hold a thousand kina.
What they do with such volume of cash is none of my business but it would be good for them to use wisely to improve their lives, solve many of their daily problems and social obligations, then, save some for the future.
But as is always the case during coffee season, many will turn to squander coffee money on alcohol and gambling.
With these will come many social and community problems and thus, left with nothing to show by the end of the coffee season.
On the other hand, this dual blessing is already turning into nightmare for the middlemen who are the big coffee buyers: the processors and the exporters.
To them, these blessings are in fact curses.
Prices are more than twice that paid for a kilo of coffee around this time of the year in 2010.
One has to spend more than twice the amount to buy same quantity of coffee.
Already the increase in coffee production this year is putting a lot of pressure on the availability of funds and the processing capacities of many processing mills.
Banks in Goroka, Kundiawa and Mt. Hagen are running out of liquid cash very quickly and the risks involved in moving huge amount of hard cash around is costing more money too.
These are readily transferred as added cost to the coffee stakeholders.
Not only are those, the banks already putting minimum limits to how much each client can withdraw at any one time.
This too is having a negative effect going down to the growers.
Processors and buyers cannot get enough to do business resulting in many issuing credit receipts.
All these combined to make doing business in coffee very difficult for the coffee buyers and processors.
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Then again, there are big volume buyers who depend on stand-alone coffee processing facilities to process their parchment coffee into green beans for sale.
This lot of operators depends on each other for mutual benefit in the industry but many of these facilities have old processing machineries that cannot service everyone properly and on time.
These machineries are working full steam non-stop seven days a week and are due to burst anytime. The cue is very long and valuable time is wasted.
The buyers are under pressure to deliver coffee to exporters from whom they got cash advances to buy coffee.
The multi-national coffee exporters are and have been acting as the banks for the coffee industry. They in turn are faced with the mammoth task of forking out more than twice the amount of money into the industry this year.
They too are already feeling the pressure.
This year sees the demise of national aspiration for localising coffee export.
The national coffee export companies are finding it extremely difficult to trade and few successful medium-sized exporters are already foregoing export and are selling locally to the big multinationals.
This in fact is a step backwards and signals a very sad turning point in the life of the coffee industry. Papua New Guinean companies are finding the going very tough and cannot maintain the pace year in year out anymore without government and the bank support.
Such financial and management problems in companies only become very obvious during such a time of high prices and bumper crop.
Coffee processing capacity of the industry is now being tested.
Enga, Western Highlands, Southern Highlands, Chimbu, Morobe and Madang do not have the capacity to process their respective production, while Eastern Highlands has, but the fact is in coffee business most of unprocessed coffee from these provinces are brought into Goroka and Kainantu to be sold. These are already putting excessive pressure on the number of coffee processing facilities in Eastern Highlands.
We have a big quality problem waiting to happen.
If it does, it will kill many businesses and destroy PNG's high standing on the world coffee market.
The danger of the highly distasteful chemical taint (Rio Flavor) reoccurrence this coffee season can not be ruled out in coffees from those areas known to have these problems before.
Here, Coffee Industry Corporation (CIC) must be very vigilant in, to ensure that its quality laws are adhered to by the licensees and the coffee buyers and processors.
CIC coffee inspectors, extension officers and scientists must ensure Rio Flavor does not pop up again. Measures must be taken now to ensure that it does not happen, because if it does, it will definitely:
(1) Mean buyers will refuse to buy our coffee as experienced a decade ago;
(2) Quality rating of PNG coffee will be destroyed that it will be very hard regain; and,
(3) We will lose many good buyers who will be very difficult to get back later.
The industry should be concerned that the highly-sophisticated chemical analysis laboratory funded by European Union and built in Lae in early 2000 for the purpose of carrying out analysis and research on the chemical taint in coffee has gone to the rats, so to speak, and are now of no value.
This asset belongs to the stakeholders, therefore, the facilities must be brought back to function and be put to use as safeguard against this potential quality threat by Rio Flavor.
Finally, companies and businesses involved in coffee that are not careful in their activities will find out by the end of the year that they made huge loses instead of profit.
The danger is great and it is in one's interest to take measures to ensure that sound business decisions and acceptable industry quality practices are employed from the outset to protect themselves to make profit and in doing so also play a responsible role in protecting our industry as a whole against such problems and we can continue to enjoy the high prices that will remain for a long time yet.
Then again, there are big volume buyers who depend on stand-alone coffee processing facilities to process their parchment coffee into green beans for sale.
This lot of operators depends on each other for mutual benefit in the industry but many of these facilities have old processing machineries that cannot service everyone properly and on time.
These machineries are working full steam non-stop seven days a week and are due to burst anytime. The cue is very long and valuable time is wasted.
The buyers are under pressure to deliver coffee to exporters from whom they got cash advances to buy coffee.
The multi-national coffee exporters are and have been acting as the banks for the coffee industry. They in turn are faced with the mammoth task of forking out more than twice the amount of money into the industry this year.
They too are already feeling the pressure.
This year sees the demise of national aspiration for localising coffee export.
The national coffee export companies are finding it extremely difficult to trade and few successful medium-sized exporters are already foregoing export and are selling locally to the big multinationals.
This in fact is a step backwards and signals a very sad turning point in the life of the coffee industry. Papua New Guinean companies are finding the going very tough and cannot maintain the pace year in year out anymore without government and the bank support.
Such financial and management problems in companies only become very obvious during such a time of high prices and bumper crop.
Coffee processing capacity of the industry is now being tested.
Enga, Western Highlands, Southern Highlands, Chimbu, Morobe and Madang do not have the capacity to process their respective production, while Eastern Highlands has, but the fact is in coffee business most of unprocessed coffee from these provinces are brought into Goroka and Kainantu to be sold. These are already putting excessive pressure on the number of coffee processing facilities in Eastern Highlands.
We have a big quality problem waiting to happen.
If it does, it will kill many businesses and destroy PNG's high standing on the world coffee market.
The danger of the highly distasteful chemical taint (Rio Flavor) reoccurrence this coffee season can not be ruled out in coffees from those areas known to have these problems before.
Here, Coffee Industry Corporation (CIC) must be very vigilant in, to ensure that its quality laws are adhered to by the licensees and the coffee buyers and processors.
CIC coffee inspectors, extension officers and scientists must ensure Rio Flavor does not pop up again. Measures must be taken now to ensure that it does not happen, because if it does, it will definitely:
(1) Mean buyers will refuse to buy our coffee as experienced a decade ago;
(2) Quality rating of PNG coffee will be destroyed that it will be very hard regain; and,
(3) We will lose many good buyers who will be very difficult to get back later.
The industry should be concerned that the highly-sophisticated chemical analysis laboratory funded by European Union and built in Lae in early 2000 for the purpose of carrying out analysis and research on the chemical taint in coffee has gone to the rats, so to speak, and are now of no value.
This asset belongs to the stakeholders, therefore, the facilities must be brought back to function and be put to use as safeguard against this potential quality threat by Rio Flavor.
Finally, companies and businesses involved in coffee that are not careful in their activities will find out by the end of the year that they made huge loses instead of profit.
The danger is great and it is in one's interest to take measures to ensure that sound business decisions and acceptable industry quality practices are employed from the outset to protect themselves to make profit and in doing so also play a responsible role in protecting our industry as a whole against such problems and we can continue to enjoy the high prices that will remain for a long time yet.
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