T he
Long
Pi pe
Transparency
and the
Coffee Supply Chain
by Hanna Neuschwander
I
f you were to place a coffee grower at one
end of a pipe pointed in the direction of your
kitchen, he or she would be hard pressed to
peer through it and discern the tiny vision of you,
morning cup in your hand, on the other end. It
would be equally difficult for you, squinting with
sleep in your eyes, to make out a distant, weathered
face on the green slopes of a coffee farm.
continued on page 24
Finca El Divisadero near Ataco, El Salvador, May 2012 | photo by Bruce Mullins
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The Long Pipe | Transparency
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Sure, it’s a long way from one place to the other. But the pipe
doesn’t just cover a lot of distance. It’s kinked, bent in all sorts of
tortuous ways, each bend one more place where coffee changes
hands and where information about it must turn a corner or
become pinched off altogether. That’s assuming you can collect
information well enough to direct a stream into the pipe to begin
with. Even then, all that might come out the other end is a dribble.
Given the complex global supply chain for coffee, it’s
unsurprising that information has not flowed freely, when it has
flowed at all. Coffee growers, in particular, have been left out
of conversations about where their coffee goes after it leaves the
farm. It simply disappears. “This is not an industry that has a long
history with benevolence and transparency,” says Monika Firl,
What is
Transparency?
At its most basic, transparency is the act of making
information available. This could include purchase
prices for green coffee, the number of years a roaster
has had a relationship with a particular farm, or the
salaries it pays its baristas. Transparency underpins
producer relations manager at the importing collective Cooperative
a concept of business relations that emphasizes
Coffees.
fairness and mutual responsibility. And it’s more
But advances in connecting one end of the coffee chain to the
other—growers to roasters, and all the roles in between—have been
a critical element to the success of specialty coffee over the last two
popular than ever, given concerns about health, safety,
environmental standards, ethics and labor.
decades. Today it’s possible, in ways that are both nuanced and
immediate, to “see through” the pipe, to use this transparency for
continuous improvement, and to hold each end accountable for its
practices.
Change has come relatively rapidly. Kim Elena Ionescu, coffee
buyer and sustainability manager at Counter Culture Coffee, recalls
a moment in 2005 when Counter Culture founder and president
Brett Smith shared a breakdown of the company’s costs to roast,
prepare, and sell coffee for a room full of other roasters as well
as coffee growers at the Let’s Talk Coffee conference hosted by
Sustainable Harvest Coffee Importers. “It seemed revolutionary
to share that information,” she says. “Given where we are now, it
seems almost quaint.”
Consider the leap from that presentation to the 2012 launch
of WebMap 2.0, an online traceability/transparency tool created
by Brazil-based green coffee exporter NuCoffee. Through
View of coffee field in Matas de Minas, Brazil. | photo courtesy of NuCoffee
WebMap, roasters can browse from a selection of coffees (the tool
encompasses more than 1,400 individual farms and 20 co-ops in
Brazil) based on region, cooperative name, type of processing,
cupping score and flavor profiles. Farm profiles contain data
ranging from the number of employees and families working
on the farm, to predominant flora and fauna, to altitude and
weather information. When a roaster buys a lot, NuCoffee
provides additional resources that range from tracking processing
information to the ability to generate QR (quick response) codes
that lead customers to a customizable coffee biography. Smaller
farms benefit from systematized collection of data that helps
identify or improve quality potential, and larger farms benefit
from the ability to collect sophisticated, geographically referenced
Technicians arrive at a farm in South of Minas, Brazil, to train producers on
implementing NuCoffee’s traceability system. | photo courtesy of NuCoffee
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The Long Pipe | Transparency and the Coffee Supply Chain
(continued)
data that help them develop strategies to manage variables
platforms support shifts that are fundamentally cultural in nature.
ranging from planting to fertilization to harvesting.
