Golden Triangle Eco-Resources Limited

117-B Nann Myaing St., Pyin Oo Lwin, Myanmar. Tel: (95) 85-21107

May 5,2000 Mr. Alan McMahon CDRT 6 Natmauk Rd. Yangon, Myanmar Dear Alan, I am sending with this cover letter a brief outline/proposal for our coffee project in Chin & Kachin states. I thought it might be of use in your planning. In the proposal I only discussed expenses and the concept as far as the drying centers. In our initial discussions though we had also talked about a central processing center to maximize the value for the farmers and community. I believe you should consider at the least a crusher/polishing machine to crush and polish the dry cherries. This is important as it costs a lot to transport dry cherries to market, and until the cherries are crushed no one can really determine their value, and as such the price paid for them is lower. Also the husks from the dry cherries can be of great benefit to the community as a mulching agent and as a fuel source. We are planning to purchase such a huller/polisher this year from a company in Brazil. The FOB cost is approximately $5,500 US. It might be worthwhile for you to purchase one at the same time. Another possibility is to expand your planning to include a processing center that would be able to process all your agricultural crops, including coffee, to an export ready state. This would absolutely maximize the value for all crops to both the farmers and the community. The machinery is relatively inexpensive and the same machines for grading and sorting can handle almost all crops including coffee, rice, pulses, sesame, wheat, and corn. Such a processing center would be able to grade and sort crops into at least two categories. 1. For export; 2. For the local market. For the local market you could even sort into a high grade for Mandalay and Yangon markets, with the remainder being sold in the local market cheaply. We can discuss this further when I come to Yangon around May 10th. We would be happy to help you with the implementation of this project and in helping to develop markets. Please let me know your thoughts when you get a chance. All the best, Gregory Love

Golden Triangle Eco-Resources Limited

117-B Nann Myaing St., Pyin Oo Lwin, Myanmar. Tel: (95) 85-21107

Community Coffee Project for Chin & Kachin States

The "Community Coffee Project for Chin & Kachin States is a community oriented sustainable development project designed to help alleviate poverty, promote environmental awareness and strengthen community ties through an integrated community based approach to coffee farming and processing.

Project Area:
The proposed area for this project covers townships in the Chin & Kachin States. These areas have a long history of coffee growing, excellent soil and climatic conditions, and the type of plants presently grown can produce a high value premium coffee for export. An added benefit is, that in the coffee growing villages in these regions, the vast majority of households grow coffee as a backyard crop and thus have experience with coffee as an agricultural crop.

Background:
Coffee was originally introduced to Myanmar at the turn of the century by catholic missionaries, and has been grown in the target area for over 50 years. Coffee is today the 2nd largest income-generating crop in the world after wheat. In addition the coffee industry as a whole is in the vanguard in promoting environmental awareness, sustainability, and social responsibility. Paul Katzeff, Conference Chair at this years annual Specialty Coffee Association conference entitled "Quality, Sustainability, and Social Responsibility" stated that the coffee industry "is one among many that is brave enough to openly care as much about sustainability and social responsibility as it does about the "bottom line"". What this means is that the coffee industry is willing to pay a premium for quality coffee grown under environmentally friendly and socially responsible conditions. At present, whereas most of the farmers grow coffee they have almost no knowledge of plant care, and the proper methods for harvesting and processing. As a result their plant yields are very low, and the coffee produced after harvesting, due to improper methods, is of an inferior quality, with a waste percentage of over 35% and thus a limited market value. Fortunately these are issues that can be corrected reasonably easily, and without a great expenditure of money, through education on plant care and the proper methodology for harvesting and processing of coffee. With training, the farmers should be able to increase their existing plant yields by over 500% and their income from coffee by over 700%.

Golden Triangle Eco-Resources Limited

117-B Nann Myaing St., Pyin Oo Lwin, Myanmar. Tel: (95) 85-21107

Approach:
The project as envisioned would incorporate three primary elements or phases: 1. An educational program to teach farmers proper plant care and the correct techniques for harvesting their coffee. The plant care training would focus primarily on pruning and fertilization. This is important as, at present, the farmers do not prune their plants and as such their yields are extremely low. The harvest training would focus on the importance of picking only the ripe red cherries, and the method of picking individual cherries rather then stripping the branches as is presently done. The purpose of this phase is to provide the farmers immediate financial benefits, in the first year, thru increased yields and higher market value. 2. The establishment of community drying centers where coffee grown by the farmers can be properly dried and processed, thus increasing the market value for the coffee. These community-drying centers will provide employment opportunities for village members, and generate extra income that can be passed back to the farmers, or used by the community to finance other needed projects in areas such as healthcare or education. The establishment of these community-drying centers will also work to create bonds between the farmers and the community as a whole, and will, by their interdependent nature, encourage a sense of community and mutual beneficial cooperation. 3. In the third phase, as the farmers and community sees the greatly increased financial benefits to be derived from coffee, the farmers and/or community will be encouraged to move from backyard coffee growing and to develop medium to large scale coffee plantations that would act in a cooperative fashion for the mutual benefit of both the individual farmers and the community at large.

