Panama's specialties: the next big thing?

Do you draw a blank when you think of Panamanian coffee? You're not alone. But this Central American country's best specialty coffees, produced in the fertile soils of the western highlands surrounding the Volcan Baru, are finally emerging from a long-held obscurity. Commanding their own distinct identities are a top-quality array of carefully produced estate coffees from over a dozen diverse beneficios.

Specialty coffee producers in Panama today enjoy a unique position that has placed the re-emerging industry at the vanguard of global coffee farming and processing trends. An ironic twist of fate, the result of a changing market conditions over the past decades, has firmly placed the nation's specialty sector in a prime position as it works to build its profile among specialty roasters.

During the 1960s, Panama's coffee producers were regularly selling estate coffees. But with the introduction of controlled markets, the ICO quota system, and an internal quota allotment system involving stamps, the business atmosphere changed, growth was thwarted, and many say it was as if the industry had "stopped in time." With low prices and little incentive to improve the industry through modernization or technification, The Panamanian coffee industry seemed to stand still. Most plantations, denied the financial resources to upgrade their farms, were unable to join the wave of technification that propelled other producing countries into high-density, high-yield output. But as the tides turned, technification began to develop darker undertones of an achievement marred by growing environmental concerns, increased regulatory measures, and a rising consumer call for greater "eco-awareness." At the time, Panama's coffee industry simply couldn't afford to modernize.

Lost in this wake was the identity of Panama's top quality coffees, which were anonymously pooled with large quantities of lesser grade beans or traded as average green coffees during the days of the controlled market.

These days, armed with primarily traditional, shade-grown farms, and with many retaining the most select varieties of trees, Boquete farmers are glad they didn't modernize. "Now it happens to be that it's the best way, keeping more open trees and distances, not high yield plantings," explains Josue Ruiz, manager of the beneficio Casa Ruiz S.A., and director of the Asociacion Nacional de Beneficiadores y Exportadores, a trade association of coffee producers. "That's one thing that helped us. During the depression of the coffee business, we were not able to adapt the Costa Rican coffee farming system because we didn't have the money, there was so much political turmoil."

Even in recent years, there has been government pressure to impose Costa Rican-style systems in a bid to boost overall production volumes, but the efforts have been largely rejected. But Panamanian specialty's biggest challenge to date has as much to do with marketing as technique: earning a reputation that accurately reflects the coffee's position as one with a true specialty origin.

"Each individual exporter has his own philosophy, in growing his coffee, in doing his processing, and in his cupping, so it adds variety to the market," says Ruiz. "Here in Panama, we have different coffee varieties and different philosophies." Ruiz family business has led efforts to raise the level of technical awareness among processors by sharing knowledge on quality issues. "If one producer finds out something new and tells the rest, it ultimately helps out everyone by ensuring the overall quality of the entire Panamanian industry," says Ruiz. Joint promotion efforts are also underway.

Panama in General vs. Boquete and Volcan in Particular

In the highlands of western Panama, a region of steep hills, narrow passes, and rich soil nurtured with volcanic ash, is the Province of Chiriqui. Considered the leading agricultural area of the country, nearly any crop can be grown successfully here. Known locally as El Valle de la Luna, or Moon Valley, the mountainous terrain of dormant volcanoes in fact supports considerable production of timber, vegetables or produce, sugar, rice, bananas, and cattle. But it is here that hundreds of coffee fincas spread across the rugged topography, and where the combined conditions of a high "cloud forest" altitude, organically rich volcanic soil, and mild rains all converge to create Panama's best-suited coffee region. At its center, north of Chiriqui's capital city of David, lies Boquete, the heart and soul of Panama's specialty coffee sector.

Historically known for its orchards of oranges, remote paradise of flowers, wildlife, coffee, it has for years attracted many visitors - U.S. army officers, engineers, and celebrities - away from the sweltering heat of the Panama Canal Zone several hundred miles to the east. Lying just east of the Volcan Baru, a dormant volcano and the highest point in Panama, Boquete is home to a vast majority of Panama's top-quality coffee players.

Overall, coffee production in Panama totals about 300,000 quintals per year, 33% of which is for domestic use. This domestic market is essentially supplied by low land regions, which produce both Arabicas and Robustas, joined only by Boquete and Volcan seconds or thirds. These two vast regions produce coffee that is exported, consisting entirely of top quality high-grown Arabicas - predominately Typica and Bourbon, but includes less often discussed varieties such as Caturras. The majority of producers in the Boquete area are small-holders, most averaging less than 10 hectares (ha) each.

