2 Minute Read
Co-founder and CEO
With international coffee prices still hovering around the 1 dollar per pound mark, the end of 2018 saw a group of 21 coffee companies – exporters, importers, and roasters - contribute pricing data to Transparent Trade Coffee (TTC), a team of researchers at Emory University led by Dr. Peter Roberts and Chad Trewick. The data received by the team at TTC encompasses more than 10,000 contracts, covering almost 150 million pounds of green coffee with an overall value exceeding 340 million dollars. This information comes from contracts that were signed between October 2016 and September 2018, for coffees that scored 80 points or above. This data was then analyzed statistically to yield the first edition of the Specialty Coffee Transaction Guide (SCTG).
Transparency being one of Caravela’s five core principles, we were among the first companies to agree to participate in this initiative. We contributed data on 2,545 contracts, representing almost 15.8 million lbs. of coffee contracted during that period. Thus, by our calculations, Caravela’s data represents almost 24% of the total number of contracts and 10.8% of the total pounds analyzed by TTC. The information we submitted to SCTG represents 100% of our contracts entered into with roasters from around the world, for coffee from the eight Latin American countries where we work. And, because we don’t source any coffees below 84 points in cup quality, our share of the data of 84+ coffees rises to 17% by volume and 28.5% by number of contracts.
The 14-page guide contains detailed information about FOB prices, grouped according to quality levels, lot size, and region of origin. Among the interesting results generated by this study is the fact that the median FOB price of all contracts analyzed during both of the periods covered was $3.00/lb - almost three times the average “C” price of 2018.
Another insight offered up by the study was that contracts for coffees scoring below 84 points represent 53% of the total volume contracted, while only 8% of the total number of pounds contracted represent coffee of 86+ cup quality, highlighting that high scoring coffees are harder to source, are less sought after by specialty roasters, or both. But perhaps the guide’s most notable conclusion is that, despite the fall in the “C” price from 2017 to 2018, the year-to-year change in median prices for coffees scoring 84+ was significantly lower than for coffees scoring below 84 points; the resilience of the former clearly shows that better quality helps insulate producers from the general market price movements.
While the scope of the study is relatively small compared to the overall size of the world’s specialty coffee market, the Specialty Coffee Transaction Guide is, without a doubt, the first and most expansive independent effort to provide the coffee industry with objective price benchmarks, empowering coffee farmers to negotiate better prices for their quality coffee and helping buyers make more informed decisions when negotiating coffee prices. This pricing data, along with cost of production information, is critical to remove the highly volatile “C” price from any pricing conversations and thus develop a more sustainable specialty coffee industry.
I urge everyone working in the coffee industry - as well as coffee lovers the world over - to download the report here and encourage more coffee companies to contribute their pricing data, so that future iterations of this guide can provide broader feedback with greater detail and even more accurate and informative results, thus benefitting producers, roasters, and consumers alike.