The Transparency Project: Terms We Use

The Transparency Project is our attempt to bring light to the murkiness of the coffee industry. We aren’t the first or only roastery doing this and we don’t think we have all the answers. In trying to explain why you should pay more for great coffee we use man different terms. Here are the meanings of some of them.

Transparency Project Overview

These are many of the terms involved in the coffee supply chain. Click through any of the links to learn more. At the bottom of the page is a list of great websites and resources where you can investigate further.


coffee FOB

FOB

FOB is a term we will use often. It stands for Free On Board and is the price of the coffee when it leaves the growing country by ship and becomes the responsibility of the importer.

Coffee is sold in different ways in every country, one thing they have in common is use of the FOB price. By using this term when you look at the different coffees we sell you can compare them.

When possible we will give the farm-gate price paid to the farmer. We don’t always have this information as each origin has a different system. Co-ops in Ethiopia are very different to individual farmers in Colombia.


Shipping in coffeeShipping

Once it hits the boat the coffee needs to be insured from damage and disaster, the shipping itself needs to be paid for and any import/export fees need to be added.

Finance also needs to be factored in. We don’t buy all our coffee at once but draw down on a monthly basis.


Rumble HQ

Storage

Once the coffee lands in Australia we need to store it somewhere. That could be in our warehouse or the importers.

Every time we roast a kilo of coffee we lose an average of 18% of its weight. That’s because of moisture and other compounds evaporating away in the heat of the drum.

If you see us talk about buying a kilo of coffee, we can only sell 82% of that coffee.


Coffee processing bag image

Processing and Payment

Every country has a different system and it might be unique to that country. Depending on where they are and how far they process the coffee themselves will decide how much of the FOB price they receive.

The first coffee bag shows the red coffee cherries, fresh from the tree. Farmers in some countries sell them like that. Next is the wet mill for processing which removes the fruit of the cherry and leaves the bean behind. The coffee still has a hard dry layer called parchment. Our final step mills the parchment off and has the coffee bagged and ready to cross the sea to Rumble HQ.

If the farmers sell the coffee cherry (fresh off the tree) they receive less than if they process it to parchment. If they go all the way from growing through processing to dry milling, they receive even more.*

*Obligatory disclaimer here. There are plenty of exceptions to these steps. We are trying to summarise a worldwide supply chain with many parts and don’t claim to include everything in a few diagrams.


Coffee C price

Market Price

Also known as the ‘C’ price, it’s the benchmark price for Arabica coffee. The price is driven by supply and demand and a flood in Brazil can drive the price down for growers in Guatemala.

The C price has no ties to the cost of production. If it costs me $5 to grow a kilo of coffee in Mexico but the C price is $4 then I might be in trouble.

The C is also in US dollars so currency fluctuations can affect what growers take home.

Specialty coffee has always claimed to be insulated from the vagaries of the ‘C’ by it’s focus on cup quality. We no longer believe this to be enough.


Fair Trade

Fair Trade

Fair Trade is an organisation that developed in the Netherlands in the late 80’s. Seeing the problems of coffee growers being tied to the market price and earning less than the cost of production they set out to do something about it.

Fair Trade sets a premium above market price that must be paid for the coffee to qualify as Fair Trade. Currently that is US$1.40 per pound. There is a $0.30 premium for organic coffee and if the market price rises above this level then an extra $0.20 is added.

Fair Trade is a fantastic organisation that helps many coffee growers. If you are buying coffee in a super market we always recommend buying Fair Trade.

Where Fair Trade falls short is at the higher end of the specialty coffee market. The coffees we buy have always been well above the Fair Trade price.


Price rumble pays for coffee

Rumble Coffee Price

Now we get to the price of our coffee. This is what the exporter received when the coffee was FOB and ready for shipping. Depending on where they are along the chain dictates how much of this price the farmer receives. Where possible we will display the farm gate price that went to the grower.

 


Further Reading

Here are some fantastic resources for further learning.

Transparent Trade Coffee work with us and other roasteries around the world to improve the coffee supply chain and increase the amount of the coffee price that returns to origin.

Perfect Daily Grind have articles and information on all parts of the coffee industry, from growing to roasting and brewing.

Coffee Lands write well-written and researched pieces on everything from the environment to farm profitability and coffee processing.

Direct Origin Trading are a group of  Colombian coffee farmers trying to bridge the gap between farmer and roaster. The infographics they produce are exceptional and their e-book An Unstable Market is a must-read if you want to dig deeper into coffee pricing and sustainability.

Our own Green Coffee Buying Guide is on our site. This is the information that we require of importers before we can work with them.

Our Web Store has our Transparency Project coffees available for sale.