Reviewing a year of business is not an unusual thing to do. But while we at Rumble see the creation and publication of this Transparency Report as a way of auditing what we achieved during the 12 months of 2019, we also see it as an important reality check.
That is, how are we doing when it comes to the issue of Transparency?
We began Rumble with a single goal: to improve the industry from the inside out, all the way from producer to the consumer. Perhaps the biggest part of this process, for us, is publishing and openly discussing the prices we pay for our coffee. In addition, we’re always striving to improve the sustainability of everything we do: from coffee-buying, to packaging, and everything in-between.
But why a Transparency Report? We know first-hand that making these sustainability-based decisions can be hard for any business, and especially a small one! But that fact is that our hearts and minds are 100% in it. We want to improve. We want to get better. We know we can do it, and this is our way of checking in to make sure we do.
Of course, the numbers speak for themselves.
With the cost of production estimated at being at least USD$1.50/lb (AUD$4.70/kg), it’s clear that we’re still facing a coffee pricing crisis. With the cost of production well above the C-market value, nobody knows how many farmers have walked away from farms or pulled up their coffee to try another crop.
These pricing issues are far from being new challenges.
In Australia, one of the ongoing sore points is the Dollar having weakened against the US Dollar around 10% since 2018. As all coffee is traded in USD, the impact on purchase price can’t be underestimated. A challenge like this has put pressure on the Australian coffee market as a whole with many roasters feeling the need to buy lower-quality coffee and the average consumer becoming unwilling to pay any more for the produce they receive.
In fact, coffee served in Australia is among the cheapest in the developed world.
In 2019, Finder released the Starbucks Price Index, a study of “the price of a coffee around the world”. Of the 76 countries included, Australia was ranked number 52. Compare this to the fact we have the second-highest minimum wage in the world and it’s no wonder cafes are out there doing it tough.
So. What can we do to help fix this?
Importantly, we have a central aim to help redefine the categorisation of ‘specialty coffee’, highlighting the role played by FOB price in a fair price paid at origin. We want farmers to experience clear incentives for producing better coffee, doing the right things on their farms and in their communities; and at the core of it, for farmers never to be underpaid by other players seeking exploitation in the name of making a quick buck.
If growers continue earning less than the cost of production, they’ll be forced to grow different crops. In fact, stuff like this is already happening in places like Colombia where, on average, farmers need to be paid around USD$1.76/lb (around AUD$5.45/kg) - around 50% more than they receive now - in order for coffee production to offer the same income as coca (for the production of cocaine).
Increasing the awareness of the prices paid for coffee helps even the smallest of operations fetch fairer prices for their product. More profits mean fairer wages for workers and continued investment in infrastructure and education. A big win!
At the end of the day, Transparency is much more than an easily definable set of standards. For us, it’s a code of ethics that underpins everything that we do.
Armed with the success of our very first Transparency Report published for 2018, in June 2019 Rumble attended the Transparency Colloquium hosted by Transparent Trade Coffee. This was a two-part meeting of coffee professionals from around the world with the common theme of discussion being - you guessed in - Transparency in coffee trade.
The first day was run exclusively for the data donors to the Specialty Coffee Transaction Guide (SCTG). Spearheaded by Peter Roberts of Emory University in Atlanta, Georgia, the latest version of the SCTG includes 57 donor partners and over 38,000 contracts covering the prices paid for coffee around the world.
Want to know if any of the coffee you’ve bought recently has been really, truly fairly acquired?
We highly recommend downloading the Report and having a read. Bolstered by the support of roasters around the world, it aims to provide everyone in the supply chain with a guide on what price should be paid by producers by examining data (origin, quality score, lot size, and more) from the contracts included. The great thing about the guide is that it’s completely anonymous: this means that exporters, importers and roasters both large and small can be a part of becoming the solution without risking their operation.
The second day of the Colloquium was aimed at companies that are transparent about their pricing, and who are actively finding ways to improve their sourcing of coffee. Roasters, importers, exporters and other interested parties get together to talk about issues, ideas and available programs that can help create a more open and fair system of coffee sourcing.
So. When a bunch of passionate people get together like this, how could we not come out of it with something to work on together?
Not long after the attendees had packed up and left the Colloquium, inspired to do more, The Pledge began. Developed by those in attendance at the 2019 Transparency Colloquum, The Pledge was something that like-minded roasteries could sign, keeping themselves and others on the same page when it comes to the communication of price data.
