Understanding Coffee Transparency: From Farmgate, via FOB, to the Roastery

Information exists, but it is not always shared

In short, transparency means openly telling the entire story of coffee. Not just where it comes from, but also under what conditions it was grown, at what price, and with what impact on people and the environment. It goes beyond labels and seeks to establish a deeper connection from the beginning to the end of the coffee chain.

The coffee trade was opaque for centuries. Where transparency is lacking, so is accountability. Coffee was a classic colonial product produced through slave labor. Well into the 20th century, people were forced into coffee production. And even today, people in certain regions produce coffee due to a lack of alternatives and are trapped in dependent structures. But it can also be different: when work is done transparently and communicated about.

Is there more demand for transparently traded coffee?

Not directly.

There is a clear upward trend for Fairtrade coffees. In Germany, sales increased by 13% in 2024 and have a market share of 5.3%. In Switzerland, 18% of all coffee sold bears the Fairtrade label, and in 2024, sales increased by 22%.

From the Fairtrade Impact Report 2024/25

However, the latest study by the DKV shows that a significant majority of respondents are hardly interested in the exact background of coffee production. Taste, strength, and price continue to dominate general purchasing behavior. Only for 42% of the subjects was the topic of "sustainable production" important to very important, while for 67% the price was important.

Perhaps the topic of transparency is more for the small roaster and specialty coffee market, as there is often the notion that small roasteries are automatically more transparent, quality coffee is inherently more sustainable, and naming the exact origin creates enough proximity and trust.

However, I would not confirm any of the three ideas mentioned.

The size and quality orientation of the roastery play no role in how transparently someone works. Naming the exact origin is merely a communication decision today – the information is available at most roasteries. The equation "high quality = high sustainability" also does not hold true.

I have drunk qualitatively fantastic coffees from farms that massively use glyphosate and neglect workers' rights. And I have drunk really bad coffee from farms that could be a compass for many others in terms of sustainable coffee production.

Is Transparency Sustainable? Untangling the Concepts

It's clear even at this point: the concept of transparency is intertwined with ideas of sustainable production, fair payment, and good partnerships. This overloads the term and makes it imprecise.

Transparency is not a concept, but a tool to achieve the stated goals in the first place. Just as a photovoltaic system is a tool to make a light bulb shine, transparency enables us to see things. Nothing more. Companies that use transparency as a tool can go far beyond seeing and initiate change with a clear view.

A new way of seeing is needed. La Capilla, Coscomatepec, Mexico

A transparent attitude creates the basis for acting more sustainably in the first place. It is the foundation for trust, long-term relationships, and authenticity. And that is precisely why transparency is more important than ever today: it is the basis for good and stable relationships at every interface of the chain.

How the Market Forces Transparency: The Changing Price

Coffee is always traded because it is a cash crop. An agricultural crop planted for sale or export, and thus for profit, meaning it should bring in cash through the crop (planted cultivation).

The way coffee is sold and bought, i.e., traded, differs in who negotiates with whom and on what basis a price is agreed. A large cooperative in Brazil does not look for small roasteries as buyers who only buy bags and not containers, while a large trader does not include micro-producers in their portfolio due to the small scale.

The C-Price is always part of a price negotiation between buyer and seller. When green coffee prices reached one peak after another in autumn 2024, the world realized that even specialty roasteries are affected by this C-Price. It is not that quality-oriented roasteries are immune to it; on the contrary: everyone is in the same boat. And that's a good thing.

However, the C-Price is not the true cost price for green coffee. It reflects supply and demand, which is determined by actual coffee availability, volume estimates, and speculation.

The C-Price is public, and coffee producers often know the smallest fluctuations much better than many roasteries. Because: if the price goes up, producers wait to sell. If it then goes down again, they tend to sell.

A New Negotiation Culture Due to High Prices

At the latest since the higher coffee prices, many buyers have had to deal more intensely with the C-Price. It became clear that no one acts independently of it, no matter how stable a relationship with coffee producers is. And that is why the C-Price moved so strongly into the center of negotiations, creating a new understanding of prices.

For years, specialty roasteries in particular have said that the C-Price is far too low for producers to make a living. Now it is high, and this poses a challenge for roasteries, as they have to raise prices, which fuels concerns about losing customers.

In recent months, I have seen many buyers and sellers discuss prices and individual cents more intensely than ever before. Roasteries (buyers) had to calculate how much they needed to increase prices, while sellers (traders, producers, cooperatives) argued how high local prices were, how small their margin was, and how high the risk for loans was.

