In an industry still affected by poverty in many producing countries, price transparency offers roasters and consumers a way to ensure their purchases aren’t contributing to the financial hardships of producers. Now, the question of what constitutes the right price -the price that not only ensures a living income but also promotes long-term prosperity, is both broad and complex.

PRICE TRANSPARENCY IN COFFEE

FOB pricing is a key reference point in discussions about price transparency in coffee. FOB (Free on Board) is an incoterm widely used in the coffee industry for export-import trade contracts, serving as a standard for price comparison in green coffee transactions, including futures and Fairtrade sales.

This Incoterm not only establishes the price but also determines when responsibility and risk transfer from the seller to the buyer. Under FOB (Free on Board) terms, this shift occurs at the port of departure. The key components included in the FOB price are:

• raw material (green coffee beans),
• processing costs at wet or dry mills,
• sorting for defects and size screening,
• packaging materials (e.g., GrainPro, jute bags),
• domestic transportation to the warehouse and port,
• handling at the warehouse and port (loading/unloading),
• export documentation, typically managed by a customs broker,
• taxes imposed by each exporting country,
• margin

→ The FOB price, simplified : FOB price = Farmgate price + exporting costs + taxes

So what is the Farmgate Price, and is it really the price a farmer gets for their coffee produce?Farmgate pricing refers to the local price of coffee within the producing country, separate from international contracts and not recognised as an incoterm.
Accessing Farmgate prices is easier with a short supply chain, for example, by purchasing directly from farms that operate their own mills. However, even when Farmgate price info is accessible, it is typically ‘approximate’ rather than fully transparent, with data that can vary or be inconsistent.

FOB (Free on Board) prices can sometimes provide a rough estimate of Farmgate prices. However, the relationship between them varies widely, depending on factors like supply chain configurations and local costs like milling and exporting. For instance, producers with more operational control -such as those who handle their own milling or washing stations, often capture a larger share of the FOB price. Additionally, exchange rates, interest rates, and other local economic factors all influence what farmers ultimately receive.

→ While FOB prices can serve as a helpful reference for estimating farmgate prices, they need to be considered alongside other factors to gain a clear understanding of a farmer’s actual earnings.

In the coffee industry, the C-market price is commonly used as a benchmark, functioning much like a stock price that fluctuates based on global buying and selling. But is comparing your FOB price to the C-market sufficient for your price transparency exercises? Not quite!

While the C-market price is a useful reference, it only accounts for part of the total price. The final cost also includes various ‘differentials’ -adjustments for aspects like coffee quality, origin (each with its own pricing structure and premiums to reflect local production costs and quality), certifications (e.g., Organic, Rainforest Alliance,…), and other attributes that influence value. These differentials vary greatly between countries and regions. Additionally, the C-market is highly volatile, so any accurate comparison requires knowing the exact C-market rate on the day your coffee was purchased.

→ Relying only on the C-market can create misleading price comparisons, making it insufficient for accurate price benchmarking.

For our Specialty Coffee community, comparing conventional coffee prices (C-market) to specialty coffee prices can often feel like comparing apples to oranges. Therefore, before conducting an effective transparent pricing exercise for green specialty coffee, it’s wise to consult the Specialty Coffee Transaction Guide. Developed by Emory University in Atlanta and with support from over 100 coffee companies, this tool provides anonymised pricing data from over 50,000 contracts, providing benchmarks for price negotiations based on quality, volume, and origin.
Since its launch in 2017, the Specialty coffee Transaction Guide has been published annually in january, with data from the previous year. It has become an invaluable free resource for professionals in the green (specialty) coffee industry.

We consulted the latest 2023 edition -which includes comprehensive specialty coffee price transaction data, and summarised the KEY INSIGHTS.

KEY INSIGHTS

1. Focused on the global specialty coffee market, the 2023 Specialty Coffee Transaction Guide noted that the median FOB (free on board) price for specialty coffee contracts in 2022/23 dropped by 3% to $3.40 per pound, down from $3.50 per pound in 2021/22. 

By comparison, over that same period, the New York C Price for arabica coffee -as established by commodities contract trading on the Intercontinental Exchange, dropped 23% from an average of $2.25 to $1.73.

According to the info assessed by the SCTG, the median price for a container of 83-point coffee fell from $2.74 (2021/2022) to $2.20 (2022/2023) per pound. This 54 cent decline roughly matched the 52 cent decline in the New York C price. However, the median price for a 1,000 pound lot of 87 point coffee rose 21 cents to $4.91 per green pound.

→ FOB specialty coffee prices do and do not move with the New York C price

2. The 2023 edition illuminates a continued trend in which average coffee prices at the highest end of the quality spectrum appear to be the less affected by the ebbs and flows of the commodities market, which cannot be said of the vast majority of the specialty market over the guide’s 3-year research period.

→ FOB specialty coffee prices for the highest-quality coffees remain stable, largely unaffected by commodity market fluctuations. This contrasts with the wider specialty coffee market, where prices have been more responsive to market changes, highlighting the value and stability associated with top-tier quality.

2. The 2023 edition illuminates a continued trend in which average coffee prices at the highest end of the quality spectrum appear to be the less affected by the ebbs and flows of the commodities market, which cannot be said of the vast majority of the specialty market over the guide’s 3-year research period.

→ FOB specialty coffee prices for the highest-quality coffees remain stable, largely unaffected by commodity market fluctuations. This contrasts with the wider specialty coffee market, where prices have been more responsive to market changes, highlighting the value and stability associated with top-tier quality.

