By Kenny Lee Wee Ting
As a habit, I always approach issues from an economic perspective, perhaps a common trait of my profession, though some may find it tedious. However, for labourers, especially farmers, this aspect is crucial as it concerns their livelihoods.
Therefore, whenever we meet indigenous coffee farmers, we start with something quite amusing: we don’t immediately talk about coffee cultivation; instead, we sit down to crunch some numbers. Only when the farmers have their accounts sorted, Only then will we begin discussing the planting and processing issues related to coffee cultivation.
Interestingly, many local coffee farmers are reluctant to calculate their costs, and some even avoid knowing the real number of trees they have in their own plantations. Numerous others simply lack the knowledge to do so. The political reasons behind this are not up for discussion, but this situation often leads to farmers unknowingly running at a loss. Or at least trapped in unworthy labour.
To expect the farmers running at a loss to strive for better coffee quality? This is almost like an impossible mission.
The issue of crop economics is merely a simple math problem. However, as usual, in a multifaceted commercial environment where stakeholders hold different values, things become immensely complex.
The question of the actual Liberica green bean yield per acre is not easy to answer as there is considerable discrepancy among research papers from different sources. Some claim an average of around 470 kilograms per acre.
According to the MARDI 1991 report, local polyhybrid (mixed varieties) Liberica yields about 470 kilograms per acre from 500 trees, which translates to less than one kilogram of green beans per tree annually.
In that same report, some polyhybrid fruit trees showed conversion rates between coffee cherries and dried seeds are as low as 7% and as high as over 9%.
Considering the confusion and contradictions in these data, there is significant room for further in-depth research that we wish to pursue on this matter.
Since most of Sarawak’s locally grown Liberica belongs to the “normal breed” category with unknown origins, I will use the 7% green bean yield mentioned in an interview with MyLiberica as the basis for further calculations.
In order to facilitate a comprehensive understanding of the production costs of Liberica coffee from different perspectives, we will demonstrate the algorithms from three different Scenarios: coffee processing plant, coffee cherries cultivator, and both combined.
[Scenario 1] Let’s first think from the perspective of a “processing plant."
If you were a Liberica coffee processing plant, what would be the cost of producing one kilogram of Liberica green beans?
With a 7% yield, we would need about 15 kilograms of coffee cherries to produce one kilogram of Liberica green beans with defects after the removal of floaters, pulp, and parchments.
In other words, if the processing plant were to purchase coffee cherries at RM 1 per kilogram, the cost of producing one kilogram of green beans would be as high as RM 15, without even considering the potential 20% of “defective beans" and the “operating costs" of the processing plant.
Looking at it from a processing plant perspective, the production cost of one kilogram of non-selected Liberica green beans could be no less than RM 18.
Even if sold at a close-to-cost price of RM 20, it would be challenging to market a product with so many defective beans.
Thus, two options remain:
A. Enhance quality control, remove defective beans, and develop better processing methods to pursue a high-quality specialty coffee pathway.
B. Further reduce the costs.
The only way to reduce costs is by lowering the price paid for coffee cherries.
As far as I know, the usual price range for purchasing Liberica cherries in Malaysia is between RM 0.50 and RM 1.60 per kilogram.
I wonder, if the price is compressed to RM 0.50 per kilogram, can coffee farmers still afford to produce?
【Scenario 2】Now, let’s consider the perspective of coffee cherries cultivators.
Let’s assume a farmer takes good care of one acre of land using square planting method, allowing for 300 coffee trees.
Each tree starts to bear fruit from the fourth year and produces 10 to 20 kilograms of coffee cherries per tree per year (which may slightly increase after ten years).
In this moderate assumption, let’s say that from the fourth year onwards, each tree produces an average of 15 kilograms of coffee cherries annually.
Based on the previously mentioned purchase price of RM 1 per kilogram, a farmer with 300 trees per acre could earn RM 4,500 annually.
This translates to a monthly income of RM 375.
However, this calculation does not account for costs such as weeding, fertilisation, pest management, pruning, harvesting labor, and most importantly, the easily overlooked “opportunity cost."
In Sarawak, due to the abundant rainfall and indistinct rainy seasons, coffee not only goes through the main harvesting period each year but also intermittently produces fruits throughout the year. This means that in order to maximize the yield of each tree, there must be labor available to carry out harvesting work in the coffee plantation at least once a week.
