Transparency Report 2020
This is the 2020 transparency report in full. In the pdf below, we present the FOB price of all of the coffees we bought in 2020, as well as the years of the relationship with the producer.
The end goal to share the price transparency report with you every year is not for every customer to understand all the data but to get more awareness and transparency around coffee prices and highlight why we need to pay more for coffee. This is the same reason why every single package of coffee that gone out of our roastery since August 2019 has the FOB price published on the label. We believe publishing our green coffee prices can spark conversations about coffee prices and relationships in coffee in general.
The FOB price is the price we pay for the coffee before the coffee leaves the port in the coffee producing country. We are using the term FOB US$/lb so it can be compared to the C-market price for arabica coffee, which is currently on 1.11$/lb. The average price we paid for coffee based on the total 55864 lb (25 393 kilos) of coffee we bought in 2020 was 3.81 US$ per lb (pound) which is about 8.4 US$ per kilo. The average price for the lots we bought (split over all lots, not kilos) was 6.13 US$/lb or 13.5 US$/kilo. The average years of working with a farm were five years in 2020. All of the producers we buy from, we have visited and know well and have done impact reports with.
Relationships in coffee
We are working with outstanding and quality-driven producers who believe in nature and want to do well. Still, it takes a long time to build trust in a business relationship, just like most relationships. To have a long-term relationship with a shared perspective on the future.
When you have trust in a relationship you also have a deeper understanding of each other. You are honest and you share what is going on in your world. These foundations are important, not only in years where you meet challenges or something unexpected is happening to one of our businesses, but also to get a better understanding of each other's work and situation. From my experience of working with the producers we are working with, every year I get the next level of trust in sharing real issues and real needs in terms of coffee production. For the producers we have been working with long term, I also see an increase in delivering the same, or most often higher, quality year on year.
The average years of working with a farm were five years. The relationship length varies between one to ten years. On the farm we only had worked with for one year, Cerro Azul, in this case, we have worked with the producer for 3 years but the actual farm was new. In 2021, we will be adding a Guatemalan producer I have known for a long, but it will be the first year of buying.
Our coffee roastery and our import are certified organic. In 2020, we sold the coffee from Teodocio Mamani (Bolivia) and Muiri (Kenya) as organic. In 2021, Hunkute and Adola (both sold as organic in 2019) will be certified as organic too.
In 2015, I made a call to only work with producers we know well and have visited. We also set up impact reports on how we were working on sustainability and logging what we saw, year on year. Sustainability is an active work, it is not fixed or something we can buy of any certification. Within coffee production, there are hundreds of different things to look at to get a good idea about the current sustainability. So when we do visit producers, we are looking at writing down working conditions, costs, insurances, discrimination policies, usage of water, and among many other things. This is our internal work and will help us and the producer to see what we and they find most urgent to focus on. And that is very different from country, farm, and people. For Drop Coffee, we have a policy for no children under 16 working on the farm.
Looking at the 2020 numbers
The average years of working with a farm were five years in 2020. All of the producers we buy from, we have visited and know well and have done impact reports with. Sustainability is an ongoing work that builds on the three pillars economy, environmental and social. To work with sustainability, all of these three pillars need to be actively updated year on year. Without one of the pillars, sustainability is unachievable. This is only focusing on the transparency of what we are paying for the coffee, it does not go into the cost of production, or living income, for the producer. Nor does it present environmental or social situation. We want to communicate the coffee prices as we can tell you for sure, that nor environmental or social will be looked after if economy is not. We hope to publish our green coffee prices that spark conversations about coffee prices and relationships in coffee in general. From all I have experienced as a green coffee buyer in the last decade, coffee prices should be even higher and Drop Coffee's ongoing goal is to pay more and more every year.
In this report, you can only see the FOB price paid for the coffee, not the farm gate price or landing price, etc. For Finca Nejapa, Los Andes, Cerro Azul, Las Delicias, Limoncillo, Alasitas, Samiachacha, Adola, Uraga and Ana Sora the FOB price is the price the coffee producer, who is also exporting the coffee, recives. For the other coffees, we are paying a separated exporter. I would love to break down even more data and numbers to you, but we are a small business with limits on what we can do.
In total, we bought 55864 lb, 25 393 kilos, of coffee spread over 28 different lots of coffee. The average price we paid for coffee we bought in 2020 was 3.81 US$ per lb (pound) which is about 8.4 US$ per kilo. The average price of overall coffee we bought from all farms was 6.13 U$/lb or 13.5 US$/kilo.The coffees we buy are high end speciality coffee, scoring from 86 and above.
2020 was a special year to buy coffee due to the lack of demand from wholesale customers as a result of the pandemic. We bought all the coffee we had committed to in 2019-2020 planning with producers. The situation made the purchasing a bit more uneven, yet there is a trend in buying most coffee annually from Ethiopia, but not by this much. Second by Nicaragua.
Read more about coffee prices
Besides publishing the FOB-prices on all labels from the coffee going out from our roastery and sharing this report annually, Drop Coffee is also giving our data to the the Speciality Coffee Transaction Guide. The Transaction Guide has a bigger data on the speciality coffee industry, with 81 data donators. That is a great report for producers to look at, compared to our smaller scale roastery that is only representing our small-medium scale roasting business. We also recommend you to keep up to date on the SCA Coffee Price Crisis Response Initiative.