“The industry has shown significant progress in promoting more
A similar but potentially more expansive tool is C-sar.
marketing manager. “We notice an increasing commitment to
op to log a huge variety of data including coffee varietal,
acknowledging coffee producers. This is an important step to help
growing altitude, pest control, pruning and harvesting
producers leave anonymity.”
practices, agricultural inputs and other soil information,
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Transparency has gained traction as more attention is focused
processing methods, carbon footprint, labor conditions,
on sustainable business partnerships and the value for producers.
and farm stories including pictures and videos. Farmers and
Third-party certification systems, like those offered by USDA Organic
associations collect their own data using the tool and then
and Fair Trade USA, have incorporated at least limited transparency
choose how to make the data available to roasters (as well as
requirements from the beginning, though usually around a narrow
others in the supply chain). There is also a roaster module,
set of parameters. Transparency has become especially important for
which roasters can use to track a large variety of quality
roasters interested in pursuing long-term trading relationships with
control data, and they can likewise share their information
farms under the direct or relationship model.
with importers, exporters and growers. Cropster, the social
Drying coffee at Fazenda dos Tachos, South of Minas, Brazil. The farm uses NuCoffee’s
traceability system to help better segment coffee varietals and quality potential for specialty
coffee production. | photo by Daniel Friedlander
transparent business relations,” says Daniel Friedlander, NuCoffee’s
This software provides a platform for any producer or co-
Randal Ribeiro, a NuCoffee quality specialist, meets with producer Gilmar
Barbosa to implement best farming practices at farm Penedo II. Processes are
recorded in WebMap 2.0 and tracked by the producer or by coffee roasters,
enabling them to provide feedback to the producer. | photo courtesy of NuCoffee
As a business proposition, transparency is about sharing
entrepreneurship company that developed C-sar, has clients
information, understanding each other’s costs of production, and
own costs to run the business risk putting themselves in a precarious
in more than 20 countries and there are so far more than
making sure everyone is clear on what is being asked for and delivered.
financial position.
20,000 farms registered in the C-sar system. Because of the
Many roasters now use transparency contracts, which allow each
potential it holds for connecting growers with roasters in
member of the coffee chain to see what the others are being paid—
with uncertainty about the best path forward. Some roasters are
deeply transparent ways, it was named the best new product
everyone knows the value being ascribed to his or her services. By
eager to explore ways to deepen transparent business relationships
in the “equipment for origin” category of the Specialty Coffee
forcing clarity around pricing, transparency also generally exposes
with their trading partners while also inviting customers in on
Association of America’s (SCAA) annual awards in 2012.
situations where prices are failing to cover costs. This can be true
the conversation. Others grapple with the question of how much
either at the farm or at the cafe. Cafes that set their prices according
information consumers actually want about their coffee.
Technology has enabled change to happen rapidly and
to scale up quickly in the last few years. But these online
to what neighboring businesses charge rather than based on their
The advance of transparency in recent years may leave roasters
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The Long Pipe | Transparency and the Coffee Supply Chain
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THE experts weigh in
For roasters interested in pursuing transparency,
the experts weigh in with advice.
“A common misunderstanding is to think customers
will care about every single detail of coffee traceability,
and of course they will not,” says Friedlander. For most,
the mere nugget of a story about a farm or a farmer—a
name on a bag of beans, for example—is enough to satisfy
any curiosity a coffee drinker has about where his coffee
comes from. Even so, some roasters see transparency—
On working with your importer
supply side and public facing—as essential to the future of
their business. These roasters are putting more effort into
Daniel Friedlander, NuCoffee
making the relatively new transparency of the commodity
“If you are a roaster who doesn’t have significant control over producer relations (e.g. you
chain accessible for customers.
buy on spot and not through the direct-trade or relationship model), then the first place to
begin is with your importer. Ask questions: Do they make traceability information easy to
access and use? How was the data gathered and verified? Was it independently audited? “
It can be tricky to talk about transparency because of
the one thing it’s most often confused with: traceability.
Knowing down to a fairly narrow level of detail where
coffee comes from—granular origin data—is a precursor
On producer relations
to thorough transparency. Friedlander believes the two
should be deeply interdependent and spoke about the
Daniel Friedlander, NuCoffee
topic at the 2012 SCAA Symposium. There, he lamented
“If you want to partner with producers and are looking for consistency in flavor profiles,
that all too often traceability and transparency are not
you need to know each individual farm and producer. You may need to know details ranging
connected. “Knowing the origin of a coffee doesn’t mean
from milling to warehousing to shipping so that if a problem happens, you can locate the
you have any kind of connection with the producer.
cause and provide accurate feedback.”
