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Foreword:
2021. We all remember having the feeling of having vaccines ahead of us and the worst of lockdown behind us. But just how wrong could we be?
And yet, here we are. We made it through, and we're sticking to our guns: our goal of a more transparent and sustainable industry for all.
This year, we've decided to rename our report Rumble's "Impact Report". Although it still holds dear the concept of Transparency, we believe that "Impact Report" is now a more accurate title.
Why? Because, encompassing the data as a whole, it stays true to the expansion of our reporting which has now moved beyond just coffee pricing and to showcasing our overall impact on the industry.
AS WE REFLECT ON 2021 WE'D LIKE TO THANK ALL OF THE CAFES, RESTAURANTS, BARS AND WORKERS THAT HELD STRONG THROUGH THE LAST TWO YEARS.
AND TO ALL THOSE WHO HAVE SUPPORTED US DIRECTLY IN THIS DIFFICULT TIME, WE SAY THANK YOU.
THANK YOU FOR HELPING US GET BACK ON OUR FEET AND FEEL COMFORTABLE AGAIN IN THE INDUSTRY WE LOVE.
Sustainability isn't just a concept related to the environment. It can be economic as well. And if the coffee industry's going to support everyone in the supply chain, one thing's for certain: it has to have a sustainable future - one in which producers can look after their families and community, while baristas making the coffee are being paid fairly to do the same.
Rumble's Impact Report is our way of being open about what we do, so that you - our clients and customers - can learn more about how we operate, and perhaps challenge yourself to improve the way you work or consume too.
Keen to get the most from our Impact Report? We'd love that for you too. Here's some key
language to keep in mind:
C-MARKET
A term used to describe the global trade of coffee as an undifferentiated, baseline quality commodity (like stock standard flour or sugar, for example). The C-price (a global price paid for coffee) is dictated by the stock exchange meaning many producers risk being underpaid as well as having the diversity of their crop unrecognized.
FAIR TRADE PRICE
Fair Trade pays a premium to member producers. Its aim is to stay USD20c above the C-market price and pay this premium to better the livelihoods of its producer members. It doesn't, however, make a real effort to improve coffee quality and
get good outcomes for coffee carmers. Its floor price is still USDS1.4 which is less than the cost of production and far from enough to bring families and communities out of poverty.
FARM GATE PRICE
The farm gate price of a product describes the net value of the product as it leaves the farm. Farm gate price, when paired with an understanding of FOB (see below), provides a fuller picture of Transparency both internally (for producers) and
externally (for buyers).
FOB PRICE
FOB is the 'free on board' price. It describes 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 argue that data surrounding FOB price is really important to share because it offers a clear snapshot of what the farmer received from the sale (less freight, insurance, finance, and other costs sometimes added to the published 'price paid' by roasters who claim a 'specialty' coffee).
Transparency, to us at Rumble, is a philosophy and way of life. When we use the word 'Transparency' in this report, we refer to the act of placing real value on the production of coffee. Rumble's approach to Transparency has three key pillars:
• Paying producers fairly
• Publishing information about the prices we pay for coffee
• Asking the big questions and having the tough conversations, both of which are necessary when it comes to getting the information we need to ensure Transparency
"Direct Trade" is a term that gets thrown around by lots of roasteries. A definition, or exactly what the concept entails, can also change from place to place.
For us at Rumble, it means that we've directly negotiated with the producer both the price and amount of product we'll purchase. After this is done, we make arrangements
with exporters and importers to manage the logistics of bringing the coffee to Australia.
Why is Direct Trade seen as beneficial? First of all, it's easy to tell the farmer is happy with the price. By cutting out the middle entity (the importer), we make great prices easier to achieve. Encouraging a greater = degree of direct trade is something that we, at Rumble, are working on as we go.
Currently, the only coffee we do this for is from the El Valle farm in Guatemala. All of our other coffees are purchased from importers. Still, most of these non-Direct Trade coffees still originate from samples sourced from origin that we cup and then contract with the importer. The importer then arranges the importation including shipping, insurance, customs clearance, storage and freight to our warehouse.
Sometimes, a small amount of our coffee is bought 'Spot', which means the importer has the coffee in their warehouse and it can be purchased for immediate delivery.
Of course, our plan is to work towards more Direct Trade. We know that this comes with some degree of risk (e.g. no guarantees in quality or protection offered by an importer), but we also know it's the way things need to move. We're making the change slowly - and purposefully - as a result.
Let's take a look at that pesky C -market price. Throughout 2021, we saw this increase from USDS1.262/lb to USDS2.261/lb, a huge jump compared to previous years.
But why? Aside from the challenges posed by COVID, a prolonged drought and destructive frost in Brazil had put massive upward pressure on prices paid for coffee - ultimately, a good thing!
Still, we'd have hoped to see smaller producers make more money too, but the price of fertiliser, labour and other costs had also gone through the roof. We also saw shipping times increase and those costs skyrocket to up to five times what they were a year earlier.
SHIPPING COSTS FIVE TIMES MORE THAN IN 2020!
