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Posts Tagged ‘business’

A boat docked in a tiny Mexican fishing village.

A tourist complimented the local fishermen on the quality of their fish and asked how long it took him to catch them.

“Not very long.” they answered in unison.

“Why didn’t you stay out longer and catch more?”

The fishermen explained that their small catches were sufficient to meet their needs and those of their families.

“But what do you do with the rest of your time?” “We sleep late, fish a little, play with our children, and take siestas with our wives. In the evenings, we go into the village to see our friends, have a few drinks, play the guitar, and sing a few songs.  We have a full life.”

The tourist interrupted, “I have an MBA from Harvard and I can help you! You should start by fishing longer every day. You can then sell the extra fish you catch. With the extra revenue, you can buy a bigger boat.”

“And after that?”

“With the extra money the larger boat will bring, you can buy a second one and a third one and so on until you have an entire fleet of trawlers.

Instead of selling your fish to a middle man, you can then negotiate directly with the processing plants and maybe even open your own plant.

You can then leave this little village and move to Mexico City, Los Angeles, or even New York City!

From there you can direct your huge new enterprise.”

“How long would that take?”

“Twenty, perhaps twenty-five years.” replied the tourist.

“And after that?”

“Afterwards? Well my friend, that’s when it gets really interesting, answered the tourist, laughing. “When your business gets really big, you can start buying and selling stocks and make millions!”

“Millions?  Really? And after that?” asked the fishermen.

“After that you’ll be able to retire, live in a tiny village near the coast, sleep late, play with your children, catch a few fish, take a siesta with your wife and spend your evenings drinking and enjoying your friends.”

“With all due respect sir, but that’s exactly what we are doing now. So what’s the point wasting twenty-five years?” asked the Mexicans.

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Working; A Most Confusing Feeling

The previous 2 weeks have been spent in Quillabamba, City of Eternal Summer, assisting with the writing of a business plan for COCLA. For those that can’t read the Spanish website, who are they, and what do they do? I hear the question (if not, skip this entry…)

COCLA are the 4th largest exporter of coffee in Peru. That’s an impressive fact when you consider that there are some big boys operating here, the top 3 exporters obviously being private corporates. It is a cooperative with 8,300 members divided over 21 primary level cooperatives; as the members are do dispersed over the fairly inaccessible terrain of the region of La Convention, it would be a complete impossibility to have central governance for all the members (the furthest members live a full 12 hour journey away from Quillabamba by truck, where they need to deliver their coffee).

The function of the primary cooperatives is to give solidarity between the members; help with harvesting, credit facilities for pre-financing crops (bear in mind you have to pay for seeds etc. a full growing cycle before you have any hope of getting paid, and that is if you have no problems with the crop) and prevent members getting picked off by purchasing ‘coyotes’, buyers of coffee and other products who, up until the influence of the cooperative movement, used to turn up and bully a very low buying price out of the farmers.

COCLA is a secondary level cooperative, functioning for the largest part as a means for the members of all the other cooperatives to access different markets; imagine being a coffee farmer in the jungle at 1500m above sea level in the middle of nowhere, how on earth will you know how to sell your coffee to, for example, a buyer of gourmet coffee from Japan? COCLA establish the relationships with importers and obtain accreditation (like fair trade and organic) to make the coffee a more interesting and valuable proposition for buyers.

In order to do this, control obviously has to be maintained through the production chain; how on earth do you try to get 8,300 different growers spread over a huge region to produce coffee to the same standard (which is pretty high; in cases for the best quality export beans, 5 faults per sample of about 200 can spell failure)? In response to this, COCLA have over the years invested in their own manufacturing plant and quality screening processes, as well as doing endless training programs (with the results taking up to 10 years to come to fruition) to get the farmers up to the level required to consistently produce quality coffee…are you seeing a theme here? Tireless work against all the odds for decades…?

So, how can Lou and I add anything to an organisation that has clearly moved mountains over the course of the last 30 years? Well, a key focus of COCLA is building diversity; it decreases risk. If something goes wrong in one area (crop disease, climate fluctuations, negative economic changes), is there another area to fall back on? Getting farmers to grow a greater range of crops, working over a range of geographic locations and, in this case, selling products through as diverse a range of channels as possible. Lou and I both have experience of developing national markets back in the UK with products, both with limited budgets and resources, often from a standing start, and its this that COCLA is interested in.

The national coffee market in Peru is growing pretty quickly, and even though COCLA has sold coffee nationally for the last 15 years, the market hasn’t really been geared to high quality coffee, due to the majority of the best beans being exported. Things are starting to change now, however, and the plant machinery that COCLA already own that produces roast and ground coffee (‘raw’ green coffee beans are the export product, due to a higher tariff on finished product, which means more processes need to be performed on the beans to get them to a state ready for consumer consumption in Peru) ready to start churning out greater quantities of product. It’s a great opportunity, with the market on a tipping point, and fantastic that (provided the business planning thing works out and we end up working alongside COCLA) the work that we do will find its way back to helping a fair proportion of the 8,300 families that rely on COCLA, especially in the face of global economic downturn and a dropping export market for coffee.

All this has found Lou and I tapping away on laptops in an empty conference centre at COCLA’s headquarters on the dusty outskirts of Quillabamba, trying between us to develop strategic ideas together in English, and then translate them into Spanish.  It’s fairly amazing that I’m in this situation after hoping for it over a year ago, working on the edge of the jungle in Peru in such an exciting project with real potential to make a difference.

Quillabamba, Peru
27th December 2009

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