Matt Earley, Just Coffee
“The company’s most significant transparency cost is one we would incur regardless:
maintaining relationships with coffee producers through travel and documenting the visits
through blog posts.”
Monika Firl, Cooperative Coffees
“For us, an importer, the biggest transparency tool we have is our luggage. Face-to-face
meetings are critical, even though they don’t tell you everything.“
On data gathering and infrastructure
Kim Elena Ionescu, Counter Culture Coffee
“Traceability takes a commitment to starting to measure data, and then measuring them.
It really doesn’t have to be that resource intensive. Our direct trade report doesn’t cover
every coffee we purchase. You can start with one coffee or two coffees. It may feel random
the first year, but after time some things come together.”
View of a coffee plantation in South of Minas, Brazil.
photo courtesy of NuCoffee
Commodity coffee can have traceability,” he said at
Daniel Friedlander, NuCoffee
Symposium. But the inverse is just as problematic—a
“Transparency is more than pinpointing locations along the coffee chain. When
farmer may have meticulous agricultural practices and
transparency becomes a structured platform for tracing processes, growers can improve
a roaster may have made significant contributions to,
quality and replicate successes on a larger scale, while co-ops, mills and warehouses can
say, environmental stewardship on a farm. Yet without
optimize logistics, and roasters can reduce risks while gaining the ability to provide more
the record keeping that traceability requires, “it may be
information to their customers.”
perceived as propaganda.” Atlas Coffee Importers founder
Craig Holt agrees: “You really have to be careful about
Matt Earley, Just Coffee
overselling what it is that we’re doing. We overstate the
“I don’t really think there are a lot of challenges to pursuing transparency, which is why I’m
degree to which we help people. We overstate the quality
baffled that more people don’t do it. One challenge to transparency reporting for us was
the time expense of setting up the transparency website, which was done in collaboration
with Cooperative Coffees. We did spend a lot of time to get it up and running. But once that
was done, the data entry part hasn’t been very costly. Once you invest in the main system,
it’s just not that hard. There’s not a lot of downside or work to doing it.”
of the coffee we’re producing. We overstate the benefits
to the environment. It’s almost like sustainability porn
the way people talk about what they do, the changes
they make. You need to be able to back that up with vivid
traceability and transparency.”
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The Long Pipe | Transparency and the Coffee Supply Chain
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Neither concept is sustainable on its own, Friedlander suggests. “Let’s not forget that
full time now, and his coffees are carried in a number
traceability is not just about sharing stories,” he notes. “There’s value in better supply chain
of highly regarded cafes). Barany still says he believes
management and also from helping producers to replicate on a larger scale what worked well
transparency should be a driving force in every business,
in coffee quality.” While the coffee industry has an insatiable appetite for traceability at the
but he notes that, “there may be better ways to share
moment, farmers are looking for transparency and better overall communication.
information with people than our original transparency
The emphasis on transparency is also growing outside the world of coffee, and this
report.” In particular, he feels there is probably a better
may eventually exert significant pressure on the industry as a whole to catch up in its
way to be tactful with farmers. “Pricing in Brazil and
transparency efforts. Companies like Wal-Mart are playing with new technologies, including
Panama is just different. But I can guarantee you that
radio-frequency identification (RFID) tags, to embed origin information, including details
the Brazilian farmer will be looking at the Panama
about health and safety, in products ranging from jewelry to paper cups. For all companies,
farmer’s asking price and wondering why they aren’t
the big question is how much data to collect and make available, and in what degree of detail.
getting the same price.”
And this is where roasters committed to transparency differ greatly.
Jen St. Hillaire is also a microroaster with her own
company, Scarlet City Coffee Roasters in Oakland,
Challenges for Small Roasters
When I first encountered Kuma Coffee, a microroaster in Seattle, it was barely a company.