It is this dichotomy that has helped the true potential of Panama's small specialty sector. Another is the staggered timing of the crop harvest, which - even within a small radius of farms - can vary significantly due to diverse microclimates. But it is the sale of coffee from the region's lower areas during the early season of the Boquete and Volcan high-altitude crop that some producers feel confuses buyers the most.

"There is a misconception," explains Ruiz. "The harvest season in Panama's higher lands lasts from September until April, so the first coffee sold in September is not the best, although they are good when well processed. The first rounds are from the lower part of the farms, and these are sold starting in November. In Boquete, the best coffee comes in from December on, but for commercial reasons the only coffee that was recognized as Panama's were those from the first rounds. Panama has been considered an average coffee just because of that. We want to let people know that there are true specialties in Panama." Some producing countries deliberately delay the sale of high-altitude coffees, such as Guatemala, primarily to achieve this distinction.

Currently, a significant amount of Panama's specialty coffee is not marketed as a Panamanian origin. It's a situation that prevents the country's specialty coffees from gaining greater exposure among roasters and consumers. Producers here are keenly aware that Panama's reputation as a source is underappreciated, a situation which can change based on their dedication to their coffees.

Panama, which in various aborigine languages translates as, among other things, "The Land Far Away," is certainly no newcomer to specialty coffee. In All About Coffee by William H. Ukers, M.A., published by the Tea & Coffee Trade Journal Company in 1935, Ukers wrote that "coffee grown in the Boquete Valley is considered to be of fine quality, owing no doubt to the care given to its cultivation by American and English planters in that district."

Boquete producers would certainly agree that the spirit - if not the physical structure of their operations - is itself "far away" from the nation's commercial coffee industry. Where else in Panama could one find so many low volume fincas with beneficios designed to mill coffee from a single farm - their own?

With a tropical, highly humid climate, Panama records hefty rainfalls averaging 1,500-2,500 mm. annually. It has in fact only two seasons: the rainy season which spans from May until the end of the year, and the dry season which lasts from December until April. Coffee producers in Boquete, however, will point out that their rainy season peaks in June with rainfall averaging 3,500-4,000 mm., with the dry season emerging in December, peaking in February, and rains starting by mid-March.

Panama - about the size of the U.S. state of South Carolina - has a great deal of physical farmland available for coffee expansion - land perfectly suited for planting the best kinds of high altitude coffee. And shifting economic trends could continue to focus attention on coffee production as a valuable export product. "The globalization of agribusiness makes it difficult for Panama to compete internationally in beef or milk," says Ruiz, noting that land currently used for cattle grazing in the western area of Volcan may become a likely candidate for future fincas, and that foreign investors have shown interest in investing there.

CASA RUIZ S.A.

The most established names in Panamanian specialty - beneficios such as Casa Ruiz, La Florentina, and Duran Estate - have already been joined by a number of newer estates in the past decade. Many represent the ideal small estates: those that have finite plans for expansion. But regardless of longevity or size, all seem to show the same desire to push the upper limits, coaxing the increasingly better coffees from Panama's hills.

Ruiz's family business, Casa Ruiz S.A., one of the oldest small producers in Boquete comes from one of the oldest small producers that has grown into a multifaceted business, working in commercial and high grown specialty grades and roasting for the domestic market. This stands in marked contrast to a number of small new beneficios that have come on-line in the past decade and export only high grown specialty.

Although many operate their own coffee farms, most mills here also purchase ripe cherries from farmers - a system that has grown more complex since the inception of the free market, but which has proven beneficial. "The controlled market damaged the industry," says Ruiz. The single price paid for all coffee disappeared as the former system ended. "Farmers choose who they want to sell to. As a miller, you must know what you're doing, but ultimately it's better." Very few farmers share the risk of final sales prices, and most are paid on demand, resulting in less management less overhead in tracking.

"Local competition is high, and so is loyalty," explains Ruiz. "So is pride. If you say the wrong thing to a farmer - imply his coffee isn't good - he won't sell to you any more, even at a higher price!" Harvested coffee, which is picked primarily by native Guaymi Indians who travel as tribes and make many passes through the farms, contains very little unripe coffee. "Traditionally, pickers are taught that green coffee is not acceptable," says Ruiz, making this a great beginning for high quality coffees. Sometimes due to the local free market and a shortage of coffee to meet contracts, buyers pay more - about $.04-.06 per pound - above market value to the coffee growers. Panama's economy is based upon the U.S. Dollar which circulates freely. This provides a rather dynamic financial flow through the coffee industry, from the growers down to the pickers, which at the same time pushes the coffee industry to deal only with high quality coffees for the international market because of the inability to "move up or down" local currency.

