Transcript

Maria Palacio: [00:00:01] A lot of the farmers, they are already struggling and they’re producing below margin. Therefore, how can we ask them to pay their workers fairly if they’re not being paid fairly? Or how can we expect for them to be organic right now if they are struggling themselves to put food on their table?

Leah Thomas: [00:00:20] Hi! And welcome to the Means and Matters podcast, presented by Bank of the West. I’m Leah Thomas, environmental advocate, creator of Intersectional Environmentalist, writer, Bank of the West ambassador and your host.

My guest today is Maria Palacio, co-founder and CEO of Progeny Coffee. Maria and John Trabelsi, her co-founder and husband, are transforming the coffee industry by selling specialty coffee in a way that empowers farmers to have better opportunities to stabilize their income. They’ve chosen to work with farmers in Columbia, where Maria grew up, and have established set pricing and given technical support to increase production. Progeny is also helping to innovate sustainable growing practices in the region– decreasing soil amendments and using less water– to grow the coffee beans.

While I’m not a coffee drinker myself, I’m extremely fascinated by sustainable farming practices and how it connects to intersectional environmentalism. And I can’t wait for this conversation.

[Music]

Leah: [00:01:31] Hi Maria, I’m super excited to have you here. Coffee is ubiquitous and coveted in our culture. It’s a morning ritual, a cup shared with friends and afternoon pick me up. But as consumers, we only see a fraction of the process that it takes for this gorgeous drink to arrive in our cups. And you’re a fifth generation coffee grower from Colombia. I’d love to learn more about your family’s background in coffee.

Maria: [00:02:00] I was born and raised in a coffee farm in Colombia. I’m the fifth generation coffee farmer from my family all the way from my mom and my dad’s side, from great grandparents and so on. So think of our like growing up in Napa, where everybody, you know, like wine is very prominent. That’s where I grew up. It’s a place and city very rich in coffee. It’s a region that’s called the coffee belt. And it’s where most of the Colombian coffee comes from.

Leah: [00:02:25] Do you have a first memory from when you were a kid involving coffee?

Maria: [00:02:30] I don’t know my first memory, but I do have one of my like my favorite memories. When we didn’t have snow back then, and I remember always like thinking about snow, like, what would that mean, to have like a whole frozen place? And I would see, like, the kids doing like the snow angels and so on.

And so there’s a place where they pick the coffee, which a coffee is a fruit. And then they peel the fruit and then they dry the seed and the seed is what is the coffee that we drink. They roast the seed and then you grind the seed. So before that, the coffee gets dried and in the farm they will do these mountains of coffee. And my brother and I will go to the second floor and we’ll jump into the coffee mountains. Just we like the thought making believe that it was snow. And we will do like snow angels in the piles of mountains. And of course, my dad will always get really mad because we will just spill the whole production.

And I think another big memory that I have is going into the field with my dad and we will be standing in there. The soil looks very rich. And once I asked my dad, “What do you like the most?” And he said, ‘When I look at the soil and he looks like a chocolate sponge, that you could just eat it or how rich of nutrients it looks like.’ I thought that was really interesting. So much passion about the soil.

Leah : [00:03:53] I love that image of you and your brother. That sounds like so much fun. And it sounds like your father had a really big love for farming. Can you talk about some of the challenges that coffee growers like your family might face?

Maria: [00:04:07] One of the biggest one has been that farmers have been producing around give or take 15 percent below margin. And it’s crazy to think that farmers will produce their products and then they will go out to market to see what is the stock market price, like the day market price, regardless of how much is there their margins or how much money they’re going to make. And usually they end up losing money. And I saw that first time with my family where there would be so much work put into it, and then they will be there breaking even or losing money. So they will get another loan because the next crop will be better because there’s always this hope like, the next crop will be the better one.

And eventually, like, you know, that bubble burst and it did burst for my dad, where he eventually for generations he lost the farm because the price was not there. And one of the biggest issues, because the price of the coffee is in the stock market. So it goes up and down constantly, depending on how much coffee is coming into the market based on Brazil and Vietnam and so on.

