Juan Valdez and FNC: The Story of Colombian Coffee

Even in the age of quality expansion and more democratic coffee appreciation, coffee iconography—Starbucks’ monolithic siren, Blue Bottle’s blue bottle—has room for a relative few. But, in terms of longevity, perhaps none of these coffee symbols has so consistently resonated with middle class America as Juan Valdez—the familiar image of a smallholder coffee farmer found on freeze-dried coffee, several lines of ground or whole bean coffee, and single-serve pods—devised in the 1960s to boost recognition of Colombian coffee internationally. Yet, the non-profit organization responsible for the Juan Valdez brand, Colombian Coffee Growers Federation (FNC, for its initials in Spanish), runs much deeper than a proud visage.

The FNC is a Colombia-based non-profit organization that conducts agronomic research, corralling large volumes of coffee, and marketing enough retail products in stores, online and at their signature cafes to render it indistinguishable from any multinational. That said, the FNC is structurally different from a major corporation in that they are, in essence, a democratically-run entity acting as an emissary for the small coffee producer. This trade organization first began in 1927 to look after the welfare of Colombian coffee farmers and to protect them from fluctuating trade prices in the global market. In the 88 years since, the company has built a cutting-edge research facility in the heart of Colombia’s central mountain range, an exporting arm, global retail operation and numerous ad campaigns.

Though the trademark Juan Valdez sash and mochila are now relics of the past, the campesino farmers that the figure represents remain as important as ever in Colombia. This legion of smallholder producers, who together form the backbone of Colombian coffee, are more than half a million in number, each farmer averaging around 3.7 acres of land. In many cases, these Colombians cultivate lands that have produced coffee for more than a century. For too many of those years they’ve served as battlegrounds whereupon guerrillas and the Colombian government fought over income inequality, land rights, and access to resources. Though violence has subsided considerably, the government and FARC (the country’s consolidated guerrilla movement, first formed in 1964) have yet to reach a full accord. Negotiations toward peace continue to be held in Cuba.

Coffee, Conflict, and Stability

Throughout the half-century of turmoil, FNC personnel very often held ground when no other normalizing or government entity would. And in some ways, the coffee industry has been a stabilizing force for Colombia’s war-torn and disaster-ridden rural areas.

... the FNC is structurally different from a major corporation in that they are, in essence, a democratically-run entity acting as an emissary for the small coffee producer.

"We have had very difficult years. In certain regions, the mayor left, the police station left, everyone left but the extensionists," says Luis Fernando Samper referring to the agronomists that serve as liaisons between farmers and the FNC. Samper’s job as the man behind the FNC’s marketing strategy is no easy task considering the trade organization is a rather massive ship casting an extremely wide net through an extensive network of divisions and products. The 88-year old institution, which can be a bit labyrinthine, is often referred to as "a nation within a nation."

An army of 1,500 extensionists, recognizable by their yellow shirts, are the boots on the ground for this "nation," interacting with smallholder producers, providing technical assistance and entering farm information into FNC’s SICA database. SICA is in some respects the Colombian coffee sector’s filing cabinet, providing location-specific information on each farm that is handy when troubleshooting large-scale problems. For example, when the coffee leaf rust outbreak hit seven years ago, this network helped identify locations of rust-susceptible varieties across Colombia’s three mountain ranges. As a solution, they promoted and subsidized rust-resistant varieties such as Castillo, a campaign that has kept productivity well ahead of its Central American neighbors.

Juan Valdez coffee. Photo courtesy of FNC. [Photo by Jimmy Sherfey.]

It should be noted that, by and large, the FNC operates on a large-volume scale; generally they are not handling the kind of coffee one might be accustomed to at an artisanal third wave shop. The FNC, rather, deals in varying degrees of quality, a necessity given their guarantee to purchase any amount of a Colombian farmers coffee at any time. For the producer, this purchase guarantee is voluntary and usually pays little more than a $1 per pound. Though this program is neither compulsory nor particularly lucrative, the FNC ends up brokering roughly a third of Colombian coffee. "By ensuring that there will always be a buyer willing and able to buy in cash any quantity of coffee, other buyers are forced to compete and the growers' negotiating power in their local communities is dramatically improved," Samper says.

... the coffee industry has been a stabilizing force for Colombia’s war-torn and disaster-ridden rural areas.

In an effort to add value and diversity, the FNC recently initiated a campaign to normalize coffee growing standards for each Colombian state, promoting regions as unique Denominations of Origin (like Champagne or Camembert in France), and inviting consumers, particularly younger consumers, Samper says, to connect the coffee to "real places that they can picture and can eventually relate to." While they are not yet recognized as Denominations of Origin, the Cafés de Origen coffees of Huila, Antioquia, Nariño, and Sierra Nevada fetch $17 for a pound bag—not quite at third wave, single-origin prices, but still the most valuable of any Juan Valdez-branded coffee to date.

