Why Yunnan coffee is of low quality and low price: all the good coffee beans have been taken away.

The upgrade of "Yunnan Coffee beans" is bitter

The coffee planting area in Yunnan has increased by leaps and bounds, bringing a series of hidden worries. In order to resolve the contradiction between the rapid expansion of production capacity and brand value, the relevant stakeholders have worked hard to solve it.

In Yunnan, the planting area of "imported" coffee is growing "explosively". Within a few years, driven by the interests of growers and promoted by local governments, Yunnan coffee (hereinafter referred to as Yunnan coffee beans) has become the second largest foreign exchange-earning agricultural product in the province.

For a long time, Yunnan has mainly sold coffee beans, which is lack of matching with downstream processing and has little profit margin. In addition, the planting area of coffee is developing too fast, and the quality is difficult to control, which gradually becomes a hidden worry for development. How to shape Yunnan coffee beans into a high-end brand, expand domestic and foreign markets, and test all stakeholders, including the government.

"after several years of leaping expansion, it is time for Yunnan coffee bean industry to advance in an orderly manner." Hu Lu, deputy secretary general of Yunnan Coffee Industry Association, said.

The Origin of Yunnan Coffee beans

Coffee is the second largest trading commodity in the world after crude oil, and its production capacity is mainly distributed in the tropics and subtropics between the Tropic of Cancer, such as Jamaica in the Caribbean, Ethiopia in Africa, Vietnam in Asia and so on.

In China, the only areas suitable for growing coffee are Yunnan and Hainan. Because coffee is quiet and Hainan is often windy, more than 98% of China's coffee production capacity is concentrated in Yunnan. As an "imported product", the history of coffee bean cultivation in Yunnan began in 1892. In Binchuan County, Dali, there are still more than 30 coffee trees planted by French missionaries.

Since the 1950s, in order to supply the coffee demand of the Soviet Union, Baoshan City, Yunnan Province began to grow small-grain coffee on a large scale. Because of its superior location and climate, the "Lujiang No.1" coffee has won many awards in the global evaluation, which has established the international status of Yunnan coffee beans. Later, due to the deterioration of Sino-Soviet relations, the history of coffee beans in Yunnan was torn apart. Until 1988, in order to disperse the risk of excessive concentration of coffee production in South America (output accounted for nearly half of the world), the multinational Nestle Coffee Company (hereinafter referred to as Nestle) found Pu'er City in the south of Baoshan City as a new world of coffee. Re-break the ground to cultivate China's coffee industry. As a forerunner, Nestl é not only restarted the history of coffee bean industrialization in Yunnan, but also became an unavoidable role in all kinds of entanglements.

Restricted by the factors such as the low awareness of farmers and the small scale of the market, the scale of coffee beans in Yunnan did not grow rapidly for a period of time after the resumption of planting.

In order to break the development deadlock, Nestl é has launched a coffee technical assistance service project in Yunnan Province since 1992 and signed a 14-year agreement with the Pu'er municipal government: Nestl é promised to buy coffee beans at the price of the spot market in the United States. as a guarantee of farmers' interests, there is no cap, and the lowest purchase price is set.

Among the more than 80 acquisition sites around the world, Yunnan's acquisition system is particularly special. In addition, it has turned the large coffee suppliers and state-owned companies that used to supply Nestl é into individual coffee farmers. To achieve this transformation, Nestl é moved its acquisition office, which was originally set up in Kunming, to Pu'er, a production area.

The practice of "knowing China better" has helped Nestl é avoid "disobedience between soil and water". During the 2011-2012 production and marketing season, Nestl é bought more than 8000 tons of coffee beans in Yunnan, 99 per cent of which were produced by individual farmers.

With the deepening of industrialization, more and more local coffee people begin to reflect: if they continue to develop according to the single planting variety bred by Nestle and the purchase price completely follow the market, Yunnan will not be able to get rid of the fate of "coffee raw material base".