3. Adjusted FOB Price Differences Across Countries for All 3 Harvest Years
This featured bar chart illustrates the variation in FOB (Free on Board) coffee prices by country, demonstrating how each country’s prices deviate from a central benchmark or average over the 3 harvest years.

• Positive Deviations: Countries like Panama (+$1.38), Ecuador (+$0.64), and Bolivia (+$0.41) command higher prices due to perceived quality or exclusivity.
• Negative Deviations: Brazil (-$0.45) and Tanzania (-$0.59) have lower prices, likely due to larger volumes or lower production costs.
• Mid-Range: Countries like Colombia and Ethiopia show smaller deviations, indicating stable prices.

DEEP DIVE*

Now, let’s take a closer look at the Specialty Coffee Transaction Guide’s FOB price benchmarks. These deep dives into quality level, lot size, and region provide more detailed insights, revealing how each factor influences pricing dynamics and market stability.

1. FOB PRICES by QUALITY LEVEL

• Higher Quality, Higher Price: In the 2022/2023 period, coffees scored between 86-87.9 had a median price of $4.20 per pound; this is 83% higher than the $2.30 median price for coffees scored 82-83.9. This significant difference underscores how quality directly drives pricing in specialty coffee, with higher-scoring beans consistently attracting premiums.
• Price Fluctuations: For lower-quality coffees, the pricing landscape has been more volatile. Prices for these coffees rose by 38% from 2020 to 2022 but then dropped by 18% in 2023. Notably, the pricing range for lower-quality coffees tends to be narrower, showing a more stable price band compared to higher-quality beans, which experience a broader range of prices due to increased demand and sensitivity to quality nuances.

• Higher Prices for Smaller Lots: In 2022/2023, lots under 1,000 pounds saw a median FOB price of $4.90 per pound, more than double the $2.24 per pound rate for lots over 40,000 pounds. This reflects the premium often placed on smaller, specialty batches that meet specific quality or sourcing standards.
• Stability in Smaller Lots: Prices for smaller lots remained relatively stable, showing resilience against market fluctuations. In contrast, the 25th percentile price for large lots decreased by 17%, dropping to $1.99 in 2023, suggesting greater price sensitivity in larger, bulk shipments.
• Broader Price Range for Smaller Lots: In 2023, the price range for small contracts was significantly wider ($3.30) than for larger contracts ($0.65). This spread highlights the unique pricing variability for specialty-grade, smaller lots, which often attract diverse buyers willing to pay premiums for quality and distinctiveness.

• High-Priced Origins: Coffees from Panama, Ecuador, and Bolivia achieved the highest three-year median prices, at $9.77, $5.25, and $4.60 per pound, respectively. Panama and Ecuador also recorded the smallest median lot sizes (370 and 661 pounds), with Panama boasting the highest median quality score at 87.9 points (see Key Insight 3 – above)
• Lower-Priced Origin: Brazil, by contrast, had a median price of $2.23 per pound, a lower quality score of 83.0, and a significantly larger median lot size of 31,223 pounds. (see Key Insight 3 – above)

Disclaimer: The authors emphasise that this guide does not encompass the entire specialty coffee market. They clearly state that the median prices provided should not be viewed as mandatory or definitive values in any interpretation of the data.

THE SPECIALTY COFFEE CHERRY ON THE CAKE
CUPRIMA’S CATEGORY TRANSPARANT PRICING EXERCISE

We’ll begin with Colombia Sol Naciente Organic from our Terra Category.
This coffee scores around 83 points, and we purchase it in full container loads. The bags we’ve delivered this year were bought at the end of 2023. We’re using the ‘FOB Prices for Specialty Coffees, 2022/2023’ (table 5), adjusted to the 2023 FOB Price for Colombia (figure 7) from the Specialty Transaction Guide.

*We adjusted the price reference from the 2023 transaction guide by adding an approximative value of 30cts/lb for the organic certification. Without this adjustment, the comparison would not account for the certification we have with Sol Naciente El Chorro. From this, we can see that for larger lot sizes, the price difference for specialty coffee is smaller compared to high-quality coffees with smaller lot sizes.

Next let’s look at an Ethiopia Yirgacheffe natural lot from Gargary Gutity washing station from our Autentica category. This coffee, from crop 22/23, was purchased in 2023 with a total of 40 bags. It has a cupping score of 85. Based on the range of 3,001-10,000 pounds and a score of 85-85.9 in table 5, the price is adjusted to the FOB price for Ethiopia (figure 7).

This example also highlights the volatility of the C-market and reinforces the importance of comparing with reference prices from the same origin.

Finally, let’s examine a top microlot from Costa Rica – Finca El Salitre -an anaerobic process from our Prima category.
We purchased only 10 bags of this lot in 2023, with a cupping score of 87.25. Using the same methodology as the previous example, here are the results:

The FOB price of this lot, compared to the C-market, commercial grade in Costa Rica, and the 2023 Transaction Guide, is higher than in the previous two examples. This confirms that higher-quality coffees combined with small lot sizes tend to command higher prices, well above the median price for 82-84 point coffees.

→ This exercise underscores the importance of contextualising and using comparable data when evaluating specialty green coffee prices. The supply chain is complex, with many factors influencing the price of a coffee lot. While this analysis may not be 100% precise, it offers a different perspective to help you better understand pricing dynamics.

At CUPRIMA, we understand that pricing benchmarking exercises can provide valuable clarity in your coffee journey. If you’d like to discuss price transparency, or have questions about FOB prices, farmgate pricing, or anything else, we’re here to help.
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