The Coffee Producer Toolkit #5: Price

Making Coffee with Lucia Solis

This episode of The Coffee Producer Toolkit examines the disconnect between the global C-market commodity price and the actual cost of susta

Key takeaways

• When adjusted for inflation, the 1s977 C-market high of $3.38/lb is equivalent to nearly $18/lb in today's money.
• The C-market exchange focuses on 'interchangeable' coffee, effectively ignoring individual quality or producer stories.

Main topics

• C-Market mechanics
• Inflation and real value

Notable quotes

The worth of your coffee is not the C price.

Conclusion

The episode empowers producers to move beyond commodity pricing by usi

Transcript preview

Speaker 3 (0:00) Welcome to the Coffee Producer Toolkit. Speaker 3 (0:03) a Speaker 2 (0:04) podcast series built specifically for coffee farmers to help you run a more financially sustainable, better managed farm. Speaker 5 (0:10) I'm James Happer. I'm a coffee journalist and the creator of Filter Stories, a documentary podcast about the history, science, and culture of coffee. And Speaker 2 (0:17) I'm Lucia Solis, a fermentation and winemaking specialist working in coffee. I live on a coffee farm and I work directly with producers to improve their lots and their livelihoods. My podcast, Making Coffee, explores the latest science and the future of coffee production. Speaker 2 (0:37) Across the series, we're covering the topics that matter most to your bottom line. Agronomy, post-harvest processing, storage, fermentation, coffee quality assessment, sales and marketing, and much more. Each episode features best practices from leading coffee farmers and experts and presents it in a way that's practical and easy to act on. Speaker 5 (0:58) And this series is made possible by our partner sponsors. The Coffee Quest, Pinhalensi, Grain Pro, Novenessis, BWT, DeskMX, and Inter-American Coffee Europe. We launch it first in English. A Spanish version is on the way. And all the episodes will be on YouTube, subtitled in Portuguese and other major languages spoken by coffee producers. Speaker 2 (1:17) Whether you're a producer, you work with coffee producers, or you're just curious about what it actually takes to make coffee farming a viable business, we Speaker 5 (1:24) think this is going to be really useful. And... If you're not a farmer, honestly, we think it might change how you see this industry entirely. And Speaker 2 (1:35) in this episode, we're tackling the question that, more than any other, determines whether your farm survives. Prices. Speaker 3 (1:48) So Lucia, in 2019, I was in El Salvador. I went to a cooperative wet mill Speaker 5 (1:52) near the Guatemalan border. And I was sat in a circle on plastic chairs with a group of producers called Piedras Azules, Blue Stones. And one of the cooperative members, Speaker 8 (2:02) Roberto Figueroa, you're the president of the cooperative. He had his phone out and he was doing some calculations for me. Basically, he was Speaker 5 (2:13) showing me Speaker 8 (2:14) in real time Speaker 5 (2:14) how much money was left over. after paying for his harvesting costs. Speaker 8 (2:22) What Roberto Speaker 5 (2:30) was saying is that he personally was losing up to $1,000 a year on the farm. A farm that was supposed to give him income to raise his family. For many producers, thank God that they grow their own food. Speaker 7 (2:46) But for Speaker 3 (2:47) many, they were going deeper and deeper into debt. Speaker 2 (2:53) And just to be clear, Piedras Azules, they weren't failing personally at managing their coffee farms. Roberto is an average producer in El Salvador. His yields are similar to his neighbors. This is the average situation for most hardworking smallholder coffee farmers in the country. Speaker 3 (3:09) Yeah. And these producers were in this terrible situation. back in 2019, because that's when coffee prices were really low. Speaker 2 (3:17) Yeah, and that's a terrible situation for any coffee farmer to be in. And unfortunately, it's not an uncommon story. It's one that we hear over and over again. The coffee price dramatically affects whether your farm is going to be profitable or not. And in 2019, it was low, and so these farms were not profitable. So some of you may be listening to this and thinking, well, that was 2019. That was a while ago. Now it's 2026 and coffee prices are so much higher. So what's the problem? Speaker 3 (3:47) Well, here's the problem with that. Yes, today's coffee prices are higher. But in the case of Piedras Azules, all the profit they're making is going straight to the banks. They're not able to keep that money for themselves. They told me that they're now just catching up on historical debt, right? Debt which is generational in El Salvador. It's not going into reinvestment on the farm. Speaker 2 (4:08) James, can I share a personal story when the depth of this debt really hit home for me? Speaker 1 (4:14) Yeah. Speaker 2 (4:15) This was several years ago and I had been contracted for an exporter in Europe and they had wanted to make their fermentation like really, you know, wild and they were trying to get these flavors out. And as part of that, they had a marketing crew that came to... process with us so that they could film it and they could talk about what they were doing to these coffees. So they had flown in, you know, four people from Germany to come and film this process. And we got there and there was no coffee. There was just no cherries. It was a really, really tough year. And we had a, you know, 10 day shooting schedule. And so we were sitting there waiting, waiting, really running out of time to capture this. And so they were