Yunnan coffee beans have unique capital: they are mainly planted in the Nu River and Lancang River valleys with large temperature difference between day and night and unique water and fertilizer conditions. Such growing conditions are even better than those in the Blue Mountains region of Jamaica, where top coffee is produced. So a decade ago, Nestl é's top brand, Nespresso, began using Pu'er coffee beans as raw materials.

Compared with Brazil, a coffee giant that uses large-scale mechanical cultivation and dry processing, the quality of small grains of coffee processed by washing in Yunnan is more similar to Colombian coffee. Colombia is the world's largest producer of premium coffee, producing 660000 tons in 2012. All coffee varieties are selected by themselves, produced in the manor mode and sold by the coffee growers' association of the country.

When coffee produced in Colombia is sold at a price of about 25 yuan / kg, Yunnan coffee beans of similar quality can only be sold to buyers for about 15 yuan / kg. In the Yunnan coffee bean acquisition system, Nestl é and Starbucks, which entered the acquisition system in 2011, will acquire the best quality coffee beans at the highest purchase price. But this price still fluctuates on the basis of the price of the New York coffee futures market. Relevant sources pointed out that the quality of Yunnan coffee beans is higher than that of coffee delivered on the New York Coffee Futures Exchange, but Yunnan coffee beans did not get a matching price due to competition from Brazil and other countries.

Awkwardly, after entering the secondary market, the coffee beans left over by Nestl é and Starbucks were bought by local enterprises at a low price, and then processed and flowed into the international market at a low price, thus forming the image of Yunnan coffee beans as "low quality and low price".

"the good beans were taken away, but the image of Yunnan coffee beans was shaped and formed by bad beans." Liu Minghui, chairman of Yunnan Aiyi Coffee, told Caijing.

During the 2011-2012 harvest season, this "raw material supply" model, which accounted for 90% of the total output at its peak, made Yunnan coffee beans suffer. Because prices have fallen too fast, the average income of Li Xiaozhi, a coffee farmer in Baoshan, has reached about 6000 yuan in previous years, which has become less than 3000 yuan. A year later, the situation remained the same: in October 2012, at the beginning of the new purchase period, the purchase price for coffee offered by Nestl é was about 17 yuan / kg, a five-year low.

"No deep processing, no brand, no scale and no market have become the four major bottlenecks hindering the development of coffee beans in Yunnan." Dong Zhihua, vice president of the Yunnan Coffee Industry Association, analyzed that "the development of deep processing lags behind, and the advantage of industrial resources has not been fully transformed into economic advantage, which greatly reduces the ability to resist risks and restricts the development of the industry."

Production capacity "competition"

To solve the above-mentioned "four difficult problems" and achieve further development is a consensus gradually formed in Yunnan coffee bean industry in recent years. Before that, the coffee bean industry in Yunnan was mostly "spontaneous": the scale of the industry was relatively small, and most of the places were treated as sideline, with no well-known brands and no industry associations.

Driven by multiple factors, this situation began to change in 2008: that year, the Pu'er tea speculation bubble finally burst. In order to reduce the losses of tea farmers, the Pu'er municipal government began to encourage tea farmers to switch to coffee. Due to the superior geographical conditions of Pu'er City, coupled with the foundation laid by Nestl é, the planting area of coffee has expanded rapidly.

In 2010, due to the imbalance between supply and demand in the global coffee market, Yunnan small-grain coffee sold at an annual high price of more than 40 yuan per kilogram, with a profit margin of more than 200%. Such a prosperous market began to promote the rapid increase of coffee bean planting area in Yunnan as a whole.

"the market is too attractive. Not only the coffee farmers themselves have greatly expanded their species, but even the real estate owners who are sitting on exorbitant profits have abandoned the real estate and come to grow coffee. " Jin Jihui, general manager of Yunnan 1% Coffee, described the situation at that time. Over the past few years, Yunnan coffee beans have become the second largest agricultural product in the province after tobacco, with an output value of nearly 10 billion yuan.

