How Millions Of Pounds Of Coffee Are Processed At Hawaiian Coffee Farms | Big Business

Summary

The Ka'ū Coffee Mill on Hawaii faces unprecedented challenges due to the COVID-19 pandemic, with nearly $1 million worth of unsold coffee beans in storage. Despite Hawaii's small contribution to global coffee production, the industry heavily relies on tourism, which has been severely impacted. The pandemic's timing coincided with the harvest season, causing a significant drop in income and revenue for coffee producers like Lou Daniele and Leo Norberte. With the retail shop closed and a decline in demand, the future of Hawaii's coffee industry hinges on the return of tourists and potential government assistance.

Takeaways

• 🌏 Ka'ū Coffee Mill on the island of Hawaii usually processes nearly 1 million pounds of coffee in a season, but currently has $1 million worth of beans unsold due to the global demand shutdown.
• 📉 Hawaii's coffee industry, which contributes less than 1% to global production, faces a significant revenue drop with no income from sales, only expenses.
• 😔 The pandemic's impact on the coffee industry was particularly harsh as it coincided with the selling season for Ka'ū Coffee Mill, leading to a loss of potential breakthrough year.
• 🌾 Coffee farming in Hawaii is spread across five islands with eight regions and nearly 1,000 farms, highlighting the wide-reaching effects of the pandemic on the industry.
• 🕒 Harvesting coffee is a time-sensitive labor-intensive process requiring immediate action once the cherries ripen, which lasts only 24 hours.
• ♻️ The coffee production process involves several stages including washing, drying, milling, and sorting to ensure top-quality green beans.
• 📊 Lou Daniele, the general manager of Ka'ū Coffee Mill, estimates a loss of over $600,000 due to the closure of the retail shop and the inability to sell the previous year's crop.
• 📉 The value of coffee decreases as it remains unsold in the warehouse, becoming old crop and devalued, which significantly affects the bottom line.
• 🤝 The relationship between Ka'ū Coffee Mill and local farmers is symbiotic; disruptions in coffee demand affect the entire supply chain.
• 🌐 The Hawaiian coffee industry is heavily dependent on tourism, which was severely impacted by the pandemic, leading to a dramatic decline in demand.
• 💰 Financial assistance from the state and federal governments, such as PPP loans, has been insufficient to cover the operating costs of the affected businesses.

Q & A

How much coffee is typically processed in a season at Ka'ū Coffee Mill?

Nearly 1 million pounds of coffee is processed in a typical season at Ka'ū Coffee Mill.

What is the current situation with the coffee beans in the warehouse at Ka'ū Coffee Mill?

The warehouse is filled with nearly $1 million worth of Ka'ū-grown coffee beans that are not being sold due to the global demand shutdown.

What was the expected outcome for the coffee industry in Hawaii this year before the pandemic?

This year was expected to be a breakthrough year for the coffee industry in Hawaii, with increased demand and sales.

How has the pandemic affected the coffee producers' income?

The pandemic has led to no more income or revenue for coffee producers, resulting in significant losses.

What is the role of Lou Daniele in the Ka'ū Coffee Mill?

Lou Daniele is the general manager of Ka'ū Coffee Mill.

What factors contribute to the unique quality of coffee from Ka'ū?

Unique weather conditions with cool evenings and warm days, along with great soils, contribute to the high sugar content in Ka'ū coffee.

How is coffee cherries processed after harvesting?

After harvesting, coffee cherries go through a washed process that includes flotation, pulp removal, demucilaging, and drying to reduce moisture content.

What is the current amount of coffee parchment stored in Lou's warehouse?

Lou estimates that he has approximately 90,000 pounds of coffee parchment stored in his warehouse.

How has the pandemic impacted the sale of last year's coffee harvest?

The pandemic hit just as last year's harvest was ending, causing a shutdown in global demand and leading to a significant loss in revenue.

What is the impact of the decline in tourism on the Hawaiian coffee industry?

The decline in tourism has led to a dramatic drop in demand for Hawaiian coffee, as the industry is heavily dependent on tourist spending.

What are the challenges faced by coffee farmers like Leo Norberte due to the pandemic?

