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Eyes on Yunnan

From the March 2019 issue.

Three decades of effort from the private and public sectors are finally paying off as coffee companies around the world turn their attention to the Yunnan Province.

Although China has been growing coffee for more than 100 years, and especially so in the past few decades, the reality is that the country is still not widely known as a coffee producer. But the Chinese government, local producers, multinational roasters, industry organisations, and more are working to change that through efforts including greater international promotion, farm level programs and trainings, and investment in infrastructure and other resources.

Meanwhile, the Yunnan Province, which produces more than 95 per cent of the country’s coffee, has helped China quietly become the 13th coffee producer globally and the number-nine Arabica producer, according to 2018 data from the US Department of Agriculture Foreign Agricultural Service.

March’s Pu’er International Specialty Coffee Expo is one such effort to highlight the region’s burgeoning coffee industry and its specialty coffee sector.

“As the region started to producer greater quantities and better qualities, we were looking at how to launch China into the international coffee market,” explains Tom Mitchell, Founder of Seattle-based consultancy Strategic Coffee Concepts, which is helping put on the annual forum and expo with the Yunnan International Coffee Exchange (YCE) and the Coffee Quality Institute (CQI). “We decided to host a forum to try to get some global recognition for what [the region is] doing and share information about the global coffee market with the local  market.”

Similarly, Tim Heinze, who has been working in the local industry for the past decade, wanted to bring more attention to the region, particularly for its emerging specialty coffee market.

“When we started Yunnan Coffee Traders, a big vision for us was to put Yunnan on the map as a specialty coffee origin,” he says, attributing its absence largely to China’s relative newness to the global coffee industry.

Even though European missionaries introduced coffee to Yunnan in the late 19th century, the crop didn’t gain traction until the late 1980s when the Chinese government, in association with the World Bank and the UN Development Programme, and Nestlé devoted time and money to the industry.

Heinze says Yunnan’s youth compared to other producing regions is both a benefit and a limitation.

“Farmers are excited to innovate and experiment,” he tells Global Coffee Report. “Whether it’s growing or processing methods or equipment, they’re definitely willing to hear about and consider different options. We don’t have the ‘this is how we’ve always done it’ mentality, which can be challenging to break.”

Some recent examples in the region have included trialling new cultivars and experimenting with fermentation and honey processing (washed is the most common process currently).

While farmers aren’t locked into tradition, they lack generations of tradition to reference as a young coffee producing region.

“Because it doesn’t have the long history, there isn’t the experience that comes with having third- and fourth-generation coffee farmers,” Heinze points out, “so the government, along with internationally certified training programs, is providing opportunities for exchange of information and dialogue that can bridge that experience gap.”

He doesn’t discredit Yunnan’s centuries of experience in other agricultural products. In fact, Pu’er is renowned for its tea production, a crop that conveniently harvests on the opposite schedule as coffee. But as global coffee demand expands and Yunnan coffee increasingly moves into the spotlight, more farmers have started growing coffee, too.

Investment drives growth
Seeing potential in Yunnan and supporting a government poverty alleviation initiative, Nestlé invested significantly in the region starting in the late 1980s. It started buying Pu’er coffee in 1992 and began providing farm-level technical assistance in 1994. By 2002 Nestlé was buying all of its Yunnan coffee direct from farmers. Over the decades it also developed an experimental and demonstration farm and constructed the Nescafé Coffee Center.

“Nestlé has been a significant player in buying and driving volumes in the region,” says Heinze. “It has also done a great job of providing resources and tools to farmers who want to get started producing coffee.”

More recently, Starbucks has also invested in the region. In 2012, it opened a Farmer Support Center in Pu’er, and last year it dedicated a significant grant to helping farming communities in line with the China Foundation for Poverty Alleviation. After years of work at the farm level, Starbucks released its first single-origin Yunnan coffee in 2017.

Meanwhile, the government continues to invest in bringing attention and notoriety to Yunnan at an international level. In 2003, Pu’er launched the Coffee Industry Federation of China, later renaming it the Pu’er Coffee Association. In 2014, the YCE was created to support trade of Chinese green coffee, as well as develop farmer support programs and infrastructure, and implement quality control and grading systems.