Coffee farmers and local governments are beginning to find that growing coffee is much more cost-effective than growing tea: in 2012, Yunnan planted 5.8 million mu of tea and produced only 84000 tons. In the same period, the planting area of coffee is 430000 mu, and the output has reached 70, 000 tons.

The gap in land use efficiency "one for ten" has boosted the enthusiasm of all parties to grow coffee.

"if there is one industry in Yunnan that can compete with tobacco in 20 years, it is coffee. If there is an industry that can surpass tobacco in 30 years, it is still coffee. " Xiong Xiangjin, president of Yunnan Coffee Industry Association, made this statement, which is the best expression of the optimistic attitude of the industry.

With the help of "Dongfeng", Yunnan Coffee Industry Association and Yunnan Provincial Development and Reform Commission and other departments jointly formulated and promulgated the Yunnan Coffee Industry Development Plan (2010-2020) for the first time (hereinafter referred to as "the Plan"). Compared with the actual development, the goal set by this "plan" is too cautious. According to the Plan, the coffee planting area of the province will grow to 1 million mu by 2015 and 1.5 million mu by 2020.

According to the statistics of Yunnan Coffee Industry Association, as of the beginning of 2011, the planting area of coffee beans in Yunnan has reached 678000 mu. As of early May 2013, a number of people in the industry quoted Yunnan coffee planting area has reached 1.38 million mu. In 2013, the planned target of 1.5 million mu, which was originally planned to be achieved in 2020, is expected to be achieved seven years ahead of schedule.

In addition to the market prospects, the visible profits and taxes and the total amount of foreign exchange earned from exports have also activated the enthusiasm of governments in Yunnan to develop coffee and become a driving force that can not be ignored in this round of production capacity competition.

The most representative is Lincang City, which was previously unknown in the industry. The city lies between Baoshan and Pu'er. At the end of 2011, the planting area of coffee in the city was less than 70,000 mu, and there was no place in the list of the main producing areas. By the end of 2012, the planting area of coffee in the city has increased to more than 270000 mu. Lincang City has become a coffee market in Yunnan Province, second only to Pu'er, "the speed of development is really surprising." This is how an official from the provincial agriculture department described it.

According to the "Plan" of the Yunnan Provincial Development and Reform Commission, the planting area of Lincang coffee will not grow to 120000 mu until 2015, which obviously underestimates the enthusiasm of Lincang City. In April 2012, the "opinions on accelerating the Development of Coffee Industry" issued by the city pointed out that coffee was listed as one of the ten key characteristic industries in Lincang City during the Twelfth five-year Plan period. Of these, 180000 mu will be built in 2013 and more than 400000 mu will be put into production by 2016.

The execution speed is faster than that. "We will work hard for three years and build a coffee industry base of 500000 mu by 2013. Build Lincang into an important coffee production base in Yunnan and even in China. " Yang Shiping, deputy director of the Bureau of Agriculture of Lincang City, expressed his position.

In order to finally achieve a planting area of 1 million mu, Lincang set up a coffee industry development leading group in various counties and districts. "the city's 25 department-level leaders are linked to 25 key townships, with awards and punishments for completion. From farmers to municipal cadres, they all devote their enthusiasm to the development of the coffee industry, which can be described as the general mobilization of the whole city. " Yang Shiping said.

The original advantageous producing areas naturally do not show weakness. At the end of 2011, the coffee planting area of Pu'er, Dehong and Baoshan, the three major coffee bean producing areas in Yunnan, has been 437900 mu, 182500 mu and 150900 mu respectively.

A year later, Pu'er City retained its position as the first planting area because it overcompleted the "Industrial Development work Plan" of 200000 mu, reaching 650000 mu, and thus successfully won the title of "Coffee Capital of China". Dehong City, which just won the title of "hometown of Coffee in China" a year ago, was squeezed into third place by Lincang City.

In order to achieve the goal, all localities have offered "real gold and silver", including discounted interest rates, seedling subsidies, and so on. For coffee growers with a certain foundation, the government will also repeatedly urge them to speed up the launch of new planting capacity and promise multiple financial incentives. If some companies fail to meet the requirements of the government, the local government will have various countermeasures.

