Let's ask a couple of tough question; do we really care how much the material costs were in a $1,000 iPhone? Don't we automatically assume every vendor that contributed to the build of that device is making a profit?
Bridge Coffee Co. made its first coffee purchase from Royal Coffee. Since that time in 2015, we have obviously learned more and more about the coffee supply chain and its impact on the availability of coffee and how purchasing decisions impact the fair treatment of the supply chain.
In a recent discussion about FOB pricing with a broker, we also spoke about Farmgate. Farmgate is an industry term for purchases that help everyone know how much money was paid to the producer. Whereas, Free On Board (FOB) is an agreed upon price that helps us roasters know what was negotiated.
"Every coffee has a price at the farm where it is grown. This “farmgate” price, as it’s known, is one of the least transparent details in coffee, and specialty coffee is no exception. “Farmgate” is an industry term with a strict definition and no certification. Royal has long bought coffees from organizations that make this information available to us. And we are always adding more. What’s missing has been a way to share farmgate pricing with roasters. We want transparency to be of value to you, to inspire new coffee selections and to fortify your sourcing programs as you make decisions over time."
From Royal Coffee
However, the importer may not be able to price that coffee to exactly what it was paid for. Margins for the folks working in the middle are significantly affected. A whole host of factors come into play that affect the cost of goods, not the least of which for green coffee, is the commodity index. Most of the Bridge Coffee Co. coffee purchases are "spot". Meaning, the coffee we buy already has been purchased by the importer and subject to these fluctuations in the market. We have seen the spot price rise and fall like gas prices at the pumps daily.
Royal Coffee was our first importer, and we have remained a loyal customer. Their commitment to transparency and education are a couple of the reasons why. Farmgate is an important step towards sustainability in coffee.
We began with hope that we would connect passionate coffee producers with passionate coffee drinkers. With the education, information, transparency, and guidance over the years, we feel we are doing that, better and better. As we are more successful of fulfilling the mission of connecting communities with great coffee, we hope you understand how much the "countless" number of people in coffee really count!