When I started working with Azahar (since 2015!) it was my first time interacting with an exporting company that was deeply interested in paying producers not just “directly and fairly” but informed by cost inputs and factoring for actual profit for the farmer. Not only that, but they were keen to be transparent with buyers about all of this. It’s a concept that industry folks love to address in a website about page, but it’s sometimes difficult to get any hard facts. A few years later, with help to fund the research from The Rudy & Alice Ramsey Foundation, Acumen Fund, and cooperative associations based in Huila, Tolima, Quindío, Nariño, and the Azahar team, the first version of the Sustainable Coffee Buyer’s Guide was launched. Getting granular with costs can be intimidating, especially with the agricultural sector, since there are so many moving parts each season. But if we’re going to be able to enjoy these bright, zippy, fruit-forward liquid miracles for the decades to come, however, then we gotta address price.
Here’s the price discovery tool developed through this research:
P= The price necessary to achieve an income goal (i) for producers with specific, known costs of production (c) and volumes (v).
A nice equation, sure, but how do we even start understanding what a sustainable price is? Azahar wanted to know too, so they began collecting data from farmers’ cost of production and yields. If you are interested to know exactly how they did this and have an hour to spare, the Specialty Coffee Association of America has a public access video of this presentation called A Sustainable Coffee Buyer’s Guide
We finally had enough quality and quantity of data for each specific region in Colombia to start to make some informed decisions on where to go with pricing, and how to get there. Take for example, what we paid Luis each time we got coffee from him for Luna.
Year 1 2018 – 1.2million COP
Year 2 2019 – 1.5million COP
Year 2 2019 – (2nd lot) 1.7million COP
Year 3 2020 – 2million COP (2nd lot from year 3 is live on our menu as of April 2021)
Initially, we thought we were paying a better price than usual at 1.2million COP (we weren’t buying directly in year 1, as an importer brought in his coffee on a spot offering list) since the internal price sat at around 800,000COP, but that’s some flawed thinking. Paying a slightly higher price than the base market doesn’t address any costs of production, debt servicing, or future investments on the farm. Any price discovery mechanism (for any agricultural product) that requires a commodity futures market to compare against to justify its “sustainability” is imperialism by another name.
The point here is this: If we want to continue to source the gorgeous coffees we’ve been getting for the years to come, everyone along the way needs to feel like it’s worth it – Us and the producer included. We’re just aiming to treat folks who produce coffee like equals and the artisans they are – Not revolutionary at all.