UMF's 2012-2013 Coffee Transparency Report

At UMF, we believe that transparency is better than any particular certification. For this reason, we are proud to present our second annual Transparency Report, detailing all pricing for the coffees that we purchased from farmers in the 2013 coffee harvest. This report details how much coffee we purchased, which farmers we purchased from, what prices we paid directly to these farmers, and how to compare these to numbers reported by Fair Trade or direct trade coffees that report FOB pricing.

Coffee farmer Rudy Carcamo on his field.

Farmers in La Unión were hit doubly during the 2013 harvest, with large losses resulting from coffee leaf rust and prices dipping to three year lows when farmers were ready to sell coffee. Although most coffee buyers, including Fair Trade Certified coffee, dropped prices with the falling market price, UMF made the decision to maintain prices from the 2012 harvest. If the coffee is as good this year as last, why would we lower the amount of money that we pay to purchase it? This year, our average green coffee purchase price was $2.54 (it was $2.48 in 2012) and our average parchment purchase price was $1.59 (it was $1.81 in 2012). Over the same time period, the coffee market price dropped 73%.

We encourage you to read this Transparency Report and ask questions. There are many companies and organizations around the world that claim to be helping farmers through the prices they pay for coffee, including ourselves. Without transparency, it is impossible for you, the consumer, to make informed decisions. Once you have read our transparency report, look for transparent information from other socially conscious coffee companies so that you can make an informed decision on what you buy for your morning cup.

How we pay farmers

UMF receives purchased coffee from farmers.

Among the numbers you will see below is the price that UMF paid for parchment coffee, or coffee with the shell still attached (this is how the vast majority of farmers sell their coffee). UMF and coffee farmers signed contracts in La Unión at the time of purchase, and these contracts show the total amount paid to a farmer for his or her coffee. The parchment coffee price is the amount of money paid directly to the farmer, divided by the amount of coffee sold to us, and it is the most transparent representation of what farmers received for their coffee.

To make comparison easier, we also translate this number into an amount paid to farmer per pound of green coffee as well as FOB pricing. FOB pricing is the most common number given by companies who report what they pay for coffee. However, this number includes shipping, preparation, and taxes that was NOT paid to the farmer. This number is different for every coffee but, as seen below, was an average of $0.41/lb green for the coffees that we purchased during this harvest.

To learn more about how this parchment price differs from prices quoted by Fair Trade and other exporters, read our 2011-2012 Transparency Report.

The Basics

Gilberto and Pedro sample coffee to be roasted and cupped.

UMF received and cupped 86 different coffees from 47 different farmers in the 2013 harvest. From these candidates, we selected and purchased the best 50 coffees from a total of 33 farmers. Eleven of these farmers participate in UMF’s microloan and training programs. In all, we purchased a total of 67,284 lb of parchment coffee from farmers. Next, we sent the coffee to a processing center in Honduras to remove the parchment and prepare it for exporting. This left us with 42,408 lb of green coffee, ready to be exported to the United States and sold. 

The smallest amount of coffee that we purchased from a farmer was 103 lb of parchment coffee, and the largest amount was 5,201 lb of coffee. The highest price that we paid was $1.78/lb parchment, and the lowest price paid was $1.38/lb parchment. As a comparison with Fair Trade Certified prices, the highest FOB price we paid was $3.72 and the lowest FOB price paid was $2.43. For reference, the Fair Trade Certified FOB coffee price this harvest was between $1.60 and $1.78 the past year.

The Numbers

Here is UMF’s 2012-2013 coffee transparency information:

A note for the blends: the price per pound green to farmer and the FOB price are estimates because the coffees are mixed prior to processing. However, the parchment price is exact for each farmer’s coffee in the blend. The bolded prices for the blends give the average for the entire blend, and the bolded number for total exported represents the weight of the entire blend.

Contracts

Below, we’ve posted a sample contract to show how we purchase coffee from farmers (we’ve removed from the sample the part of the contract that includes personal financial details). The main parts of the contract are explained here:

•  Código del Café (Coffee Code): A unique code assigned to each sample we receive.

•  Cantidad (Amount): The amount of parchment coffee we purchased in qq, or quintales. (One quintal is 100 lb.)

•  Oferta (Offer): The rate we offer for each carga of coffee. (One carga is 200 lb, and the price is listed in the Honduran currency: Lempira. 1 USD ~ 20 Lempira depending on daily exchange rate)

•  Precio Contrato (Contract Price): The total price paid to the farmer -- the amount of coffee purchased multiplied by the rate offered. (Oddly, the standard practice is to list the amount of coffee in quintales, or multiples of 100 lb, and to make the offer per carga, or 200 lb. It’s a confusing system, and we didn’t invent it. The contract price takes this difference into account.)

•  Firma (Signature): This contract was signed in UMF’s La Unión office by UMF Financial Officer Charles Heins.

For a glossary of terms in the transparency report, and to view last year's numbers, visit our 2011-2012 Transparency Report.

A Cup of Coffee with Filadelfo Juarez

The three of us stand outside his doorway, armed with a Chemex coffee maker, a scale, a blender, and Filadelfo Juarez’s Zingerman’s-roasted coffee tucked away in our bag. I’m with Patrick and Martir, members of the Unión MicroFinanza team in Honduras, and we’re about to have a cup of coffee with Filadelfo Juarez.