After deducting these expenses, it is uncertain whether there will be RM 280 left as monthly income. Intercropping with other agricultural products during this time may be necessary to secure a sustainable livelihood.
If a processing plant lowers the cherry purchase price to RM 0.50 per kilogram, the monthly income for farmers would be reduced to only RM 140.
Therefore, if processing plants wish to maintain long-term coffee production, it’s evident that prices cannot be squeezed too low; otherwise, who would be willing to continue coffee cultivation?
However, this issue remains controversial. Some local growers try to argue that coffee farmers in the inland areas have minimal costs. They claim that planting some Liberica trees is considered “additional income" or “supplementary income."
This is partially true, but from an economic perspective, Nothing comes free. To creating this “income" still requires “labor costs." These “labor costs" are also the farmers’ “opportunity costs."
Applying a modern economic perspective, even rest time is a form of production cost known as “reproduction of labour power." Without rest, there won’t be labor force for the next day. So, in reality, rest is a means of producing labor force.
What I’m emphasizing is that there’s a limit to an individual’s productivity. Just as a farmer can only care for a certain number of coffee trees, if we don’t determine an economically viable planting amount, the efforts of coffee farmers could be squandered.
Now getting back to the point, I often ask coffee farmers this question: assuming the same amount of labor, how does the income compare when planting oil palms, rice, pepper, or other commodity crops?
If we consider sustainable development, we need to think further. Currently, we are facing the younger generation in rural areas. Compared to securing a monthly salary of RM 1,500 by working in the city, what are the advantages of cultivating Liberica?
For coffee farmers who only sell cherries, let’s calculate the monthly income based on an average production of RM 280 per acre with 300 trees. Increasing one acre with 300 trees would add RM 280 to the income.
Hence, proper “scale planning" before starting to plant is crucial. Planting without proper calculations may lead to problems. If farmers plant too little and realize a few years later that they can’t make a profit and can’t make ends meet, they will eventually abandon the plantation.
Unfortunately, such occurrences are common in Sarawak.
In fact, Liberica, due to its robust branches, poses difficulties in pruning and harvesting compared to Arabica and Robusta.
Is it possible for one farmer to take care of four acres of land with 1200 coffee trees? Well, It may be feasible during the off-season, but during the busy fruiting season, it’s hard to say.
【Scenario 3】Coffee cultivator themselves engage in processing as well.
In this situation, farmers can achieve higher income. Assuming one acre of land with three hundred coffee trees, each tree produces 15 kilograms of fruits per year. That would make up to 4,500 kilograms of coffee cherries in a year. After removing the pulp and applying a 7% conversion rate, it would yield approximately 315 kilograms of green coffee beans.
If these green coffee beans are sold at RM 20 per kilogram, the annual income would be RM 6,300, which translates to RM 525 per month. Planting two acres of land would yield RM 1,050 per month. (Please note that this is based on the assumption of the optimal yield without deducting costs.)
This approach not only offers better selling prices but also allows better control over the quality, making it seemingly the most favorable option. If the quality improves, the selling price per kilogram is likely to exceed RM 20. Finding direct-trade partnerships with roaster may sell at
even higher price.
However, we cannot be overly optimistic to assume that every small-scale househole coffee farmer can easily find direct-trade buyers, and overlooking the challenges and costs of inland transportation and logistics, it becomes evident that intermediaries or coffee cooperatives also hold their own value in this context.
【Conclusion】
My rough calculations provided here do not lead to any definitive conclusions. Instead, they aim to offer some reference data and algorithms for farmers genuinely interested in venturing into Liberica coffee cultivation, providing a closer approximation to reality. Apart from the cold financial figures, individuals with different perspectives will have varying value judgments.
Overall, it is possible to achieve profitability in Liberica coffee cultivation, considering the economic characteristics of Liberica crops. To achieve profitability, one must either focus on producing high-quality beans or scale up the operations. Ideally, a combination of both approaches would yield better results.
From my perspective, a minimum scale of approximately 3 acres with over 900 trees may be necessary to generate a reasonable initial income. And, when considering yield alone, introducing Mardi’s latest varieties would be the optimal choice for long term.
（*Note: According to some recent data obtained from local coffee farmers, the actual yield of wild-type Liberica is only 5%. Therefore, the data in this algorithm needs to be adjusted downward.)
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