The example of Lincang is the most typical: at the beginning of the industry, the local government introduced the more powerful Yunnan Dehong Hougu Coffee Company. The company, which used to be a raw material supplier to Nestl é, began to create its own "Hougu Coffee" brand after 2008. Due to financial constraints, Hougu Coffee is unwilling to operate on a large scale in debt. "the development plan of 10,000 mu to 1 million mu is really not a leap that an enterprise can accomplish." A person familiar with Hougu Coffee told Caijing.

A local enterprise in Lincang City, which used to operate a sugar factory, was timely introduced into the development plan by the government. After selling the well-run sugar factory, the enterprise invested about 400 million yuan to set up Lingfeng Coffee Company.

According to local planning, by the end of April 2013, the planting area of Lincang City has changed from zero to about 160000 mu. By the end of 2014, it will reach 300000 mu.

Don't wash the mud when the radish is fast.

When the output of coffee beans in Yunnan increases rapidly, a series of hidden worries follow.

In Ganba Village, Yunxian Township, 80 kilometers away from Pu'er City District, there are several land conflicts every month.

Some people who moved out of the village more than a decade ago are now asking to move back in order to regain their land and grow coffee. Such examples are common in the main producing areas of coffee beans in Yunnan.

However, coffee is a particularly "delicate" crop, whether it is planting, fertilization or drying processing, coffee farmers are required to pay great attention. The deficiency of any link will lead to the failure of downstream products. This quality requirement conflicts with the concept of higher profits for farmers.

Coffee farmers changed the original distance of 1.5 meters from one meter to one meter. "nearly 700 coffee trees are densely planted on an acre of land, which is not only difficult to harvest, but will also greatly reduce the quality of coffee." This is how Duan Shaoshan, head of Baoshan Shian Coffee Co., Ltd., describes it.

This is first of all related to the lack of guidance from scientific and technological personnel. "if the annual increase in coffee acreage is only 30,000 to 50,000 mu, the cultivation of talents can keep up. But all of a sudden, it has grown to hundreds of thousands of mu and millions of mu. In fact, it is the interns who are in charge of this industry. " Hu Lu, deputy secretary general of Yunnan Coffee Industry Association, said.

Coffee farmers also do not pay enough attention to seedlings. In the past ten years, a large number of Katim varieties have been developed in the main producing areas of coffee beans in Yunnan. However, the fine varieties such as Ironpika and Bobang have disappeared one after another.

In the small grain coffee, the iron pickup is the closest to the original species, with excellent aroma and sour taste, but not resistant to rust, the need for considerable shade trees, resulting in its low yield and high maintenance cost. Bobang is a secondary species of iron pickup, aroma and alcohol thickness belong to high quality, also have rust resistance, the yield is not high planting weakness.

Katim is a commercial variety with high yield, but the cup and taste are inferior to the former two, which is formed by the cross between the rust-resistant Tim and the Bobang mutant. "if most of the varieties are Katim, then from the source, it will be difficult to guarantee the quality of our coffee." Liu Minghui said.

This problem cannot be solved in a short time. The gene bank of coffee germplasm resources in China is in Yunnan Dehong Hot cropping Institute, although it has 285 germplasm resources, but due to the long-term lack of investment, it has been unable to produce several new varieties with high quality and high yield. By contrast, the Colombian National Coffee Research Center has more than 1100 germplasm resources, which can continuously provide varieties with strong stress resistance.

Due to the lack of uniform production standards, the problems caused in the harvest process will also cause secondary damage to those coffee beans that are originally of good quality. Unlike Brazil, which is mechanized, Yunnan's topography determines that its coffee can only be harvested manually. Take the need for three harvesting workers per mu of land as an example, while 1 million mu of land requires nearly 3 million people of labor.

In the case of not finding enough cheap manpower, in order to reduce costs, Yunnan coffee beans are mostly harvested without distinction. Red and green coffee beans are mixed and harvested at one time.

