Open Cost-of-Production Tool Seeks Fairer Green Coffee Pricing

A New Resource for Cost-Based Pricing

A Portland-based roasting company, Junior’s Roasted Coffee, has introduced a publicly accessible tool called the Cost of Production Covered Template. Available through Google Docs, the template is designed to help green coffee buyers and producers arrive at a price for green coffee that reflects what it actually costs to produce—moving beyond quality metrics alone. The goal is to support more equitable pricing throughout the supply stream.

Why It Matters

Quality is frequently the only yardstick used to assess a coffee’s value, and the industry has many ways of defining and measuring it. In a blog post on the company’s website, Mike Nelson, co-owner and green buyer at Junior’s Roasted Coffee, writes: “The specialty coffee industry offers ‘higher’ prices paid based on quality specifications,” but “‘high’ is arbitrary if we don’t know a business’ costs of production. When and how will a farm actually profit if we don’t know their cost of production?”

The template seeks to calculate how much farmers spend to produce coffee and then use that figure as a basis for determining price. Nelson continues in a press release about the tool: “Running a farm is running a business. We want to support their business, and coffee producers want to support ours. The price transparency provided by the template ensures a gross margin is reached for producers.” He adds: “As a green coffee-buying company, we have the power to dig deeper into what a ‘farm partnership’ can look like and into what questioning and advancing equity and ethics could do for our businesses and hopefully the industry.”

Background and Development

The template is part of Junior’s Cost of Production Covered Project, which launched in 2018. Although the template is now being made public, Junior’s has been using a version of it for the past five years. “From 2018-2022, Junior’s put the template to the test with five coffee producer relationships in Guatemala, Brazil, and Colombia,” the press release states. “It was their goal from the beginning to make it available for use by other roasting companies.”

The template consists of a questionnaire and a spreadsheet: “The questionnaire gathers the farm’s direct expenses related to producing one pound of green coffee. The spreadsheet organizes and calculates this data into a price and margin to base a coffee contract on.” Users can make a copy and adapt the questions, but sample questions include:

• How much coffee do you sell in a harvest year (including second or late harvest if relevant to your farm) as parchment in pounds?
• What are your permanent-labor costs for the entire year? These costs include fixed farm maintenance labor, administrative labor, security labor, and your own salary. Any family labor costs should be considered in market rate wages.
• What are your total agricultural input costs for the entire year? These costs can include fertilizer costs, other soil nutrition costs, herbicide costs, fungicide costs, and pesticide costs.

Iterations and User Expectations

“The template has gone through a few iterations over the years,” Nelson writes. “We started this project with a questionnaire that was nearly 50 questions long that gathered data for a pro forma template that we had built.”

The template is open for anyone to use, but participants are asked to “acknowledge the project’s creators and adopt its mission of collaboration” and to share findings with producer partners. “We share our spreadsheets and the process directly with the producers or through collaborating importing partners. We ask all users to do the same. To truly build equity into the supply stream, negotiations must be transparent and producers must be present to set their contract prices.”

The Cost of Production Covered Template is available here.