Southland Merchants launches processing mill in Brazil

Southland Merchants is increasing its commitment to smallholder Brazilian farmers with the launch of a processing mill in the Mantiqueira de Minas region that will give producers greater ownership over their coffee.

To Brazil-focused coffee trader Southland Merchants, transparency and traceability are crucial to making a meaningful and sustainable impact at origin.

“Coffee is an interesting commodity in how there’s a lack of ownership producers have over the product. Generally, they have little say in where their coffee goes or what’s done with it. That’s not the way we want to trade,” says Andre Selga, Co-owner of Southland Merchants.

“If there’s no transparency, it’s really hard for growers to thrive while producing specialty coffee. If you hide information, like the quality of a coffee, the likelihood of them producing the same crop the next year is very low.” 

Andre and his wife, Nadia Moreira, formed Southland Merchants in 2017, with the goal of not only sharing the great coffee of their native Brazil with the Australian community, but supporting and empowering families and producers back home.

“I visited Brazil in November last year and caught up with a few small growers. I asked them what their biggest needs and challenges were, and one of the topics they pointed out was access to the international market. As Brazilians, we can make this better because we understand their struggles and mind-set,” Nadia says.

“They also face the challenge of not fully understanding their product. Many can’t cup coffees, so they can’t put a price on it and have to believe what the buyer or middleman says it’s worth, which is hard sometimes.”

Andre adds that being a smallholder in a large producing country can also make it difficult to access services that would add value to their coffee.

“Some of the big co-ops in Brazil will process two to three million bags of coffee per year. If you’ve only got 20 bags, it can be pretty hard to get a slot, so they end up selling the coffee locally because they can’t afford to process their coffee and sell it ready to export at a higher margin,” he says.

While Southland Merchants has its own team on the ground, maintaining relationships with and supporting producers, the trader has long looked at how it could deepen its involvement on the ground. Andre and Nadia saw an opportunity to do just that. When one of their long-term producing partners in the Lambari region told them they had built a warehouse and invited Southland to join them, due to the synergy of their values and business proposition.

Southland Merchants is turning that warehouse into a coffee storage and milling facility, where small producers will be able to access services that add value to their coffee. 

“Our partners are fourth generation farmers, with a deep understanding of their neighbours in the Mantiqueira de Minas region,” Nadia says. “Southland Merchants will add our expertise and experience of the very mature Australian specialty coffee market to the project.”

Andre hopes for the site to start processing coffee for 2021’s crop.

“On the farm, producers pick, dry, and process their coffee, but it’s still not ready to be traded as specialty coffee. They need a warehouse to store their coffee and process it further to meet the requirements of the international market,” Andre says.

“The closest milling warehouse facilities was around 70 kilometres from the region. We want farmers to be able to go and see where their products are being sold. They’ll decide what they want to do: if they want to process it or sell it as unprepared coffee to export businesses to prepare. It’s all about the decisions they can make. At the moment, a big chunk of producers can’t make that call.”

The warehouse will be equipped with silos, a destoner, dust and impurities exhaust, bean density and screen size grader, optical (colour and shape) sorter, and other equipment to make sure the coffee meets international quality standards and is export ready. Nadia says Southland Merchants has made sure these services will be accessible.

“We’re thinking of local, small, and medium growers and making sure they can do this at a small scale. Our equipment will be ready to process as little as one bag of coffee if needed,” she says.

“It’s not just about ourselves but empowering producers in whatever path they take and bringing high quality coffee to the local or international market. After processing their coffee, if they would like to do business with us, that’s great, and if not, they’ve at least learnt more about how and what they are capable of.”

Helping producers, particularly those Southland Merchants sources from, at the milling stage will also provide the trader, the farmers, and their customers with greater transparency and traceability. Southland Merchants has partnered with a blockchain start-up that will help track the history of a particular lot of coffee and make this information available to the supply chain as a whole.

“Right now, merchants collect information from farmers and make that available to roasters. We want to give more ownership to the farmers, who can start collecting their own data and put that into a system that roasters add to, which everyone can share and access,” Andre says.

“That’s going to be the next focus in the specialty coffee industry. Taste and flavours are key, but people will start turning down coffees that taste really good but don’t have traceability or transparency. We want to take a progressive approach and be that bridge between growers and roasters so they can benefit from each other.”

Nadia adds that this encourages smallholders to track their processes that they hadn’t previously, resulting in a better understanding, and consequently, a better crop, business, and price. 

“Some small growers produce a good coffee but they do not know what they did to achieve that quality. With this traceability and transparency, they can empower themselves to grow with us and with our roasters,” she says.

“They start to think about their process, how they can replicate what they’re doing right and do better things in areas they’re not. Nowadays, this is happening with big producers, but not yet with the smallholders.”

The new facility will provide a location for Southland Merchants and other organisations in Brazil to provide training and education programs to smallholders.

“There’s little education at a farm level, so producers are working off the past experiences of their parents and grandparents. They know how to farm, but sometimes they don’t know why they do what they do, or how they can improve,” Andre says.

“We want to fulfil that lack of education at farm level. That goes from soil nutrition up to farm management – how to treat the farm as a business, something they need to run, be profitable, and make decisions of what to produce.”

Nadia says helping producers improve their farming techniques could have a massive impact on their livelihood and results in greater flavours and coffee quality.

While greater transparency and education will not necessarily have an immediate effect on a producer’s livelihood, Andre says these small steps form a long path to a healthier coffee industry.

“When a producer sees their face or name on a roaster’s pack, it makes a huge difference in how they seem themselves and run their business,” Andre says. 

“It’s tangible and they can see the result of their work, a whole year’s struggles. They start being proud of what they do.” 

For more information, follow Southland Merchants on Instagram at @southlandmerchants

This article appears in the February 2021 edition of BeanScene. Subscribe HERE.

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