2/3 of the price for the producer, is it realistic?

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2/3 of the price for the producer, is it realistic?

Recently algrano’s users replied to a short survey with the following questions:

1. Which price would you pay for the coffees you are looking for, delivered to your roastery? (in USD / kg)
2. If you pay 10 USD / kg for a coffee delivered to your doorstep, what do you think should be a faire price for the producer?

80% of the respondents are willing to pay more than 6 USD per kilogram for a specialty coffee from Brazil delivered in Europe. The average green coffee buyer sets a fair price for the producer at 63% of the price he pays at his doorstep. It is a pleasure to see that algrano’s specialty coffee roasters are willing to reward quality at the farm.

However, how is it in reality?

The industry organisation of German coffee roasters, die Röstergilde, published the average price paid by their members in 2014. Using today’s exchange rates, average spending was 5.05 USD / kg. Comparing this price to the ICO Composite Price and the Fairtrade minimum price, only 42% respectively 54% of the price paid by the roaster goes to the producer.*

Is direct trade any better?

Let’s have a closer look at one coffee listed by a Brazilian producer organisation on algrano. This specialty coffee is offered for 6.20 USD / kg delivered in Germany. The producer organisation decided to sell this coffee at 4 USD / kg. Hence, the farm price corresponds to 65% of the price paid by the roasters! Therefore, it seems that algrano’s price structure, fits almost perfectly average roasters’ expectations.

But is it just one exception?

Considering all current listings on algrano, it is not. In fact, it is even the lowest producer share! Exporting and importing costs remain the same per kilogram green beans. Hence, when prices increase with quality, only rewards to producers increase. algrano is proud to offer a trade framework, in which price structures satisfy both commercial partners.

*The ICO composite price of the month of September and the minimum Fairtrade price excluding the cooperative premium are used. In order to obtain producer prices, from both prices exporting costs of 0.4USD/kg are subtracted.