Part 5: Asking the Right Questions
Now that we’ve unpacked context on what goes into pricing coffee, from terms and language to production and operating costs to purchasing models and value added, it’s time to talk about how to ask the right questions. As a roaster, it’s important to find out if your coffee purchase represents an investment in a resilient supply chain, so how do you take that conversation deeper than asking about prices?
One good starting point is to ask importers how they go about setting prices for producers, in general and in specific. How do those prices compare to the C market, Fair Trade, and Fair Trade Organic prices? Do they use the C market as a starting point, or decide on baseline rates that are consistent season to season outside the C market? Do baseline prices (prices before producers receive additional quality premiums for exceptional coffees) ever go down from year to year due to the C market, or are they consistent?
Another question to ask is whether an importer’s baseline rates allows producers and producing groups to meet their costs and reinvest in their farms and infrastructure. No matter what they pay for quality premiums, if the baseline rate doesn’t allow producers to survive and thrive, it’s not sufficient.
While asking these questions of your importer, it’s equally important to check in with yourself, your business, and your customers. How much are you willing to pay for a healthy, resilient supply chain where everyone meets their costs? Can you still meet your costs if everyone gets paid fairly? Will your customers pay what they need to in order to make it happen? If not, why not? What can change their minds?
It’s crucial that people learn more about the supply chains they work within. The more questions you ask your importers, the better. To ask us a question, email us at info@redfoxcoffeemerchants.comcoffeemerchants.com, or contact us on twitter or instagram.
To learn more about the complexities of coffee pricing, take a look at Part 1, Part 2, Part 3, and Part 4.
By: RJ Joseph