Ecuador Emerges as Lauded Andes Origin

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By Bethany Haye

Ecuador is a small coffee producing country that has come into focus lately as an emerging source of high-quality, high-grown specialty arabica.

Located in the northwest of the South American continent, it is blessed with exceptionally high biodiversity, very pure water for washing, high-altitude Andean plateaus, coastal plains, ample shade and rainfall, and rich volcanic soil. Roughly half of Ecuador’s coffee is produced at lower altitudes along the Pacific coast, particularly in the Manabí region, with superior quality arabica grown at higher altitude in the foothills of the Andes and Sierra mountains.

Many of the country’s small plantations, generally family-owned and only 1-4 hectares in size, are old and neglected. Lack of access to financing has hampered investment in rejuvenating plantations and many cultivars are in need of complete renewals. An underdeveloped supply chain and low-grade infrastructure have hampered production for decades.

The upside to the lack of development is that pesticides and chemical fertilizers have been out of reach for most farmers, making the product quasi-organic. Traditional cultivation has not had a negative effect: At the beginning of the 2019 coffee year (CY), farmers reported a low presence of pests and diseases.

Overall, Ecuador’s coffee sector is a mix of domestic bean production and processing imported beans for the soluble industry which accounts for most exports. Production of processed coffee is 60% arabica and 40% robusta with combined green bean equivalent (GBE) exports estimated at 75,000 60-kilo bags for marketing year (MY) 2018/19; 410,000 bags of soluble coffee (about 84% of total exports), and some 64,000 bags of roasted-ground coffee (highland and lowland). Germany, Russia, and Colombia were the top export markets in CY 2017 and CY 2018.

Coffee was introduced in Ecuador in 1846 and took off in the late 1920s. It was a main export crop through the 1970s. But production dropped greatly due to the price crises of the 1990s and in the early 2000s. Thousands of young growers left the sector, many emigrating to the US and Spain, leading to a freefall in the country’s coffee production. In fact, output fell so drastically that Ecuador now imports more than it grows or sells. Meanwhile, the huge worldwide soluble-coffee industry continues to demand a high volume of very inexpensive robusta which Ecuador once was able to supply, and which had led to an internal industry set up for processing beans into soluble. In order to keep that sector going, and to meet domestic demand, Ecuadorians buy cheap robusta from Vietnam while selling their own better-quality green robusta at a higher price to neighboring Colombia for its instant-coffee needs. So today, Ecuador both imports and exports beans and exports soluble coffee.

The entrance of new lower-priced producing countries has put Ecuador in a dilemma. While helping its processing industry to stay afloat, this has also coincided with a severe loss of competitiveness in the growing sector from the 1990s on. In the last 10 or so years, Ecuador also lost its competitive edge in processing imported coffee, due mainly to high transportation costs between Ecuador’s main port cities of Manta and Guayaquil to the regions where coffee processing plants are located; the excessively high cost of electricity and water in Guayaquil, and unstable and inadequate electricity and water supplies in Manta.

As a result, Ecuador’s soluble sector, and exports of soluble coffee have fallen by half in the last few years.

Until 2015, the Ecuadorian Coffee Council (COFENAC), a public-private organization was responsible for coffee policy and trade and assisting the national sector. In an attempt to re-boot the industry, the Ministry of Agriculture and Livestock (MAG) took control of coffee policy and technical assistance programs in 2015. MAG “continues to assess ways to promote coffee production through technical assistance, pruning campaigns, provision of inputs, and full renewals of old cultivars.” The other main industry support group is ANACAFÉ, the National Association of Coffee Exporters.

The good news is that USDA’s May 2019 report finds Ecuador’s coffee production in MY 2019/20 (April/March) forecast at 275,000 bags (60-kilo bags) on a GBE basis, it is up 20,000 bags or 8% higher from the MY 2018/19 estimate. This is based on expected results of efforts to recover old plantations and the replacement of old trees and cultivars with new ones in recent years. FAS Quito is maintaining its MY 2018/19 coffee production estimate at 255,000 bags.

Ecuadorians edge toward quality

The great majority of internal consumption is still soluble coffee, made with hot water or hot milk poured over one of the many products in industry leader Grupo Noboa’s, “El Café” range. Another version is made by replacing crystals of soluble with esencia de café, a thick, dark liquid coffee concentrate poured into a cup of hot milk. There is also a traditional brewing method using a cloth filter or “chucho”. But preferences are changing and a market is slowly developing for better quality roasted ground coffee as Ecuadorians join in the coffee culture started in neighboring Colombia and Peru. Specialty roasters and outlets such as Café Vélez, Galletti, Cafecom, El Español, Sweet & Coffee, Isveglio, Cyril, Corfú, and Colombia’s Juan Valdez are sprouting in major cities. And producers have recently begun roasting their own coffee and selling it internally, adding to the development of domestic consumption both qualitatively and quantitatively.

Starting in the early 2000s, coffee producers have been investing in good Arabica varieties and improved practices. Rather than the traditional method of waiting for the coffee to dry on the tree as café en bola, they are picking ripe and implementing better processing, as well as using more sophisticated marketing strategies. Increasingly, single-farm, single-variety, and better-processed lots are sold internally to new mills, importers, exporters, and roasters.

In fact, domestic consumption has increased despite the slowdown in the Ecuadorian economy. Total domestic coffee consumption in MY 2019/20 is forecast at 249,000 bags GBE, up 9,000 bags or 4% higher than the MY 2018/19 revised estimate of 240,000 bags, for a per capita consumption of about 0.87 kilograms per person.

Ecuador has taken a bold step in deciding to concentrate on its very high-quality specialty coffees and even has developed a new cultivar, Sidra, developed from Bourbon and a Typica variety with unique fruity, floral notes. When grown at higher altitudes and carefully processed, these coffees are helping to bring Ecuador into the specialty-producing spotlight, with a flavour profile described as concentrated, juicy and complex, with a lot of sweetness, jam notes, and medium acidity.

Ecuador’s specialty sector made headlines in 2018 when the winner at Taza Dorada sold at auction to the Korean, Momo’s Coffee, for $29 a pound, the highest price ever for locally grown coffee. Green coffee from the Galapagos Islands can cost between $5 and $11 a pound - and that’s the farmgate price. Lava Java’s whole roasted beans retail for $16 a pound.

But foreign exporters who want to join in this renaissance are finding it a rocky road: low production and low incentives for growers make sourcing and buying fine coffees from Ecuador a constant – and expensive – challenge.

So, is this burst of high-priced specialty product the beginning of a trend or a mirage? Top specialty Ecuadorian coffee is very expensive, and expensive coffee is harder to sell. Is the high price justified by some holy grail, caviar-of-coffee aura – as ANACAFE, states forthrightly on their web page, calling it “the best coffee in the world” – or is it simply down to high production cost and low output, your basic supply and demand?

And, most importantly, will the major upsides – unique high-quality coffees that are certified organic, bird-friendly and sustainable; dedicated and educated growers and ideal storage conditions in Quito – outweigh the many challenges of low output and inadequate infrastructure?

Time will tell. The world seems ready for Ecuadorian specialty coffee. The hope is that Ecuador will be able to meet demand in time to rescue its crisis-stricken wider coffee sector.

Top export destinations for soluble coffee: Germany, Russia, Poland, Mexico, and Ukraine. Top trading partners for arabica: US, Cuba, Germany, Japan, Canada, and Sweden.