Coffee beans, like tea, are easy to taste bad, so the processing after picking is very important. "being able to process within 30 hours is one of the secrets of Colombian coffee that is much higher in quality than ours." Yang Zhiqi, chairman of Lingfeng Coffee, said.

After the coffee beans are harvested in Yunnan, coffee farmers generally put them in their yards for 15 days before they are processed into coffee beans, which can easily lead to the deterioration of some coffee beans. In addition, when the yard is not big enough, coffee farmers will choose to dry coffee beans on the road, which is easy to be mixed with stones and sundries. "they simply sift through the coffee beans and sell them. It is very troublesome for an advanced machine to process the coffee beans clean." Liu Minghui said.

In order to reduce the above-mentioned series of problems in the initial processing process, Pu'er City began to formulate measures for the management of the primary processing of coffee in 2013. "our idea is to set up a processing demonstration plant in every county to drive every household to improve its overall quality. If you don't do it well, the image of the whole industry will be destroyed. " Lu Han, director of the coffee office of Pu'er City, said.

"but it is really difficult for these more than 1 million coffee practitioners to learn to separate red and green coffee beans and to be careful not to mix coffee beans with stones." Hu Lu said.

The way of Yunnan Coffee beans

The rapid expansion of Yunnan coffee bean industry urgently needs a breakthrough. First of all, it is necessary to change the fate of simply being the source of raw materials for the supply of coffee beans, but we need to face the challenges of both domestic and foreign markets; in this process, quality control is almost as important as the development of our own brand.

In the short term, the impact of the economic crisis and the bumper harvest in the main coffee producing areas around the world will restrict the price of coffee beans in Yunnan. As the price of small-grain coffee is higher than that of medium-grain coffee mainly produced in Vietnam and other countries, in order to reduce costs, foreign roasters have recently changed their formulations to reduce the proportion of small-grain coffee, thus affecting the international market of Yunnan coffee beans.

In the long run, Yunnan needs to face the mature industrial chain and development model of Brazil, Colombia and other countries. Yunnan coffee beans do not have an advantage now, whether it is to fight for quality or price.

In order to gain more value-added in the industrial chain, rough processing plants in Pu'er and other places have been trying to no longer just dry coffee beans, but to make higher-quality "double A meters".

"but foreigners don't buy, either because they don't recognize it, or because it's expensive." "buyers are not interested in establishing Yunnan's own coffee flavor system," Jin said. "they just want to get the raw materials at the lowest price."

To increase the voice and get rid of the above dilemma is the reason that both local governments and enterprises talk about when they expand the planting area of coffee. But take Vietnam as an example, although it has become the third largest coffee producer in the world, it is only a passive pawn in the industrial chain.

"even Brazil cannot say that it has the right to set prices, and it is almost impossible for Yunnan to gain a say through increased production." Yang Zhiqi, chairman of Lingfeng Coffee, said.

Even so, he sold his well-run sugar factory a few years ago and entered the coffee industry. He has three explanations for this: first, the management of coffee cultivation is in place, and the benefit is good; second, there are limited areas in China that can grow coffee; and third, the sale of international products is not a problem.

In order to seek a breakthrough, Lingfeng Coffee has taken a completely different path from other coffee companies.

Since 2008, Hougu Coffee, once Nestl é's largest supplier of raw materials in China, began to set up its own production line in order to gain more markets. This represents the consensus of the Yunnan coffee industry: to do a good job in intensive processing is an important breakthrough for Yunnan coffee. But at present, whether it is brand building or marketing channel construction, Hougu Coffee has not achieved the desired goal.

Lingfeng Coffee chose the opposite path. Under the premise that the planting area of the company is about to reach 300000 mu, it is clear that it will not enter the lower reaches of the industrial chain in the short term. "under the premise that people, money and things are limited, what I consider is to turn coffee beans into high-quality products through the quality control system." Yang Zhiqi said.

