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Transparency Is a Data Point, Not an Endpoint
Knowing how much your favorite roaster paid for a coffee is a good starting point—but that number requires much more context to be meaningful
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“Transparency” is a word that’s used a lot in coffee. It’s frequently invoked by coffee companies—like roasters, or green coffee buyers—to share how much they pay farmers. The choice to share these figures is framed as an effort to be more open about business dealings, and as a demonstration of ethical practices.
But what does transparency really mean in coffee? It might sound revealing when a roaster tells us that it paid $4 per pound for a given coffee. But that information is really just an isolated data point—one that doesn’t make much sense without broader context.
This week on the podcast, I interviewed Mike and Caryn Nelson of Junior’s Roasted Coffee and Guilder Cafe in Portland, Oregon. For years, Mike and Caryn have been working on a side project called The Cost of Production Covered, which aims to identify how much it costs farmers to produce a pound of coffee—and then build a price for that coffee based on that number. It’s a complex project, one that has taken many forms since its inception. Most recently, Mike and Caryn have released a template for roasters and farmers, which provides a way to mutually determine production costs (the template is open-source, so interested coffee actors are invited to make copies and tailor the template to their own needs).
One of the primary reasons Mike and Caryn created this template was to build more context around coffee pricing:
Mike: For us, we wanted the context. I think that what we’re hearing in the specialty industry is that we (consumers) need to pay more for coffee because of 86+ scoring natural gesha, this and that. Or that we need to pay more for coffee because we (roasters) paid a lot for it.
I think that for us, cost of production is the missing link, and for consumers too, and other buyers—it’s the missing link. It’s getting people to understand just why we need to be paying more for coffee.
To work with producers, for us, it was important, especially in the beginning, because we were learning about all of the different costs involved. Andres Fahsen was crucial in building the questionnaire over the years and helping us build this template because he was being very detailed about his costs and what it takes and what’s missing...
If you’re not talking with producers directly, it’s very important to work with importers that you know and trust and who have direct contact with farms or washing stations so that we can learn more about their context. And also then at the end of the day, say, “Hey, does this look right? Does this cost of production reflect your costs truly?” And if so, we’ll move forward, but only then...
A good friend said to me once, “Any transparency is good.” I think that can still be true, but context matters. Context still matters—if we say, “This farm gate was received by this producer and wow, it’s $4 a pound.” That seems high when you look at other prices they’ve paid, or another roaster’s farm gate prices that they paid, but it doesn’t mean anything unless we actually know what it costs the producer to produce that quote unquote “high price”—it might actually not be a sustainable price for that farm, for their business.
Let’s look at Mike’s example: A roaster pays a farmer $4 per pound for their coffee, and publishes this price on its website in an effort to be transparent. Right off the bat, we have some context for this price. For example, coffee is traded as a commodity, so if we look at the New York Stock Exchange’s price for coffee today (August 7, 2023), we’ll see that coffee is being traded for $1.62 a pound. (As a side note: If this price sounds upsetting, that’s because it is—former guest Rachel Northrop does a great job explaining the history and dynamics of the C-market on a past episode, if you want to learn more.)
In comparison, $4 per pound sounds pretty good. But what if that higher rate still doesn’t cover the farmer’s production costs, and means that they’re operating at a loss? What does it mean for the roaster to then publish this number “for transparency’s sake”?
Transparency has been a topic of debate—and a source of confusion and frustration—in coffee for decades. Back in 2017 and 2018, when the topic seemed to be on everyone’s lips, I remember it felt like a big deal when companies published the amount they paid for coffee on their websites.
And that’s not to say it isn’t a big deal. As Mike says, any transparency is good, and the $4 per pound fact gives us a place to begin building context. One of the reasons Mike and Caryn made their template is that production costs are a poorly understood metric. But I think for many actors, transparency—particularly around pricing—is often seen as an endpoint when really, it’s just one data point.
“Without context on cost of production and other costs throughout the supply chain, the price paid for coffee is just a number,” writes RJ Joseph for the Red Fox Coffee Merchants Journal. “Think of it like rent: if I told you what I pay for my apartment, the number would be meaningless without knowing more about its size, location, and the general cost of space in my region. The same is true for coffee pricing.”
RJ breaks down the points along the coffee supply chain where actors incur costs, including transportation, labor, storage, and logistics. These numbers fluctuate depending on myriad factors, like which country a business is operating in, or the size of a given farm or importing business. The more of this context that accompanies pricing information, the better we can all determine what fair payment really looks like.
I’ve quoted Jenny Odell, author of the book “How To Do Nothing: Resisting the Attention Economy” numerous times on this newsletter, and one of her quotes feels particularly apt here: “Context is what appears when you hold your attention open for long enough; the longer you hold it, the more context appears.”
Ideally, transparency in coffee should function this way: drawn not from a single interaction, but built from a whole world of context. Today, too many businesses use a single price point as shorthand for “we’re a good coffee company.” But when we zoom out, focusing only on transparency around pricing is like running a mile, stopping, and realizing you’re actually supposed to be running a marathon.
The Cost of Production Covered Project has been an ongoing effort, transforming and changing over the last five-plus years. I think the marathon metaphor works here because price transparency is just a starting point, a mile marker on a much longer mission. Mike says of the template, “We see it as the minimum, this starting point for transparency.”
Or, as RJ puts it in the last chapter of her five-part series on coffee costs, roasters should be curious, and ask questions of their importing partners. “It’s crucial that people learn more about the supply chains they work within,” she writes. “The more questions you ask your importers, the better.”