At the time of producing this report, coffee prices are showing no signs of lowering. We hope things stay this way: that prices remain higher than they were, and that by paying more for quality coffee, we're all pushing for a better standard price paid to farmers overall.
Since we started publishing our FOB prices, we've been trying to find a better system of comparison to give more context to the S figure quoted. With only a handful of roasters in Australia publishing their prices openly, it is nearly impossible to do this successfully. What's more, the C-market and Fair Trade
prices have their own inherent issues and don't offer the full picture of what's going on within the industry.
For the last three years, we've been donating our coffee purchasing data to the Transparent Trade project at Emory University, Atlanta GA. As part of the project, data donors now have access to the full range of each other's data. As a result, we can start to understand the impacts being had by our coffee-roasting peers around the world. It's all made possible by using the more practical and in-depth parameters required by the project including FOB price, lot size, (total coffee produced for a lot), cup score (a quality index), and region.
While you'll find that we still quote the Fair Trade and C market prices in this report, we do this only in the spirit of transition. The project out of Emory University aims to make commonplace more effective, clear and transparent measures of Transparency. By doing so, roasters, farmers and importers can make more educated decisions about the S figure at which negotiations should start when a new lot is purchased.
Since considering this method of comparison, we've also made some changes for 2022 to increase our spending at origin outside of price rises. We've achieved this through a better assessment of our supply chain margins, and we're now more direct than ever before! This means, of course, that we're now much happier about where our money is going: right into the hands of our much-loved producers.
Producer Spotlight
In 2018, we started the search for better, more transparent and sustainable producers. Early the following year, we were introduced to Marlon Del Valle.
Marlon is a young farmer from the much-loved Huehuetenango coffee- growing area of Guatemala. Marlon, his brother Rudelfi, and his mother Marfa Eugenia have worked El Valle, an 8-hectare coffee plot in Union Cantinil, since 2003. They work with entirely eco-friendly practices and have huge respect for Guatemalan coffee culture. Seriously impressive stuff.
When we met Marlon, he'd just taken over the management of the family farm. Now 26 years old, he's finished his studies in agronomy and was able to start making improvements to the family operations, seeking out more opportunities for more Direct Trade of their coffee. Once we heard the Del Valle story (and had tasted the coffee, of course), we knew these wonderful humans would be a great fit for our Rumble crew.
TO PUT IT SIMPLY, MARLON IS A CHAMPION. WE CAN'T WAIT TO NURTURE A LONG-AND- LASTING RELATIONSHIP WITH THE DEL VALLE FAMILY!
The family were previously selling coffee at collection points where the price is set daily on the global C-market price. Operating via Direct Trade, we were able to buy half of the family's coffee in the first year at 30% over this price. In 2022, we plan on purchasing their whole production.
Since 2019, the quality of Marlon's coffee has been rapidly improving. Reports back from the farm indicate that the family is very happy with the arrangement that's eventuated, particularly in terms of prices paid. Marlon's mother especially reports feeling far less stressed about the harvest every year.
Marlon also works for a not-for profit organisation helping other farmers improve their operations. Interestingly, Marlon has also banded together with some friends to run a program helping schools capture and provide clean drinking water.
We at Rumble HQ have been hard at work finding ways to improve our environmental impact. As a product manufacturer, we can not remove our impact entirely, but we know that every decision we make can begin to reduce impact as a whole
We're incredibly proud of the fact that we still use our two council bins for recycling and general waste. Our soft plastics (mainly Grain Pro coffee sack liners) are picked up for recycling, and all of the coffee sacks and coffee chaff and grounds are picked up by locals for their gardens.
And guess what? Our bags are completely recyclable: bring them back to the roastery for processing, or take them to the supermarket and place them in the soft plastic bins after following the bags' instructions. We've also been making moves to offset our energy usage during roasting, a process with can chew up a fair bit of gas and electricity. At this stage, we're participating in a carbon offset program with our energy provider which purchases carbon credits from green initiatives to offset our roasting output.
Of course, this is also why we purchased a new roaster - a Loring, the most energy-efficient machine currently on the market! We've also made small changes to Rumble HQ such as the use of energy-efficient LED lights throughout the entire warehouse.
While prices paid to farmers is one of the main issues plaguing global coffee production at this time, so too are the challenges of the farming conditions. Arabica coffee, for example, is very susceptible to disease and pests. What's more, issues like the age of trees, hardiness of different varietals, soil condition and - perhaps most importantly - education in farming are also challenges that impact the industry as a whole.
We started making donations to World Coffee Research, an initiative running incredible education programs all over the coffee- growing world. In 2022, World Coffee Research will launch a global breeding network, bringing together national breeding programs and producers to make information easier and quicker to access.
We are also making donations to Grounds for Health. Starting in 1996, Grounds for Health is a non-profit organisation with its focus being the prevention and treatment of cervical cancer. They run screening programs throughout a growing number of coffee-growing communities.
We love coffee. To make sure we can all continue drinking and enjoying it in the future, one thing is clear: we need to support the communities that produce it.