Think about it just like throughout the years what this is costing, like all those small farm holders are up in the mountains – they end up getting less education, less access to information, less access to, you know,  roads, education and so on. So it starts creating this much deeper poverty loop because then the new generations are not educated, they’re not getting that access to capital or anything to take on their family business. And it’s really sad to just see the whole community just fall into this poverty loop. When coffee is the second most consumed beverage in the world, the consumer is willing to pay more for their cup of coffee and they’re drinking more coffee. But at the farm level, they are not paying them more.

Leah: [00:05:58] So Progeny is often described as a coffee business, but in reality it’s a lot more than that. It helps growers by sharing advice about how to improve their production process. And the company uses your family’s farm to test methods that you share with the farmers. So how do you describe your business model? Because it really is unique and very different.

Maria: [00:06:21] So when we started, we started with a question: how can we create a sustainable coffee chain that actually brings value to the farmers as well as our consumers that believe in high quality?  We thought we understood that first there was a huge problem at the farm level. And so we were like, okay, we need to bring this education to the farmers. So that’s where we provide education, technical support to the farmers to transform their farms into sustainable farming, specialty farming.

And one thing that people usually ask is like is this fair trade? Is this like, what certifications do you have? And then we always answer, well, a lot of the farmers, they are already struggling and they’re producing below margin. Therefore, how can we ask them to pay their farm, their workers fairly if they’re not being paid fairly? Or how can we expect them for them to be organic right now if they are struggling themselves to put food on their table?

So what about we take them on a journey where we put more money into their hands and then we go teach them on how to transform the farms. So we help them transform all the way to, you know, just into getting to sustainable farming, reforestation, climate change and like all these other components, as well as how to manage their money.

And we realized that, you know, from the moment the coffee leaves the farm until it arrives to the consumer, there could be around 10 different steps. And that’s where all of that value stays and doesn’t go down to the farmer. So as being from the source, we understood that we could eliminate most unnecessary steps. So something that took 10 steps, we’re able to take it to three different steps and take it directly to our consumers. So we work directly from the source and we create quality at the source. Then the roaster enhances and maintains that quality. And the barista showcases that quality that the farmer created.

Leah: [00:08:23] Can you help me understand a bit more about the difference between coffee sold on the commodity market versus the specialty market?

Maria: [00:08:31] Coffee sold on the commodity market, they’re just growing coffee. There’s not much intention put into it. It goes into the mass market. So those are the coffees that you are drinking out at Nestle, your Folgers or, you know, all these mass market companies. So this is like your basic, you know, chocolate-y nutty coffee, there’s not much into it.

Now, specialty coffee is grown like wine and it’s grown intentionally, similar to wine. And being coffee, more complex than wine, which is very interesting. People usually don’t know this. What you aim on a specialty coffee is getting a very complex cup of coffee. Different aromas, different flavors, jasmine and rose or, you know, hints of lemon and it’s a whole experience. It’s not that cup of coffee that you take for caffeine. But at the same time, specialty coffee were able to get much higher prices. Therefore, it’s much easier to get it out from the commodity price. So farmers are able to be paid more.

And in a very numeric way, so coffee is rated by a score which goes from one to one hundred. And 80 points and above is considered specialty coffee and 85 points and above is considered specialty excellence coffee. The rating is based on their balance, acidity, sweetness, complexity, that there’s no defects, there’s no trace of chemicals, there are no damages. If you see on our packaging, we always put the score of the coffee so people actually know exactly what is the score, what are they drinking.

Leah: [00:10:14] I don’t usually drink coffee, but I’m drinking coffee right now for this interview and I’m not going to lie – I’m kind of buzzing right now. So I’m fully understanding the powerful effects of coffee. So, you left coffee for a while– moving to the United States to work in design, which is really cool. Can you tell me why you decided to return to the coffee business and how you incorporated learnings from your time working in design?

Maria: [00:010:43] It was just so obvious that as I was growing, I was like, well, this is not profitable. Why will I stay at the farm? And this is a huge issue because the new generations are leaving the farm. So there’s no people to grow our food, which is a huge issue. But for me it was just like, OK, I shouldn’t stay here because there’s no opportunities. And my grandpa was really key on like, you need to get educated and you need  to get out of here. And I wanted to be a fashion designer. I went to school in Columbia and then eventually made it to New York, where I was working for high-end fashion brands. And throughout my journey, I was able to work for Marc Jacobs and Alexander Wang where I was managing the over, all the overseas production, meaning managing large budgets in many different factories at the same time. And so the whole supply chain.

