direct trade annual report

[Andy]

I was just sent Counter Cultures direct trade annual report
http://www.counterculturecoffee.com/docs/CCDTC_Annual_Report.pdf

It starts with...

This report is the product of real transparency: the first annual report on our Counter Culture Direct Trade Certified coffees, the people, and relationships which make those coffees possible. The intention of this report is to give a succinct, transparent summary of our financial and personal relationships with the producer partners
whose coffee was certified under the Counter Culture Direct Trade Certification program in 2009.

Transparent pricing from origin is a neat concept although not unique to Counter Culture, not many of the others publish an annual report.  Kudos to them for putting it out there for discussion.

Our goal is to build long-term, durable, mutually beneficial relationships with our producer partners. The duration of these relationships is a good indication of their sustainability.


Well... Just because you have a long term relationship certainly doesnt mean that its sustainable or a good partnership.  Heck, just ask Nike about the long term relationships with kids making shoes for $1/day.   Ok, maybe Im being overly cynical but the facts are that while producers ride donkeys coffee moguls drive Ferraris.

The gotcha for me in this report is the fact that most of these hand selected coffees which are directly traded are being bought for a small percentage over the NY-C index price for commodity grade  coffee and many of the coffees purchased in this report were sub $4/kilo FOB.

I dont think this is the true market price for these coffees and the growers could yield a far better price for this, the premium selection from their annual crop.

One day I hope to see less marketing spin and a fairer price for the farmers via web based auctions for specialty coffees (eg: CoE style auctions)
 
Ok, so the price is in US$, you still need to freight and clear the coffee but these prices are still way too low in my opinion.  Counter Culture (and others) are landing these coffees for sub $5/kg and selling for $35/kg+ and the cafes are selling per cup for $100s.

I dont want to beat-up Counter Culture Coffee for releasing this document, Im sure there are far worse practices out there by other roasters/brokers/importers but as we know, the industry doesnt need to take much from the fat-end and feed it back to the thin end to make huge differences to the lives of the farmers on the ground.

Hmmm... I guess this is yet another reason FairCrack still sits so well with me.


Footnote: The NY-C price for coffee today is $1.32/lb and last September it was $1.48/lb

[flynnaus]

Re: direct trade annual report

I guess there is many a start up that came out with good intentions.

The gotcha for me in this report is the fact that most of these hand selected coffees which are directly traded are being bought for a small percentage over the NY-C index price ...

...these prices are still way too low in my opinion

Is this because Counter Culture Coffee had to remain competitive with other sources? If they set the price too high to allow proper compensation to the growers, would buyers turn to cheaper sources to maximise their profit margins?

Annually, we must show evidence to CCDTC’s independent auditor
– Quality Certification Services

Who sets their standards?

I guess this is yet another reason FairCrack still sits so well with me.

Not just you. It was fantastic to not only help these people get their product ready for market but for us to be able to buy it. Im happy to pay a higher price for the beans of those who have benefited from Fair Crack to ensure the growers benefit much more than they would from NY-C prices.

It would be nice to see other areas benefit too but I hope that doesnt step on any toes. Wouldnt want to have someone named Carlos  turn up on our doorsteps with his burly buddies checking shoe sizes for shoes designed for one-way trips off the back of a boat.  

[beanflying]

Re: direct trade annual report

I actually had a look at RFA and FT annual reports a year or so back and the marketing and overheads kill off a lot of any benifit gained to the farmer and seem to be more about making the consumer feel warm and fuzzy than in actually putting money back into the source. In a lot of cases where you let a money handling entity near a not for profit type organisation they lose sight sometimes of who they are really trying to help.

If direct sourcing is going to work then helping them improve quality at the source and removing middle men from the chain has got to be a good thing providing the price paid reflects that improvement. There seems to be to many fingers in the pie in the normal coffee supply chain to me across the board which must be to the detriment of the farmers.

I was watching the idiot box this morning and Tim Costelloe was talking about program delivery and waste caused by admin costs. Nearly $1 of every $2 goes into getting money on the ground. So Faircrack, Coffeekids and like programs really make some of the others look bad. [smiley=thumbup.gif]

[bassway]

Re: direct trade annual report

Annually, we must show evidence to CCDTC’s independent auditor
– Quality Certification Services

Who sets their standards?

CCDTC do.

http://www.qcsinfo.org/organic/specifictradepractices.pdf

[Dennis]

Re: direct trade annual report

Nearly $1 of every $2 goes into getting money on the ground. So Faircrack, Coffeekids and like programs really make some of the others look bad.

I do agree and am not an advocate for large charities where most of the donations are eaten up by administrative costs, however we also need to keep in mind that even if only 15% from these behemoth charities ends up where its needed, its 15% of millions of dollars, and thats a far more sizeable sum of 100% of say, $10k.

So if Tim Costello has acknowledged wastage due to administrative inefficiencies, and is doing something about that, then I think thats a good thing.