Information exchange in both directions. Apas visiting us in Basel

The high C-Price has thus led to greater transparency in pricing. Sellers and buyers have communicated their figures more openly than ever before. And this knowledge is now present. I am convinced that we as an industry will not fall back into a pre-2024 era, because the strong price pressure brought with it a knowledge shock that is now decisive. Price negotiations will be more transparent from today onwards.

Still Not Transparent Enough: Towards the True Cost Price

"Open book" has been the motto for many buyers in recent months, and they have shared their figures with sellers. This was unimaginable just a few months ago. Buyers' concerns forced them to communicate more transparently. And yet, the true cost price remains untouched. This is the selling price that takes into account all production costs, including so-called externalized costs like environmental impact.

Self-produced organic fertilizer at Apas in Brazil

This must be the next step to achieve truly transparent pricing. This includes determining what constitutes a good income for producers. A "good income" cannot be determined by roasteries or a C-Price.

Producers in a perfect world would decide what they needed, but the C-Price remains the reference. However, to get a more realistic understanding of how the C-Price should be categorized, tools like Fairtrade's Living Income Benchmark are helpful. This can provide contextualized figures on what plausible wages in certain regions of the world might be. Furthermore, knowledge of production costs, a margin, plus external costs would be needed to calculate a comprehensive price for green coffee.

This is a long road, and it requires more transparency for all stakeholders in the coffee chain to answer these questions. Transparency is indispensable for correct pricing. Beyond that, we must ask ourselves:

who actually benefits from transparency?

For Whom is Transparency Crucial? Different Perspectives

Of course, there are limits to transparency.

When we talk about transparency in the coffee chain, we imply trade practices, prices paid, cultivation methods, perhaps working conditions, and environmental impacts. Most of the time, these are issues concerning cultivation.

Roasteries that demand a lot of transparency from traders and producers are invited to show just as much transparency themselves. The principle here could be:

The degree of transparency I demand from you, I will also give to you.

And with that, you set your own limits of transparency, because there may be topics you prefer not to talk about. Thus, like-minded individuals find each other along the chain.

What do the individual actors in the chain gain from transparency?

Let's assume that the greatest possible degree of transparency is applied to a specific coffee chain, everyone is comfortable with it, and information exchange goes in both directions - from seed to cup and from cup to seed. Often, there is an information asymmetry. But if this is broken, there are opportunities for all involved.

When information asymmetry is broken, there are opportunities for everyone:

Producers:

• Empowerment through knowledge of their product's value and the ability to negotiate fair prices beyond production costs.
• Access to direct, long-term partnerships that enable stability and investment in sustainable farming practices.
• Improved working conditions and fair wages for farm workers, who are often underpaid.

Green Coffee Importers:

• Their important role as bridge-builders between producers and roasters, managing logistics and quality assurance.
• The opportunity to build trust throughout the chain through their own transparency (e.g., regarding their margins and services).
• Risk management through detailed knowledge of origin and production conditions.

Coffee Roasters:

• Building a strong brand and credibility through authentic stories and traceable origins.
• Improving purchasing strategies through deeper insights into producers' cost structures and optimizing the supply chain.
• Differentiating themselves from competitors and attracting conscious customers who value ethical consumption.

Customers:

• Ability to make informed purchasing decisions that align with their personal values (e.g., environmental protection, social justice).
• Understanding the "true price" of coffee, which reflects the social and environmental costs along the value chain ("True Pricing").
• Appreciation for the product and the work behind every cup of coffee through detailed origin information.

Interpreting Transparency Correctly: The Need for Contextual Knowledge

Anyone comparing two 87-point coffees, one from Kenya and one from Brazil, knows that these 87 points taste different. The coffees from Kenya and Brazil taste fundamentally different but can have high ratings for individual taste attributes and thus reach 87 points.

Same score, different reason, we often say during tastings.

But if I only communicated the 87 points, without the context of origin, varietal, processing, etc., then it tells me that the coffee is probably very good. But I still don't know how it tastes, for what purpose it might be suitable, and who else might like it.

Similarly, raw figures and facts are not helpful in the transparency debate. An isolated FOB price, the type of harvest and processing, the ownership structures in the chain - all information that says little without context. Two examples:

Don Roque produces high-quality coffee, with a yield of less than 1 tonne per hectare

High price for a good coffee:

Small-scale producers in the Oaxaca mountain region of Mexico are often entirely dependent on their small harvest. This makes the coffee exclusive and more expensive. A higher price is necessary here for their survival and is determined by scarcity, not solely by the quality in the cup.

Cheaper price for a superb coffee:

A fantastic lot from a Colombian producer with over 100 hectares of land was rated qualitatively higher but was identically priced with the Oaxaca coffee. Due to size, efficiency, and modern fermentation in large tanks, the coffee could be produced more cheaply.

