Towards A Data-Backed and Anonymous Coffee Transaction Guide

Peter Roberts of the Goizueta Business School at Emory University addressing the TTC Colloquium participants in Hamburg, Germany. All photos courtesy of Transparent Trade Coffee.

Transparent Trade Coffee (TTC) recently held its second annual colloquium, involving a range of forward-thinking coffee professionals in a series of discussions about how to leverage pricing transparency as one way to evolve green coffee purchasing behaviors.

Led by Peter Roberts, a professor at the Goizueta Business School at Emory University, the TTC Colloquium brought together 27 roasters, importers and exporters representing multiple geographies at Quijote Kaffe in Hamburg, Germany, last month.

What resulted was a series of conversations that challenged existing paradigms in coffee purchasing, beginning with the premise that we are not paying nearly enough for high-quality green coffees, resulting in a significant risk for an industry that depends on quality to differentiate itself from the mainstream.

Post author and Reciprocafé LLC consultancy owner Chad Trewick.

Pushing for a deeper awareness of specific problems and solutions, this group got right to the topic at hand: Current green prices cannot sustain livelihoods in coffee-growing communities or production levels required to meet forecasted demand.

Among the conversations was a focus on a pilot project that will produce a data-backed transaction guide for the specialty sector. This guide will ask industry participants to donate key information about their green coffee purchases from the last two harvests. Information on prices, quantity, quality and region will be anonymized and aggregated by researchers, with the goal of creating an alternate price discovery tool for the specialty coffee industry.

Meredith Taylor of Counter Culture Coffee.

This guide will provide as much value to producers and exporters as it does to importers and roasters. In the hour-long conversations, several roasters indicated an urgent need for this alternate pricing tool because they are under enormous pressure to pay prices that align with industry standards. Currently, this means alignment with the New York “C” price, which is broadly understood to be way too low and volatile to sustain the specialty sector.

Reflecting on this project and on the Hamburg conversations, Roberts stressed that, “while the specialty sector clearly needs pricing benchmarks, these must accurately reflect the supply and demand for coffees that are valued because of their quality and identity.”

If all goes according to plan, the pilot transaction guide will be based on data donated by 20-30 exporters, importers and roasters working around the world of specialty coffee. It is expected to be released later this fall.

Geoff Watts of Intelligentsia Coffee.

While the pilot will rely on less-than-perfect information in its first phase, supporters will learn quickly and make refinements so that it becomes increasingly relevant for a broad group of sellers and buyers. They will also work to attract a larger and more diverse set of data donors so that the guide presents information that applies to a broader swath of the specialty coffee industry.

In addition to providing a pricing context for specialty coffee transactions, these data will support additional research to assess whether and where current prices are sufficient to allow payment of minimum or living wages on coffee farms and to induce needed investments in coffee quality and quantity.

This led colloquium participants to another important set of conversations about real costs of production for specialty coffee. Azahar Coffee, a green coffee exporter and retailer in Colombia, has invested in preliminary research related to the green coffee prices that are necessary to create economic outcomes where minimum and living wages can be supported.

“In traditional coffee consuming countries such as the U.S., we would never willingly negotiate something at a price below what would be required for its maker to earn a minimum wage — nor would we ever consider paying our employees below minimum wage,” said Tyler Youngblood, Azahar’s co-founder. “But as we have reviewed our early findings, that is exactly how coffee is sourced. Our industry too rarely pays what is needed to even allow farm owners and farm workers to earn the equivalent of a Colombian minimum wage. In fact, most prices paid to producers rarely allow them to even reach their country’s respective poverty lines.”

The Hamburg group repeatedly resisted the temptation to perfect every detail or remove every potential hurdle with these research projects before getting started. All participants were in very strong favor of moving forward with these core projects — even if data is limited — as a kind of living, breathing project in the name of transparency.

At present, imperfection is preferable to inaction, especially given the staggering consequences associated with industry-wide paralysis: persistent hardship in coffee communities and a crippling loss of supply diversity that impairs the ability to differentiate.