Better late than never. We have in previous years written a lot about the importance of paying fair prices to the farmers and the importance of transparency.
So, like previous years here are our coffee prices paid in 2013. The prices are per pound (lb=453g) og green coffee Free on Board (FOB), which means the price for the coffee packed and stacked in a container delivered to the ship.
Since not everyone understands how the coffee trade works, below is an example from our book “Finca Tamana” on the break down of the price we paid for the coffee and who gets what. (The example is from 2012) Remember that purchasing models and logistics are different from country to country, so the break down will vary. Our main focus when buying coffees is to make sure the trade is transparent and that the farmers get a good price for their coffee. In fact we speak with most of the producers we buy from throughout the year on Skype or e-mail and we prefer to negotiate prices with the farmers directly. That way we can make sure their costs are covered and that they make a fair profit.
On our end, we have to pay for shipping, handling, financing, rent, storage rent, gas, electricity, bags, insurance, quality control and labour costs in order to produce the coffees. Of course our production costs are higher than for instance a big supermarket coffee brand as they can roast up to 20.000 kg of coffee per day whereas we normally would roast 200kg in a day.
On average we paid USD 4,83 per lb of green coffee last year. This is a lot more than the commodity market price which today is about 1,40 USD per lb. With the production techniques we have helped implement on most of the farms we work with and buy from, the commodity price would not even cover the production costs. Therefore we have to pay more in order to get the quality we prefer. You might also notice that the prices we pay vary from country to country and lot to lot. This is because we look at the costs of production and the quality of the coffee when we negotiate prices.
We strongly believe that paying fair prices to the farmers is the best way of ensuring they continue their hard work and are able to invest in producing quality coffee for the future. We see all over the world that farmers are uprooting their coffee trees in favor of other cash crops as the commodity market coffee prices today are at around USD 1,40 per lb. The low prices means that for most farmers their costs are not even covered.
In fact we can see that the commodity price today is the same as it was 30 years ago. Imagine having the same salary as people in the 80’s but you had to pay 2014 prices for food, clothes, etc. That is just not right. Therefore we will still be pushing the prices up in 2014 and try to make more roasters do the same.