In the picturesque valley of Nepal, a movement of coffee growing farmers is growing quietly. As they busy themselves plucking the ripe cherries- a smile shows on their face. They see Kumud Singh and Rabindra Shrestha from Alpine Coffee Estate Pvt. Limited steadily walking upto them.
It was in 2008, the team of Kumud and Rabindra, young entrepreneurs from Kathmandu, had approached these farmers who used to cultivate cash crops such as maize, millet etc., to produce coffee. Initially, the farmers were hesitant. They had seen some of their neighbours grow coffee and they knew that growing Arabica coffee was a hard job- it grew only in the hilly terrains -- 800-1600 meter above sea level; had a long gestation period, and fetched a low farm gate price.
Convincing the farmers was not easy. But, the duo persisted. Coffee grown in this region had a huge demand in the western market. Known as ‘speciality coffee’- it fetched a premium price. Also, the domestic market had a huge potential to grow since the Nepalese people had begun to experiment with coffee as a beverage. The next, challenge was to convince banks and financial institutions to invest into their business plan. After a lot of persuasion they managed to get a personal loan at a very high interest rate to start their business. Within a period of few years, ‘Katman’Du Coffee’ brand started to get noticed and appreciated due to its high quality produce. They decided to take a leap in terms of expansion and started looking for a quality investor. While presenting their cases they came across the ICCO Impact Investment Team.
The deal was finallised in the year 2013, and the investments have been used to upgrade process techniques from harvesting cherries to roasted beans, increase procurement of green beans from other farms, market development and investment implementation. The investment will also be used to increase the production and sales capacity of Alpine’s coffee and to convert outstanding personal loans from the founders.
In an interaction with ICCO Investments communications team, Kumud Singh and Rabindra Shrestra shared the overall journey of Alpine Coffee, the initial struggles they faced, and the impact of their work on the lives of the poor farmers.
II: How did the idea of getting into the business of coffee happen?
AC: Rabindra and I met while doing our MBA from Kathmandu University. We both specialized in marketing. The idea for Alpine Coffee came when we were in our last semester of our college. A friend of ours was thinking of starting a coffee plantation and we thought we could also jump start into this business. We did some research as students for a couple of months and thought it would be a good thing to do for the future.
II: What are the two important defining factors behind this idea?
AC: First, majority of the Nepali population are farmers but have not been able to increase their income levels. They know how to grow and take care of any suitable plant you give them but lack skills in identifying, processing and marketing suitable cash crops. Coffee can be grown in most hilly parts of Nepal between 800m and 1600m so there is a lot of room for expansion and people involvement. Second, Coffee being a commodity has markets around the world and Nepali Coffee being grown in the highlands using organic methods is treated as Specialty Coffee hence we thought that connecting to a buyer would not be a big challenge.
II: How does a coffee farmer stand at an advantage compared to a cash crop farmer?
AC: Coffee is also one of the identified cash crops in the hilly regions of Nepal. The income from coffee compared to other products which were being planted earlier is higher, (esp. maize and millet which were being planted earlier. Coffee has an increasing market share even in the local market. Compared to other cash crops and vegetables, coffee can be stored for a long time and has a ready market both inside and outside of Nepal. Most other cash crops have storage issues and markets are limited compared to coffee.
II: What impact will this venture have on the farmers?
AC: Growing coffee takes three to four years to get the first harvest and seven years for full maturity. But once a plant is fully grown this is where the most value is created as we see. The value is huge, and can be see beneficial in terms of income generation, employment generation (in most cases women workers), land usability (as people are moving away from farming in certain areas-barren lands- coffee being a perennial crop require less efforts compared to seasonal crops), environment preservation (coffee is shade grown so a lot of big trees are planted along), erosion reduction (coffee is mostly planted in the hills and the bio mass in a plantation helps preventing soil erosion).
II: What are your expansion plans?
AC: We are planning on increasing our farms to a different area (further away from Kathmandu) as the one where we are currently located. If we start in a different place the surrounding farmers would also take up coffee farming as we have seen in our current location. This would definitely help them in terms of knowledge transfer and easy access to markets. This new expansion would be in a much larger area as compared to what we are doing now. The idea is to start a full commercial plantation. This will bring in knowledge at the grassroots level and production volumes which is still lacking because of no commercial coffee plantation in Nepal. Other aspects of employment and environment will follow. With this knowledge we can have a lot of smaller independent farmers who would be interested in doing similar things. For expansion to a fully commercial plantation acquiring or leasing land and gathering finances would be our biggest challenge.
II: Apart from the investment, has there been any other value addition from ICCO Investments?
AC: Thanks to the investment support, we now have a top class processing facilities- the best machines. This has really impacted our work in terms of establishing ourselves as a brand. ICCO Investments has additionally, helped is in institutionalizing our work. Earlier we did not have a proper system but now we follow financial reporting, project progress report, establishing HR policies and above all planning and setting goals for short and long term growth. ICCO Investment has also helped us to contact and network with the export marketers in the Netherlands.