So what I took from that into coffee was just like that learnings of the supply chain and being able to understand and manage that from afar. But then how I changed to coffee as I was in New York, just consuming a cup of coffee. And that’s where I met my co-founder, John Trabelsi. We just got so prescient, like, wow, like I’m consuming this cup of coffee and I go back home and my family is still in the same place.

It takes a farmer three years to grow the coffee plant and then he takes like nine months of harvest. So there’s so much work that goes into that cup of coffee. But at the roasting level, it takes 12 minutes to roast a batch of coffee and it takes the barista five minutes to brew your cup of coffee. And so just seeing all of those like, wow, that farmer is the one that’s putting the most into this cup of coffee in terms of time and effort and being out there at six a.m. in the morning until late night, rain or shine. And so just seeing all that production, that’s where we ask yourself, how can we create a sustainable coffee chain? What is happening? Why is all of these incredible world here of coffee and these other side of the world is not translating to the source? And I feel like all of that just started calling me back to my roots.

[Music]

Leah: After a short break, Maria and I talk about building a different kind of business, why funding was really hard to find, and innovating for a changing climate. Stay with us.

[Music]

Leah: [00:13:30] So I love design, I love fonts, I love images. And I think you really nail it with your packaging because it really stands out as different. So when you started Progeny, what was it like when you pitched your business to investors and farmers?

Maria: [00:13:46] It took us four years to actually open Progeny because we, we were bringing a very unique idea. And the coffee industry has been very male dominated, especially where I’m from and my region. I came with this idea of like, what about we bring our own coffee, we showcase, we don’t do blends, we test out new fermentation processes and all of these innovation. They’re like, no, no, no, that’s not how we do it. But for me, it was just like so funny because I was like, well, every year you’re doing the same things over and over and getting the same results, right? The world out there is changing constantly. We need to change our ways to accommodate to the world.

And so we did find a lot of resistance until this one farmer was like, OK, we’re going to do this together, let’s figure it out. And that’s how we were able to kind of like put some things together and open in a very small scale until we were able to test and show the farmers back in Colombia that we were serious and we were going somewhere. Sometimes it’s just hard to change your ways where they have been ingrained for generations.

At the investor level – you ask how you came to the investors. I think right now is the right time where we’re seeing a lot of like this shift between, you know, climate change is very real. And then the consumers are really looking for companies that represent their values. They are more transparent. They really care for the farmers. We hit all those points where we have a very innovative model, where we’re taking care of our climate throughout the supply chain all the way to the packaging, but then as well as opening new sales channels, like going B to B, retail and so on.

So it took us a while to access to that capital. Until we broke through that, ‘We’re not just a coffee company. We sell impact, but we are scalable.’ Then it was easy to get access to capital. Before that, when we were starting, I feel like it was a little bit challenging. And we did need to knock so many doors, so many doors. And we got so many doors closed. Or we had that comment  like, someone with that traction doesn’t look like you, and like just all those stereotypical comments that a female founder faces. But I think the key was just to deepen your education and dialing down your business model and your offering. And why are you so unique in the market.

Leah: [00:16:32] So I’d love to hear more about how people helped you. You’ve spoken publicly about how when you were seeking funding for your business, major financial institutions turned you down. But organizations that support women of color did offer resources.

Maria: [00:16:47] Yes, it was quite a journey. I remember when we were starting, we’re like, OK, we need to scale and we need to scale fast, because in order to move impact, we need to move volume. And so we got our first big contract from a very known tech company here. And I feel like, OK, with this contract in hand I’m going to be able to go to our bank and get the loan and finance. And I remember going to every single institution. They all say no because I didn’t have this credit history. I didn’t have enough. And that was my job in that moment. So for them, I didn’t have a job.

And I remember getting to like the last like weeks where I, we really needed to start production and put everything together. And yet we didn’t have the funding because every door had closed. And in that moment we got introduced to these incredible community of lenders that they were there to support small, minority founders. And it was such a difference because for the first time, they were hearing my story, and seeing Progeny’s potential and seeing our theme’s potential. And it was just very beautiful. And then I realized that there’s just all these ecosystem underneath that is ready to support us and to stand by us, to help us grow. And so I found Working Solutions, PCV, Opportunity Fund, ICA that they were all under the same mission. And they were the ones that lent us and helped us get here.

