This article first appeared in Enterprise, The Edge Malaysia Weekly on January 13, 2020 - January 19, 2020

In the Sabah highlands, more than 1,300m above sea level, local farmers are cultivating Arabica coffee. The farmers — who live in villages in the Ranau district, about three hours’ drive from the state capital, Kota Kinabalu — started planting this variety of coffee after the state’s Agriculture Department provided them with seedlings to help them supplement their income.

The seedlings were given to about 40 farmers. However, many of them eventually abandoned their Arabica coffee plants after failing to find buyers willing to purchase their produce at a fair price.

When entrepreneur Jackz Lee visited the farms in Kampung Toboh Lama and Kampung Tudan a few years ago, he found only 18 farmers still taking care of their coffee trees. “The other farmers told me they no longer did so because coffee prices were not good,” he says.

Lee was puzzled. To him, the coffee cherries looked amazing. Surely, these could be sold at speciality coffee prices?

Most of the coffee beans cultivated in Malaysia, which are of the Robusta and Liberica variety, are sold at rock-bottom prices. These Arabica beans, which are hand-picked and hand-processed, cannot compete with those imported from countries such as Colombia and Brazil, where the beans are processed with machines.

Buyers of local beans do not care about the quality, says Lee. They focus on quantity because the beans are to be processed for three-in-one coffee packets, and not to be freshly brewed.

“It really saddens me that these farmers are giving up on their coffee trees. I roasted their beans and the coffee tasted really good. We sent some to roasters in Kuala Lumpur and Penang and they gave us positive feedback and wanted to order from us. That was when we decided to supply these beans to local and international roasters,” he says.

Lee and his business partners — Michael Cheah, Mei Lam and Chelsea Lam — settled on the name Sabarica Coffee, a portmanteau word combining Sabah and Arabica coffee. They wanted to make a difference for the farmers by buying their beans at a much higher price, provided that these were of a certain standard and quality.

To achieve this, Lee took it upon himself to help the farmers improve the quality of their beans. But first, he had to fully understand their needs. Together with Miguel Meza of Hawaii-based Paradise Roasters, he held a meeting with the farmers to learn about their situation.

They learnt that the farmers actually preferred planting tobacco and coffee compared with vegetables. Although vegetables can be harvested more quickly, the farmers were at a disadvantage. Just an hour’s drive away is the town of Kundasang, where vegetable farmers sell their produce at dirt-cheap prices — 1kg of cabbage, for example, can be sold for as low as 20 sen.

“They also told us that vegetable farming needed a lot of capital. They would need fertilisers, herbicides, pesticides … the list goes on. Coffee and tobacco, on the other hand, are quite simple to plant. Also, they are not easily perishable — unlike most vegetables, dried coffee beans and tobacco leaves can be kept for months before selling,” says Lee.

Now that he knew the farmers would prefer to grow coffee trees, he asked them what they thought the beans should sell for. The farmers felt that a 30% to 50% premium to the price of instant coffee would be fair.

“After thinking about it for a while, I offered them what I thought was a fair price. The farmers were very happy. In fact, one was so overjoyed, he told us he wanted to dance,” says Lee.

He also asked the farmers what kind of help they needed, pointing out that the Agriculture Department did extend support in the form of depulper machines and fertiliser subsidies. However, the farmers were not exposed to information on methods that could improve the quality of their harvest.

Also, most Malaysians did not even know these farms existed or that good quality Arabica coffee was being farmed locally, says Lee. “We saw many things that we could improve on. From the plantation methodology to harvesting, depulping and processing, we could increase quality at every stage. We are currently helping them to market to local roasters. Eventually, we will market the beans to roasters worldwide.”

Treating farms like research labs

Although Lee is passionate about bringing Sabah coffee to the world, he is not a native of the Land Below the Wind. The Perlis-born entrepreneur had spent most of his adolescence in Kedah before enrolling in Universiti Malaysia Sabah in 2005. While he was in university, he climbed Mount Kinabalu 11 times, which made him skilful enough to start guiding other students on the climb.

In these few years, Lee guided more than 1,000 students for the very low cost of only RM10 per person. Having saved up quite a bit of money by the time he graduated, he accepted an offer to open a Malaysian restaurant in Ulaanbaatar, Mongolia, together with a few partners. However, they closed shop after six months, having made a loss.

After taking a short break in Kedah, Lee returned to Sabah to offer his services to those who wanted to climb Mount Kinabalu. He set up a proper tour company to guide travellers from all over the world to scale Southeast Asia’s tallest mountain. As a result, he was able to bounce back and generate a steady income for himself.

