- Although Hawaii accounts for less than 1% of the global coffee production, the crop is a $US50 million industry for the state.
- But when the COVID-19 pandemic closed down restaurants, cafes, and hotels throughout Hawaii and across the country, demand for coffee plummeted.
- As this year’s harvesting season begins in growing regions like Ka’Å«, coffee producers have been left sitting on millions of dollars worth of last year’s crop with nobody to sell to.
- Business Insider visited a coffee mill in Pahala, Hawaii, to understand the financial impact the COVID-19 pandemic has had on those in the industry.
- Visit Business Insider’s homepage for more stories.
Following is a transcription of the video.
Narrator: Nearly 1 million pounds of coffee get processed in a typical season at Ka’Å« Coffee Mill on the island of Hawaii. But this warehouse is filled with nearly $US1 million worth of Ka’Å«-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 $US50 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’Å« 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 labour-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’Å« 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’Å«. While farms and regions like Kona wrapped up their harvest in late December, the harvesting season in Ka’Å« 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 $US600,000 in lost revenue that we’ve had just because our visitor centre 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’Å« 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’Å« 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 $US20,000 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 $US18 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 have either heard about us through family and friends, or they have 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 cafÃ©s. One of those farms it buys from is Ka’Å« 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 travelling, 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 $US10,000, 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’Å«, 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’Å« 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.