Defending Panama's Coffee From American Fraudsters

By Betty Brannan Jaén

Translated By Paula van de Werken

April 16, 2006

Panama - La Prensa - Home Page (Spanish)    


A Ship Passes Through the Panama Canal. But Panama
is More Than Just the Canal. According to Some,
it Also Grows the World's Most Delicious Coffee. (above).



Map of Panama. (below).






Coffee Growing in Boquete, Panama (above)



Coffee in Bloom, Boquete, Panama, 1910. (below)


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Washington DC: The world does a lot of about faces, but few come along that give so much pleasure as the one which I am going to report today.

Ten years ago, I reported on a fraud case in the United States, in which a coffee distributor, Michael Norton, bought Panamanian coffee at $1.80 a pound,  put it into bags labeled 100% Kona Coffee "Made in USA," and then sold it at $9.75 a pound,  a scam which confirmed that Panamanian coffee was low-balled on the international market.

But now, "The big joke in the industry is that Panamanian coffee is no longer being passed off as Kona, it is Kona that is calling itself Panamanian," Daniel Peterson of Hacienda La Esmeralda told me.

On Monday, while awaiting the results of the panel judging the quality of some 160 coffees from 40 countries, I interviewed Peterson and other Panamanian coffee-growers at the Panamanian kiosk during the annual convention of the Specialty Coffee Association of America, being held in Charlotte, North Carolina. As this journal has reported, Panamanian coffee was judged the world champion, with prizes for Esmeralda Especial, Café Kotowa, and Carmen Estate. (See the Tuesday’s and Thursday’s articles). During a preliminary round of the competition, five of the ten coffees with the highest scores in the world, were Panamanian.

In order to appreciate this sweeping victory, it is necessary to stress that Panama is a very small producer that only entered the industry ten years ago, and which bears very high production costs (compared to countries like Brazil) because everything is done by hand. But the thing that impressed me most from my interviews on Monday with the Panamanian coffee growers was to discover that the secret of their success has been a very astute strategy based on quality over quantity, an example that could serve Panama well in many other industries (I am thinking particularly about tourism).

I even see a tourism potential in the Boquete and Volcan, areas where coffee is cultivated, and which I thought, when I visited them in February, could be called "the Napa Valley of Panama." The scenery and climate remind me of the vineyards of France or of California, where every vine-grower or hotel-keeper invites the tourist to stay long enough to enjoy the landscape, the tranquility and the local products. Speaking with the coffee-growers in Charlotte on Monday, I discovered that the Collins family - owners of the famous Hotel Panamonte in Boquete - has opened a bed and breakfast on their Lerida Estate property (whose coffee also has won the SCAA first prize in previous years).  Boquete which has become a magnet for foreigners - above all those who are retired and looking to buy a house - does promote tourism, but, at the same time also promotes an inflation of land prices which could eventually threaten the coffee-growing estates. Elida Estate, of the Lamastus family, is trying to take advantage of both opportunities with a residential development on its land.

Another idea taken from the world of wine is that coffee must institute a "denomination of origin" which will regulate market practices and avoid fraud. Panamanian producers are pushing for this and one would think that the Kona scandal would confirm the need that this be done. But amazingly, the United States opposes this. According to what I hear, during the negotiations of the free trade agreement, Washington has taken the position -  which is absolutely unacceptable, in my opinion - that whoever roasts the coffee is the one with the right to the label of origin. Since small producers of elite Panamanian coffee generally sell their beans without roasting them, American companies are trying to assume the right to label it "Made in USA" when they roast it. If Panama accepts this at the negotiating table, not only will Panamanian coffee’s stamp of quality be at risk, but the United States could then flood the Panamanian market with cheap coffee from Brazil or Vietnam, which is roasted in the United States and bears the label, "Made in USA."



Keep Your North American Labels
Off of Panama's Coffee!


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In Charlotte, on Monday, I understood and rejoiced that special Panamanian coffee is bringing prestige to the name of Panama, with luxury prices being paid on the international market. This is something for the country to be proud of, and something that the government should support with a policy of promotion which would include serving Panamanian coffee in its Embassies, allowing coffee kiosks in its airports and tourist sites (Tocumen especially), and - above all - defending the Panamanian coffee industry against cloak-and-dagger marketing fraud, which up to now, I know, it has not been doing.

