Transparency

Planting coffee isn’t quite as simple as sticking the seed in the ground and waiting. Usually, coffee trees start life in a protected greenhouse as they sprout and are moved into the field once they are strong enough. Most species take 3-4 years to mature and begin producing fruit. This fruit, what we commonly call a coffee “cherry”, can be handpicked if focusing on quality, or machine harvested for larger production. This can happen once a year in most coffee-growing regions, but in countries that lie along the equator or in warmer climates, there may be two harvests annually. If the farmer sells the coffee in cherry at this point or continues to process themselves before sale, that price is called the “Farmgate” price and should cover the cost of production, be sufficient to cover personal expenses, and include a profit margin.

Farmgate price often is a raw price for unprocessed and unmilled cherry or parchment, so this price is relevant in the context of where it was sold and how it was processed, but tough to compare country to country. For example, payment in Pesos (Avg 4,323.28COP to $1.00 or €0.92 in 2023) per carga (125kg) in Colombia as a farmgate price is not directly comparable to Costa Rican Colones (Avg 544CRC to $1.00 or €0.97 in 2023 per quintale (46kg or 101lbs) of cherry in Costa Rica. Those prices look very different depending on if the coffee as delivered in cherry or in parchment, the Green Been Equivalent or yield factor for that farm, and exchange rate at time of sale which means that they don’t demonstrate equity to an end consumer without additional context.

After harvesting, the cherries are processed, usually with one of two broad methods and there are new variations and experimental methods being introduced all the time: the dry method, where cherries are spread out in the sun to dry before the skin and mucilage are removed, and the wet method, which involves removing the pulp immediate, fermenting, and then drying the bean with only the parchment skin on. For either method, once the beans are dry, they are hulled or “dry-milled”, where the outer layers of the dried cherry and/or parchment are removed. This step also often includes polishing to remove any remaining dried skin, grading and sorting the beans based on size and weight. Often, this is the first time the coffee will be tasted and the quality and attributes will be noted. It’s common for samples to be sent at this point to exporters, imports, or potential customers for further assessment, we call these Pre-Shipment Samples (PSS).

Note that there are two points here where the coffee is losing weight. Once when the seed is removed from the fruit, cleaned, and dried. Then again when they are graded. This means that to end up with say 1kg of coffee ready to export, we need more cherries by weight to start with. This is often calculated by something called a “Green Been Equivalent” (GBE). A simple ratio to calculate how much weight in cherry it takes to have an output of a specific weight of finished coffee. GBE can be different depending the on the processing standards , allowed screensize, even ripeness of the fruit when harvested. which again varies greatly by origin or from farm to farm. In Brazil, you may allow down to 15 screen size which would mean this % would be higher, but in Kenya for AA, this may be lower. This adds a wrinkle into the relevancy of Farmgate price without a strong geographic understanding of coffee agronomy in the country being discussed.

The processed and milled beans, now referred to as green coffee, are packed in sacks and moved to the port of departure and ultimately to the country of consumption. Importers usually work with Exporters to make this journey happen. The price paid by the Importer when the coffee arrives at port is called the “Free On Board” (FOB) and (if the exporter is a sustainable business) covers the costs of Farmgate/Processing/Milling/Domestic Transport and anything else arising from getting the coffee from farm to port and on the boat. In landlocked countries that need to export by truck or plane to the nearest port, it’s common to see prices reported as “Free on Truck” (FOT) or “Free Carrier” (FCA), which is the price when the coffee is loaded onto the truck in the case of FOT, or any vehicle in the case of FCA, to make the journey to port. Both of these prices include the exporter’s margin, which can vary dramatically depending on the business model of the exporter.
FOB is the most common request we get for financial transparency, but as you can see, this number may not always indicate the impact on the farmer without a strong understanding of the full geographic and economic picture of the purchase. Simply one exporter having a higher margin than another can make this number slightly misleading when trying to determine how much was paid to the farmer or producer.

Once the “Free On Board” (FOB), “Free on Truck” (FOT), or “Free Carrier” (FCA) price has been paid and all the stacks of paperwork have been signed, the coffee is physically moved onto the ship, truck, or other transportation method (sometime plane or train) for shipping to the point of import. While every effort is made to minimize the time this takes, moving the coffee can take anywhere from a few days to months depending on the shipping method, route the coffee must take, and the perils encountered along the way.

Upon arrival at its destination, green coffee samples are roasted, tasted, and graded by sensory scientists to assess that their quality and flavor profile are consistent with the pre-ship sample. The green coffee is stored in a climate-controlled environment until it is sold and shipped to the Roaster. These handling and warehousing costs are often called “Ex-Works” or “Ex-Warehouse” and cover the cost of doing business by the Importer.

Roasters purchase the green coffee and prep it for serving or distribution to their customers. Roasting, packaging, distribution, and retailing are the final stop in the coffees journey to becoming a final product ready for consumption

Customers enjoy the results! The “Retail Price” of the final cup or bag covers the remaining costs incurred and profit by the Roaster.