In 2011, Lee travelled to Mongolia for an 11-day backpacking trip around Hohhot, where he met Cheah. Impressed by Lee’s story, Cheah contacted him a few weeks later to inform him that he had created a website that would help the tour company increase its exposure.

After years of good business and some losses following a failed homestay start-up, Lee faced his biggest challenge to date — a natural disaster. In 2015, a 6.0 magnitude earthquake lasting 30 seconds struck Ranau, killing 18 people and injuring 130 others on Mount Kinabalu, most of whom were stuck on the mountain for hours waiting to be rescued.

This affected Lee’s business severely. Spooked by the incident, many climbing groups cancelled their trips. The company had to refund up to RM165,000. “After that, we noticed a sharp decline in the number of climbers. Believe it or not, the business still has not recovered,” he says.

But Lee is not planning to close the business anytime soon. He loves guiding people to the summit of Mount Kinabalu as it is his favourite mountain to climb. In fact, he has climbed Mount Kinabalu 92 times so far — still far from his goal of 500 times.

After the earthquake, business was slow. So Lee, who enjoyed a few cups of coffee a day, decided to open a coffee house. While this was not a money-making venture, he enjoyed getting to know the local coffee community. He made friends with a lot of the local downstream players — coffee roasters, baristas and drinkers.

He was also an active member of various coffee associations. In fact, he was chairman of the Borneo Coffee Alliance in 2018.

“The connections that I made over the years has really helped me with the Sabarica project. From my conversations with them, I am able to inform the farmers what type of coffee the market is actually looking for as well as how different types of processing affect the flavour of the beans. We are trying to provide the farmers with as much information as possible so we can figure out how to best produce the coffee beans at the farm level,” says Lee.

Growing coffee is not easy as the plants are exposed to many potential diseases and pest-related problems. Lee says farmers need to defend their plants from leaf rust disease (fungal disease that causes the leaves to look rusty), nematodes (roundworms) and dieback branches (progressive death of twigs, branches, shoots or roots, starting at the tips), among others.

The main issue is coffee borer beetles — tiny black beetles just a few millimetres long. The female beetles bore holes into coffee cherries before laying eggs among the seeds. Each female beetle lays two to three eggs per day for a period of 20 days. When they hatch, the larvae devour the seeds, destroying the cherries in the process.

“This is a very big problem. Yesterday, I had to throw away almost 30% of the beans that I was sorting through because they were damaged by the coffee borer beetles,” says Lee, adding that solving this problem is currently his top priority.

In addition to assisting the farmers via a WhatsApp group, he also visits the farms almost every week to teach them new methodologies, learn about their problems and purchase beans. These trips can be physically and mentally draining as the drive to the villages can take up to three hours because of the rough roads. Parts of the roads and bridges are still under construction, so cars have to travel on rocky terrain, steep slopes and even cross shallow rivers.

“I think about it this way: If I do not go to the farms, who will? I may not make much money by purchasing the beans from the farmers and selling them to the roasters. But at least I get to help the industry. Someone told me that what I am doing is chi li bu tao hao [a Chinese idiom that means an arduous and thankless task], but I do not mind,” says Lee.

The problem with the local coffee industry is that not many want to be upstream players, he adds. “I find that many people want to become baristas and win competitions to be famous. But not many want to know what is going on at the farm level even though this is crucial to the quality of the end product.

“If we do not support the upstream players, no matter how good our baristas are, their knowledge will only be confined to roasting and brewing. They will never be able to tune the flavours at the farm level. They will not know the differences between varieties such as Cattura, Catuai, Pacamara, Typica and Bourbon. Most probably, they will just copy and paste the information from the internet.”

However, Lee is not discounting the fact that Malaysia has good downstream players. In 2018, Irvine Quek of 103 Coffee Workshop won the World Latte Art Championship in Brazil while Regine Wai of Page 2 Cafe was the first runner-up at the World Brewers Cup. Quek recently won the 2019 World Latte Art Battle in South Korea.

“I am very proud of them. But what about the farms where the coffee beans were produced? Did you know that they flew all the way to Brazil, Panama or Colombia to source good coffee for the competitions?” he says.

“I saw this as a good opportunity to improve Malaysia’s coffee industry. We can treat the farms like university labs, where students can study, do research and collect information. That is why we welcome them to visit our farms, where they can learn more about the upstream processes. We are coming up with a coffee workshop so that people can attend classes and get a certificate.”

Slowly but surely, Lee’s efforts are starting to bear fruit. When he started the project, there were only 18 farmers. Today, there are 39 farmers producing Sabarica coffee beans.

