What is fairness?
When roasters talk about where coffee comes from, most people talk about “farmers”; but farmers are not the only actors. Farms come in many sizes and can involve many people; farms are businesses, after all. Depending on who and how many people run it, the ethical issues in pay and fairness vary. The following process describes coffee from seed to cup with each step involving more and more people who are involved in the sale of the coffee.
A Farm Owner grows coffee: farms can be small or large (some farms produce more coffee than Colombia!), and the owner could do nearly everything or nearly nothing. Someone, however, has to tend the trees: the owner(s) or their employees. Moreover, farmers do not always pick their own coffee: sometimes the family of the farmer, sometimes seasonal hired labor, sometimes full time employees, or sometimes machines pick coffee for them.
Coffee gets to the processing mills: some farmers have their own processing mills and process at the base of where the coffee is picked. Others belong to cooperatives or societies and farm owners or farm workers deliver their coffee to a cooperative/society run mill. Still others will sell their coffee to a local intermediary who will purchase the coffee, blend it with other coffees, and process it before reselling it.
Coffee gets processed at a mill: coffee grows in a cherry and needs to be removed from the cherry before it is roasted (really before it gets anywhere near leaving the country). Processing goes beyond cherry removal, however; it also includes removing mucilage and drying the coffee until moisture stabilizes. There are, of course, several methods of cherry removal and drying with many variations on those themes (think natural/sun-dried, honey/miel, and washed with all the permutations: anaerobic, white/yellow/red/black honey, double washed, etc.). Again, this could be done by the farm or mill owner or by farm or mill workers.
Coffee gets exported: Export requires a good deal of political and financial wherewithal as well as knowledge, processes, and risk; most farmers lack the means to participate at this level (e.g., they cannot obtain an export license due to cost or by-law-restrictions) or cannot/will not take on the risk. Additionally, many exporters act as sourcing partners for importers. In this case, an importer will describe the coffee they want (taste, price, volume, quality, regional designation, etc.) and the exporter will find or build the lot for them. In some cases, farms are vertically integrated from the trees to export. When coffee changes hands from the exporter to the importer, (that is, where the importer now owns the coffee and the attendant risks of tranpsort) this is called Free on Board or F.O.B.
Coffee gets imported: Import also requires a good deal of political and financial wherewithal as well as knowledge, processes, and risk; most roasters lack the means to participate at this level or cannot/will not take on the risk. Most “Direct Trade” roasters (including Penstock Coffee) outsource importing to other companies.
Coffee gets roasted: Roasters take green coffee and make it brown. Roasters can purchase coffee from an importer, an exporter, a miller, a cooperative, or a farmer. The price paid at each step in the chain will go up, and most roasters refer to the F.O.B. price even though this number is not helpful in determining the fairness of the transaction at the farm level: the coffee has changed hands at least once if not up to five times (in some countries, like Yemen, even more) and the price paid indicates not what the farm owner received, much less the one to hundreds of possible people may have been employed along the way, and what was their pay like? Their conditions of work and life? Should we not also distinguish between small farms (less than 5 hectares), medium farms (5ha-30ha), and large farms (30ha+), where a margin of a few cents times millions is very different than the margin of a few dollars times a few thousand? (Ipanema in Brazil, after all, produces more coffee than Colombia!) And we are only dealing with economical and social fairness; what too of the soil, water, flora, and fauna?
our Answer: Farm Direct
For us, we have aimed to purchase coffee as directly as possible and as traceable as possible. So, for the majority of our coffees (by weight), we determine the lot and price with the farm or mill owner (1. or 3., above; what we call “Farm Direct” though it could be paid at the Mill level). We internally commit to always pay our Farm Direct partners 1.25x the Fair Trade minimum, which is $1.65. That makes our minimum price, $2.06. We generally give the grower leeway to determine the price assuming they know their costs best and will mark it up appropriately to support their business. If the quality of the coffee is low, however, and the price is high, we will push back to find an equilibrium point above our Farm Direct minimum but in keeping with the quality. In some cases, though we have paid more even when the cupping quality is not high (e.g., in Haiti, rampant inflation and high transportation costs in Haiti makes it nearly impossible to purchase specialty coffee below $5/lb at our Farm Direct Level).
Our other coffees come from importers. We have talked with and worked with a good many importers in the US and generally purchase certified coffees (RFA, C.A.F.E., UTZ, Organic, or Fair Trade) from them or we have an even narrower selection of importers who work at the farm and mill level to purchase their coffees and have multi year, transparent programs in place that benefit the growers and their communities. Typically, these coffees score exceptionally high, but often are not available from year-to-year, and so our offerings change.
Recently, some roasters have begun to speak of doing direct trade while only paying lip service to it. Or, in fact, doing direct trade, but not paying well or working with farms who do not treat their people or land well. A group of roasters and organizations have pushed roasters to publish their purchasing information. Indeed, they’ve asked them to do much more. We’ll let their words (a Transparency Pledge) speak for themselves:
A common code for transparency reporting in green coffee buying
• Give any participant in the coffee supply chain the opportunity to sign on and help create a transparency movement.
• Help signatory individuals and companies create a “community of best practice” and set an example for the entire coffee industry.
• Avoid co-optation by non-committed actors by requiring participants to state the percentage of transparent coffees in relation to the total business volume.
• Signatory individuals and companies must commit to a goal of increasing transparency reporting until all coffees bought by an individual company are reported with all information stated in this Commitment
• Ensure a sustainable supply of coffee by working towards a living income for producers so they will continue to invest in the future of their businesses.
• Transparent reporting enables actors throughout the supply chain to make informed choices. This will help the industry to raise prices paid to farmers and provide living incomes in coffee producing countries.
• Transparency about Free On Board (FOB) Prices is a first step.We encourage all companies and actors along the supply chain to make prices transparent at every step of the supply chain.
• Transparency is a tool to ensure that marketing claims are backed by actual facts.
• We will create transparency data that is publicly available and easily accessible;
• State the producer/producer organization the coffee was purchased from;
• State the Free On Board (FOB) price paid for the coffee;
• Indicate the quality of the coffee, for instance by using the SCA score in order to indicate cup quality;
• State the lot size (volume) of the coffee purchased;
• State the length of the relationship between producer/produ-cer organization and buyer;
• State the percentage of transparent coffees in relation to the total volume of coffee (in lbs/tonnes) sold in the stated year.
Companies that sign this pledge must publish the required information about at least one of the coffees they are selling. If the published information is called into question, companies that signed this contract agree to share a randomly selected number of green coffee contracts with other participants in order to verify information published in the transparency reports (peer review).
While there are no quick fixes for the problems that beset the coffee industry, this is a step in the right direction, and a very exciting one at that. Not only have we signed the pledge and begun submitting information, but we will go one step further: we won’t just publish the F.O.B.; we will also publish the farm gate price (that is, the price we agreed on with the mill or farm owner, and which they received). Here is our live updated document below: