In specialty coffee, there is a growing conversation from industry professionals surrounding how much is paid for a pound of green (unroasted) coffee and if that price is enough to sustain not only the individual farmer, but the future of the industry. At Allegro Coffee, we are always asking the question: where does the money go? Our goal in sourcing is that what we pay for coffee makes its way into the hands of the individual farmer and that price means the farmer can make a profit from growing coffee.
These conversations are crucial to the industry, and Allegro as a coffee roaster, as they can help shift the power dynamics between buyer and seller. In turn, coffee farmers can achieve fair, and increasingly higher, prices for the coffee they grow. Unless we focus on equitable coffee prices and essentially paying more for coffee – at all levels including coffee consumers – farmers will not be able to continue making a living from coffee, putting the future of coffee in question. We’re proud to be contributors to the Specialty Coffee Transaction Guide, which is one tool to empower coffee farmers and add transparency to the coffee supply chain.
The “C” market & the price of Arabica coffee
So why are we so concerned? First off there is a price crisis in coffee as the current market price of green coffee is low (at time of writing just over $1.00 per pound of green). Commercial Arabica coffee (which is what Allegro Coffee and specialty coffee roasters source) is traded on the futures market called the “C” on the Intercontinental Exchange. The market, like with other commodities like oil and orange juice, sets a minimum price that buyers have to adhere to in making a purchase. Coffee is a volatile commodity due to various factors, including speculation by non-industry investors and supply and demand issues.
In fact, coffee is the most traded agricultural commodity in the world- an estimated 20 million households make their living producing coffee. The commodity price for green Arabica coffee is hovering at historically low levels – many times this price does not even cover the costs it takes the farmer to produce the coffee. Because of this low market price many farmers have to sell their coffee at a loss. But industry leaders in the specialty coffee supply chain have determined there is a need to make a clear distinction between higher quality coffees and those coffees traded at the minimum market price. These specialty roasters, including Allegro Coffee, are driven to find positive solutions to this price crisis in order to sustain the livelihoods of our producer partners.
A path forward with the Specialty Coffee Transaction Guide
This is where the Specialty Coffee Transaction Guide comes into play. The Specialty Coffee Transaction Guide is an initiative to establish benchmarks for prices paid for green coffee. The guide itself is a reference document which shows what specialty coffee roasters are actually paying for certain quality levels of green coffee. This guide shows actual data on prices paid, as opposed to simply basing coffee prices on the volatile commodities market. The guide relies on a group of progressive data donors – roasters, farmers, exporters, importers all along the coffee supply chain – who provide detailed information on what they are paying or receiving as a price for green coffee. The data is then compiled and by a team of researchers at Emory University. Once analyzed, the guide is published and posted at transactionguide.coffee where it is available in multiple languages for free download.
Strong partnerships in the coffee supply chain
All of this data is confidential in the spirit of providing a useful tool which coffees can be equitably traded, empowering both the buyer and seller with transparency. Each year the information is updated to reflect the changing market and as new data donors join the project. Allegro Coffee has been a data donor since 2018, contributing pricing information on all our contracted coffees to the project. This year we also made a financial contribution to support the continued development of this important resource. The ultimate goal of the guide is the same as ours: to build and maintain strong partnerships throughout the coffee supply chain. Transparency is the core of our sourcing practices – the more information we share with our partners and the more they can share with us helps us all make better and more holistic decisions.