Spanish Article Below

Celebremos con café

Betty Brannan Jaén
WASHINGTON, D.C. – El mundo da muchas vueltas, pero son pocas las veces que esas vueltas dan tanto placer como lo que voy a reportar hoy.

Hace diez años, reporté sobre un fraude en Estados Unidos en que un distribuidor de café, Michael Norton, compraba café panameño a $1.80 la libra y lo traspasaba a bolsas que decían 100% Kona Coffee, Made in USA, para venderlo a $9.75 la libra, fraude que comprobaba que el café panameño estaba subvalorado en el mercado internacional.

Pero ahora, "el gran chiste en la industria es que el café panameño ya no se hace pasar por Kona, sino que el Kona se hace pasar por panameño", me dijo Daniel Peterson, de Hacienda La Esmeralda.

El lunes entrevisté a Peterson y a otros cafetaleros panameños en el kiosco panameño de la convención de la Specialty Coffee Association of America (SCAA), en Charlotte, North Carolina, mientras esperábamos los resultados de la competencia que mediría la calidad de unos 160 cafés de 40 países. Como reportó este diario, el café panameño quedó como campeón mundial, con premios para Esmeralda Especial, Café Kotowa, y Carmen Estate. (Ver artículos del martes y jueves). En una de las rondas preliminares de la competencia, cinco de los diez cafés con los puntajes más altos a nivel mundial eran panameños.

Para apreciar este triunfo arrollador, es necesario subrayar que Panamá es un productor pequeñísimo que solo entró a la industria hace diez años y que carga con costos de producción que son altos (comparado a países como Brasil), porque todo se hace a mano. Pero lo que más me impresionó de mis entrevistas el lunes con los caficultores panameños fue descubrir que el secreto de su éxito ha sido una estrategia muy astuta basada en calidad sobre cantidad, modelo que podría servirle a Panamá en muchas otras industrias (pienso particularmente en el turismo).

Incluso veo un potencial turístico en las áreas de cultivo de café en Boquete y Volcán, que me parecieron "el Napa Valley de Panamá" cuando las visité en febrero. Los paisajes y el clima me recuerdan los viñedos de Francia o California, donde cada viticultor y hotelero invita que el turista se detenga a gozar de la vista, la tranquilidad y los productos locales. Conversando con los cafetaleros en Charlotte el lunes, descubrí que la familia Collins –dueños del famoso Hotel Panamonte en Boquete– ha abierto un hotelito bed and breakfast en su finca Lerida Estate (cuyo café también ha ganado el primer premio de SCAA en años anteriores). Que Boquete se haya convertido en un imán para extranjerossobre todo los retirados que buscan comprar casa– fomenta turismo pero, por otro lado, también fomenta una inflación en el precio de terrenos que podría eventualmente amenazar las fincas de café. Elida Estate, de la familia Lamastus, está tratando de aprovechar ambas oportunidades con un proyecto residencial dentro de su finca de café.

Otra idea tomada del mundo de los vinos es que el café debe instituir un sistema de "denominación de origen" que regularía las prácticas de mercado y evitaría los fraudes. Los productores panameños están presionando para esto y uno pensaría que el escándalo Kona confirma la necesidad de que esto se haga, pero Estados Unidos, asombrosamente, se opone. Según entiendo, en la negociación del tratado de libre comercio, Washington ha tomado la posiciónabsolutamente inaceptable, a mi criterioque quien tuesta el café es quien tiene derecho a ponerle la etiqueta de origen. Como los pequeños productores del café élite panameño generalmente venden su café sin tostar, las empresas estadounidenses pretenden arrogarse el derecho de ponerle made in USA cuando lo tuesten. Si Panamá acepta esto en las negociaciones, ello no solamente pondría en peligro el sello de calidad distintiva del café panameño, sino también que Estados Unidos podría fletar el mercado panameño del café barato de Brasil o Vietnam que es tostado en Estados Unidos y por ello llevaría etiqueta de made in USA.

En Charlotte, el lunes, comprendí y celebré que el café especial panameño está poniendo muy en alto el nombre de Panamá, con precios de lujo en el mercado internacional. Esto es un orgullo para el país, que el gobierno debiera respaldar con una política de promoción que incluiría servir café panameño en las embajadas, permitir kioscos de café en aeropuertos y sitios turísticos (Tocumen en especial), y –sobre todo– defender la industria panameña a capa y a espada. Hasta donde , esto no se está haciendo.

La autora es corresponsal de La Prensa