The owner, Mark Barany, began as a hobby roaster while working full time in the IT
department at Seattle Pacific University. He did everything for his tiny operation himself—
down to filling bags of coffee and stamping the Kuma logo on them by hand. But he did one
other thing that was unusual, especially for a roaster of his size: He published green coffee
purchase prices on his website. The information was basic—just the name of either the farm
or the importer from which the coffee was purchased, as well as the price per pound. Barany
emphasizes that simply publishing purchasing data was easy—it was a matter of uploading
information he already had on file.
“I want my business to be honest and transparent,” he says. “I want my customers to have
complete confidence that we are buying world-class coffees and paying healthy premiums
Calif. She has likewise flirted with basic transparency
reporting such as Kuma’s but decided that simply
posting purchasing prices isn’t a meaningful indicator
for customers. St. Hillaire points out that pricing can
depend on many factors, including the amount of coffee
purchased, the season, whether it’s organic or fair-trade
certified, and the timing of contracts. A roaster who
purchases coffee pegged to the “C” market will pay a
higher price if they book right before a “C” market price
drop than a roaster who books after the drop, for the
same coffee. “Where exactly is the transparency in this,
Quality specialists work closely with
producers on traceability projects.
photos courtesy of NuCoffee
and what is the point of it if you don’t have something
tangible to compare it to?” says St. Hillaire. “If you’re just throwing numbers out there with
no reference to anything else, what does it mean?”
to our farmers.” Nevertheless, Barany says he received limited feedback from his customers
about this transparency initiative, even though local media paid attention. According to
Barany, it was mostly farmers who took notice: “At least a couple of our partnering farmers
were checking out the list to see what prices we were paying to other direct-trade partners.”
It was this, in part, that led Barany to stop publishing the information in 2012. “One of
How Much Information Is Too Much?
In contrast, perhaps the most complete transparency project a coffee roaster has taken up
our partners was upset that we were buying another neighboring farm’s coffee at a higher
in the United States is from a mid-sized regional roaster in the Midwest called Just Coffee, a
price and wanted to use the data as leverage, even though his coffee didn’t cup out quite as
member of Cooperative Coffees. It begins when Cooperative Coffees posts all of the contracts,
nice.” Barany says that supplying “bonus” content such as a transparency report has taken a
invoices and bills of lading for every lot of coffee it imports. The roaster members of the co-op
back seat to keeping up with new business and improving offerings and service (he is roasting
can assign a code to their coffees that links back to this paperwork via a website. Just Coffee
has done more with that available data than any of the other co-op members.
Early on, Just Coffee printed basic data about each coffee right on the coffee bags,
along with a code that led customers to a website where they could access nearly all of the
purchasing documents for a given lot. The bag label included a breakdown of how much of
the customer’s per-pound price went to the farmer, as well as to import fees. It also included a
generic breakdown of labor costs, label and bag costs, and markup.
It goes without saying that to be truly transparent, you have to be accurate—but that isn’t
always easy in the coffee business. When green coffee pricing is determined by a floating
premium over the “C” market cost, the actual amount paid to a farmer may differ from the
forward contract price because of daily (even hourly) “C” market fluctuations. Just Coffee
has removed its financial transparency label from printed bags because of this uncertainty.
Instead, a new generation of bags will include links allowing customers to access real-time
data as well as purchasing documents online.
Just Coffee co-founder and farmer relations/outreach coordinator Matt Earley thinks
people appreciate being given a chance to make thoughtful choices. “From a marketing
perspective, we believe it sets us apart and that people come to us for this reason,” says Earley.
“We look at business as a way to create a better model within an industry that needed a better
View of a coffee plantation in South of Minas, Brazil. Traceability systems help producers in different regions
maximize quality and yield. | photo courtesy of NuCoffee
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model.”
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The Long Pipe | Transparency and the Coffee Supply Chain
(continued)
information they would like reported. “People
information is too much for them,
growers get better at that, we put a
(CBI) produces a transparency report that’s
Thornton, “with the intent to try and inspire
are comparatively well versed in the
like to see that it’s there,” he says. But he adds
rather than proactively keeping difficult
value on it,” Ionescu says. Counter
directly modeled on the one developed by
others to follow a similar path.”
politics of trade. (They are also generally
that most “probably only experiment with it
documents inaccessible.
