Last year, the leading market price of coffee, The New York Stock Exchange C-price, fell below the symbolic $1/lb. As you can see from the above chart, it seems that it was just a symbolic point to pass and that the downward trend continues without any indication to change.
For decades, concern over the low price paid to farmers has been on the agenda for a number of organisations and people in the coffee industry. One of the first times we saw this, was in the early days of the international liberalisation of the coffee market in the late 1980s. Here, the Fair-Trade Movement tried to create an initiative to secure coffee cooperatives’ minimum prices in relation to their production costs.
When we began Coffee Collective, one of our core values came from the concern over the low price. We have from the beginning worked to include the farmers in the value addition and revenue of coffee. But now, with the extreme market dynamics, we see it is not only a matter of moral beliefs. It’s clear that anyone who wishes to continue to drink good coffee needs to take action. There is no invisible hand taking care of this!
The inherent lack of transparency in the market is a devastating factor, that prevents the coffee market from working well. Since 2007, we have implemented different elements of transparency. Among other things we display FOB prices on our coffee bags, we have had graphs in our coffee shops illustrating the prices we pay to the farmers and producers compared to market prices, and we are inviting farmers to come to talk and engage with our guests.
We have yet to fully succeed in engaging the consumers in the importance of transparency in the coffee market. We believe, that only a few coffee consumers know about the current price crisis facing the coffee farmers. Just as few know how this threatens the future possibilities to continue to drink coffee at the same level of quality, as what they do today.
We need to try and do better on our communication with the consumers. That’s why we from June 19 will take some new initiatives to try and strengthen our communication on transparency. A core element in our new strategy will be to communicate Quality Bonus.
Quality Bonus is actually not a new element to us. It is just the term that is new. Quality Bonus is the exact number for how much we have paid above market price. This value has been displayed on our bags since 2013, along with the FOB price.
For example, the Kenyan coffee from Kieni you can taste from our menu these days, we have paid 419% above the market price. This makes the Quality Bonus 419%. The Kieni coffee performs that much better than the average Kenyan coffee, which is what the Quality Bonus is based on.
While the specific calculations of the Quality Bonus will always be accessible on our website in our annual Sustainability Report, our hope is that we can engage the consumers in talks about transparency by displaying the Quality Bonus on our coffee bags.
In the chart below, you can see the Quality Bonus paid to farmers and producers over the past years. We are proud to see how we have been able to pay more to the farmers for each year that has passed.
While we do not believe that the term, Quality Bonus is the final answer to the price crisis, our hope is that it will leave an impression and start sparking conversations on the matter. We see it as a tool to try and push things in a direction that hopefully can bring better returns to the farmer. This way, you, the consumer, the coffee lover, the guest in our coffee shops can get an insight as to how important it is to support transparency in the industry, so we can all keep enjoying good coffee in many years to come.