Filadelfo, or Fito, works for the public schools in the area of La Unión, Lempira, Honduras. He was an elementary teacher for eleven years and now holds an administrative position. He also grows coffee. Good coffee. He owns a small amount of land outside of town and harvests it during the school break. That means that during his vacation, he’s up at 5, kisses his wife and two young kids goodbye, piles coffee pickers into his truck, and drives up through the lush mountains to his fields. We are at his house to give him some of the coffee picked last year, roasted by Zingerman’s in Ann Arbor, Michigan.

He invites us into his home, with simple concrete walls, humble furnishings, and a telenovela playing on the TV in the background. His two children run up to greet us. All shake hands, exchange greetings, and then we tell him why we’re here. We bought coffee from him last year, which means his hard work was rewarded with a fair price instead of the tragically low prices imposed on farmers here in Honduras. Moreover, his coffee was roasted and sold at a fantastic store in the United States, in Michigan.

That’s when we pull out the bag, the 12-ounce brightly colored Zingerman’s bag with Fito’s name written across the front label. His face lights up as he gingerly takes the bag from Patrick, runs his fingers across his name, and asks us in Spanish, “This is my coffee?” Farmers in Honduras usually don’t know where their coffee ends up in the world, let alone get to see it beautifully packaged with their own name right on the bag.

Fito’s grinning, and we are too.

He calls his wife over to look at his coffee and they both touch it, ask more questions about it. Where exactly is it sold? This is the coffee we sold you last year? Bags just like this are sold in Michigan? I mention how his coffee was actually the coffee of the month at Zingerman’s, and Patrick describes the sign in the store that says “Honduran Microlot: Filadelfo Juarez”. We decide to prepare some coffee then and there, and Fito has the honor of opening the bag. He tears it open with a knife and smells it, inhaling deeply. He passes it to his wife so she can smell it too, and then they scoop some out in a spoon for their little girl. She stands on her tiptoes to smell her dad’s roasted coffee. Still grinning, Fito says that it smells delicious. 

The coffee most Hondurans drink is called café de bolsa, or coffee in a bag. It’s pre-ground, very low quality, and devoid of flavor. This certainly doesn’t smell like café de bolsa. Fito asks us about the roasting, and we describe the process at Zingerman’s Coffee Company, the sophistication of the custom roaster, and the care with which they test and roast his coffee. Patrick translates the description on the bag: notes of tropical fruit, honeysuckle, and the bittersweet presence of grapefruit. Fito nods, agreeing that his land is known to produce a grapefruit flavor. My mouth begins to water.

We take out our equipment and start measuring the fresh coffee beans. We explain the process to Fito and his family as we run the beans through an old blender, our best replacement for a coffee grinder. His wife boils water on the stove in a tin pot, and when it’s ready, we pour it over the small mountain of Fito’s ground coffee in our Chemex. Everyone, everyone, leans in as the aroma drifts up from the Chemex. There are audible responses, and Fito and his wife exclaim in delight that it smells delicious.

As the last drops of coffee filter through, Fito’s wife washes out some small teacups. She asks us if we want to add sugar and we surprise her by politely declining. Café de bolsa is always prepared with a lot of sugar, either to drown out any mucky, bitter taste or make up for a lack thereof. We assure her she doesn’t need to add sugar to this coffee, and she pours it straight into the teacups.

Fito is first. He sips carefully and smiles, and then we give his wife the next cup. Our cups come next. I ask Fito what he thinks his coffee tastes like. Before he responds, his wife claims in surprise that the coffee isn’t bitter at all, that it’s remarkably smooth. We all agree. We acknowledge the floral hint of honeysuckle, giving the coffee a delicate sweetness. And then we turn to Fito for his response.

“Well, this isn’t café de bolsa.” Fito is chuckling, and we are too.

We stand around the kitchen, savoring what is surely the best coffee this household has ever had. We review the flavors, the grapefruit, the honeysuckle again, and over and over they mention how unbelievably smooth this coffee is. No sugar needed. We’ll leave the rest of the coffee with Fito, so he and his family can continue to smell it, drink it, display it, enjoy it. I’m glad I tucked his coffee into my suitcase the day before I left; seeing Fito and his family’s reaction to their own coffee, beautifully roasted and packaged and prepared, is a humbling experience.

We settle into the small patio outside, chatting as we sit on plastic chairs. Fito tells us about how he’s going back to work in a week and describes this year’s harvest. Instead of the gradual maturation of his coffee, all of it seems to have matured at once. While that means he gets to pick almost all of his coffee before returning to work, if rain comes in and delays coffee picking, his livelihood could be destroyed in a matter of days. The fragility of it all strikes me. It’s especially powerful to process while I’m sitting in Fito’s house, accepting coffee and fresh watermelon from his wife, watching his children play, realizing that much of this situation would be different and could be different due to a few days of rain, sun, or any other small and uncontrollable circumstance. Fito’s hopeful that the weather will hold out. He’s especially excited, too, because he claims that this year’s harvest is going to be even better than last year’s. I think of the amazing coffee we just shared with him and imagine the possibility.

I cannot wait for my next cup of coffee with Filadelfo Juarez. 

Story and photos by Morgan Fett