Culture is especially interested in what
Counter Culture. The company uses it to
motivated by cooperativism—Just Coffee
once to see how it works; only a handful of
it indicates if growers don’t know
report on all of its Project Direct line of
game. For coffee verified to meet their Coffee
is one of the top-selling coffee brands in
customers check back constantly.”
their costs. “If you don’t know how
coffees—and because of CBI’s scale, those
and Farmer Equity (C.A.F.E.) Practices
much you’re spending on your farm,
coffees are reaching a large audience
standards, the company says financial
you’ll never really be able to answer
(customers include Target; coffees are sold
transparency “down to the farmworker level”
the question of what the right price
under the Archer Farms label).
is a must. Demonstrating that money goes
It helps that Just Coffee’s customers
food co-ops nationally.) Earley says that
Despite Earley’s assurances that Just
Just Coffee receives regular inquiries about
Coffee’s customers do make use of the
the information they provide, including
generous data they provide, the data can be
from customers who spot mistakes or
difficult to navigate. Earley is comfortable
make recommendations about additional
letting his customers decide how much
Curating
Transparency
Counter Culture Coffee’s Ionescu is
blunt about it: “No one reads the
transparency scorecard. We get
zero questions about it.” Even so,
Counter Culture has made the report a
centerpiece effort for the company.
Counter Culture is one of the only
coffee companies in the United States
that produces an annual transparency
report—one that curates complex data
for customers so that it’s digestible
while still being meaningful. The
report has evolved from a simple
willingness to share information to a
more concerted effort to push it into
the public sphere. In 2007 and 2008,
Counter Culture published a minimum
green coffee purchase price—their
first foray into financial transparency.
The first full report was published
in 2009, with information garnered
from an annual audit, including price,
most recent farm visit, and cupping
score. The company also includes
duration of the farm relationship
because, according to Ionescu, “that’s
an area where I think our work, and
philosophical approach to direct trade,
differs from some of our peers.”
For the 2012 report, Ionescu wants
to up the ante, redesigning it to inspire
more interest. “There’s still so much to
be done to engage consumers,” she says.
In an age of information overload, the
company believes that telling a simple
and visual—but detailed and accurate—
story is crucial. The 2012 report will
be combined with other data the
company collects in a formerly separate
sustainability scorecard. Items such as
whether or not each farm documents
how much it costs to produce a harvest
will also be included. Most estate farms
collect this data routinely, but that’s
not true of smallholders. “If a co-op
has a program in place to help their
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is for the coffee. It’s not a good price
for any grower if it doesn’t cover cost
“We took this approach to try and create
a consistency,” says CBI’s roastmaster Paul
Even Starbucks has skin in the transparency
where it is supposed to go is a prerequisite for
continued on page 34
of production,” she adds. “But if we’re
paying $5 a pound and it’s not covering
production costs, there’s something
wrong on that farm.”
The company wants to see its
wholesale clients apply the same
logic to their menu pricing. Rather
than simply looking at what the
chain coffeehouse across the street
charges, they encourage clients to look
at their real costs and to price drinks
accordingly.
Ionescu emphasizes that it’s
critical in healthy, long-term business
relationships for growers to understand
why their coffee costs $15 per pound
retail in the United States, when they
were paid $4. “I go to co-ops all the
time and present our cost of production
in the same format we’d use to talk to
shareholders”—which usually means
showing them a spreadsheet full of
numbers. “We need to make it more
interesting and engaging for them.”
In part because of the effort
Counter Culture invests in
communicating with farmers, Ionescu
reports the company hasn’t faced any
resistance from growers to publishing
purchase prices. “I have heard from
other roasters that they don’t want to
share FOB (free on board) prices because
it’s like publishing a farmer’s salary,
but that hasn’t been my experience.”
After initial resistance from some of
the company’s importing partners,
who Ionescu believes were concerned
about being cut out of the supply
chain, everyone eventually came
around. “We worked hard to keep up
open and honest communication with
everyone.”