The Pledge has four main intentions:
• To give any participant in the coffee supply chain the opportunity to sign-on and help create a more active Transparency movement
• To help signatory individuals and companies create a “community of best practice” and set an example for coffee industry as a whole
• To avoid co-optation by non-committed actors by requiring participants to state the percentage of transparent coffees in relation to their total business volume
• To facilitate signatory individuals’ and companies’ commitment to the goal of increasing Transparency reporting until all coffees bought by an individual company are reported with all information requested by the The Pledge
The great news?
The Pledge now has 50 members including Tim Wendleboe, Seven Seeds, and of course… Rumble!
The below table presents data on all coffees purchased by Rumble in 2019 and includes the price paid for each at its origin. But before we begin...
We at Rumble focus our Transparency on the Free On Board price - or FOB price - describing the price paid at origin - that is, the value of the coffee as it sits in freight, about to leave the place in which it was grown.
We like to use FOB as our metric of choice due to the fact that it more easily facilitates Transparency in data-sharing. For example, by recognising FOB price, the roaster can know exactly how much the producer was paid at origin, less other costs that are added to coffee once it’s shipped and stored.
We think it’s important to recognise that a non-FOB price doesn't tell the full story about how much the farmer receives. Without breaking down that total cost to the consumer, there’s the possibility that suppliers lay claim to a costly ‘specialty’ coffee.
At every opportunity, we also aim to include farm-gate pricing data - that is, data on whatever price the farmer receives for their coffee as it leaves their farm.
WHAT THE NUMBERS SHOW
In 2019, the average price we paid for coffee was AUD$7.99/kg up from AUD$6.88/kg in 2018
If you compare this to the average C-market commodity price of around AUD$3.29/kg and an average Fair Trade price of around AUD$4.80/kg you can see the value we offer to our Rumble producer communities.
WHAT’S NOT INCLUDED (AND WHY):
Cost of production (COP)
While varying dramatically from country to country, a recent report has measured the cost of producing coffee to be sitting at around $1.05 to $1.40 USD/lb meaning that C-market coffee prices are often below the COP
Although most of our producers don’t yet have access to a full picture of what it costs to produce their coffee, you can see that the prices we’ve paid are well above the average fair trade price (see below) - more to come in subsequent editions!
Let’s get this straight: Transparency may be important but the process of achieving it isn’t always easy.
Visiting producers and ensuring good, consistent communication takes a lot of time, effort and resources in order to be effective and productive. Of course, this is especially so because of the different conditions, interests and needs of each region.
We know first-hand, however, that the benefits of doing so are always worth it.
Overall, Rumble aims to work with only as many countries as is reasonably manageable. We don’t stretch our resources, or the resources of others, and we aim to spend quality time with the wonderful seven regions we’ve chosen to work with.
For us, face-to-face, honest and genuine working relationships with our producers come first. Focussing on the quality of our relationships with growers (rather than sourcing as much coffee as possible from as many growers as possible) has several benefits including:
• Increasing traceability
• Ensuring consistency of supply via excellent, on-ground relationships
• Fostering active re-investment in farmers’ livelihoods (via coffee trade) and communities (via the act of spending time in the community)
Here are the countries we work with:
• Papua New Guinea (PNG)
In Burundi, coffee accounts for a significant portion of the nation’s GDP. Here, most coffee is produced by families in their personal gardens and processed at washing stations run by cooperatives (or sometimes privately owned).
The coffee we buy is sourced from Salum Ramadham. Salum has built four washing stations since 2012 to provide better outcomes to the people of the surrounding area. With payments normally doubling the government standard and bolstered by the provision of compost and other assistance to the community, we know we’re working with one of the best operators in the country.
Brazil is the largest coffee-growing region in the world. A majority of Brazil’s coffee is produced very cheaply by large farms with mechanical picking operations which ensures these farms play a big part in dictating C-market global trade. Some might argue that part is too big!
We source coffee from two producers in Brazil. The first is Pedro Gabarra who runs three large farms in Campos das Vertentes. In 2019, the wonderful Pedro was very proud to win the award for Brazil's Most Sustainable Farm (Globo Rural Magazine’s 6th Sustainable Farm Awards). He also runs a program that helps rescued birds and other animals that have been saved from illegal trade, getting them ready for release back into nature. This commitment to restoring balance in nature and community runs true to everything Pedro stands for.
