Worth

 

Coffee pricing anywhere along the line is pretty much guesswork, but comparing numbers up and down the production chain and from place to place gets even more dicey.

The reason that all coffee pricing is pretty much guess work is that most of it is loosely based on a convoluted supply/demand market mechanism and the rest of it is set in circumstances where people don’t even know their operating costs.

There’s also a lot of morphing between units and currencies, making things even more convoluted. I have a personal aversion to putting everything into dollars, because the shock-and-awe tactics of “people who live on a dollar a day!” are too over/misused. Here I’m putting things into dollars so that they mean something to you, but I’m also including indicators so that you have actual points of reference for how much that amount is worth in a local context. Listo?

Determining what coffee is worth depends on the form it’s in and the place in which it’s in that form. For example, a cup of coffee.

A 4oz cup of “tinto” costs 500 Colombian pesos, roughly $0.25 (tha buñuelo is another $0.50). Minutes on your cell phone cost between 100-200 pesos and for 6000 pesos you can get a full lunch.

A cup of brewed coffee in New York can cost anywhere from $0.75 to $4. That’s 1400-8000 pesos.

A pound of roasted whole bean coffee can cost between $6-18 dollars in the US. Here in Colombia roasted whole bean coffee is only recently being sold per pound and runs around 10,000 pesos.

 

A pound of this green (Arabica) coffee is the global crux of every other coffee price that comes before or after it. The price at which a pound of green coffee is traded determines the money the growers/processers make and can thus pay their employees. It determines how much it costs for roasters to buy to then sell to consumers. And the price per pound for this green Arabica coffee has nothing to do with coffee.

It is no way connected to the cost of production any of the 50+ countries where coffee is grown. It has to with how many people are buying and selling contracts for coffee, but because you can just sell one contract to buy another one and never actually any up with any coffee, just a rotation of contract trades, it then also has to with how many people think (speculate) that other people will be buying or selling coffee. And how much. And exactly when how many people will buy how much.

As of 16:59 EST Friday May 17, 2013, a pound of green Arabica coffee was trading at $1.37.  If I’d written this post on Wednesday, I’d be telling you $1.43. The New York price per pound is then what local coffee coops/middle men plug into a magic formula to determine what they pay for the coffee in parchment that they then turn into green coffee for export.

On the other hand, a pound of this green Panamanian Geisha can be worth upwards of $100/lb. Last year’s top Panamanian Geisha auction price was $ 90.25/lb, with the record breaker in 2010 at $170/lb. The 2013 auction takes place in a few weeks.

“Direct Trade” sales aim to pad traditionally low market prices by offering a “market plus X” for the exceptional coffees they buy. Some even sidestep the market altogether, by buying coffee at a fixed price based on the cost of production. But because most coffee farms aren’t selling “direct trade” and aren’t run like businesses, a surprising number of farmers don’t know the cost per kilo of growing coffee.

With Friday’s market price- which holds through the weekend- 125 kilos of coffee in parchment is worth 500,000 pesos ($272.50)- more or less. The price could different depending on the factor. In parchment it’s worth 4,000 pesos ($2.18). For 4,000 pesos you can get a kilo of potatoes (800), two empanadas (1000), a pack of 5 arepas (1000), and at least 30 minutes of internet (1200).

These cherries are Costa Rican, making them worth between 800-1500 colones per cajuela (1 ft square, roughly 13 kilos) to the picker who picked them. That’s between $1.60-$3 per cajuela, meaning between $0.12 and $0.23 per kilo. A top notch picker can pick upwards of 30 cajuelas per day, so at 5 days a week that’s 150 cajuelas, or between 120,000-225,000 colones a week. A beer costs 1000 colones, I got a cheap duffle for 7,000, and local bus fares are around 500, with long distance rides at around 8,000 or 10,000.

These cherries are Panamanian geisha, and they’re worth a daily wage far above per volume/weight payouts. Some pickers even sign a contract for the season.

These cherries are Colombian, so they’re worth between 380-500 pesos per kilo, which is roughly $0.21-$0.27 per kilo. It’s the end of the harvest and Colombian pickers are picking about 120 kilos per day, for 45,600-60,000 pesos a day, for 228,000-300,000 pesos a week.  A soda costs 2,000 pesos, a beer 1400, a pack of cigarettes 2000, and the all-important jumbo batteries for the portable radio, 2000 for a pack of 2.

Let’s review! These are the current average (mode) prices per kilo of Colombian coffee in all its different forms.

Cherries (price paid to pickers by owners)	$0.21 (380 pesos)
Parchment (price paid to owners by coop)	$2.18   (4,000 pesos)
Green coffee (price paid by importers to coop/exporter)	$3.14 ($1.37/lb)
Green coffee (price paid by roasters to importers)	Depends on market price at the second in which the deal is made
Roasted coffee (price paid by consumers to roaster)	$22 ($9.99/lb for Colombian French Roast on freshdirect.com)
Prepared coffee (price paid by consumers to vendors) for 16 oz ‘grande’	$2.40

Kind of like the integrity of Juan Valdez, what coffee’s worth really depends on whom you ask.