Bellwether Coffee with Heifer International Introduced New Pricing Model For Coffee
Farmers to Boost Income
May 14 - 2021
Coffee Geography Magazine
Setting a new standard in
coffee pricing, Bellwether Coffee, the creator of the most sustainable commercial coffee roaster, Heifer
International, a global development
organization, and Sustainable Harvest,
a mission-driven specialty coffee importer, today announced Verified
Living Income, a pricing model designed
to meet coffee farmers' livelihood needs.
in transparency, the new pricing model determines the minimum price farmers
need to be paid for their coffee to earn a living income. The Verified
Living Income model calls for three priority shifts within the coffee industry:
power dynamics between buyers (traditionally "price-setters") and
producers (traditionally "price takers");
procurement practices to directly address economic sustainability at origin;
cooperation across the supply chain and invest in the future of coffee,
ensuring that coffee production provides a dignified, self-sustaining
livelihood for farmers.
all know and love the coffee these farmers produce, but people don't realize
the downward price spiral farmers are stuck in. Coffee can be a poverty trap,
simply because the farmers who grow it are not paid adequately for their very
valuable products," said Strategic Initiatives Manager: Coffee &
Commodities at Heifer International, Cory Gilman. "We believe
products like coffee are not sustainable unless they are tied to living incomes
at origin. Coffee companies have a big opportunity to help end poverty in
growing regions by paying verified living income prices, and our methodology
shows it's possible."
Strategic Initiatives Manager: Coffee & Commodities at Heifer International, Cory Gilman
develop the Verified Living Income methodology, a pilot study was conducted in
Tolima, Colombia with 38 smallholder farmers from the ASOPEP
cooperative. Leveraging Heifer International's extensive living income benchmarking
expertise in the coffee industry and Sustainable Harvest's deep producer
relationships, origin staff, and expertise in the coffee industry for data
collection, the pilot study showed that with an average cost of production
of $1.33 per pound of green (unroasted) coffee, buyers would need to pay $1.89/lb. at
the farmgate and $2.24/lb. Free on Board.
results of the Verified Living Income pilot program highlight the need for
further transparency and accountability across the coffee supply chain,"
said Cooperative Manager at ASOPEP, Camilo Enciso Suarez.
"Identifying the key factors that impact farm profitability is powerful,
and pairing that knowledge with prices based on the true cost of production can
transform farmers' lives for the better."
cooperation from stakeholders at every level of the value chain, Verified
Living Income can be a path to improve farmer livelihoods through alleviating
economic instability in the coffee-growing regions and creating the value
necessary for coffee production to be viable for farmers — today and for future
Sustainable Harvest, our most fundamental belief is that the traditional coffee
supply chain must change, and more value needs to shift toward coffee farmers.
This has been our mission for nearly 25 years and Verified Living Income now
provides an additional actionable standard that more roasters can adopt. The
industry has a new opportunity to discover a Living Income price that can
assure a sustainable supply chain for years to come; our role will be to help
them navigate how to get there," said Director of Sales at Sustainable
Harvest, Monica Terveer.
Director of Sales at Sustainable Harvest, Monica Terveer
Living Income marks a substantive change in the way the industry pays for green
coffee. It is a truly transparent, economically viable method of determining
how much to pay for green coffee, rooted in farmers' livelihood needs,"
said Senior Sustainability Manager at Bellwether Coffee, Grayson Caldwell.
"Committing to paying producers living income-based prices is not only a
strategic investment, but also is foundational to a more sustainable and stable
coffee industry. We call on the industry to join Bellwether in adopting the VLI
pricing model and committing to paying living income-based pricing as a core
procurement approach within their respective supply chains."
Senior Sustainability Manager at Bellwether Coffee, Grayson Caldwell
data from the Verified Living Income pilot indicated the need for Bellwether to
increase the price paid to ASOPEP by 20%. In December 2020, Bellwether
signed a contract with ASOPEP to reflect the Verified Living Income Price
of $2.24 FOB. Bellwether has committed to implementing living
income-based pricing throughout its supply chain, with the first milestone of
all Latin American coffees targeted for completion by 2023.