The Specialty Coffee Transaction Guide

The Specialty Coffee Transaction Guide

Author: Matt Hampton(Head Roaster/Director, Rumble Coffee)

It’s been almost a year since I represented Rumble at the Transparent Trade Coffee Colloquium.

What did we learn?

This meeting of minds was organised by Peter Roberts of Emory University. With over 30 industry professionals from all over the world, the colloquium was the perfect opportunity  to discuss the current and future situation of coffee for growers, roasters and consumers all over the world.

Who joined us? Well, we welcomed the likes of Tyler Youngblood from Azahar Coffee, Geoff Watts from Intelligencia, Meredith Taylor from Counter Culture and Peter Dupont from the Coffee Collective… to name but a few, of course.

Cool, huh?

Transparent Trade Coffee Geoff Watts

A bunch of things were discussed (and much coffee consumed, let’s be honest) but the main question that was raised, and for which solutions were drawn up, was this:

How do we know the ‘right price’ that farmers should receive for their crop?.

Drawn from this central question, there were two ideas that really stood out to us during the few days we had together.

Let me tell you a bit more about them.

1. Find out the cost of production at the farm level.

Of course, like most good ideas, this one is harder than it sounds.

In Colombia alone, farmers can experience a cost difference of 30% from region to region.

The other big problem is currency. Internally, farmers are paid in the local currency but coffee is traded in US dollars. A change in exchange rates (fickle as they are) can, in turn, mean big changes to what farmers receive.

What being more conscious of farmers’ needs, interests and expenses does, at the heart of it all, is help the market adapt. Although this could be a mighty and difficult systemic evolution to encourage, we all agreed that with lots of work and time, this kind of thinking could be implemented on a global level.

Elias Roa Coffee Cherry

2. Create a Transaction Guide

The other idea, slightly easier and certainly way more of a ‘quick win’, was to create a Transaction Guide. Proposed to make use of contract data gathered from both importers and exporters operating around the world, this idea was a totally exciting one; this special Transaction Guide would have the purpose of giving those making purchases, as well as farmers/producers, a more accurate idea of the market value of their coffee.

Pooling our resources, we became incredibly excited at what we could achieve as a team. Something much greater than the sum of its parts; something that could guide, educate and – in some small way – regulate the market for the good of all.

And so… how to get the ball rolling?

On the final day of the Colloquium, Peter asked if people were open to handing over their contract data. The data would contain information that both farmers and buyers could use to make decisions about sales including lot size (how much of that particular coffee was grown), F.O.B. price (Freight on Board price -that is, the cost of delivering the goods to the nearest port with the shipping and associated freight costs thereafter being paid by the buyer) and cupping score (a system based on a 100-point scale of coffee quality rating from “off grade” to “super premium specialty”).

While this data is useful when pulled together, individually, it doesn’t tell us much at all. F.O.B. price, for example,does tell us that a majority of the fee has been paid to those working at the coffee’s origin (a good thing, of course) but what the data doesn’t tell us is what the farmer actually received. The other key issue is that some retailers appear to be laying claim to offering ‘specialty’ coffee without offering to make clear the actual price paid for the product.

All the more reason for pooled data, right?

With 21 data donors mainly from Europe and the USA, the colloquium gathered 2 years of contract data from over 10,000 contracts.

As we’d imagined, with this many contracts, there was more than enough data to get things started..

Transparent Trade Colloquium 2018 in Hamburg

The takeaways (see what we did there?)

The first learning? That combining the two key aspects of quality and smaller lots clearly creates higher prices. This helps farmers that are able to produce small, micro lots, and sell them separately from their standard production, make a better living.

The second? That we as an industry can, and will, do a huge amount more to support farmers.  If farmers don’t get paid enough, the outcome is quite simple: they’ll grow something else.

We can’t – and shouldn’t – let that happen, can we?

Karl Wienhold, a Colombia-based specialty coffee trader and consultant, wrote a great article in which  he researched the differences in farming coffee and coca. In this, he concluded that if we can get the minimum price paid for all coffee over $1.76 US per pound, it will help protect the industry for future generations.

A Transaction Guide. Not a bad collective solution, huh?Download your English version of the Transparent Trade Coffee Guide  here.