Torque's Proportional Pricing
This is a coffee revolution
Commodity market sets lowest possible coffee value
Consumer market sets the true value of coffee
Coffee Producers received 20% of the price of every bag of beans you buy.
You get amazing coffee. Producers get their share.
Everyone shares value equity
All of us in Specialty Coffee agree that coffee producers are valuable, but we haven't agreed on how to assign that value, who assigns it, or how to convey it through the supply chain.
At Torque we believe that the way forward is to reverse engineer the coffee value equation & go from value received to price paid. Proportional Pricing means simply that the value of a coffee is relative to the value it generates for the roaster. Based on that premise, Torque applied a Proportional Pricing equation in which the producers receive 20% of the retail value of every bag of roasted coffee.
We call it Proportional Pricing© because it automatically adjusts to the price the bag of coffee is sold at. Proportional Pricing changes the value equation of the coffee supply chain. Instead of the commodity market deciding what a coffee farmer's coffee is worth, you the customer decide its value. Proportional Pricing means that a preset percentage of that value is due the coffee producer. You know the exact impact your purchase has on the coffee producer. No complex math, no 50 page reports, no long explanations, sob stories or strings attached. It's just the Producer's Portion.
Torque is not trying to imply that we pay more than anyone else, or that other coffee companies pay too little. It's our belief that reversing the value determination to begin at the retail price and applying a preset percentage is the cleanest, simplest, least imperialistic way to bring equilibrium to coffee.
At Torque we believe that all contributors are due their portion of value. By reverse engineering the coffee supply chain and tying the producer's value directly to the full value of the coffee, together we can change the equation. The exact percentage can vary, it is the direct action of valuing a producer's coffee based on a preset value equation that brings the coffee supply chain a little closer to equilibrium.
> Producers receive 20% of the $20 price of each bag of coffee, so $4 per bag
> It takes 400g (14oz) green to make 340g (12oz) roasted coffee. (roasting coffee loses 15%-18% weight.)
> $4.00 for 400g of green coffee or $4.53/Lb
> We pay $4.75 /lb green farm gate so that we ensure producers are golden.
This is what the farmer/cooperative is paid. Import & export costs are on top of that. (aka FOB + EXW costs)
Coffee Producer Pricing In Context:
Torque Coffees pays our producers $4.75 a lb farm gate for green coffee. On average the cost to get these coffees FOB ready is another $0.50 a lb. so our typical FOB cost is $5.25 a lb.
New York "C" contract price was bouncing around $2.50 /lb green FOB (as of March 2022 the commodity grade coffee) this is a 20 year historically high price! normally the C price hovers around $1.40 /lb
Transparent Trade Specialty Coffee Transaction Guide prices for 2020/2021 For 85-87 point Specialty coffee (like we buy) FOB prices median ranged from $3.50 to $4.50 /lb FOB
Transparency.coffee The Pledge average FOB prices paid for specialty green coffee in 2020 ranged between $3.40 to $5.00 FOB
So subtract $0.50/lb for typical farm gate pricing on the above examples and you get a likely farm gate price.
Our vision is that all craft coffee roasters will embrace Proportional Pricing© so that we can harness our collective super power to bring coffee into equilibrium. Whether it's 20%, 18%, 10% or any other number, the impact is the clarity & transparency it delivers. The exact percentage is not crucial, it is the direct action of valuing a producer's coffee based on a preset value equation that brings the coffee supply chain a little closer to equilibrium.
So ask other roasters you know what percent of their own retail coffee prices they pay their coffee producers. We would love to talk with them and share how we make it work and how it changed our entire approach to coffee buying. This kind of radical approach is not for everyone, but it works for us and it works for the coffee producers. We think it can work for others as well.
We would love to talk with any interested roaster, producer, exporter or importer and share how we make it work and how it changed our entire approach to coffee buying. This kind of radical approach is not for everyone, but it works for us and it works for coffee producers. We think it can work for others as well.
Learn more about changing the equation