Implementation:
The "Community Coffee Project for Chin & Kachin States" will be implemented and managed by the United Nations "Community Development for Remote Townships" project (CDRT) with "Golden Triangle Eco-Resources" providing technical advice and expert personnel on a sub-contractor basis, as well as guaranteeing the purchase of all coffee produced by the project. Initially, "CDRT' personnel working in the region will conduct a survey, on a village-tovillage basis, to determine the number of farmers growing coffee and the approximate number of plants presently producing with their estimated yields.

Golden Triangle Eco-Resources Limited

117-B Nann Myaing St., Pyin Oo Lwin, Myanmar. Tel: (95) 85-21107

The data from the survey will then be analyzed, by senior management staff from CDRT and Golden Triangle Eco-Resources, to determine the ideal locations for the village drying centers, based on their central access to coffee, roads, and transportation. A list of potential sites will be established, and then meetings will be conducted between village leaders, farmers and personnel from CDRT and possibly Golden Triangle to present the project, and determine community and farmer interest and willingness to participate. After this, based on farmer and community interest, a final determination of villages participating in the project will be established and a budget drawn up, based on estimated personnel and equipment necessary for implementation. Personnel from the two organizations will then be selected, teams established, and village groups assigned. Operational procedures for training, supervising, and operating the drying centers will also be decided at this stage. Experts from "Golden Triangle" will then work with and instruct the teams from CDRT in the care of coffee and the set-up and operation of coffee drying centers. The selected teams will then move into the villages for a period of relationship building with the farmers and local community leaders. During this period final locations for the drying centers will be determined and arrangements made for their operation. Then in the early fall, before the harvest, training seminars, conducted by expert personnel from "Golden Triangle", will be held in all participating villages educating the farmers on the proper methods for harvesting, and processing their coffee. The procedures for the farmers relating to delivery of their cherries and payment from the drying centers will be explained at this time. When the harvest begins the teams will work with the farmers to guide and assist them with the proper procedures for collecting the cherries and transporting them to the assigned drying centers. Golden Triangle experts will rotate and visit all drying centers every few days to ensure established methods and procedures are being carried out properly. Immediately upon completion of drying, and possibly crushing, Golden Triangle will buy the green beans at a premium to market value, using a formula to have been previously agreed upon.

Golden Triangle Eco-Resources Limited

117-B Nann Myaing St., Pyin Oo Lwin, Myanmar. Tel: (95) 85-21107

Drying Center Facts & Approx. Costs

Equipment:
Item Grass Mats Rakes Water Drums 1 Pyi Basket 8 Pyi Basket Polypropylene bags Big Baskets Small Basket Use For drying the cherries on For turning the cherries on the mats For floating the cherries to remove defects For measuring For measuring For storing and packing coffee 50 Kyats For floating cherries For carrying cherries 60 Kyats 110 Kyats Approx. Unit Cost 85 Kyats 100 Kyats 4,000 Kyats 700 Kyats 2,000 Kyats

For calculating equipment neccesary for a Drying Center capable of drying 10,000 Pyi a season you would need the following:

Item

Unit Cost

Total

Mats Rakes Water Drum 1 Pyi Basket

500 4 1 3

85 100 4,000 700

42,500 400 4,000 2,100

Golden Triangle Eco-Resources Limited

117-B Nann Myaing St., Pyin Oo Lwin, Myanmar. Tel: (95) 85-21107

8 Pyi Basket Poly Bags Big Baskets Small Baskets TOTAL

2 200 3 2

2,000 50 60 110

4,000 10,000 180 220 63,400

For staff you would need approximately 5-6 Workers, 1 Supervisor, 1 Night-watchman.

Golden Triangle Eco-Resources Limited

117-B Nann Myaing St., Pyin Oo Lwin, Myanmar. Tel: (95) 85-21107