A Reflection on the Crop Economics of Liberica Coffee in Sarawak

By: Dr Kenny Lee Wee Ting

I have a habit of looking at things from an economic perspective, which might be a common trait among specialty coffee advocators with some experience. However, I understand that some people may find it tedious. But for labourers, especially farmers, considering the economic aspect is crucial because it directly affects their livelihoods.

For that reason, my meetings with indigenous coffee farmers always begin with number crunching. Some may find such an approach laughable, but it serves a purpose. We can ensure the farmers have their accounts sorted before we move on to discussing the planting and processing aspects of coffee cultivation. Financial matters must be in order before we shift our focus to specific coffee-farming issues to achieve sustainability.

Perhaps it is due to the lack of understanding of Liberica's actual production capacity, many local coffee farmers are reluctant or don't know how to calculate their costs properly. Some even avoid counting the trees they have in their plantations. 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 farmers to strive for better coffee quality while operating at a loss is unrealistic.

The issue of crop economics is merely a simple math problem. However, as usual, things become complicated in a multifaceted commercial environment where stakeholders hold different values.

The actual Liberica green bean yield per acre is a complex question with varying answers found in different research papers. Some sources suggest an average yield of approximately 470 kilograms per acre.

According to a report by MARDI in 1991, local poly hybrid (mixed varieties) Liberica coffee yields around 470 kilograms per acre from 500 trees. This means that each tree produces less than one kilogram of green beans annually.

The report also highlights that conversion rates between coffee cherries and dried seeds in some poly hybrid fruit trees can range from as low as 7% to over 9%.

Considering the ambiguity present in data from these different sources, there is a clear need for further in-depth research to gain a better understanding of Liberica coffee yield. We are committed to pursuing this research to provide more accurate information on the matter.

Considering that a significant portion of the locally grown Liberica coffee in Sarawak is categorised as the "normal breed" with origins that are not well-documented, I will be relying on the 7% green bean yield figure mentioned in an interview conducted with MyLiberica as the foundation for subsequent calculations.

In order to provide a comprehensive analysis of the production costs associated with Liberica coffee from various angles, we will present the algorithms for three distinct scenarios: the coffee processing plant, the coffee cherry cultivator, and a combination of both. This approach will enable a thorough understanding of the costs involved at different stages of the coffee production process.

Scenario 1: Think from the perspective of a processing plant.

Let's begin by examining the perspective of a Liberica coffee processing plant and the associated production costs.

To produce one kilogram of Liberica green beans, considering a 7% yield, approximately 15 kilograms of coffee cherries would be required. This calculation takes into account the removal of floaters, pulp, and parchments. (the cracked beans is yet to be remove)

Assuming the processing plant purchases coffee cherries at RM 1 per kilogram, the production cost of one kilogram of green beans would be as high as RM 15. This estimation does not even consider the potential 20% of "defective beans" or the operating costs of the processing plant.

From a processing plant standpoint, the cost of producing one kilogram of non-selected(unsorted) Liberica green beans could be at least RM 18. Even if this product were to sell for a close-to-cost price of RM 20, marketing a coffee with many defective beans would pose challenges.

In light of these circumstances, there are only two options:

A. Improve quality control measures, eliminate defective beans, and implement better processing methods to pursue the path of high-quality specialty coffee.

B. Further reduce costs.

The only way to reduce cost lies in lowering the price paid for coffee cherries.

To my knowledge, the price range for purchasing Liberica cherries falls between RM 0.50 and RM 1.60 per kilogram in Malaysia. If the price lowers to RM 0.50 per kilogram, a crucial question arises: Can coffee farmers still afford to produce under such circumstances?

Scenario 2: From the perspective of coffee cherries cultivators.

Let's assume a farmer takes good care of one acre of land using the square planting method, allowing space 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 annually (which may slightly increase after ten years). Now let's moderately assume that from the fourth year onwards, each tree produces an average of 15 kilograms of coffee cherries annually. Based on the mentioned purchase price of RM 1 per kilogram, a farmer with 300 trees per acre could earn RM 4,500 annually, which means a monthly income of RM 375.

However, this calculation does not account for expenses such as weeding, applying fertiliser, pest management, pruning, harvesting labour, 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 to maximize the yield of each tree, there must be a labourer 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 will be lower to only RM 140.

Therefore, if processing plants wish to maintain long-term coffee production, it's evident that prices cannot be cut 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 Liberica trees is considered "additional income" or "supplementary income" for those rural farmers. This is partially true, but from an economic perspective, Nothing comes free. Creating this income still requires labour costs and opportunity costs.

From a modern economic standpoint, it is important to recognise that even rest time carries a significant production cost known as the "reproduction of labour power." This concept highlights the necessity of rest in enabling the sustainability of the labour force for subsequent days. In essence, rest can be seen as a fundamental means of producing and maintaining a robust labour force. Without adequate rest, the workforce would not be able to function effectively, emphasising the crucial role that rest plays in the overall production process.

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.

Returning to the main topic at hand, I frequently pose an important question to coffee farmers: When considering the same amount of labor invested, how does the income compare when cultivating crops such as oil palms, rice, pepper, or other commodities?

To truly understand the implications of sustainable development, it is essential to delve deeper into this matter. In particular, we must consider the perspective of the younger generation residing in rural areas. When compared to the prospect of securing a monthly salary of RM 1,500 by working in the city, what advantages does cultivating Liberica offer?

For coffee farmers who solely focus on selling coffee cherries, it is crucial to calculate the monthly income based on the average production of RM 280 per acre with 300 trees. Expanding the plantation by one acre with 300 additional trees would result in an income increment of RM 280.

Therefore, undertaking proper scale planning before commencing the planting process is crucial. Planting without proper calculations and foresight may lead to problems. If farmers plant too little and subsequently realize, after a few years, that they are unable to generate a profit or make ends meet, they may ultimately abandon their plantations.

Regrettably, such occurrences are all too common in Sarawak.

Liberica, due to its robust branches, poses difficulties in pruning and harvesting compared to Arabica and Robusta.

Now, the question arises: Can a single farmer effectively manage and care for four acres of land housing 1,200 coffee trees? While it may be feasible during the off-season, it becomes considerably more arduous to accomplish during the busy fruiting season.

Scenario 3: Coffee cultivators themselves engage in processing as well.

In this situation, farmers can achieve higher incomes. Imagine one acre of land with 300 coffee trees, and each 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 those green coffee beans are sold at RM 20 per kilogram, the annual income would amount to RM 6,300 (RM 525 per month). Planting two acres of land would yield RM 1,050 per month. (Please note that this is based on the presumption 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 favourable option. If the quality improves, the selling price per kilogram is likely to exceed RM20. Finding direct-trade partnerships with roasters may sell at

even higher prices.

However, we cannot be overly optimistic to assume that every small-scale household 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 value in this context.

Conclusion

The calculations I have presented here are not meant to provide definitive conclusions. Rather, they serve as reference data and algorithms for farmers who are genuinely interested in embarking on Liberica coffee cultivation. These calculations aim to provide a closer approximation to reality. It is important to note that besides the financial aspects, individuals with different perspectives will have their own value judgments that come into play.

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 three 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 the 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.)