FINCA LA ESMERALDA 

One relative newcomer to the coffee scene is Price Peterson, who came to Boquete 25 years ago to run a dairy farm. At the time he had acquired a small coffee plot with his ranch which for years remained virtually untouched. But when the pricing and profit structure of dairy production began to fluctuate, "more at the whim of politicians than market forces," Peterson says, he began to search for an alternate business. His goal: to have a business guided by international forces, not the vagaries of local politics. "Panama was already good at two things: bananas and coffee," recalls Peterson, director of Finca La Esmeralda. In the search to diversify, he ultimately found his answer back at his own coffee farm.

Gradually turning land that wasn't suitable for cattle into coffee fields, Peterson planted 20 ha of coffee in 1992 and added another 20 ha the following year. Like many who have entered the industry in recent years, Peterson realized the decision to commit more resources to be a catch-22 situation: Is the coffee I can produce on this land of sufficient quality to warrant construction of a dedicated mill? After two seasons working with an established beneficio in town, Peterson built a small wet/dry mill with the intent of processing all of his own crop, but with no desire to purchase and process crops from other farms - a prospect Peterson and his wife found daunting, "like pulling a slot machine." The highly controlled, estate mentality is particularly common among the region's newest producers.

To market the Esmerelda Estate coffee to U.S. roasters, Peterson shopped extensively for a broker whom he felt would work to get the name out into the green coffee markets. Considering its small size, the estate chose a single firm - Holland Coffee of San Francisco. And although Peterson has a finite ceiling in mind for his own farm's production, he's typical of the industry's belief that Panamanian specialties must "think big" as a unit, even if it consists of many small estates. "Panama must build its volumes if it is to make it as an origin," says Peterson.

"We have to give it time," adds Peterson's wife, Susan. "This is only our third year. We shipped six containers this year, and hope to work our way up to ten or 12 eventually, but then that's it."

To staff the finca and beneficio, the Petersons found ample manpower among the Guaymi Indians. As Americans who once confronted the challenges of adjusting to life in Panama and learning its cultural nuances as outsiders, Peterson feels they were much more attuned to the importance of making an effort to understand the Indian culture. "Just be fair, that's the key to being good employers." Speaking the language - which Peterson agrees is fairly uncommon among the local employers - is just the beginning of trying to understand their culture.

Looking back, Peterson believes he never would have been able to get into coffee without the dairy and cattle farm providing a steady income to support the farm expansion and mill construction.

CAFE VOLCAN BARU

On the west side of the Volcan Bard volcano is the town of Volcan, and one the newer producers that has made a significant effort in marketing its specialties - Cafe Volcan Baru.

"We started planting coffee in 1989, and we've been in business for three years. This is our fourth year with the beneficio," said Michael Janson, plant director and one of four brothers that own the farm. "This mill was built to be able to process seven different coffees from seven different farms simultaneously, which is very different for many other mills. And then we can keep them separated in our beneficio. It's harder for other beneficios, because they are geared more towards volume." The beneficio was designed and built to process only 10,000 bags of coffee, which includes crops from its own farms.

The estate's flagship coffee, El Tucan, is all hand selected. Other coffees include La Torcaza, El Tigre, Colibri, and Candela. In all, 30% of the beneficio's exports are production from its own farm.

Establishing and expanding its own farms is important to Jansons for the sake of exerting greater control over the crop: "We try to help the farms we buy from. I can lend them money so they can fertilize and spray. But, it's hard. I can't control five or six farms that don't belong to me. The only way you can have that kind of control is by having your own crop.

"We started with a small crop, we planted five acres of coffee the first year. By the third year in 1992 - our first harvest - we had 1,000 quintals. Right now we're processing about 6,000 quintals.

"We have both open systems and shade, but most of the ones that we have right now are open sun. We have different plots, 20 hectares here, 20 hectares over there, and keep woods between them."

"If you grow too big, you can't keep track of hundreds of pickers and make sure that they only pick the right coffee. It's very hard to control that," says Janson.

Paying close attention to processing was a crucial goal when the plant was designed and remains a key concern in its operation. "Because we're a new farm, we can be very demanding. With any new worker that comes in, we say, 'you're going to do it this way, or...'"

Developing one's own farm requires a certain degree of trial and error fine-tuning. "You have to experiment on your own farm. At first, we started planting 7,000 trees per hectare. But nowadays, we found out it doesn't work here, because we have too much humidity. So we cut down some trees. We haven't decided whether it should be 3,500 or 4,000 per ha. We're not old enough to be able to tell that."

Cafe Volcan Baru has an extensive patio for sundrying, which is used whenever weather permits. "When we have the sun, we only use the patio," says Janson. When peak harvest levels combine with rainy weather, the patios are used as predriers for several days before moving the beans inside to a drum drier. "For me, the best thing is to give it two days on the patio, or one day just to get enough of the water off and then get it in the machine."