Coffee farmers like Leo Norberte are facing financial difficulties due to the lack of orders and the loss of income, with an estimated loss of about $20,000 every month.

What measures are being taken to help the coffee industry recover from the pandemic?

Starting October 15, visitors who test negative for COVID-19 within 72 hours of arriving in Hawaii can avoid a two-week quarantine period, which may help boost tourism and the coffee industry.

Outlines

00:00

🌴 Impact of Pandemic on Hawaiian Coffee Industry

The Ka'ū Coffee Mill on the island of Hawaii faces unprecedented challenges due to the global pandemic. With nearly 1 million pounds of coffee processed in a typical season, the warehouse is currently filled with $1 million worth of unsold coffee beans. Lou Daniele, the general manager, explains that the global demand has collapsed, leaving them with no income or revenue, only expenses. Despite Hawaii contributing less than 1% to global coffee production, it generates around $50 million annually. The harvesting season is ongoing, yet last year's crop remains unsold. The coffee is handpicked, processed through a series of steps including washing, drying, and milling before it can be sold as green beans to coffee shops and roasters. The pandemic's timing coincided with the end of the harvest, causing significant financial strain as the retail shop was forced to close, leading to over $600,000 in lost revenue. The situation is further complicated as this year's harvest begins with last year's coffee still unsold, and the longer the coffee remains in storage, the less valuable it becomes.

05:00

📉 Economic Struggles of Coffee Farmers Amidst Tourism Decline

Leo Norberte, a coffee farm owner, and Lou Daniele from Ka'ū Coffee Mill, along with other businesses like Maui Coffee Roasters, are grappling with the economic fallout from the pandemic. The Hawaiian coffee industry, heavily reliant on tourism, has been hit hard as visitor spending, which was nearly $18 billion in 2019, has plummeted due to a 98% drop in tourist arrivals in July 2020. The closure of retail shops and the decline in demand for coffee have led to significant financial losses. For example, Maui Coffee Roasters has drastically reduced its coffee purchases from Ka'ū Coffee Mill, from 50 to 100 bags to just 10. The lack of help from the state and federal governments, despite receiving PPP loans, has exacerbated the situation. The latest round of the Coronavirus Food Assistance Program may not provide much-needed relief due to its requirements. The future of these businesses hinges on the return of tourists to Hawaii, with a potential glimmer of hope as new measures allowing visitors who test negative for COVID-19 to avoid quarantine are set to begin in October. However, the recovery is expected to be slow and challenging.

Keywords

💡Ka'ū Coffee Mill

Ka'ū Coffee Mill is a coffee processing facility located on the island of Hawaii. It is a central hub for coffee production, where coffee beans are processed during the typical season. The facility is significant in the video's theme as it exemplifies the impact of the global demand shutdown on local coffee producers. For instance, Lou Daniele, the general manager of Ka'ū Coffee Mill, mentions that they are still holding onto nearly $1 million worth of coffee beans that would normally have been sold by that time in a regular year.

💡Global Demand Shutdown

The global demand shutdown refers to the collapse in coffee demand worldwide due to the pandemic. This is a pivotal concept in the video as it directly affects the livelihood of coffee producers. The script highlights how the shutdown has led to a halt in sales, causing a significant financial strain on businesses like Ka'ū Coffee Mill, which is unable to sell its stockpile of coffee beans.

💡Harvesting Season

The harvesting season is a crucial period for coffee producers when the coffee cherries ripen and are handpicked. It is labor-intensive and time-sensitive, as the cherries must be processed quickly once ripe. The video emphasizes the challenges faced during the harvesting season, especially with the ongoing pandemic, where the previous year's crop remains unsold while a new season has already begun.

💡Coffee Cherries

Coffee cherries are the fruit of the coffee plant from which coffee beans are extracted. They are handpicked during the harvesting season and are the starting point of the coffee production process. In the script, Lou Daniele describes the urgency of processing coffee cherries once they ripen, as they only last 24 hours before they must be processed.

💡Washed Process

The washed process is a method used to convert coffee cherries into parchment, which is a stage before the beans are dried and roasted. It involves several steps, including flotation, pulp removal, and demucilaging. The video uses this term to illustrate the detailed and meticulous process of coffee production, showing the transformation of coffee cherries into the final product.

