Edit: Due to the sensitive nature of this subject, we decided to take the time to reflect on the feedback we received on our original post in order to ensure that we are listening to our friends in the black community and using the proper language to address the injustices faced by people of color. Our goal for this piece is to provoke thought around the subject of coffee history, the role white supremacy plays in our industry and what consumers should look for in supporting companies who exude transparent buying practices.
For us, this is an ongoing conversation both internally and externally. When we started to write about this topic, we realized that we still have much to learn, so our dedication to ourselves and to our customers is to be crystal clear- black lives matter. We also want to highlight the importance of transparency in the supply chain, a system built on colonialism & white supremacy and what consumers should look for in the companies they support.
In our last blog, we covered some of the challenges, fears and setbacks of managing a roastery and cafe through the pandemic. The feedback we received from our friends and customers helped us realize the importance of communication and transparency which is now leading us to make these updates and post a more frequent thing.
Today, our country is arguably in the midst of two pandemics. One is viral while the other is human. The recent Black Lives Matter protests, in response to the murder of George Floyd, have led me to reflect on the very industry I work in and the way we treat people in the supply chain who are vulnerable and stand to be most affected- the coffee producers, who are mainly people of color.
Around the globe, there are an estimated 25 million coffee farmers that depend on coffee for sustenance and over 2 billion cups of coffee sold per day. Global coffee production varies from year to year according to weather conditions, disease and other factors, resulting in a coffee market that is inherently unstable and characterised by wide fluctuations in price. This price volatility has significant consequences for those who depend on coffee for their livelihood, making it difficult for growers to predict their income for the coming season and budget for their household and farming needs.
What exactly is the C-Price?
In the summer of 2015, Fair Trade USA and Cornell University teamed up to collect data from producers in central and south America and the result of this study concluded that the average coffee farmer in South America required a minimum price of $1.25 to $2.40 to just cover their cost of production. For context, as of this writing the C-Market price is at $1.02 per lb., a price that hasn’t fluctuated much since 1973.
The New York C price is the reserve price for Arabica coffee traded by Intercontinental Exchange (ICE), a large international commodity trader based in NYC. This price assumes that coffee is a homogenous product (i.e. a commodity like wheat, corn or cotton) and is informed by supply and demand economics. Most Arabica is traded either via this Exchange or priced in relation to the current C-market price. The C-price is notoriously volatile and affects all coffee producers globally. It is currently exceptionally low, as a result of speculative trading and an excess of global supply of Arabica. C-price is internationally communicated in USD/lb. and refers to coffee that is milled and ready for export.
How does Specialty Coffee get it right and what do consumers need to be aware of?
In the past few years, there has been a growing trend among a few specialty coffee roasters who are championing purchasing transparency at every level. Prior to publishing their data, the lack of transparency and available information in the supply chain has historically meant that consumers are unaware of how much the producer actually ended up getting. Because of this ambiguity, many have capitalized on the low market price all the while bolstering their brand as a specialty brand, which is not only false but dangerous to the future of coffee.
To create market distinctions, a growing group of quality purveyors across the country are publishing their prices to educate consumers on how we are collectively developing new benchmarks on sustainable coffee pricing. Of course, while there is never a shortage of good intentions, there are still a myriad of challenges and questions to transparency in the supply chain. For example, without context, publishing the prices is somewhat arbitrary without taking into account a producer’s Cost of Production. Suppose that a roasting company published their F.O.B price (Free on Board), which represents the price of milled coffee in bags at the port, only tells one side of the story but doesn’t account for all of the costs accumulated beforehand. This is why our partners at Azahar Coffee in Colombia have published a green coffee buyer’s guide called “Sustainable Buyers Guide.” By gathering this data, Azahar is identifying the prices required in order to:
- a) meet the poverty line
- b) meet the minimum wage, and
- c) have extra to reinvest in developing the farm.
This data provides a useful and accessible benchmark for coffee buyers to determine the farmgate price, and from there the FOB price, which includes Azahar’s margin and processing costs. With this type of information, we can without a doubt offer prices that are sustainable with data to support it.
What does publishing these numbers look like?
Every company is different, and many are still weary of publishing their costs mostly out of fear that customers would use this information to negotiate a lower price or perhaps become an advantage for competitors to poach accounts. These are legitimate concerns that we discussed internally but felt compelled that in order to move the industry forward, we have to collectively share this information. In doing so, it protects both producers and consumers, brings integrity to the industry and allows for a continual check of motives while allowing consumers to spend their money on companies that strive for a fairer, more sustainable price.
Here is a link to an example of one of our contracts from Beneficio San Vicente in which logistics and financing were done by a green coffee importing company named Olam Speciality Coffee. The prices in this contract are F.O.T. which stands for Free on Truck and is the price that we are required to pay for the transport of our coffee to Chicago.
And here is a link to an example of how this information is carried over to our transparency reports. Take for example producer Denis Enamorado, from whom we’ve been buying directly since 2016. Each of our releases comes with a QR code that shares farm story and pricing information, which we believe is crucial to establishing the most equitable partnership between Denis and Metric while also helping to educate consumers on the importance of transparency.
As roasters, we have a responsibility to acknowledge the past as well as understand and communicate how the low C-Price disproportionally affects people of color. For consumers, we encourage you to support roasters who are open to sharing data and are committed, year over long-term buying partnerships with producers. While in practice, this is a step in the right direction, we have much to learn and this is by no means a solution; just the step in the right direction.
Last- we want to encourage you all to develop a passion for learning more about how coffee is produced and how you can support companies that make it their mission to be equitable, transparent and dignified across the supply chain. Here are a few things for you to consider or talk to the roasters you support.
- Ask for supply chain traceability reports. Companies who buy coffee directly from small farms should have easy access to that information and willingly share it with their customers.
- Support high-quality, smaller roasting operations. Now more than ever, many companies are established and funded by big money, so checking out who’s behind the coffee you're buying speaks volumes about their practices.
- Get information about the milling and exporting operations. The notable ones have a good reputation with producers and importers and are always open to sharing how they work.