To encourage and support economic development within coffee-growing regions, it is important to develop market models that allow coffee farmers to earn appropriate, and even attractive, returns on their investments in coffee quality. As we develop the Farmers to 40 model, we are refining a quarterly reporting system that allows participating farmers to track the sales of their coffee through our different channels (i.e., online retail, in-store retail and green sales).
As you can see in this sample report, accumulating coffee sales translate into a “Total Revenue per Pound Sold” figure – currently $3.43 for “Farmer X” (one of our current Nicaraguan farms).
In addition to transparently tying farmers’ payments to accumulating coffee sales, the sample report also shows how we are structuring the payments to our farmers. Note that “Farmer X” received an initial payment of $2.20 per pound of green coffee, which is higher than the current Fair Trade price for certified organic coffee. This initial payment ensures that even if we have trouble selling coffee, farmers are still guaranteed a fair price for their beans. At the same time, the payment model is “cash flow sensitive” to the needs of coffee roasters. Additional payments to farmers are tied to actual coffee sales, and are made after these sales are booked.
Finally, we also like the fact that the timing of additional payments might also address an additional issue experienced by coffee farmers – the need for pre-harvest financing in the next coffee season. Returning to the sample report, if the remaining 1,810 pounds are sold evenly over the next two quarters (at roughly the same prices that were received in the first two quarters), Farmer X will receive one additional payment of $580 at the end of June, and another payment of $3,100 at the end of September.
All the more reason to keep selling (and buying) Farmers to 40 coffee …