💡Parchment

Parchment is the term used for the coffee beans after they have been processed to remove the outer skin and pulp, but before they are dried and roasted. In the video, Lou Daniele mentions having approximately 90,000 pounds of coffee parchment in his warehouse, which is awaiting the final steps of processing.

💡Green Bean

Green bean refers to the coffee beans after they have been hulled, polished, and classified, but before they are roasted. These are the beans that will eventually be roasted to become the coffee we know. The video explains that Ka'ū Coffee Mill produces close to 160,000 pounds of green beans in a normal season, which are then sold to coffee shops and roasters.

💡Pandemic Impact

The pandemic impact is a central theme in the video, illustrating the devastating effects of COVID-19 on the coffee industry. It discusses how the pandemic led to a loss of income and revenue for coffee producers, with the shutdown of businesses and a dramatic decline in tourism. For example, Lou Daniele estimates a loss of over $600,000 in revenue due to the closure of the retail shop.

💡Tourism Dependency

Tourism dependency highlights the reliance of the Hawaiian coffee industry on visitors for sales. The video explains that unlike other coffee-producing countries, Hawaii's industry is heavily dependent on tourists, which is evident in the significant drop in demand as visitor arrivals fell drastically during the pandemic. This dependency is a key factor in the industry's vulnerability to external shocks like the pandemic.

💡Coronavirus Food Assistance Program

The Coronavirus Food Assistance Program (CFAP) is a government initiative mentioned in the video that aims to provide financial assistance to farmers affected by the pandemic. However, the video points out that due to the program's requirements and wording, many coffee farmers, including those in Ka'ū, may not be able to benefit from it, indicating the challenges in accessing relief during these difficult times.

💡Revenue Loss

Revenue loss is a significant issue discussed in the video, affecting both large operations like Ka'ū Coffee Mill and individual farmers. The script provides specific figures, such as Leo Norberte's loss of about $20,000 every month due to the pandemic, illustrating the financial strain on the coffee industry. This loss directly impacts the ability of these businesses to continue operations and support their local communities.

Highlights

Nearly 1 million pounds of coffee is processed annually at Ka'ū Coffee Mill.

The warehouse is filled with $1 million worth of Ka'ū-grown coffee beans that are not being sold due to the global demand shutdown.

Hawaii's coffee production is less than 1% of the global total but brings in around $50 million a year.

This year, coffee producers like Leo Norberte are facing no income and only expenses due to the pandemic.

Ka'ū Coffee Mill expected a breakthrough year but the pandemic disrupted their plans.

Coffee harvesting in Hawaii is a labor-intensive process with a short window once the coffee cherries ripen.

Coffee cherries are handpicked and processed through several stages before becoming green beans.

Ka'ū Coffee Mill has approximately 90,000 pounds of coffee parchment waiting for the final steps.

The pandemic hit just as last year's harvest was ending in Ka'ū, causing significant issues for coffee sales.

Lou had to close the retail shop on March 19, resulting in over $600,000 in lost revenue.

The longer coffee sits in the warehouse, the less valuable it becomes.

Ka'ū Coffee Mill and local farmers have a symbiotic relationship that is being disrupted by the pandemic.

Leo Norberte is losing about $20,000 every month due to the lack of coffee orders from the pandemic.

Hawaiian coffee industry is heavily dependent on tourism, which has been severely impacted by the pandemic.

Visitor arrivals to Hawaii in July 2020 fell by almost 98% compared to the same month last year.

Maui Coffee Roasters has seen a significant drop in demand for coffee, going from 50 to 100 bags to just 10.

Businesses like Ka'ū Coffee Mill, Maui Coffee Roasters, and local farms have not received much help from the state or federal governments.

Starting October 15, visitors testing negative for COVID-19 can avoid quarantine, which may help revive tourism.

Ka'ū is a strong district with a history of resilience, and there is hope for a slow recovery of tourism.

Transcripts

Nearly 1 million pounds of coffee

get processed in a typical season

at Ka'ū Coffee Mill on the island of Hawaii.

But this warehouse is filled with nearly $1 million

worth of Ka'ū-grown coffee beans,

and they aren't going anywhere.