Since the big push in the late 1980s, Arabica production in China overall has been increasing exponentially – nearly 20 per cent per year on average, according to the YCE. At the same time, coffee companies big and small have been flocking to the region.

“Over the past decade-plus we’ve seen most of the major green bean trading companies and import companies of the world moving in either through joint ventures with local companies or independently setting up their own offices,” explains Heinze. “There are more people talking about Yunnan than ever before.”

The potential for specialty
As the greater Yunnan coffee industry expands, so does its specialty sector – though still comprising less than 10 per cent of total coffee production.

Last year, China was the Portrait Country at the Specialty Coffee Association’s annual expo. There, the YCE announced a collaboration with CQI to develop 10 model farms across Yunnan devoted to increasing coffee quality through improved farming and processing practices.

“Results have been promising [so far], with the country’s best coffees earning Q scores that rival coffees from some of the world’s most celebrated origins,” says YCE General Manager Shu Yang. “We believe the proportion of specialty coffee in Yunnan and the linkage to international markets will increase through expansion of the project.”

Some of those roasters flocking to Yunnan are particularly interested in the burgeoning specialty market as they look to new, exciting coffee origins. But some skeptics question Yunnan’s potential in the specialty scene considering the region’s reputation for inconsistency and widespread use of Catimor, a variety that carries the stigma of being a commercial-grade variety and, thus, not capable of specialty-grade quality.

Nestlé is also responsible for Catimor’s dominance in Yunnan, having widely distributed the variety early on, less for its quality and more for its hardiness, high yield, and resistance to disease.

While those characteristics are true and contribute to Yunnan’s healthy production volumes, Heinze also describes Yunnan Catimor as full bodied and creamy with chocolate notes and citrus acidity. It can be a “standout choice for a specialty espresso blend”, he says. “The coffee plays well with others by providing a solid base and fantastic mouth feel, and enhancing the notes of other coffees blended with it.”

What’s keeping Yunnan from achieving large-scale specialty production, however, is largely its reputation for inconsistency.

Strategic Coffee Concepts’ Mitchell says the entire industry has been “plagued by inconsistency” during its brief history because farmers “never really learned how to produce high-quality coffee.” So part of YCE’s work with CQI is to help farmers improve consistency. “Besides teaching farmers how to grow specialty coffee, it’s equally important to teach them how to produce good coffee consistently,” he tells GCR.

Heinze says Yunnan also lacks the quality control standards necessary for consistent, specialty-grade coffee. Yunnan Coffee Traders has spent the past several years working with farmers to improve quality control and work toward producing large volumes of specialty coffee. There is still a long way to go, he says. “However, we continue to drive forward and work to put in place better quality-control parameters and provide training to improve quality as well.”

In addition to farmer training, Yunnan Coffee Traders has implemented China’s first optical coffee cherry sorter to improve efficiency and consistency, and to get more value out of the nearly seven tonnes of cherries that particular mill sees per day.

All eyes on China
Even though there is work to be done to truly bring Yunnan to its potential, the region is drastically further along than it was just 30 years ago – which was on the verge of extinction. According to the YCE, in the 2017-18 harvest season, Yunnan produced 2.3 million 60-kilogram bags of coffee across 120,000 hectares and 1.14 million farmers.

As the government and private sectors pour resources into coffee, multinationals set up shop, specialty roasters look for the next exciting origin, and farmers embrace new ways of doing things, that exponential growth is forecast to continue. This is further supported by China’s strong infrastructure, stable economy and expanses of government-owned land open for cultivation – characteristics that are quite the opposite of most coffee-growing regions around the world.

“China is on the verge of growing a lot more coffee,” Mitchell estimates. “People are finally awakening to the idea that China actually grows coffee, so there’s been a really strong uptick in interest levels.” Simultaneously, China is also consuming a lot more coffee, which has been driving interest at both ends of the value chain. In fact, China now has more certified Q graders than any other country, and the largest number of Starbucks of any country outside the Unites States.

The YCE’s Yang says the Chinese coffee industry is in the midst of a transformation: “Once an afterthought in the global coffee landscape, China is now a burgeoning coffee origin and is poised to play an important role in the green coffee sector in the years to come.”

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