Unshackling Supply Chain Pricing to Better Remunerate Farmers
June 14, 2022
One perennial issue in the coffee supply chain is ensuring that farms get a fair shake. Another is assuring consumers that the deal is real.
Now a new specialty coffee startup aims to cut through the clutter by building its business around what it says is a simple and clear sourcing price formula. Based in San Diego, California, online seller Torque Coffee declares that 20% of the retail price of each bag sold is paid directly to farmers. That’s $4 on a $20 bag. They call it “proportional pricing.”
“Our mission is to empower coffee consumers to personally apply torque to the coffee supply chain to affect positive change,” says Andy Newbom, who with his wife Nanelle is co-founder of Torque.
Looking more closely, that $4 is the price paid to growers for the 400 grams, or 14 ounces, of green coffee needed for a 340-gram/12-ounce retail bag of roast beans. (Roasting reduces weight by 15%–18%.)
What is significant is not so much the price level as the transparency of pricing, since this is the so-called “farmgate” price paid to individual farms and cooperatives. This value is rarely reported by retail sellers, which instead might report a freight-on-board (FOB) price. FOB is less reliable as an indication of value paid to growers since it includes non-farm costs like local cargo transport, milling, and warehousing.
Knowing the farmgate price lets consumers rest assured that the grower of the coffee they drink was able to earn a livelihood based on the retail price of the crop, which tends to be more stable than prices in commodity markets. This helps ensure that growers are less disadvantaged by price downturns. A potential caveat, however, is that they might miss out on extra profits from price spikes.
Torque sells by the individual bag and by monthly or semi-monthly subscription, offering a new coffee every two weeks. On June 15, it began shipping a blend dubbed Star Power, mixing beans from Ecuador’s Loja region and Columbia’s town of Jerico, Antioquia Department. The packaging is recycled, reusable, and compostable.
The Newboms describe themselves as coffee “lifers,” saying that they have worked in every nook and cranny of the industry in the US as well as in some origin countries. Along the way, they have “fallen in love with all the wonderful, crazy misfits and dreamers we call coffee people.”
Beyond selling beans, Torque aims to rally other craft roasters to embrace its pricing cause via https://proportionalpricing.com/
