Subject: DJ: Better Future Brewing For ET Coffee Farmers

East Timor: Better Future Brewing For Coffee Farmers

By Tom Wright

DILI, East Timor, August 23 (Dow Jones)--Try to find coffee from East Timor, barely three months old as a nation, and you'll probably come up empty-handed.

While coffee from neighboring Indonesia is gaining international recognition alongside time-tested Colombian and Kenyan beans, East Timor isn't a name which would register with most coffee lovers.

But a growing band of aficionados is starting to warm to the taste of the coffee grown in the highlands of this tropical southeast Asian country, and industry experts say East Timor coffee has the potential to challenge the world's best-known brews.

Starbucks Corp. (SBUX) already buys from East Timor farmers to make its 'Cafe Verona' blend. The East Timor coffee, an earthy-tasting organic arabica known locally as Hybrida da Timor, is mixed with lighter Latin American beans to make the Seattle-based company's popular expresso.

For East Timor, creating a cachet for its coffee is crucial to alleviate poverty among its 800,000 people, about a quarter of whom rely on the bean for a living.

At a time world coffee prices are near 30-year lows due to a huge overhang in supply - with stockpiles even used for fuel in some cases - carving out a niche market for East Timor coffee is crucial for farmers to sell their output at a premium to the market.

But most of East Timor's harvest this year, which will draw to a close in a few weeks, will end up in anonymous foreign instant coffee brands, raising little money for farmers.

Bad Habits

East Timor's efforts to stand with the best coffees in the world are blocked by widespread ignorance among farmers about how to harvest, dry and process the bean, says Alistair Laird, an adviser to Cooperative Cafe Timor, the nation's largest coffee buyer.

"To reach the niche market, we've got to improve the standard," he says.

CCT, a cooperative of 18,000 farmers sponsored by the U.S Agency for International Development, hopes to sell just under half of its 1,700 tons this year to Starbucks, Laird says. After operating since the mid-1990s with the help of foreign experts, the cooperative is starting to produce coffee of international quality.

In a downtown Dili warehouse, East Timorese laborers working for CCT are busy sorting through thousands of green coffee beans, picking only the best to go into waiting containers for export.

The cooperative hopes to sell its coffee at a premium price of up to $1.40 per pound, compared to the September contract for arabica on the New York Coffee Sugar & Cocoa Exchange, which was trading Thursday at 46.70 cents/lb.

The remainder of East Timor's harvest, which is set to total about 6,500 tons, a tiny amount on a global scale, won't be able to command such a premium. Many farmers are still harvesting green coffee beans in a way which destroys the potential of the coffee, Laird says.

Even CCT has huge room to improve before it builds up brand recognition with consumers for its coffee, rather than having the coffee end up as a blend with other better-known names, he adds.

But such a goal isn't out of reach, experts say.

East Timor's highlands offer a perfect environment for growing coffee, which the Portuguese imported here several decades ago. Guerilla activity in the mountains during Indonesia's 24-year occupation of the country actually added to the quality of coffee by keeping modern pesticides and fertilizers off the crop.

In a recent study, the Specialty Coffee Association of Europe found that about a third of East Timor's growing regions have the potential to produce coffee which could compete with the best in the world, given better training.

So watch out for East Timor coffee, which may be coming to stores near you soon.

-By Tom Wright, Dow Jones Newswires; 6221 3983 1277;

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