We’re also proud to work with Kleumon Silva of Sitio Canaa. In 2019, we bought one of Kleumon’s very first lots from the farm. He’d been working alongside Antonio Rigno for almost ten years, thus learning from one of the most awarded and well-respected producers in Brazil. Kleumon’s coffee is all hand-picked and he uses some wonderfully interesting methods to get the best from his crop!
Colombia is home to a majority smallholder farmers that grow and process their own coffee.
The country has, in recent years, led the way in the development of new exciting new processing methods and the establishment of microlots.
The bulk of our Colombian coffee is from the brilliant co-op, Ubaque Union (close to the capital city of Bogota) with whom we have a very special relationship. Co-ops don’t always function to produce the best outcomes for producers but with what we've seen (and tasted) first-hand in Ubaque, this group has it sorted. We’re so proud to work with them.
Our other lots from Colombia have been sourced through our export/import partner, Cofinet. Facilitated via our close relationship, we’ve been allowed access to unrivaled information about the money made to the producer: we’re proud to say that almost all our Colombian producers were paid at over double the daily rate set by the government-run coffee board.
Like Burundi, most coffee in Ethiopia is produced by families in their personal home gardens and harvested alongside beautiful vegetables and grains. Ethiopia is the birthplace of coffee and therefore has far more genetic crop diversity than other origins - in fact, many varieties haven’t yet been fully researched!
Our contact here is the incredible Israel Degefa who owns 28 washing stations and his own coffee mill, and is an amazing advocate for the development of his community. Israel contributes 10% of his company’s profits to build schools and run local health programs. What a guy!
Guatemala has over eight very different growing regions. At Rumble, we’ve focused our sourcing on Huehuetenango. Huehue has (for us) the most interesting profiles. With extremely high altitudes and many micro climates to choose from, we feel we can get everything we need from here.
We’re proud to work with two families in Huehue.The first is the Vides family. Since 1958 the family has been producing amazing coffees. In 2002 they placed second overall in the Cup of Excellence; an incredible achievement. Importantly, the Vides family have worked hard to build a school and a daycare facility (aimed at stopping child labour) for the children of workers.
The second is the Del Valle family. We started working with the Del Valles after Marlon Del Valle took over management of the family farm. Marlon, 26, finished his studies in agronomy and was able to make some great improvements on the family operations, seeking out more opportunities for direct trade of their coffee. Once we heard the Del Valle story and tasted the coffee, we knew these wonderful humans would be a great fit for Rumble.
Marlon also works for a not-for-profit organisation helping other farmers improve their own operations. Interestingly, Marlon has also banded together with some friends to run a program helping schools capture and provide clean drinking water.
To put it simply, Marlon is a bloody champ and we can’t wait to nurture a long-and-lasting relationship with him and his family.
We bought one lot from Kenya in 2019: the beautiful Kabumbu.
Kabumbu is a small five-acre estate in the Kiambu county, owned and managed by a single farmer: Joseph Mugo Karaba. Joseph independently processes and sells his own coffee. With support from marketing agent, Sucastainability, he’s also able to sell coffee directly to the buyer ensuring better traceability and Transparency for all.
Importantly, this method of sale/purchase also means that any premiums paid for the coffee are given directly back to the producer.
We believe in helping our neighbours. With PNG as one of our closest, the decision to ramp up our support of growers in PNG was a clear one.
While many PNG growers produce amazing coffee, they generally don’t have the resources to do so sustainably. Most growers are small holders growing coffee in their backyard alongside other edible crops.
Our partner here is the legendary Jerry Kapka, a local man who’s done amazing things in his community. We continued to pay Jerry a premium in 2019 for his foundation to help keep up its important community-based projects.
Our plan for 2020 is to buy a new, very special lot for our Shadow Boxer blend, so keep your eyes peeled!
Like every human on this planet, we understand that data has the potential to be confusing and sometimes even a little meaningless to those less familiar with it. Still, with the production of this Report, we hope in some small way to change this. If we can help facilitate the data literacy of even a small number of people, we’re doing exactly as we intended.
We hope that over time, with more people taking part and showing interest, that Transparency and what it offers the industry as a whole become a prerequisite for consumer awareness.
So, watch this space. If one thing’s for certain, it’s that we’re hard at it!