Lou Daniele: By this time

in a normal year,

that all would have been

milled down and sold.

But since the global demand

completely shut down,

I'm still hanging on to that.

Narrator: Although Hawaii accounts

for less than 1% of the global coffee production,

on average it brings in around $50 million a year.

But this year...

Leo Norberte: No more income. No more revenue.

Only expense.

That's why I'm losing a lot.

Daniele: It was gonna be our breakthrough year,

that's what we were calling it.

We could see it.

We could taste it. We could feel it.

And now that is just,

you know, all basically gone away.

Narrator: But coffee producers have no time to waste.

This year's harvesting season is well underway,

while millions of dollars' worth of last year's crop

sits in limbo.

Although Hawaii is primarily

known for its Kona Coffee,

the crop is grown on five

islands in eight regions,

and there are nearly 1,000 coffee farms

throughout the state.

Daniele: Coffee's always

been part of my life.

I think since I was about 8.

Narrator: That's Lou.

He's the general manager

of Ka'ū Coffee Mill.

Daniele: So, we have unique weather

and we have great soils down here.

We have very cool evenings, very warm days.

And what that does,

it puts a lot of sugars into our coffee.

Narrator: Before that coffee gets poured

into someone's cup, it gets harvested

from a coffee plant like this one.

Harvesting is a labor-intensive process

with a countdown once the coffee cherries ripen.

Daniele: We have to do something with it immediately.

It only last 24 hours.

Narrator: When coffee cherries ripen,

they are handpicked and loaded into 100-pound bags.

The majority of Lou's coffee cherries

go into what's called the washed process,

where they are converted into parchment.

Daniele: Basically entails going through a flotation tank.

From there, it's gonna get sucked up into the pulper.

That's where we remove the skin and the pulp.

From there, it goes into a demucilager.

Once it goes through the demucilager,

we have removed all that slimy pectin layer,

goes into another flotation tank.

And then it's gonna be transported

over to the drying deck.

When it comes out of that process,

comes out of the wet mill, it's 46% moisture.

You gotta dry that down to 9 to 12%.

Narrator: After drying in the open overnight,

the parchment is loaded into a mechanical dryer

for 24 hours.

Daniele: Then we can move it into our warehouse.

Narrator: Lou estimates that he has approximately

90,000 pounds of coffee parchment in his warehouse,

waiting for the final steps.

Daniele: We store it until we need to mill it

into green bean.

Narrator: When Lou is ready to convert

the parchment into green bean,

it heads to the dry mill.

Daniele: That dry-milling process does several things.

So, first, it's going to hull it.

It's going to polish it.

Then it goes into a classifier,

which pulls out all the different sizes.

Narrator: From there, the green bean

heads to the gravity table.

Beans that are too light because they are

overripe, underripe, or damaged by pests

float to the top and are discarded.

The rest of the top-grade product

continues on to the optical sorter,

which removes any remaining impurities.

Daniele: Coffee's one of those products

that any little defect is gonna throw off your cup.

Narrator: This is what will eventually get roasted

and become what we know as coffee.

In a normal season, Ka'ū Coffee Mill

will produce close to 160,000 pounds of green bean,

which gets sold to coffee shops and roasters

throughout the state and internationally.

Daniele: I was up 30% over last year.

And then the pandemic hit.

Narrator: The pandemic took hold

just as last year's harvest was ending in Ka'ū.

While farms in regions like Kona

wrapped up their harvest in late December,

the harvesting season in Ka'ū

runs through March and April.

Daniele: So, when this pandemic hit,

most of the Kona folks kind of had

gotten rid of their crop already,

where we were just starting to sell.

I generally sell most of my bulk product

in the first quarter of the year.

And by that time, things were already

shutting down across the globe.

And so that caused a lot of issues.

Narrator: Lou was also forced to close

the retail shop on March 19.

Daniele: I estimate that's roughly

a little over $600,000

in lost revenue that we've had

just because our visitor center has been shut down.

Narrator: To make matters worse,

this year's harvesting season has already begun

while they are still trying to sell off

last year's product.

And the longer that coffee sits in the warehouse,

the less valuable it becomes.

Daniele: As that coffee sits there,

that's now become old crop.

And so it gets devalued.

