We love to engage customers on the topic of coffee pricing because it’s a critical reason why we started Level Ground. Are farmers being paid what they deserve? That’s the ‘seed thought’ to our business’ genesis in 1997!
Today, an equally consuming question for us is “As a customer, are you receiving great value when you purchase Level Ground coffee?”
Level Ground strives to elevate coffee for everyone. Whether farmer or customer, our goal is to see coffee make lives better.
As the globe shrinks due to increased trade and as climate change deeply affects supply of quality coffee, its warranted that every coffee lover becomes familiar with the basic themes to ponder. Farmers are so important, but often overlooked, in the big picture of what we consume.
For this blog post, we’re only talking about the farmers who grow the coffees Level Ground sources, stages and supports into the North American marketplace.
With that in our sights, let’s narrow down the pricing topic so that we’re all on the same page!
In our current 2021, Level Ground is only sourcing Organic, Fair Trade, Specialty Arabica coffee. EVERY one of those descriptors directly affects the price we pay.
Additionally, we purchase all coffee as green beans (unroasted) using US currency.
So, that’s five variables that affect pricing, whether the coffee was grown in Honduras or Rwanda:
- Specialty Arabica – scores over 80 points (out of a possible 100 points). The commodity price for Specialty Arabica coffee moves around in market value every day based on supply, demand and various economic pressures. A minimum of $1.40 USD per green lb must be paid for it to be marketed as ‘Fair Trade’ but the price may go significantly above that as the quality & demand for specific beans increase.
- Organic certified – fetches a premium of at least 30¢/green pound.
- Fair Trade certified – fetches a premium of at least 20¢/green pound.
- Shrinkage – we import seeds (green, unroasted beans) and they lose 16-18% weight in the 10-15 mins during the small-batch roasting process.
- Currency exchange – all purchase orders are negotiated in US dollars per pound of green coffee at the shipping port from which the shipment will depart/origin (we call it an FOB price).
There is a sixth factor also at play, national differentials, but we won’t broach that topic here.
When we combine all those factors, the minimum price we will pay for any of the coffees we source is $1.90USD FOB. Level Ground typically sources coffee that’s cupping 83-86 points. To get that level of quality, we pay more to ensure that we elevate BOTH your ‘in the cup’ experience and the farmers’ ‘in the pocket’ experience!
In 2021, we expect to source and stage approximately 30 lots (aka shipping containers) of green coffee. The average price we’ll pay across all 1.2 million pounds of green coffee is $2.05US/pound.
Whether it's Peruvian sols, Tanzanian shillings or Ethiopian birr, 60-70% of what Level Ground pays for green coffee goes back to the farmers' pockets. The balance of the purchase price goes toward quality control, milling, sacking, surface transport and lots of technical assistance – check out our blog post on Why We Love Agronomists to understand the value add delivered by coffee co-ops to their farmer members.
You can also check out Sustainable Harvest's article on Understanding Fair Trade Coffee Prices.