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Specialty coffee ripe for a shot of capital

The owner of Brazil’s largest biodynamic farm tells us the industry is failing to catch up with demand because of a lack of financing.

Henriqe Sloper has mileage in the coffee business. The owner and manager of Fazenda Camocim, located in a mountainous region of Espírito Santo, a state in southeastern Brazil, says the farm has been in the hands of his family since 1962.

And yet he reckons what he’s seen lately is unprecedented. His market segment is growing at an annual 15 percent, he tells Agri Investor; his farm’s production has more than quadrupled in recent years. This is because Fazenda Camocim operates in a booming niche of the industry: biodynamic coffee.

Sloper knows why the segment is on a high. “It has a lot to do with preserving nature, notably water, by not using as many agrochemicals as in the past. We just can’t keep doing things the way we are.” Yet, as environmental concerns have come to the fore, so has a surge in consumer demand for more information about how coffee is produced. “They want to know where it comes from, how we’re treating people and animals.”

This latter driver is so strong, he explains, that the rapid growth of specialty coffee is not enough for supply to catch up with demand. Coffee production at large, he reckons, is increasing at a similar pace to worldwide population, or about 2 to 3 percent a year. Big investment in specialty coffee is allowing the segment to be far perkier – but it still represents only about 5 to 6 percent of the whole market. He says growth needs to be double its current rate to sate consumers.

He believes that’s a tall order. “It won’t be an easy target to attain, mostly because sustainable coffee plantations are largely in the hands of family-owned businesses, not big corporations. These need private financing, and support from the government.”

Sloper says investors’ help needs to go beyond deploying cash into farm expansions. Projects are being rolled out, he says, aiming to regenerate forests to make plantations more resilient. “Not only will it strengthen the sustainable aspect of the plantation, but also help us deal with weather changes.” Global warming, indeed, is already taking a toll. “These days we get either no water, or far too much,” he says. Last week, his plantation received more than 200mm of rain in a single a day.

“We need a holistic approach, not just monoculture,” he argues. “Agroforestry will protect against those extremes.”