It's a huge blow to our bottom line.

Narrator: Although Ka'ū Coffee Mill grows

and harvests coffee from its 86 acres of fields,

it also buys coffee cherry from local farmers.

But now that demand for coffee has dropped,

Lou has been put in a difficult position.

Daniele: You know, I depend on these guys

to sell me coffee, and they depend on me to buy it,

so it's kind of this whole symbiotic relationship.

And, you know, when one part of that whole system

gets disrupted, it can be devastating

for the folks down the line.

Norberte: I don't know how longer I can survive

without help.

Narrator: That's Leo.

He owns a coffee farm just down the road

from Ka'ū Coffee Mill,

where he harvests about 250,000 pounds

of coffee cherry every year.

Norberte: The people that I supply,

they don't order coffee.

Because of the pandemic,

I lose about $20,000 every month.

And now we start harvesting again.

Narrator: For both Lou and Leo,

much of the drop in demand for Hawaiian coffee

can be attributed to one factor,

a dramatic decline in tourists.

Unlike countries in South and Central America,

which can produce coffee at a fraction of the cost

and ship their products around the world,

the Hawaiian coffee industry is dependent on tourism.

And visitor spending totaled nearly $18 billion in 2019.

But this summer was different.

Visitor arrivals to Hawaii in July 2020

fell by almost 98% compared with the same month last year.

Daniele: People come here specifically

because they've either heard about us

through family and friends,

or they've read about us,

or they follow us on our website.

Narrator: Like the retail shop at the mill,

many of the businesses Lou and Leo sell their coffee to

are dependent on tourists as well.

And as visitors to Hawaii dropped,

so did the stores' demand for coffee.

Nick Matichyn: Back in February, we were having

one of our best years ever.

And then all of a sudden, somebody opened a trapdoor,

and we've been in a free fall since then.

Narrator: Nick is the owner of one of those stores.

He started Maui Coffee

Roasters almost 40 years ago.

Matichyn: It was established for a need

to roast Kona coffee at that time.

From there, we just grew.

Narrator: Maui Coffee Roasters buys coffee

from farms throughout Hawaii,

which it then roasts and sells in-store

and to local grocery stores and cafés.

One of those farms it buys from is Ka'ū Coffee Mill.

Matichyn: We buy green coffee from them in 100-pound sacks.

In a normal season, we

would go anywhere from

50 to 100 bags.

And right now we're down to,

I think we've just got in 10 bags.

At first we said, "Well, I guess it's time

to close the business."

But after a couple meetings,

we decided we were gonna try to weather it out.

Narrator: Though coffee shops have resumed service,

tourists have not resumed traveling,

which means fewer sales for everyone.

Matichyn: You know, if we

don't make it by January,

we might not be here.

Daniele: An operation this size takes a lot of folks

to keep it running, and we need a certain amount of revenue

to keep this operation going.

Narrator: Unfortunately, Lou, Nick, and Leo

have not gotten much help from the state

or federal governments.

Although all three received PPP loans in the spring,

the operating costs of their businesses meant

that money didn't last long.

Matichyn: We blew through

that PPP money really quick.

You know, 'cause there wasn't that much.

Norberte: One time they gave me $10,000,

but I spent only one week, no more.

So I need some more help.

Narrator: And while coffee farmers were included

in the latest round

of the Coronavirus Food Assistance Program,

getting help might not be as easy as it seems.

Daniele: Because of the requirements

and what they're asking of the farmers,

a lot of these folks aren't going to be able

to glean money from that program.

Nor are we, because of the way the wording is in that.

Narrator: For folks in Ka'ū,

their only hope of returning to normal operations

depends on tourists returning to the islands.

And, fortunately, visitors might soon be arriving.

Starting October 15, visitors who test negative

for COVID-19 within 72 hours of arriving in Hawaii

can avoid a two-week quarantine period.

Matichyn: It's created a whole new atmosphere here

just by the people that live here.

Everybody's got this hope.

Daniele: All I can say is that

Ka'ū is a very strong district.

The people are strong.

They have a long history of being fighters.

I know that tourism will eventually come back to Hawaii.

I don't think it's gonna be a quick rebound.

It's gonna be a slow recovery, but we will recover.