The profit model he envisioned is: coffee farmers sublet land to Lingfeng at a price of 15 yuan per mu per year, Lingfeng is responsible for nearly 5000 yuan of investment per mu, while all coffee beans produced under the supervision of farmers belong to farmers, and Lingfeng buys them at the market price to earn the middle price difference.

To reduce risk, Ling Feng interplanted macadamia nuts in coffee fields. No matter what the market outlook is, basic income can be guaranteed.

Due to the use of standardized planting methods, Yang Zhiqi believes that he can better control the quality of coffee than the practice of individual retail investors in places such as Pu'er, and his coffee beans are not worried about finding buyers.

"I can't control the market price, so I'll do what I can control, quality and cost. If I do these two things, I can guarantee that when everyone loses money, I lose less, and when I make money, I earn more. " Yang Zhiqi said.

This model is not without risks. In addition to the standard implementation is not in place, for Lingfeng, which lacks end products, once the high-standard coffee beans can not find a buyer, their room for manoeuvre is obviously limited.

Many people in the coffee industry in Pu'er also have reservations about the "group army" approach, represented by Ling Feng, to achieve stable quality and find buyers. "the so-called standardized methods are inevitably out of shape in actual implementation." Jin Jihui said.

Jin Jihui, general manager of Yunnan 1% Coffee, believes that if higher purchase prices can be given to coffee farmers, poor quality and confusion in harvesting and processing can be resolved one by one. But the pressure will be transferred to coffee processing companies, in order to give higher prices, one is to make boutique coffee, the other is to be a good brand.

Pu'er hopes to cultivate its own high-quality coffee brand in order to cope with the risks of the market. But the process is not easy, because it will not conflict with companies such as Nestl é. One possibility that locals are worried about is that Nestl é has stopped collecting coffee beans locally before its brand has grown.

"the growth of local coffee enterprises needs the tolerance of Nestl é. If there was some lack of tolerance in the past, I hope there can be more. Let us become stronger and bigger together in the process of symbiosis and common prosperity. " Hu Lu said.

In addition to the industrial chain and brand competition breakthrough, how to expand the domestic market, Yunnan coffee beans will also face challenges.

"large-scale cultivation is like a gamble." Said a leader of the agricultural department in the main coffee producing area.

In 2012, global coffee production exceeded 8.3 million tons. In the same period, the output of Yunnan was about 70,000 to 80,000 tons. Starting from 2013, the 1.38 million mu coffee planting area previously sown in Yunnan will begin to bear fruit one after another.

According to this estimate, the output of coffee in Yunnan will not be less than 160000 tons. It is obviously impossible for these 160000 tons to enter the international market at once. Expanding the domestic market has become the first choice of Yunnan coffee beans.

According to experience, a country's economic level is proportional to coffee consumption. Since 1998, China's per capita coffee consumption has been increasing at a rate of 30% year by year, and coffee shops in large and medium-sized cities are also growing steadily at a rate of 25% a year.

The number of cafes in China nearly doubled from 15898 in 2007 to 31783 in 2012, according to the Comprehensive report on Chinese Teahouse & Cafe consumers and Industry released by Mintel Information Consulting.

"the consensus in the industry is that within 10 years, China's coffee consumption will reach 1 trillion yuan." Hu Lu said.

The problem is: of the more than 100,000 tons of coffee consumed in China at present, less than 30,000 tons are directly satisfied by domestic production, and most of them are met by imported coffee.

"the Chinese people's psychology of coffee consumption is very abnormal. The quality of Yunnan coffee itself is already good, but it is fried and sold directly, and no one wants it. People have to wait for Yunnan coffee beans to be exported abroad and roast other coffee beans of even worse quality before they are willing to pay a high price. " Lu Han, director of Pu'er Coffee Industry Office, said.

As a latecomer in the coffee world, the answer is not clear how Yunnan coffee beans slowly cultivate their own brands and get out of this dilemma. The rapid growth of Yunnan coffee beans, whether to squeeze more market share in the international market, is still unknown.