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For coffee growers outside Gukeng, reality falls short of promise

For coffee growers outside Gukeng, reality falls short of promise

(photo No.57) By Elizabeth Hsu CNA staff writer Twenty-seven-year-old Lin Wen-hung was an office worker until he decided to return home to his rural village in central Taiwan and help his aging parents with their betel nut plantation.
Quickly realizing that growing betel nuts was no longer a lucrative business because of the shrinking domestic market, Lin decided in 2005 to grow coffee trees on the family's land in Nantou County's Guosing Township.
"The golden age of betel nuts had passed, and my parents had both gotten older and could no longer do hard work, " Lin said, explaining what compelled him to change to a different crop.
But unlike many of the agricultural success stories trumpeted in recent months to encourage more people to go into farming, Lin has struggled, and his experience provides a cautionary tale for city slickers lured by the promise of high-end agriculture.
He has learned that without marketing savvy and the right crop, romantic notions of getting back to nature can quickly be dashed by reality.
Lin's interest in growing coffee beans was spurred by the trend toward "Taiwan-grown coffee" that took off after Yunlin County's Gukeng Township successfully organized a Taiwan Coffee Festival in October 2003, the first ever in the traditionally tea-growing and tea-drinking country.
"It gave us the idea that maybe coffee could bring us extra income" since coffee is one of the most popular drinks in Taiwan, the young farmer said.
Using some of his betel nut trees to shade the coffee trees -- which thrive in temperatures ranging from 19-25 degrees Celsius -- would also mean he would not have to cut down his betel nut trees to make way for another crop.
Lin said the shelter provided by the betel nut trees, along with his use of organic fertilizer, resulted in good-quality coffee beans, but as he has since found out, quality is not enough.
Though his harvest of 2-3 tons of coffee beans in 2008 was the biggest of any coffee farm in Guosing -- one of Taiwan's five largest coffee growing areas -- he has so far sold only about one-third of them.
"I still haven't been able to find a marketing channel. So far, I've only been able to sell my product to friends and relatives, " he sighed. "I still have to rely on betel nuts to feed the family." Lin has invested around NT$2 million in seedlings and machines to grow his coffee beans, and plenty more in labor and the time spent caring for the crop, but after a three-year wait for the trees to bear fruit, he has sold only NT$500,000 worth of product to date.
"Marketing is the biggest challenge," Lin acknowledged.
One potential outlet for his coffee beans are the thousands of specialty coffee shops around Taiwan, many of which sell so-called estate-grown coffee, but there are two main barriers to entry for local growers: price and availability.
The Taipei-based Jeanlook Co. imports beans from acclaimed farms around the world, and roasts and brews some of them in their own coffee shop. Taiwanese beans are not on the menu even though the shop would like to offer customers the choice.
"They are off menu. Customers must ask for it and we'll serve it if we happen to have the beans, " says Jeanlook's Tika Lu, who tends to the company's coffee shop and has been deeply involved in the business for the past half-decade.
The problems, he explains, are that Taiwan's coffee output is generally small-scale and unstable, and the beans are expensive.
Not only is it hard to get a consistent supply of a variety of beans from small local suppliers, the cost of buying Taiwan-grown coffee beans is 40 times higher than that of importing raw beans from Ethiopia, Lu said.
Wu Yi-ling, the chairwoman of the Taiwan Coffee Association, agrees that price is a major market entry barrier.
She said the cost of coffee imported from Colombia, a favorite among local consumers, averaged around US$3 per kilogram in 2008, while locally grown coffee wholesales for between NT$500 (US$15) and NT$800 per kg.
Wu attributed the pricing gap in part to Taiwan's high labor costs, and Lin admitted that the cost of labor in Taiwan to pick the beans is at least NT$100 per kg and cuts into growers' profits.
"Although Taiwan coffee is fresher than imported beans, we only make a 20 percent profit when we sell a kilo of beans for NT$500, " Lin said.
Quality is less of an issue, Lu says. Although Taiwan's coffee may not be appreciated by worldly coffee aficionados, it suits the local palate because it is generally mild, plain and without strong characteristics such as a special acidy texture.
What Lin has trouble understanding is why Gukeng's apparent success has failed to translate to other coffee growing regions in Taiwan, such as Guosing, especially since Gukeng is forced to import beans just to meet its own needs.
According to the Gukeng Farmers' Association, Gukeng's coffee output, on 120 hectares according to 2004 figures, accounts for more than 33 percent of Taiwan's total.
That scale of farming cannot possibly satisfy the demand of the millions of people who visit Gukeng every year, Jeanlook's Lu said, a view confirmed by Lin.
"I heard some local coffee shop owners tried to buy Taiwan-grown coffee from farmers in Gukeng but couldn't because so many beans there were imported. There are actually not as many farmers growing coffee there as reports indicate," Lin said.
Yet even with a flood of imported beans, Gukeng continues to draw crowds and attention while Guosing is relatively ignored -- evidence of the importance of properly positioning one's product and an indication that recreational tourism may be the one viable strategy for marketing locally grown coffee.
In 2008, the small town with a population of 36,000 people hosted nearly 2 million visitors, and it pulled in an estimated NT$45 million during the coffee festival that year in the month of December alone, the local farmers' association said.
According to a Taiwan Coffee Association report, the future of Taiwan's coffee market will be defined by reasonable prices, top quality, convenient access, multiple flavor choices, personalization, and uniqueness, which lend themselves to the Gukeng model.
"Let Taiwan coffee become part of the leisure-oriented agricultural business or tourism," said Wu, who advised young coffee growers not to "make coffee growing a purely agricultural business." Growers in Guosing seem to be getting the message. Unlike the Gukeng farmers' association, the Guosing farmers' association is not familiar with coffee, so coffee growers are starting to fend for themselves.
Lin says farmers, recreational farm and hostel operators, and other service businesses in the township are now working together to form a "tour strategy alliance" in an attempt to match coffee with tourism.
Until the plan comes to fruition, Lin will continue to struggle without another viable marketing option, but he has no intention to abandon the crop.
Asked why he continues to grow coffee in the face of its many challenges, the second-generation farmer said that having decided on this course, he is committed to doing everything he can to make the business successful.
He is planning to produce a line of drip coffee bags with homemade coffee to sell to hostels and hotels.
"I won't give up being a farmer, " he insists. "It is my commitment to the family."