2012

The View

Commodity pricing does one thing, and one thing only! It ensures that international trade of coffee will always be a buyer’s market. The interests of growers are never a consideration in pricing predicated on the “C” as a base. The “C” is the knife held to the farmer’s throat. And everyday, buyers of specialty high quality coffees that continue to use this flawed system are unwittingly assisting in making that knife sharper.

It does not matter how much a grower’s cost of fuel is; it doesn’t matter what the currency exchange rate is; it doesn’t matter what his labor and agronomy costs are; all that matters is what a trader in a skyscraper in New York or London, who has likely never visited a farm, is ultimately willing to pay – for an electronically traded security. I understand that shredded paper makes lousy coffee so, why are they causing famine and death in distant lands for that certain aroma of greed?

There was a time not so long ago when the NYBOT did work – sorta. That, of course, was before they sold out to ICE and any chucklehead with a laptop could directly determine whether a farmer receives a fair and equitable price for his labors. A surprisingly large number of them choose devastation for the farmers by driving down the “C” in order to hedge their equity portfolios.

With only a few notable exceptions (thank you Susie Spindler and the ‘Cup of Excellence’) there are no real alternatives. How can this be? For 25 years, the SCAA has carved out a niche as the representative of small cafes and roasters working with small growers and cooperatives. Why then does the association continue to tolerate a price discovery method that is anti-competitive, and financially crippling to small businesses in the US while assuring undervalued crops and famine in countries of origin?

So, who exactly is getting rich here? We know it is not the small roasters; they are dropping like flies under the burden of wildly fluctuating coffee prices and overvalued held inventory. It is not the independent retailers; they are struggling with high coffee costs and skyrocketing operating costs relative to the big chains. We know it is not the farmers, they are being crushed under terrible labor and material costs coupled with devastating currency exchange rates leaving them barely able to feed their families.

The SCAA, SCA of Europe, SCA of Japan, the ICO and others should aggressively pursue new forms of price discovery for non-commercial grade coffees. The CQI should use its key strength, and original core mission, of quality discovery and education to work toward new pricing models and exchange systems. Instead of spending millions on “Global” databases that will tell us what side of the hill a coffee was grown on, our trade associations and affiliates would better serve the members by leading the effort to open a new trading method that is equitable to small businesses in consuming countries and truly fair to farmers around the world.

It is clear that this is easy to say but hard to accomplish. However, there can be no quantifiable standards of sustainability, both in supply from origin and in met demand in consuming countries, without engaging a pricing mechanism that is based on actual quality, costs of production, and costs of distribution.

All of us must join to work toward rational standards of sustainability that ensure equitable and prosperous results for all members of coffee’s value chain. Some in our industry will initially have a hard time letting go of pre-conceived attitudes about commercialism and competitiveness. Many of us already understand the basic idea and are looking for answers. Let’s get the ball rolling, let’s organize a conference to bring together ideas and begin building the framework for international standards of sustainability based upon rational commercial purposes and goals.

Cheers,
Kerri & Miles

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