Insights

Registered TTC Coffees Provide Benchmark Pricing Information for the 2017 Harvest

Posted on 31st Jan 2017 15:20:40 in Roasters

Registered TTC Coffees Provide Benchmark Pricing Information for the 2017 Harvest

Posted on 31st Jan 2017 15:20 in Roasters

 

A previous TTC Insight suggested that the expanding roster of registered TT Coffees might deliver important pricing benchmarks for growers selling into specialty coffee markets. As we head into the 2017 pricing negotiations for specialty coffees grown around the world, it is an appropriate time to look more closely at the transparently-traded coffees that were registered in 2016.

 

By the end of 2016, twenty different specialty coffee roasters had registered 145 coffees on the Transparent Trade Coffee site. Eighty of these coffees were registered in 2016. The top five roasters – in terms of the number of registered TT Coffees – were Bird Rock (14), Counter Culture (11), Quijote (8), Coffee Collective (7) and Transcend (7).


The average GPP (green price per pound) paid for these 80 coffees was $5.26. However, when we set aside three outliers – each with a GPP greater than $20 – the average falls to $3.81. This is slightly lower that the corresponding average for coffees registered in 2015 … $3.97. In the context of prices paid by consumers for the corresponding roasted coffees, we saw an average RTO (return to origin) of 22.1% in 2016, up slightly from 21.9% in 2015.


This $3.81 average masks considerable variability in these pricing data. In 2016, GPP figures ranged from a low of $2.00 to a high (excluding outliers) of $7.05. In 2015, the corresponding minimum and maximum GPP figures were $2.46 and $8.33.

 

Looking across the regions where specialty coffees are grown, the highest average price was for coffees grown in Africa (GPP = $4.10 and RTO = 23.3%), while the lowest average price was for coffees grown in South America (GPP = $3.56 and RTO = 22.6%). In between were the coffees grown in Central America (GPP = $3.86 and RTO = 21.0%). 


                                                        

Zeroing in on countries with more than ten registered TT Coffees in 2016 indicates the potential demonstrated by Costa Rican growers (GPP = $4.67 and RTO = 24.9%):



CountryCoffees Registered in 2015Average GPPAverage RTO
Costa Rica15$4.6724.9%
Honduras10$3.9223.1%
Colombia15$3.8420.8%
Ethiopia17$3.8022.2%
Guatemala30$3.7722.3%
El Salvador14$3.6918.2%


It will be interesting to see whether these regional and country differences persist as the sample of registered TT Coffees grows and, if so, what factors are responsible for more favorable green prices. Some guidance in this respect may be found in another recent TTC Insight, which showed that green specialty coffee prices tend to increase with bean quality and with the length of the grower-roaster buying relationship, but decrease with the quantity of coffee purchased in each lot.

 

In the meantime, given this very small sample and its obvious selection bias, the above averages must be viewed as aspirational and not representative of the middle of the specialty coffee market. That said, they do represent real prices paid by progressive specialty coffee roasters, and therefore should not be dismissed as arbitrary or misleading. 

With this in mind, specialty coffee growers who aspire to these kinds of prices must (with support) start figuring out what must be in place in order to expect green prices that anchor on $3.81 per pound, as opposed to $1.27 (the 2016 average of the ICO Composite Indicator) or $1.60 to $1.90 (the current Fair Trade minimums for conventional and organic coffee).


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