Get ahead of the harvest

A contract is a commitment to purchase a number of bags at an agreed-upon price over a defined period of time. 

• “Spot” pricing is for coffee landed in a US warehouse, immediately available for purchase or contract. Buying spot gives roasters the ability to shop across multiple suppliers, and is suited for short-term needs.
• “Pre-Arrival” pricing is for roasters who contract coffees before they become available in the US. These offers are marked as AFLOAT, and called out on our Upcoming Offers menu.  Since contracts are not confirmed until the coffee arrives and the roaster is able to approve an arrival sample, this is a low risk way to secure first selections at 15c discount off the spot price. 
• “Pre-Shipment” pricing is for roasters who commit to purchase before a coffee is even exported. This is a good option for those with more collaborative sourcing styles, repeat relationships, who have asked for something similar during their annual planning with us, or who otherwise engage their Crop to Cup reps early in the harvest. Roasters receive insight into early offers, pre-shipment samples and a final landed sample before approval. They also receive at least a 25c discount off spot pricing; sometimes more since roasters are able to make counter-offers directly to suppliers. 

There is no minimum size for contracts; good planning allows anyone to get ahead of the harvest and bring in more intentional coffees.  After contracting, coffees can then be released as needed – usually for up 9-12 months from the coffee’s arrival in the US.

Contracts always depend on sample approval. You can request samples from our Forward and Spot Offer Lists, or ask your Sales Rep about what’s currently in-harvest.

Prices on our offer list are quoted Free on Truck (FOT) from the warehouse indicated. This means that the price listed includes fees charged by the warehouse for loading onto an outbound truck, but not the cost of transport to you.

GrainPro or Ecotact bag liners come standard for all offers unless requested otherwise. Harvest year is current calendar, unless indicated otherwise.  Older inventories are automatically discounted.

Past that, it’s quite simple. Prices includes all costs directly associated with a coffee up until it is released from the warehouse…plus our margin of 10-45c.

The total markup between exporter and roaster covers these 6 items:

1. Cost of coffee – prices plus premiums paid at export
2. Cost of logistics – ocean freight, insurance, import/customs, port charges, warehousing
3. Cost of capital – financing, payment processing, exposure to delays, rejections, and defaults
4. Operational costs – sampling, and an amortized portion of both overhead and upkeep for our QC lab
5. Supplier support – our operating fund for producer programming, in-country staff and pre-crop financing
6. Our margin– the extra we add on top to pay ourselves so that we can keep on coming back.

Let’s review. The offer price you see is a coffee’s export price plus costs directly associated with transport, capital, operations, supplier support …and a margin for ourselves. 

So the only variables in pricing are (a) when you contract with us, and (b) the size of lot being imported. The earlier you book, the less risk we carry and the more volume we can commit to producers. The larger the volumes, the more we can spread fixed costs, making full containers cheaper than micro-lots. 

The table below breaks this down by time of contract.

We buy good coffee and pay good prices.

Our average FOB export price between January 2019 and May 2020 was $2.41 per pound across all pounds imported (or $2.78 per pound average across all lots/contracts irrespective of lot size).

The max price paid in this set was $12.00, the minimum was $1.70, and the most common price was $3.25.

FOB export price doesn’t mean much without proper context. For example, NYBOT in the date range for the above hovered around $1.00. We look at the FOB export price only as an indicator of how competitive a coffee is on the world market. Higher quality and more unique coffees command higher prices over time. But price is only part of the picture.

As a point of reference, the export prices we paid between January 2019 and May 2020 averaged $1.32 per pound higher than the C market price at time of contracting (or average $1.69 over C per pound across all lots/contracts irrespective of lot size).

When it comes to pricing every situation is different and deserving of special consideration. Our goal is to help farmers to maximize their harvest, to buy as much coffee as we can sell, at the highest prices we can sell them for, with as much of this going to the farm-gate as possible. And this looks different everywhere we go. However, wherever we go, there are some principles that remain the same:

1. We do not pay producers based on the C market (global commodity coffee price).  While the C is a factor in how prices are figured from farm-gate to export, it has no bearing on how we negotiate, or on what price we think a coffee is worth. This leads to more stable pricing for all partners.
2. Context matters. Every country, every community and every quality means something different for price.  How premiums are decided and distributed is contextual as well, and custom to each supply-chain.
3. We take a long view. Price is only part of a producer’s revenue, which is only part of income, which is only part of a farmers’ satisfaction and sustainable well-being. Our biggest indicator of success is the long-term satisfaction of our customers and suppliers.
4. The seller sets the stage.  Our first step to determine a fair export price is to determine the cost of a coffee – a cost that includes production costs as well as an adequate margin for continual improvement and profit.  We then provide feedback on what sort of offers we would need to achieve or exceed this price relation to similar products on the market. Upon agreeing on a price we contract to purchase and present these offers to roasters.
5. We can always do better.  We return to purchase from the same groups year-over-year when possible. There is an expectation on both sides that our prices should not decrease. And in as many cases as possible we want our prices to increase.  Increases recognize supplier loyalty, quality improvements, community/workplace investments by the supplier, and other positive factors.

We approach pricing as an open conversation, one that includes all stakeholders. We do not apply a single pricing rule across the producing world. Nor do we rely solely on negotiations to get us to the right price.  While it is often complicated, it’s always worthwhile, and we are happy to talk about how pricing works for whatever supply-chain matters to you.