Leah: [00:18:25] Wow – it’s awesome to hear how you found alternative funding sources that really believed in you as a woman, to lead the business and to challenge the status quo of an industry. You’ve talked about ways that Progeny has worked on innovation and climate change. Many coffee growers are worried about how climate change will impact their beans. How are you planning to help farmers and Progeny adapt?

Maria: [00:18:49] A few years ago, we started an innovation farm. You know, usually specialty coffee grows at very unique conditions. So it needs to have certain temperature, high altitude and just certain soil. And so we’re like, OK, what about we have an innovative coffee farm at a non-optimal conditions, so at a place that is either too hot or too much rain, it’s very harsh conditions and we try to mitigate all of these and find innovative techniques.

The beginning of the year, we were able to see our results and we were able to hit a specialty coffee level with all of these innovative techniques. So right now, we are going to be able to roll out all of these new techniques to the farmers who are going to be struggling as the temperatures are going higher or more rain are coming. We also develop new farming techniques where we’re able to reduce about 90 percent of water consumption.  We’re able to, through fermentation, to dial in the profile. And then as well as we are, you know, just going out with the farmers on working on reforestation, treating the water correctly, bringing back more into the ecosystem and using more organic methods into the farm.

Leah: [00:20:10] So, how has your family’s life in Colombia changed because of Progeny?

Maria: [00:20:16] It changed dramatically. My dad, my mom, my brother, they’re all working with Progeny, so they shifted from commodity. My dad eventually had lost his farm, and so he was at a point where farming was his life and then he lost his anchor. And my mom was just so disappointed of coffee.

So it was really exciting to see them all one by one, joining the company and helping us, you know, just shift out of these. I remember not so long ago when we actually got the coffee from my mom’s farm as we did all the innovations. And one thing that was really funny as we started growing and telling her how to do things, she was just like, that’s not how it is supposed to go. And she was really, really strict about stuff like that’s not how it is supposed to go. And we’re like, please trust us. We know what we’re doing. And when she tried her coffee, she was crying because she could not believe how good and the price she was getting for her coffee.

[Music]

Leah [00:21:24] Ok, before I let you go, I want to ask you five questions for my lightning round. Ready, set, go! Advice would you give your younger self?

Maria: [00:21:34] Really nail down numbers.

Leah: [00:21:38] One thing you do to take care of yourself?

Maria: [00:21:40] I think one hour of every day to the gym. That helps me mentally and physically to stay engaged. And prayer, of course.

Leah: [00:21:50] What’s the best advice you ever received from a mentor?

Maria: [00:21:53] The moment you get 50 Nos, that means that you’re closer to a yes. So always seek to get those 50 Nos to get to your Yes.

Leah: [00:22:02] A book on your nightstand table?

Maria: [00:22:04] Besides the Bible, it will be The Blue Sweater from Jacqueline.

Leah: [00:22:10] A gadget or device that you can’t live without?

Maria: [00:22:13] I will say my phone, but just because we are in constant communication with the source and the farmers.

Leah: [00:22:20] Thank you so much, Maria, for joining us today. It’s been a wonderful conversation, and I can’t wait to see what Progeny has in store.

[Music]

Leah: [00:22:31] If you’re ready to support Maria and try some of Progeny’s coffee, you can order directly from their website at Progenycoffee.com. To find out more about Maria and the other women we’re profiling on our show, visit MeansandMatters.com/Podcast

Means & Matters is presented by Bank of the West. It is a production of Duct Tape Then Beer and Backbone Media, in collaboration with me, Leah Thomas

From Bank of the West: Leslie Nuccio, Lily Ruiz and Jim Cole are executive producers. From Duct Tape Then Beer: Becca Cahall is the executive producer. Elizabeth Nakano is the senior producer. Anya Miller Berg and Fitz Cahall are consulting producers. Editing and mixing by Jacob Bain. Original composition by Brendan O’Connell. Transcriptions by Ani Miller-Yahzid.

From Backbone Media, Mercedes Brown and Becca Hollard are producers.

Thanks for listening.