Planting coffee isn’t quite as simple as sticking the seed in the ground and waiting. Usually, coffee trees start life in a protected greenhouse as they sprout and are moved into the field once they are strong enough. Most species take 3-4 years to mature and begin producing fruit. This fruit, what we commonly call a coffee “cherry”, can be handpicked if focusing on quality, or machine harvested for larger production. This can happen once a year in most coffee-growing regions, but in countries that lie along the equator or in warmer climates, there may be two harvests annually. If the farmer sells the coffee in cherry at this point or continues to process themselves before sale, that price is called the Farmgate price and should cover the cost of production, be sufficient to cover personal expenses, and include a profit margin.

Farmgate price often is a raw price for unprocessed and unmilled cherry or parchment, so this price is relevant in the context of where it was sold and how it was processed, but tough to compare country to country. For example, payment in Pesos (Avg 4,323.28COP to $1.00 or €0.92 in 2023) per carga (125kg) in Colombia as a farmgate price is not directly comparable to Costa Rican Colones (Avg 544CRC to $1.00 or €0.97 in 2023 per quintale (46kg or 101lbs) of cherry in Costa Rica. Those prices look very different depending on if the coffee as delivered in cherry or in parchment, the Green Been Equivalent or yield factor for that farm, and exchange rate at time of sale which means that they don’t demonstrate equity to an end consumer without additional context.

After harvesting, the cherries are processed, usually with one of two broad methods and there are new variations and experimental methods being introduced all the time: the dry method, where cherries are spread out in the sun to dry before the skin and mucilage are removed, and the wet method, which involves removing the pulp immediate, fermenting, and then drying the bean with only the parchment skin on. For either method, once the beans are dry, they are hulled or “dry-milled”, where the outer layers of the dried cherry and/or parchment are removed. This step also often includes polishing to remove any remaining dried skin, grading and sorting the beans based on size and weight. Often, this is the first time the coffee will be tasted and the quality and attributes will be noted. It’s common for samples to be sent at this point to exporters, imports, or potential customers for further assessment, we call these Pre-Shipment Samples (PSS).

Note that there are two points here where the coffee is losing weight. Once when the seed is removed from the fruit, cleaned, and dried. Then again when they are graded. This means that to end up with say 1kg of coffee ready to export, we need more cherries by weight to start with. This is often calculated by something called a Green Been Equivalent (GBE). A simple ratio to calculate how much weight in cherry it takes to have an output of a specific weight of finished coffee. GBE can be different depending the on the processing standards , allowed screensize, even ripeness of the fruit when harvested. which again varies greatly by origin or from farm to farm. In Brazil, you may allow down to 15 screen size which would mean this % would be higher, but in Kenya for AA, this may be lower. This adds a wrinkle into the relevancy of Farmgate price without a strong geographic understanding of coffee agronomy in the country being discussed.

The processed and milled beans, now referred to as green coffee, are packed in sacks and moved to the port of departure and ultimately to the country of consumption. Importers usually work with Exporters to make this journey happen. The price paid by the Importer when the coffee arrives at port is called the Free On Board (FOB) and (if the exporter is a sustainable business) covers the costs of Farmgate/Processing/Milling/Domestic Transport and anything else arising from getting the coffee from farm to port and on the boat. In landlocked countries that need to export by truck or plane to the nearest port, it’s common to see prices reported as Free on Truck (FOT) or Free Carrier (FCA), which is the price when the coffee is loaded onto the truck in the case of FOT, or any vehicle in the case of FCA, to make the journey to port. Both of these prices include the exporter’s margin, which can vary dramatically depending on the business model of the exporter.
FOB is the most common request we get for financial transparency, but as you can see, this number may not always indicate the impact on the farmer without a strong understanding of the full geographic and economic picture of the purchase. Simply one exporter having a higher margin than another can make this number slightly misleading when trying to determine how much was paid to the farmer or producer.

Once the Free On Board (FOB), Free on Truck (FOT), or Free Carrier (FCA) price has been paid and all the stacks of paperwork have been signed, the coffee is physically moved onto the ship, truck, or other transportation method (sometime plane or train) for shipping to the point of import. While every effort is made to minimize the time this takes, moving the coffee can take anywhere from a few days to months depending on the shipping method, route the coffee must take, and the perils encountered along the way.

Upon arrival at its destination, green coffee samples are roasted, tasted, and graded by sensory scientists to assess that their quality and flavor profile are consistent with the pre-ship sample. The green coffee is stored in a climate-controlled environment until it is sold and shipped to the Roaster. These handling and warehousing costs are often called “Ex-Works” or “Ex-Warehouse” and cover the cost of doing business by the Importer.

Roasters purchase the green coffee and prep it for serving or distribution to their customers. Roasting, packaging, distribution, and retailing are the final stop in the coffees journey to becoming a final product ready for consumption

Customers enjoy the results! The Retail Price of the final cup or bag covers the remaining costs incurred and profit by the Roaster.