Long before the name evoked an infamous detention center, the southeastern province of Guantánamo was known for its beautiful mountain ranges and coffee plantations, which produced most of the island’s high-quality arabica beans. This was Cuban coffee at its finest, with a worldwide reputation for excellence.
Some 90 percent of Cuba’s coffee comes from Eastern Cuba, another 8 percent from the central provinces, and the remaining 2 percent from the western province of Pinar del Río. Coffee no longer grows in the deforested and exhausted soils in the plains and hills around Havana.
Cuba’s efforts to replenish its coffee exports, in partnership with foreign investors and marketing companies, could help resurrect its once-proud global image. One company in particular is already beginning to make a difference. Cuba Mountain Coffee (CMC), owned by former British Conservative MP Phillip Oppenheim, is investing in the revival of Guantánamo’s coffee crop and will reintroduce the beans on the world market.
In a deal that’s been nearly five years in the making, CMC announced in January that it had finalized terms for partnering with Empresa Procesadora de Café Asdrúbal López Vazquez (AL), a Cuban processing company, to market and sell arabica beans grown by private farmers in 17 microregions throughout Guantánamo. Those terms were expected to win final approval this month from various Cuban government ministries, including the Ministry of Agriculture.
CMC first announced the pending deal in August, at the same time reporting an agreement between CMC and Nespresso to supply the company with green coffee beans. Nespresso, a division of Swiss food giant Nestlé, caused a flurry of excitement across the United States in August when it began exporting the first Cuban coffee to the U.S. market in half a century. Under new U.S. regulations that permitted the import of some products from the private sector, debut supplies of Cafecito de Cuba capsules to sold out almost immediately, thanks to limited sources in Cuba.
CMC aims to change that. Over the next five years, it plans to invest $5.5 million in local production, including the purchase of equipment, plants, and nurseries. While AL provides technical agricultural support to 2,000 farmers and manages the local processing plants, CMC will advertise and sell the green beans, splitting the proceeds. For Oppenheim, this involves distinguishing Guantánamo’s coffee by each microregion, altitude, and variety, characteristics that don’t presently exist for the global consumer.
“At the moment, the state export agency (Cubaexport), which exports all Cuban coffee, tends to bulk the coffee up,” Oppenheim told Cuba Trade. “It only has about four grades. It’s really a bulk product only sold by the container.”
Revitalizing a Niche Industry
In the high mountain ranges of Guantánamo province, conditions are particularly favorable for cultivating specialty grade coffee. Aided in part by winds coming off the Caribbean sea, the beans are able to slow-ripen at much lower altitudes than in hotter countries such as Brazil, Panama, and Colombia, resulting in a higher complexity of flavor.
“Consumers don’t really care where [sugar] comes from,” says William Messina, an agricultural economist at the University of Florida, “whereas Cuban coffee could command a real niche in global markets with the help of foreign investment.”
UNESCO recognized the historic significance of Cuba’s southeastern coffee region in 2000, when it designated the remains of 171 coffee plantations as a World Heritage Site. Strewn throughout the provinces of Guantánamo and Santiago de Cuba, and occupying some 200,000 acres, these decaying 19th century plantations are monuments to an era when Cuba’s coffee economy flourished. They owed their success in large part to new agricultural methods imported by French exiles from present-day Haiti (then known as Saint-Domingue) after its revolution broke out in 1791. Aided by an increasing supply of slave labor, Cuban coffee production eventually surpassed sugar production. While sugar later became Cuba’s preeminent export, in the years leading up to the 1959 Revolution the country was exporting more than 20,000 metric tons of coffee a year––most of which was grown in the southeastern provinces. These days, however, coffee production lies in the hands of small family farmers, and has fallen to 24 percent of its pre-revolutionary volume.
“One of the reasons is the farmers haven’t been incentivized with price support, or with inputs, and it has not been worth their while growing coffee,” explained Philip Oppenheim. “You go up into the Guantánamo mountains and there are thousands of farmers. Mostly, they’ve got a pig, they’ve got a mango tree, and if they grow coffee at all, they’re no longer specialist farmers like they used to be. They’re subsistence farmers, and the coffee’s their cash crop. So, two kilos of coffee a year to the [government] buying authority, and that’s it.”
In recent years, the Cuban government has raised the price of coffee in an attempt to stimulate production, and farmers now get slightly more than the average world price, depending on the grade. As part of the deal with CMC, AL is authorized to pay out quality bonuses to farmers; Oppenheim says his company is pushing for its Cuban counterpart to be given complete flexibility over what they pay farmers in the future.
The agreement for CMC’s Guantánamo project—which is not a joint venture, but a ‘contract of administration’ allegedly designed to make it easier for foreign businesses to work in Cuba—took nearly five years of negotiating and numerous trips to the island. The contract falls under a new category introduced in Cuba’s 2014 Foreign Investment Act (Law 118) that makes it easier to set up than a joint venture. In exchange for the investment and product marketing, CMC gets rights to the coffee from these micro-regions for up to ten years.
Despite the success of the venture so far, Oppenheim warns that businesses with a romantic view of Cuba can easily come to grief. “I know people think it’s the promised land, but it’s quite a difficult place to do business,” he says. “The Cubans have got to get to know you very well before they’ll do anything with you. It’s very personally based. They want to be sure they can trust you and work with you.”
Another factor that make deals so time-consuming is the still-sensitive nature of foreign agricultural investment in Cuba, and the fact that CMC is operating in such a politically charged region—demonstrated by the recent rejection of TechnoServe, the U.S. NGO that had originally planned to work on the project.
Washington-based TechnoServe was the first to approach CMC about working with Nespresso, announcing in July that the NGO would be working alongside its long-time partner to provide on-the-ground support to Guantánamo coffee farmers. But as Cuban officials became aware of TechnoServe’s involvement later in the year, “the guys in Guantánamo made very clear to us they did not want an American NGO” in their backyard, said Oppenheim. “They like Nespresso, no problem, but they won’t work with an American NGO.”
Nespresso told Cuba Trade that it is moving forward with discussions on how to best work with Cuban farmers, adding that “as a global partner among others, TechnoServe is a valued member of our team and will continue to play a role in this endeavor.”
A Long Term Investment
Because it takes three years for coffee plants to begin producing––not to mention the need for continual replanting––coffee is not a short-term investment. Still, thanks to a recent increase in production, CMC will be selling Guantánamo’s arabica beans on the world market as soon as this year, Oppenheim told Cuba Trade. Now that negotiations with the Cuban government have concluded, the project should take off by late 2017. CMC’s next task will be to raise additional capital—either through crowdfunding or concessional loans from Finnish, Danish, or Canadian banks.
“The banks are still very difficult,” said Oppenheim, referring to U.S. regulations that prohibit American financial institutions from corresponding with Cuban banks. “There is no perceptible change yet in the banking system in response to Obama. A lot of people now use Canadian or Estonian banks.” Even so, the long arm of the U.S. Treasury can block transfers, even if not in dollars and outside the United States, for many months.
With so much U.S and worldwide demand, however, the long wait to export coveted Cuban coffee is apparently beginning to come to an end.