The three Ss

Currently, most of the coffee trees planted by Sabarica Coffee farmers are of the Catimor variety. This is a good and strong species that can generate stable income for the farmers, says Lee. It is also gaining traction as one of the best Malaysian-produced coffee beans, having been ranked No 2 at the Asean Coffee Federation’s cupping event recently. The beans were also used by The Owls Cafe’s Cheah Seng Foong at the Malaysia Open Barista Championship, landing him a top five position.

Lee is experimenting with other varieties too. Recently, he sourced the world’s most expensive coffee — Gesha coffee, an Arabica coffee variety — to see whether it could be planted in the Sabah highlands. This variety broke records recently, fetching US$1,029 per pound at the Best of Panama speciality coffee auction.

“I was surprised to see the bidding result. So, I bought 1kg just to see if we could produce it here. If we can, then Malaysia will have a good name in coffee production,” says Lee.

In his efforts to get the world to acknowledge the quality of Sabah coffee, Sabarica holds on to three Ss — solving farmer’s problems, supporting the local industry and sharing. When it comes to solving farmers’ problems, Lee says these could be things like dealing with plant diseases and pests as well as production-related problems such as fermentation and sorting.

“Earlier this year, a farmer from El Salvador, who runs a 90ha coffee plantation, came to visit. He asked our farmers to treat their fields well because this business can be sustained over many generations. He himself is a fourth generation coffee farmer,” he says.

“To sustain the quality of the fields, he reminded the farmers to not use environmentally harmful pesticides, herbicides or other chemicals. He also guided us on proper germination and harvesting methods.”

Lee tries very hard to educate the farmers on the best methods of farming that will not have a negative impact on the environment. But he acknowledges that this will take time.

“We are trying our hardest to tell the farmers to move away from monoculture (single-crop cultivation), slash-and-burn (cutting and burning forests to make way for a farming field) and shifting cultivation (cultivating a piece of land that will be abandoned to allow it to revert to its natural vegetation). But this will require continuous and long-term efforts. We cannot expect the farmers to change their ways immediately,” says Lee.

He is also teaching the farmers to implement permaculture, an agricultural practice that promotes biodiversity by planting a diverse range of crops in a field. This method of farming intends to ensure the ecosystem remains strong with different plants working together to flourish the land. The fundamental aim is to prevent anything from becoming too influential on the farm to the detriment of other assets, be it a species of insect or plant.

“We have learnt that the best tree the coffee farmers can plant is the Tamarillo, also known as the tree tomato. The coffee plants under the Tamarillo trees are all-round better than the ones under direct sunlight. The leaves are healthier, greener and larger. The fruit is larger and riper, and a darker purple compared with the usual bright red,” says Lee.

The Tamarillo fruit can act as feed for the birds flying around the field, whose droppings then act as a fertiliser that provides nutrients to the soil. “The Tamarillo trees generally produce a lot of fruit. In fact, more than any of the farmers can consume themselves. My wife suggests turning the fruit into jams. If this is successful, it could be another source of income for the farmers,” he says.

As for supporting the domestic industry, Lee believes that local coffee roasters are facing problems sourcing coffee beans from overseas. For instance, if they do not realise that their import permits have expired, they will not be able to receive their supplies. This means they either have to send the beans back from where they came from or to another country while the problem is sorted out.

“Also, roasters do not just make a call to buy more than five tonnes of coffee beans. Usually, they fly there, examine the farm and the factory, discuss the price, pay the deposit and test the beans before making the purchase. This entire process, on top of the import tax, is very costly. Shipping is also not cheap,” he says.

“If the local roasters are willing to pay a bit more to our farmers for their speciality coffee beans, they will be able to save a lot of money. That is why we are trying to get as many downstream players as possible to visit us. This can help support the local coffee industry.”

Lee says the third S refers to the sharing of information and new equipment. If the company continues sharing these, the farmers will be able to sell high-quality beans to the downstream players. They will also be confident and proud of their beans if Sabarica Coffee continues to share the positive feedback they get from the downstream players, he adds.

“I once brought Nestlé Malaysia’s business executive officer, who wanted to source some locally grown Robusta beans for Nescafé, to Tenom. We went there and spoke to the Agriculture Department officer, who told us that there used to be 1,000ha of Robusta fields there. However, due to the low prices it fetched, most of the farmers turned to planting oil palm. When crude palm oil prices tanked, many of the smallholders faced financial problems,” says Lee.

“That is why I emphasise Arabica coffee. We can offer a better price to the farmers and the market demand is there. They will not convert their coffee fields into plantations for other crops.”    

The different coffee processes

The seed or bean of a coffee cherry has three layers of protection — the skin, mucilage (gelatinous substance) and parchment. After the seeds are harvested, Sabarica Coffee farmers use one of three methods to process the cherries — washed, honey or natural.