The Paisaje Cultural Cafetero (PCC) is also on course to become a Denomination of Origin. Already a UNESCO World Heritage Site, this large swath of land located in the cloud-dressed Andes of Central Colombia is known as the "Coffee Cultural Landscape" in English and it covers the departments of Quindío, Caldas, Risaralda, and Valle del Cauca. UNESCO recognizes the regional character as one built on the "collective effort of several generations of campesino families generating innovative management practices of natural resources in extraordinarily challenging geographical conditions." Rows of coffee trees line steep mountain faces, peering down on colorful farmhouses made of earthen walls with bamboo bones, rooftops crowned by clay tile.

L to R: An FNC extensionist displays a coffee bean and FNC's Origens map. [Photos by Jimmy Sherfey.]

To further promote the PCC, the FNC has commissioned a mobile business center to travel the region recruiting farmers to sell their coffee through the FNC-sponsored campaign.

Challenges Ahead

While initiatives like these promise to improve the region’s market reputation, independent brands looking to devise their own market strategy may be less excited about the campaign.

After graduating from college with a communications degree, Diego Agredo returned to Buenavista in Quindío to help run his family’s farm, Finca San Cayetano. Dissatisfied with prices offered by the purchase guarantee, he chose to sell outside of FNC channels. Agredo began to brand his coffee independently, roasting and selling to specific buyers when the 2013 global coffee price crisis sent earnings below the cost of production. Market access proved tricky, and selling to random buyers continued to yield razor thin profit margins for Finca San Cayetano. Agredo says his indie-label coffee has had trouble gaining a solid retail price in contrast to what a bag of Juan Valdez fetches in the supermarkets of Colombia, a point of frustration for the young campesino as he believes the two are virtually the same coffee.

... the FNC ends up brokering roughly a third of Colombian coffee.

"In the supermarket, I don’t think [our coffee] will go past 20,000 pesos ($6.80 USD) for a pound. It’s more for a bag of Juan Valdez, and it’s similar quality they sell at 24,000 pesos ($8.16 USD). And Juan Valdez uses this coffee," Agredo says splashing his hand into a sack of yet-to-be milled coffee. "It’s a quality cup."

Marketing chief Samper contends there are opportunities for independents to sell their brand domestically through the PCC label, even providing local business meetups to connect farmers with buyers at the mobile business center. He notes the annual fees attached to these programs are modest, at around $70 USD, compared to the standard marketing costs of brand sampling and quality control, functions which FNC performs at a fraction of the cost. The bargain notwithstanding, profit for a campesino farm like Finca San Cayetano is measured in pennies on the dollar, and the annual fees associated with the marketing program have further discouraged Agredo.

Farmers continue to face an uphill battle in the effort to produce an ultra-clean cup of coffee with tastes for which the third-wave clamors, like sweet notes of caramel or acidic notes of raspberry and strawberry. Though the FNC has shown some financial support to producers of superior quality, brand Executive Director Roberto Velez acknowledges the microlot game does not represent a significant share of the FNC’s activities at present. "Microlots are not the biggest part of the specialty business, but they are certainly one of the most dynamic parts of specialty coffee. We do want to encourage one-to-one exporting," Velez says referring the recent development of direct trade in the industry.

The Future

With world coffee consumption expected to increase by 25 percent in the next five years, more business savvy farmers ... could prove crucial to Colombia’s quality reputation and future success.

With world coffee consumption expected to increase by 25 percent in the next five years, more business savvy farmers capable of building trade relationships could prove crucial to Colombia’s quality reputation and future success. In spite of the FNC’s encouragement and training, the country, as a whole, is at a disadvantage in terms of this "one-to-one," or direct trade model. Smallholder farms with reduced access to education and resources make up 95 percent of producers, so English-speaking, tech-savvy growers with the capacity to host independent U.S. buyers are few and far between in Colombia. The guerilla activity of the still very recent past also damaged the country’s reputation amongst specialty buyers in the early years of direct trade which began a little over a decade ago.

Maria Alvarez Restrepo, a smallholder producer in Antioquia, says that FNC extensionists have helped her build capacity, teaching her and the farm staff proper management. Nevertheless, Alvarez’s farm isn’t immune to the challenges facing the larger Colombian coffee industry, such as labor shortage in the coffee fields. This past year, the smaller March/April crop known as the traviesa proved especially difficult at a time when farmers rely on the extra income to sustain themselves through the main harvest at the end of the year. "There wasn’t anyone in town to harvest," says Alvarez. "The coffee over-ripened across the entire village, more or less. It’s very tough; the next generation doesn’t want to work on the farms because it’s not worthwhile."

Though it’s not the most attractive business, some young, educated farmers, even if they are anomalies, continue to take the chance on small scale agriculture. "Our life is here," says Diego of the fledgling Finca San Cayetano. "In spite of the difficulties, we have more stability here than in cities. We’ve seen cases of people selling the land for the promise of the city, and it doesn’t work out ... We want to show that a dignified life as a campesino is possible."