The prices were identical but had no direct relation to the sensory experience, but rather to economies of scale and cultivation methods. Without context, a price is just a number.

What do price indications like FOB really mean?

Initiatives like "The Pledge" invited roasteries in 2018 to share FOB prices to bring transparency to pricing. This was an important step in the right direction, creating a small ripple effect in the specialty world. To this day, many roasteries share their purchase prices on an FOB basis.

"FOB is just the beginning," states the 2019 vision. Only when all prices in the coffee chain become transparent will it be possible to calculate a living income price or even the true cost price.

The FOB price (free on board) means that the exporter bears all costs up to loading onto the vessel. Once the coffee is on the vessel, subsequent costs transfer to the import side. An exporter can, but does not have to be, the producer themselves.

Before and after that, further costs arise, which are mapped in different pricing models:

Picker's Wage

Does not appear in classical pricing models, but is included in the farmgate price. There is a guidepost for this, the "Living Wage" approach, which differs from "Living Income": While "living wage" reflects an employment relationship, "living income" is the reference for self-employment. The "living wage" approach is therefore used to determine the picker's wage, and "living income" for farm owners.

Ex-Farmgate

The price a producer receives for coffee directly from the farm.

FOT (Free on Truck)

The price after the coffee has been transported from the dry mill to the port and changes hands there.

FOB (Free on Board)

The price when the coffee is loaded onto the ship. The exporter bears all costs up to this point.

DDP (Delivered Duty Paid)

The price for the coffee when it arrives, customs cleared and taxed, at the roastery's doorstep.

The mentioned costs are so-called Incoterms: definitions that specify who bears which costs and when the goods are transferred. Furthermore, Incoterms provide information on whether the goods are transported further by the buyer or seller.

Every coffee chain has its peculiarities and often never functions identically.

The Incoterms are based on coffee supply chains that are often similar but differ in detail. Some peculiarities can be:

• it's not a single producer, but they are part of an organization (e.g., cooperative)
• individual producers typically do not own a dry mill, i.e., the facility where coffee is prepared for export
• the dry mill service can be purchased, or the dry mill buys the coffee and exports it
• cooperatives or exporters (traders) typically own dry mills
• the exporter always needs a counterpart, the importer, who then buys the coffee. These can be subsidiaries or independent companies.

Therefore, the questions:

So what does the FOB price say?

Without context, not much.

The basic idea of FOB communication is that eventually you have enough transparency to calculate the Living Income. However, neither the FOB price nor the ex-farmgate price is sufficient for this. More precise calculations are needed, dealing with the individual living situations on the ground.

Without context, the FOB price is simply a number. And just because a roastery communicates this price, it cannot yet be assumed that it would be a good price for producers.

I often see roasteries state the FOB price with the additional information that the price paid is x times higher than the C-Price (the stock exchange reference price). I believe this means two things:

• the willingness to communicate transparently, which is necessary and laudable
• the intention to use a different communication, which is incomplete if not contextualized

Context is king - as long as the FOB price stands alone, it doesn't mean much. Only by collecting further data points can a more complete picture of how the coffee was traded be obtained.

An FOB price of 10 USD per pound of green coffee seems high. However, if the ex-farmgate price was only 5 USD, it means that the costs for processing, logistics, and export margin have doubled the price – an enormous markup. Just because a roastery communicates the FOB price, it is no guarantee of a fair price for producers.

Here are the FOB prices we pay for green coffees.

Is transparent also fair?

As mentioned at the beginning, transparency is an instrument that helps us to even understand what happens in a long supply chain. Where a product is charged with monetary and ideal values, whose contribution to the chain improves the product, and what we can learn from it.

Transparency is necessary, but by itself it is not an explanation for a deeper understanding of a supply chain. Likewise, transparent information without subsequent action is no guarantee of fairness.

An ethical dilemma can arise when we are in an information asymmetry; that is, when one part of the coffee chain knows more about the market and more about the other part than vice versa. The goal should therefore be that the benefits of transparency also reach the producers, so that solutions can be worked on together.

The future of transparency

Coffee companies that are accountable to third parties, e.g., a label organization like Fairtrade or Rainforest Alliance, or shareholders, must per se work more transparently than many smaller companies and often show a higher degree of precision.

Whether this information is then also shared with customers and producers is another story. However, the exercise of learning more about one's own chain has long been done, especially by larger companies. Who ultimately benefits from this is unclear.

For change to happen at all, transparency across the entire supply chains is needed. Above all, however, a clear understanding of how we, as companies, individuals, and institutions, approach transparency is required. If it serves as a guideline for our actions, if we think of it in both directions ("I share as much as I request") and see it as a creative tool for change processes, then it is a powerful tool for a sustainable coffee chain.