Washed coffee cherries are depulped to remove the skins. Then, the cherries are soaked in water for a few days before they are dried. In the honey processing method, the skins are removed but the mucilage is left on the seed to dry. These golden amber beans have a sticky texture. Natural processed cherries are dried in the sun for a few weeks without having their skins and mucilage removed.

The beans are then hulled to remove the parchment layer. This prepares the beans for sorting and grading. Sabarica Coffee’s beans are sorted by size and appearance. Smaller, damaged and unhulled beans are removed. The beans are ready to be roasted after a final grading process.

Meet the farmers

Jackz Lee, co-founder of Sabarica Coffee, says he really likes working with the farmers in Kampung Toboh Lama and Kampung Tudan in Ranau, Sabah. These farmers — who are mainly of the Dusun tribe — have never treated him like an outsider. In fact, they are friendly, hardworking and eager to learn.

“The farmers here are open to new ideas and methodologies. They want to increase the quality of their harvest and are willing to give their best to make it work. When I am not communicating with them face to face, we communicate via our WhatsApp group, where I also share new information,” says Lee.

Maini and Daimin are a husband-and-wife team who work on their family farm. They currently have three and 10-year-old coffee trees. The farm is located on one of the highest hills in Ranau at 1,450m above sea level. They also grow Tamarillo and bananas.

A few years ago, the couple constructed a building behind their home to accommodate their growing family. However, it has remained empty as most of their children work in the city. One is even working at Intel’s assembly plant in Bayan Lepas, Penang. So, the building is being repurposed as accommodation for those who visit Sabarica farms.

Another farmer, Mathew, used to work at an engineering firm in Singapore. He spent 12 years there before calling it a day and starting his farming career. “I got sick of it. Here, the air is cleaner and fresher and I can work in my own time,” he says.

Mathew plants tobacco and Arabica coffee on a slope, improving it over the years by also planting shade trees. He plans to expand his coffee farm in the next few years.

Michael is a farmer who went back to the village after quitting his long-term job. He had worked for about 20 years for Indah Water Konsortium in Puchong, Selangor. He likes farming because the job is quite flexible. “I do not like working when it is hot, so I work either very early in the morning or later in the afternoon. It is labour-intensive, but at least it is not mentally stressful,” he says.

Kampung Tudan’s Junaidi, who tends his farm with his children, is one of Sabarica Coffee’s new farmers. He had been planting and harvesting Arabica coffee for a while, but had not been able to find a buyer.

After learning about Sabarica from fellow villagers, he decided to ask Lee to check his beans and see if they were still worth selling. The retired policeman was in luck. Lee thought the beans were in good condition, but he would only purchase them if they were already hulled.        

Seeking automation

The processing of Sabarica Coffee beans is mostly done manually. Farmers plant, maintain, harvest, hull and sort the beans without the help of any machines.

While the depulper provided by the Sabah Agriculture Department has helped, the farmers still do physically intensive work to prepare the beans for sale. Hulling, for example, requires them to pound small amounts of beans more than 40 times with an upsized version of a wooden mortar and pestle.

To solve this issue, Jackz Lee, co-founder of Sabarica Coffee, has a plan to build a processing mill near the farmers’ villages that comes equipped with industrial-sized automatic hulling and sorting machines, among others. When the processing mill is completed, the farmers will be able to focus on planting, maintaining and harvesting the coffee plants.

“The farmers were very happy with the idea. They even offered us land for free to build the processing mill, with the proviso that if we ever want to stop operating the mill, we cannot dismantle any of the equipment,” says Lee.

“If the plan materialises, the farmers can concentrate on expanding their farms. They will not have to spend hours hulling and sorting the beans anymore. And since everyone shares the equipment, the quality of the beans will hopefully be standardised.”

 When Lee asked around how much it would cost to build a processing mill, one of the earliest quotations he got was a total of US$110,000. He is now looking for ways to fund the project.

When Lee came to Kuala Lumpur recently for a coffee event, he was told that he could look at peer-to-peer (P2P) financing and equity crowdfunding (ECF) platforms for funding. P2P financing and ECF platforms are regulated by the Securities Commission Malaysia.

“One of the people I met — a banker — suggested that I do it in stages. He said I could start by issuing a note on one of the P2P financing platforms and pay the interest. Later, when the company has grown, I could offer equity on ECF platforms and perhaps sell a 30% stake to the public. This made sense to me,” says Lee.

He says it will take some time before the company is ready to formally take the next step in raising funds for the processing mill. However, he is confident that when the mill is completed, it will improve the lives of the Sabarica coffee farmers significantly.      

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