2016 Transparency Report
Like always we want to be as transparent as possible and show you that there is a reason why our coffees cost a bit more. In the photo above you can see all the prices we paid for our coffee in 2016. The prices are per pound (lb=453g) of green coffee Free on Board (FOB), which means the price for the coffee packed and stacked in a container delivered to the ship. What the farmers are paid from the F.O.B price will vary from country to country depending on the trade structure, but as an example we have illustrated this in our 2015 Transparency report.
In additionn to the F.O.B price we pay for the green coffee we also have to pay for shipping, insurance, financing, logistics and production costs which adds to the price we are charging for the coffees. Of course our production costs are higher than for instance a big supermarket coffee brand as they can roast up to 40.000 kg of coffee per day whereas we normally would roast 200kg in a day.
You may notice that the average price we paid per lb is slightly lower in 2016 (5,08 USD) than in 2015 (5,41 USD). There are several reasons for this. Mainly the Norwegian currency has been very weak due to the low oil prices and therefore I have negotiated with the farmers we work with to keep the prices on a stand still. We also did not buy any expensive auction coffees last year and the prices in Kenya were generally slightly lower due to higher yields.
Still we are very proud that we are able to pay a sustainable price to our farmers, which is not the case when it comes to the NY coffee commodity price, which in 2016 was ranging from about USD1,40 – 1,80 per lb throughout the year. For the coffees we are buying, these commodity prices wouldn’t even cover the farmers’ costs of production.
Elias Roa from Finca Tamana, Colombia has become a good friend over the years…
As always our main focus when buying coffees is to make sure the trade is transparent and that the farmers get a good price for their coffees. This can be quite difficult in some countries yet very easy in others. For example, it is a lot less complicated to work and communicate directly with a single farmer that has enough land to be able to process and dry his/her own coffee as compared to dealing with cooperatives in East-Africa. The challenge with the cooperatives is not necessarily transparency but that one lot of coffee can consist of coffees delivered by up to several hundred different smallholder farmers. This also makes it difficult to work directly with farmers in order to improve their product at farm level.
Until now our volumes have not been big enough to be able to source directly from Ethiopia where we have had to rely on Nordic Approach to help us source good coffees. From all other origins we buy from we souce and buy directly from either farmers (Americas) or cooperatives (Kenya). Our ambition for 2018 is to try to find ways we can work more directly in both Ethiopia and Kenya so that we can hopefully have a positive influence on the farmers and the coffees we are sourcing from East-Africa.
We strongly believe that paying fair prices to the farmers is the best way of ensuring they continue their hard work and that they are able to invest in producing quality coffee also in the future. Without economic stability they are not able to invest in their farm which we see as crutial for developing the coffee quality.
Since we started working directly with a few selected farmers in 2009 we have managed to dramatically improve how they harvest, process, dry and store their coffees which has resulted in much better quality. We have also helped them iplement new and exciting cultivars of coffee on their farms which takes 4-10 years to really see the benefits from. We will see a few of these new cultivars, such as SL28, already this year from Nacimiento and Finca Tamana and we are expecting more interesting cultivars from the Caballeros and Los Pirineos in the upcoming years.
In other words, we have a lot to look forward to and we could not have come this far without the support from our customers and guests. Thank you.