[Andy]

Re: direct trade annual report

Is this because Counter Culture Coffee had to remain competitive with other sources? If they set the price too high to allow proper compensation to the growers, would buyers turn to cheaper sources to maximise their profit margins?

I can see your point but I doubt that would happen in this case as Counter Culture are also roasters so in effect they have no middlemen, and near maximum profit... more than enough savings in their chain to sling the farmer a few more cents a pound.

If direct sourcing is going to work then helping them improve quality at the source and removing middle men from the chain has got to be a good thing providing the price paid reflects that improvement.

"providing the price paid reflects that improvement"... agree. I dont think that a 20% over the floor-sweeping commodity grade is a good reflection of anything except a higher margin to the buyer after cutting out the middleman.

It was fantastic to not only help these people get their product ready for market but for us to be able to buy it.

Yes, buying it was a surprise as I didnt really think we could pull that one off on our small volumes.

We purchased that coffee at Tanzanian auction and paid nearly 300% of the NY-C index price to get top bid. After the deal was done we gave an additional US$1/kg because we could. The end result was we landed an amazing coffee with a fantastic story and the street price was about AU$2/kg more than a generic Tanzanian coffee bought through an existing broker.

...and the price differential would have been nearly zero if we have a countainer full but sadly they cannot grow that much and we cannot pay for that much!

As a roaster, that AU$2 more it cost to land here was absorbed and the roasted sell price was the same. Sure I made less profit on the roasted coffee but the difference certainly didnt send me broke.

The punchline was that the actual farmers got paid the couple of dollars which has a huge impact to their yearly income yet back here it made no difference to anyone from home roaster, commercial roaster or end consumer.

I guess my long-winded point really is that a few extra dollars at the growing end is worth far far more than any amount of marketing hype produced by end-users.

[scoota_gal]

Re: direct trade annual report

Can I just point out, that this is not exclusive to coffee. Just look at any of our local farm produce and youll see that our farmers are experiencing the same thing as coffee farmers. Whilst there is a lot of hype about fair trade and all for coffee, we should also see the bigger picture of how this affects all who are primary producers.

The classic example is the farmer who gets paid less than 2 per kilo for their cattle and the supermarkets who charge in excess of 15 dollars a kilo for the end product. The farmer doesnt get to have the better parts of the cow sold off for a higher price, like a supermarket does, he has to take the 2/kilo for the whole beast...

A bit of a cynical response I know but I just wanted to make a point that it is not only coffee that suffers from farm gate price parity. Id personally be happy to see a bit more fairer trade go on for all primary produced products but I dont think we will see it happen.

[flynnaus]

Re: direct trade annual report

Can I just point out, that this is not exclusive to coffee.

Most of us are mindful of the poor return farmers get Scoota. A lot of it has to do with globalisation and labour costs which is why MTE coffee is more expensive than most other coffees we buy on CS.

I would happily buy direct from farmers and pay them a price that they deserve but it would be too uneconomical to travel to the farms from where I live. Farmers markets are the go and if one of these were nearby and readily available, I would buy from them.


I dont pretend to understand the whole situation but it is usually the biggest fish in the food chain that profit most.

[Bullitt]

Re: direct trade annual report

We seem to have gone a bit OT, but I agree the primary producers have been, and are being ripped off by the big system.
Folks there was an item on TV recently that asserted the high price for meat at the big chain supermarkets was mostly due to "overheads and waste".
They also asserted most consumers can get a better deal from large coop style butchers who deal directly with farmers, because there is less waste and less overheads.
We can vote with our dollars and stop supporting the wasteful supermarkets, and rather support the farmers markets and co-op butchers etc.  
I realise it is more difficult if you live in a large city, but buying meat in bulk is also usually cheaper, so with some planning it might be possible to justify a longer trip to get meat, or fresh fruit & vegies etc.

At least we made a difference with Faircrack.
Happy shopping.

[Yelta]

Re: direct trade annual report

We recently had a citrus grower in the Riverland SA, publicise the fact he was selling fresh naval oranges online, checked out the site, his oranges were priced at $3.75 per kilo, with a disclaimer that goods damaged or lost in transit were not his problem.
Checked prices in the local supermarkets, $1.75 KG, bought a bag and found they were very good new season Aussie oranges.
So why would I go to the hassle of buying from the grower online at inflated prices. :

[Blue_House]

Re: direct trade annual report

Its all about the food miles.  Unfortunately our coffee habit is one of the worst for food miles.  Here in NW Tasmania we are able to buy fresh, local and organic from farmers markets.  You dont want to know the spray regime used on Tasmanian onions (which will explain why some onion farmers dont eat them). As Matthew Evans says you should buy it from the grower or from someone who knows the grower (by name).  Our next step at the Blue House is to grow our own beef & have it slaughtered on site.  A bit difficult for those in the city