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  • QA 075
    Question:
    What are the possibilities of producing soluble coffee in Ethiopia and what would this require?
    Background:
    My family owns extensive coffee plantations in the Ethiopian Highlands near Djimmah. What would be the possibilities of transforming our product into soluble coffee, and what would we need for this?
    Asked by:
    Producer - Ethiopia
     
    Answer:

    All coffee can be transformed into soluble although the extraction rates vary. For example, the industry standard is that 2.6 kgs of green coffee is equivalent to 1 kg of soluble. But there are operations that achieve better ratios, depending on the systems and raw material that are used. See also QA 064.  

    However, the mere fact that basically any coffee can be transformed into soluble does not necessarily mean that to do so is a good idea or even a profitable one. Downstream processing is often seen as a way of adding value to a raw product at origin but, unfortunately, it is not as simple as this. If it were then the export trade in processed coffee products from origin would be much greater than it is. To note also that considerable soluble processing capacity exists in Brazil and in importing countries - over-capacity according to some.

    Section 02.11.01 for example compares export prices for soluble coffee against a green price indicator. This suggests that the added value is likely to be marginal and a run of low world market prices may not allow the speedy recovery of the cost of new installations. Both bulk soluble and green coffee are subject to the same market forces. And both sell relatively cheaply in bulk. True added value in coffee mostly comes with packaging and brand marketing. Also, many soluble brands are a mixture of arabica and (much) cheaper robusta - only a few origins produce a 100% arabica-based soluble coffee.

    Your question does not make it clear what type of coffee you intend using but we assume it is sundried arabica, not wetprocessed. In this respect it is worthwhile to know that Ethiopia's main competitor, Brazil, also accounts for over half of all soluble exports from coffee producing countries. There is strong competition in the spray-dried segment and the outlook for new entrants does not appear to be all that positive. Freeze-dried on the other hand does reasonably well. It also retains the flavour better, important for a pure arabica or niche product, but costs considerably more to install and produce.

    We are not in a position to provide details of soluble processing plants but in any case would suggest you determine first of all what the ratio green-soluble for your coffee is likely to be. Also, what would be the quality and how would this appeal to both local and foreign markets? What price range would you have to compete in? What size processing plant could your own, secure, green coffee production support? (Without year-round production, operating costs are likely to be excessive). To start you might begin by having a look at www.niro.com, the website of a leading soluble processing equipment manufacturer, and enter into a dialogue to obtain some basic details of product testing, design capacity, minimum throughput, cost…  To note though that Brazil with its huge internal market and large soluble industry  also manufactures soluble processing equipment and is a potential supplier: peamarketing@peamarketing.com.br is one source you could therefore explore as well.

    But before doing any of this please read also sections 02.10.02 through 04. These offer background information on soluble coffee generally. We understand from a recent study conducted in Asia that an economic processing capacity is in the order of 1,000 tonnes finished product, requiring a green bean input of between 2,500 to 2,800 tonnes.  We further understand that to achieve profitability good local or regional markets are needed as well, perhaps for as much as fifty percent or more of total output. Cost estimates differ but trade circles suggest a figure of around ten million US Dollars for smaller plants (600 tonnes freeze-dried -1,800 tonnes spray-dried), most of which would be incurred in foreign exchange of course.

    Posted 10 February 2006

    Related chapter(s):
    Related Q & A:
    QA030, QA064