But for 100% sundried coffees, a premium price is earned. Janson stresses that a lot can go wrong on the patio. It simply requires extra attention, and bears an extra risk. "If the workers are not turning the coffee properly, and the sun is real hot, it's going to get dry on one side, but not on the other side. It's not the same as the drum." As such, Janson pays particular attention to protocol on the patio. "You have to be very careful. If the coffee gets too dry, and workers are shoveling it or stepping on it, it's going to be dehulled," says Janson. "So, we leave a small path. The minute you start stepping on it, you're going to hurt the coffee."

Although Janson places much emphasis on proper processing, he is also a believer in regional growing differences affecting the final cup. "That's why they taste different, because we have different lands, we have different micro climates in Panama. The soil's different. The varieties are different. So the coffee has to be different."

Concerned about ensuring the overall quality of Panama's coffees, Jansons see their mill as state-of-the-art, but realize that sharing crucial information with other producers can go a long way in establishing a regional consistency. "In specialty coffee particularly, you need to be consistent. You can't have good coffee this year, and next year say, "Oh, well, the crop wasn't any good. It takes several years for clients to gain that trust."

"We don't see ourselves as competition," says Janson of the other producers in Boquete, "because if his coffee is good, and mine is good, and the other guy's is good, then Panama will get a name. We have to promote all the coffee in Panama."

"Panama's been so small that we have never been known," says Janson. "Now, all over in Panama, people are learning about milling their coffee better. You can have very good coffee coming from your farms, but the minute it gets in the mill, it can be mined. On the other hand, it doesn't matter how good your mill is if the coffee from the field isn't good. The mill isn't going to make it better. You have to have both."

FINCA LERIDA

The Finca Lerida, a small estate farm situated at 1,600 meters elevation, has one of the most unique beneficios in all of Panama: a vintage mill situated in the middle of the farm. Built between 1911 and 1924 by Toilet Bache Monniche, an engineer who came to Panama with the Panama Canal Co. to build canal locks, the estate is now owned by Mrs. Inga Collins and sons.

After remaining dormant for 12 years, the beneficio was recently restored to full milling operation, thanks to stronger prices for Panama specialties. "It was cheaper to take our crop to other beneficios for processing," explained Hans Collins, director of Finca Lerida. The plant itself is a fascinating step back in time. A siphon device - patented by Monniche in 1936 - separates floaters and feeds beans to a turn-of-the-century, Scottish-built McKinnon & Co. pulper which is driven by a diesel engine. Small beans are fed through a smaller adjacent pulper called a repasser, and are sundried along with the floaters.

Larida's patio is even more unusual than the mill: a system of outdoor drying racks, called bastidores, that stand several feet off the ground. Utilized in Columbia and Africa, the devices are found in use only at one other farm in Panama. Beans predry for three days in a shallow, mesh-bottomed tray through a combination of sun and passive air movement. Since the beans never warm up to any great extent, moisture is reduced to only 36%. A second type of triple-tiered telescoping bastidore further reduces moisture to about 12% in four to five days. The drawers are closed at night or during periods of rain. A wood-fired drum dryer or secadora is also available and can dry a batch of coffee in 24 hours, necessary during uncooperative weather. Beans then sit in reposo for two months, during which time the humidity levels equalize to a uniform 12%.

Coffee is processed in daily batches, with each separately washed, bagged, tagged, and cupped for defects. Entire batches that aren't satisfactory are pulled from export, and remaining beans are blended as estate coffees. Total production, picked solely from the surrounding farm, is 2,000 quintals, or 1,500 bags annually.

Among the highest altitude farms in Boquete - up to 1,800 meters - the entire plantation consists of seven farms totaling 55 ha, which yield an average of 50 quintals per ha. "The typicas here used to grow up to 16 feet high," says Collins, but they have since been trimmed to contemporary standards. Collins says an additional 60 ha. is available for expansion.

Looking Ahead

When political stability returned to Panama in 1990, attention was again focused on rebuilding the nation's economy - which was left in shambles after years of mismanagement, sanctions, a growing national debt, high unemployment, and a deteriorating national infrastructure. Since then, Panama has implemented various structural reforms, including trade liberalizations, that have all smoothed the way too stable business relations. Coffee, a well-established industry, is once again rising in profile as among the nation's prized assets.

With an impressive roster of talent and dedication, Panama's specialty coffee sector is well equipped to move into the consciousness of coffee lovers. The future of its market potential only reflects the producers' desire in Panama to carve a permanent - and respected - position among specialty roasters.

For an in-depth analysis of the regional taste differences of coffees from the Boquete and Volcan region, see "Cupping the Coffees of Panama" by Tim Castle, September 1996, pg. 96.