Other coffee companies have
taken notice and are extending the
concept. Coffee Bean International
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The Long Pipe | Transparency and the Coffee Supply Chain
(continued)
any coffee to be verified. “It’s a nonstarter if this isn’t happening,”
says Jim Hanna, director of environmental impact. “We’ve had the
transparency requirement since day one of C.A.F.E.”
Starbucks also has a sophisticated set of “global responsibility”
reports on everything from fair trade purchasing to in-store water
consumption, which take to heart the lessons of consumer-facing,
modern information design. The scorecard, a sort of executive
summary of the full report, is remarkably easy to digest. Some of that
digestibility comes at the expense of detail. The furthest Starbucks
goes in disclosing financial information is to give an average purchase
price for their green coffee ($2.38 per pound in 2011); they don’t report
about individual purchases.
Hanna says that—similar to Counter Culture—not many people
read the scorecard by itself. “If you have standalone CSR [corporate
social responsibility] reports, only a limited group of people will read
them—academics, activists, employees and competitors, usually.
Technicians arrive at a farm in South of Minas, Brazil, to train producers on
implementing NuCoffee’s WebMap traceability system. | photo courtesy of NuCoffee
But as we’ve embedded the stories in the larger messages, it becomes
relevant for customers,” Hanna adds. For that reason, there is a
prominent “Responsibility” web page linked from the Starbucks
homepage that contains much of the scorecard information. “Our
company is built on our relationships and the trust our customers
have for us,” Hanna says. “There is a sort of natural cynicism about
multinationals and large brands with the ‘just trust us’ message. So
things do need to be externally verified. Trust drives people to come
back to our store. And this kind of reporting engenders trust.”
demands, not just react to them. And of course, it can still be in
the long-term best interest of companies to be transparent, even if
consumers don’t express that view themselves.
On the contrary, it’s empowering for both coffee drinkers and
producers to be able to conjure the idea of one another—to “see,”
metaphorically at least, from one end of the pipe to the other. As
technology and culture shift, information about coffee will travel not
only a straighter path, but a wider one.
Should Consumers or Roasters
Drive the Transparency Train?
No one I spoke with argued that increasing transparency for the
purposes of improving relationships in the supply chain was a bad
idea. (Though the value is broadly accepted, it should be noted that
Hanna Neuschwander is a freelance writer who is continuously
amazed by coffee’s ability to pull her deeper into its orbit. She is the managing editor of
an open-access scholarly journal, Democracy & Education, and the author of Left
Coast Roast (Timber Press, 2012), a guidebook to artisan and iconic coffee roasters
from Seattle to San Francisco.
still only a fraction of transactions are performed transparently.) But
feelings were more mixed when it came to how that transparency
could be extended or explained for consumers, who appear to be largely
unmotivated by the details. Ionescu believes that most of Counter
Culture’s customers appreciate that the transparency report exists but
don’t bother to read it, seek out details or ask questions. “Frankly, it
makes it incredibly easy to take advantage of consumers, especially
in the direct trade model,” she says. “There are so many definitions,
r e s ou rc e s
Tools
Cropster C-sar www.cropster.com
WebMap 2.0 www.nutrace.com.br
(click on “offer list” for more information)
and there is so little accountability. No one is holding us accountable
publicly.”
And that—for roasters who are grappling with transparency—is the
crux. “We’re trying to hold ourselves accountable,” Ionescu says. “In
some cases it’s less about what a consumer wants than it is about our
responsibility to be as clear as possible. We need to give people more
than they ask for.” In Ionescu’s view, roasters have quite a bit of power
to influence the kinds of questions consumers are asking about coffee,
and Counter Culture wants their customers to want transparency.
This flies in the face of common business logic, in which
companies anticipate and respond to their customers’ desires. Counter
Read the reports
Just Coffee www.justcoffee.co-op/tags/transparency_project
Counter Culture http://counterculturecoffee.com/sustainability
Coffee Bean International www.projectdirectcoffee.com
Starbucks www.starbucks.com/responsibility
Transparency Contract
See Transparency Contracts—Measuring your relationships in dollars and sense
(Roast, Sept/Oct 2007)
http://coffeeexploration.blogspot.com
(search for “transparency”)
Culture’s approach to transparency is to try and shape consumer
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