Economic Sustainability: Part 1 – FOB Price
Free on Board (FOB) price is becoming a standard reporting metric in the specialty coffee industry. Basically, this is the price paid for coffee once it gets on a container ship for transport. This price is listed on the shipping documents and is verifiable. The FOB price is a single number that includes the following:
- The amount the coffee farmer was paid
- Transportation costs within the producing country
- Additional logistics costs in the producing country
- Margin for the exporter
How do we use FOB pricing?
I know you’re asking, “okay, so, why is this important?” It’s important because we believe people should be paid fairly according to the work they’ve put in and we try not to work with anyone that we suspect is taking advantage of people in the supply chain. The FOB price is one piece of information that helps us benchmark our coffees to ensure a fair price is paid along the supply chain. This can help us make an informed decision about whether to work with someone or not, and you will see FOB price listed in the description for many coffees we source going forward.
When it comes to buying green coffee (which we do a lot of), comparing the FOB price to the Specialty Coffee Transaction Guide and a Living Wage Index (when available) is a key way we ensure economic sustainability in our supply chain. Read the next part of this series to find out more about the Specialty Coffee Transaction Guide and how it plays a role in the economic sustainability of our coffee.