2020-2021 Transparency Report

Aurelio Villatoro (Producer of El Amate, Guatemala)

2020 was by far the most challenging year in business for us. The year started off well, maybe even better than past years.  In December of 2019, we switched our Probat drum roasters out and replaced them with Neuhaus Neotec fluid bed roasters. This was a big change as well as a risk, but we felt confident in the future vision of our coffee roasting with the new machines. We had some momentum with the new roasters, giving us cleaner & sweeter results. However, like many other small businesses, the global pandemic forced us into the unknown & turned our plans sideways. We had anticipated some growth and contracted coffee according to these future projections. There is usually some room for error. If you contract too little, you can always find some spot coffee if needed.

In 2020, we had contracted too much coffee. When production dropped 47% and we closed the cafés, it was a dark time. We laid off 75% of our employees and drained our bank accounts when cutting the last paychecks. The fear really started to set in when we realized we were on the hook for all of the cafés rent & monthly bills, even if we weren't operating. The idea of losing everything wasn’t a good state to be in. We continued roasting with a very small crew and had to re-assess our business operations. We needed to put all things related to roastery operations under the magnifying glass to see what was making sense at the time, with the thought that we may have to shut down entirely because we didn’t have a clue what the future would look like. We needed to prepare for the worst, while trying to stay afloat.

There were a lot of small things that we started to change, like workflow layout in our roasting and packing area. The morale was at an ultimate low with harsh news everyday coming from the media & a lot of political agenda that did not align with our values and views. Wearing masks at work became policy, taking extra steps to wipe down surfaces and washing your hands an unhealthy amount of times a day. We were fortunate to have a solid crew at the roastery and we slowly started bringing back a few who had been laid off. The retail sales went up, but wholesale was way down. This meant we had way too much green coffee. We had no idea what to do with all of the contracted coffee. The producers we work with had already signed contracts and coffee was sold to us.

The hard part was trying to figure out future predictions without knowing how long the COVID-19 pandemic would be affecting our business and the supply chain. Because the last 2 years have felt like one long year, we chose to report them together. The information you have here is 100% of what we roasted. All of the data is pulled from cropster. We will also start including coffees we did not roast and had to find new homes for because this is also part of being 100% transparent about our operation.

Roasting companies who purchased relationship coffees in 2020 & had contracts in place most likely faced a similar situation as our company. Buying direct creates a higher reward for the producer and the roaster, but comes with a price of high risk, especially if the coffee arrives in bad condition or if you buy too much. When the coffee is not in good shape upon arrival, you are still liable for it. If you buy too much coffee, you may be roasting past crop coffee or you have to sell the coffee to another roaster & 90% of the time, you don’t get close to money you had originally paid for it, taking a loss. 

In 2020 & 2021 we sold [offloaded] 108,516 lb of green coffee for a loss of $124,327.00. We bought coffee at a high price compared to the market in 2020, but when we had to sell the excess green, we sold it at a lower price, taking a big loss. 

*If there was no PPP funding, we would not be in business today.

We are excited about the direction we have been headed towards with the business and want to share all the details. 

Each year, we have a conversation with the producers we have relationships with. It’s important for us to know  what the cost of production is for them, which usually opens up the conversation about what they want & need to make, for their sustainability. 

Mario, Leonel & Hector Martinez in Santa Barbara Honduras

The questions we ask are something like:

How much does it cost to produce the coffee?

How did you feel about the price that you received last year for the production?

How has the current harvest year been for you & what do you need from us?

We give feedback with the coffee we purchase. If they are interested & open to suggestions, that is something we may offer. Every producer we work with is important to us and we want them to succeed. If they are successful, there’s a higher probability that we will have access to the coffee in the future. We want to be able to continue working with the producers we do business with for the long term.

We talk about quality when we describe our coffee & want to explain what purchasing quality coffee means for the industry, the producers and the future of coffee. If you start with paying producers a sustainable price, where they can profit from their production & support their families, they are able to live a better life while also securing a future for the production of their coffee.

In the last couple years, there have been an alarmingly high number of coffee producers who have stopped growing coffee because of the prices they get from their production. Between climate change [global warming] &  prices, the production is going down. This leads to less coffee available and the C market goes up.

If there is not enough of a price difference between the c market and what you are paying for quality coffee, what will motivate the farmer to continue producing quality coffee that is more labor intensive = costing more.

Nancy Njeri, a farmer for Gachuiro 

The only way we can continue purchasing high quality coffee is to pay sustainable prices not tied to the C market. Farmers want security and something to rely on that is not the C market. 

Here are the FOB prices we paid in 2020 & 2021. 

You can see that we have an $0.48 increase in our FOB prices in 2021 compared to 2020.

This is a big jump from 2020 and this trend will continue for 2022. 

2021 we also saw the biggest increase in transportation costs and shipment delays. The shipping costs doubled and tripled in some cases. Our shipping costs were anywhere from $ 0.37-1 per pound in 2021.

We are hoping this will give other roasters the courage to share their prices. By sharing your costs, you help farmers understand their coffee value. This is the start to a more sustainable coffee future.

Thank you for your support!

 

What you can expect from us in the future is probably similar to the years prior with more small special lots that will be released year round. 

In 2020-2021 we donated 3,805 lb of roasted coffee that did not pass our quality control to Oregon Food Bank https://www.oregonfoodbank.org/ & Do Good Multnomah https://dogoodmultnomah.org/ & Meals on Wheels https://www.mowp.org

We also donated 739lb of roasted coffee to Equitable Giving Circle https://www.equitablegivingcircle.org/

Thank you for reading!