STiR coffee and tea magazine

STiR coffee and tea 9 create a special brand of coffee, and that's what works. We saw it with all the brands that you mentioned. They found some way to do it. A lot of times, it takes a great deal of investment to get there, but to step back; for coffee farmers, it's about creating a stable business, which means they need to do more than produce a commodity, they need to invest in creating brands that consumers demand. In the case of Pachamama, it made a lot of sense for these farmers to create a global co-op in the United States and not just do it by themselves. COCLA in Peru could have come up here and hired me to roast and market their coffee, but a few years later, they had issues at the origin, and we would have had a huge problem. We were much smarter having a group of five co-ops. The group is scalable, too. We can add new members in the future, and we hope to do so, but the idea is that everyone participates. Every producer has access to the capital necessary to deliver their best coffee to consumers with the branding and roasting they expect here in North America. Smallholders do need to be organized, whether through a co-op or other means. And in such a huge global market, you've really got to be organized in a sophisti- cated way so you can compete with everyone else. Ultimately, it comes down to creating some point of differentiation, something that sets you apart. And so, like I said, it's really not that hard. It worked for Stumptown; I don't know why any of our coffee farms can't do it. STiR: Is it a bit challenging reporting to 400,000 owners? How do you ensure the cooperatives meet uniform quality standards? Thaleon Tremain: We don't enforce anything. We just set up the system with all the right and proper incentives to align quality production. We pay members so well because they own the company, and they will make sure we get their best coffee. We can pay for it, and we can continue to pay for it, and they know that we will continue to buy their coffee because they know we work for them. STiR: So, you articulated your expectations precisely, and when the member co-ops perform, they directly benefit. The self-actuating aspect justifies the need to discipline themselves to deliver quality coffee on time, deal collaboratively with problems, and solve them now instead of later. Thaleon Tremain: Yeah, and all that happened 20 years ago when our initial board of directors sat down and wrote the bylaws of Pachamama. They laid out the rules. These people had a lot of experience and knew that if Pachamama were successful, it would be 30 years down the line, and during that time, people would be fighting over these bylaws. We had the advantage of doing this from the very beginning. Since we started from nothing, we could write it the way we wanted and put financial incentives in place. I don't care if it's a co-op or not when social and financial incentives are in place; people are probably going to perform as you designed it. And so, if you wanted to design a supply chain based on quality, I think this is exactly what you would do. It doesn't have to be a co-op. But I think this cooperative structure works really, really well in our case because our members are co-ops, and the governance aspect of co-ops is fantastic. It's a democratic organization on a global scale, so we don't have a lot of the vola- tility you might have down in Nicaragua at the board level. Here in the United States, one member from each country co-op is represented on that board, which gives us stability. What's great about cooperatives and global trade is that they can help organize small producers so that they can at least begin to compete in this global commodities market. To be competitive, they need to be much more organized than just locally and nationally. They need to be globally organized. If they can get to that level, then they need to do exactly what Pachamama is doing and go straight to where the value is to the consumer. In the big picture of coffee supply and demand, there are very few buyers, right? Yeah, and millions and millions of producers. So how do you get these producers to somehow organize themselves to gain market share and pool their resources so they have some bargaining power to tilt that balance of power a little bit back in their direction? Pachamama. BIO: Tremain earned an MBA in entrepreneurial studies at Texas McCombs School of Business and an MBA in international business from Pontificia Universidad Católica de Chile. He spent two years with the Peace Corps and, for 10 years, has been a member of the National Cooperative Business Association's Cuba Cooperative Working Group to normalize diplomatic ties between the US and Cuba. Pachamama's farmer-owners at COCLA cooperative recently opened the brand's first overseas retail shop in Santa Teresa, Peru. Photo courtesy Pachamama Coffee Pachamama board meeting. Owned by 400,000 growers organized in five different country co-ops, the Pachamama board contains one member from each country to maintain stability. | Photo courtesy Pachamama Coffee

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