looking at their budget and they were just like, okay, we're going to pay double the price for cherry. Nobody cared. We'll pay four times. Nobody cared. We'll pay five times your price of cherry. We were just talking to any pickers, any producers that were in the area. And we're sitting there thinking, we're going to pay you five times the amount of what you can normally get for just like a couple of hours so that we can get started on this project. The team thought that that was a significant amount of money until they told us, we are so in debt. There's 15 years of debt. Five times on this one payment doesn't matter. And nobody was interested. And I think that's one of the things that happens when we look at these really high prices, where it's like, sure, it's a one-time payment, but producers are dealing with years of debt. And so that, you know, that little price increase doesn't go as far as most buyers think it would go. Speaker 5 (5:42) Right. Another issue is that the coffee price today, you know, it's not as high as it seems. We saw that back in February 2025, coffee hit $4.41 a pound. But Speaker 3 (5:55) that high is nowhere near as high as you think it is. Because the previous high, as in the nominal high, that was set back in 1977 when the C market hit $3.38 a pound. And once you adjust for inflation and you put that in today's money, that is close to $18 a pound. $18 a pound is what the coffee price was in 1977. So when we talk about coffee breaking a record last year at $4.41, in real terms, That's about a quarter of what coffee was getting 50 years ago. Speaker 2 (6:27) So what we want to highlight is that even though the price seems very high, in reality for producers, the price of coffee has actually been falling for 50 years. And now, producers, you will know farmers around you. You will have heard stories of people who, even in the very, very bad times, even at very low coffee prices, somehow still managed to get... good prices, maybe even high prices. And you might feel like you're failing here. You might feel like you're the one who's not able to access these systems. And we want to be really clear. You're not failing. You haven't done anything wrong. Speaker 3 (7:02) Exactly. You are operating inside a market whose rules were written around a completely different kind of farm to yours. To understand why, you have to understand that coffee is a commodity, right? Like oil, like wheat. Commodity prices, they go up and down for all sorts of reasons. Supply, demand, climate, you name it. And the logic of the commodity market is very simple but brutal. If you as a producer can't get your cost of production below the market price, you cannot make a profit. And then free market ideology says, well, maybe you should get out of the business of coffee farming or cut your costs, become more efficient, or you leave. That is the market at work. squeezes out people who cannot produce cheaply and it rewards the ones who can. But Speaker 2 (7:47) this is exactly where it gets so screwed up for coffee because it's not a fair playing field because coffee has Brazil. Brazilian producers can grow coffee at dramatically lower costs and the market says that you should just give up, walk away. But... We know it's not that simple, right? This is your livelihood. This is maybe the only crop in your region that earns any kind of return. And on top of that, this might be ancestral land. It's the only land your family owns. It's the land that you've farmed for generations. And it would be you. You would be the one to lose it. So what are you supposed to do? Go down to the city? I don't know. For a lot of people, that's just not a life that they want. So of course you stay. Speaker 5 (8:30) And it's also especially hard for you. Like, imagine a farmer in Germany who produces cereals. Cereals, like coffee, is a low-margin crop. But Speaker 3 (8:39) they sell it into a wealthy country with price contracts, subsidies from the EU, a safety net underneath him when prices crash so they never go destitute. You are growing a similar low-margin crop, but you almost certainly have none of those protections. And the Pietra Sazordes producers make this point. The coffee leaves their farms as a low-margin crop. But by the time it reaches the café, it's expensive. Speaker 8 (9:05) And look, Speaker 5 (9:09) I can understand how a producer sees the price that a coffee goes for in a café. It's so much more than what they got paid, and they can feel like the market is rigged against them. Speaker 5 (9:27) But the truth is, that's not the case. Speaker 3 (9:30) Because everybody who touched a coffee after it left your farm added their margin to it. The exporter added their margin, the importer added their margin, the roaster added their margin, the cafe added their margin. And before you know it, the price of a cup of coffee is so much higher. And these margins are necessary because that is the price they have to set to make their businesses long-term sustainable. And you can too. Speaker 3 (9:59) The thing is, there are farmers who manage to get premiums for their coffee, higher prices. And in this episode, we want to help you get there. We want to help you capture more value for your coffee. Speaker 5 (10:15) And so, over the next hour, we're going to walk you through what Speaker 2 (10:19) the C-market is and why you shouldn't be using it to set the price of your coffee. Speaker 5 (10:23) How to figure out what your minimum price has to be by figuring out what your coffee costs to make. Speaker 2 (10:29) What other producers around the world are charging and where to find that information for free. How Speaker 5 (10:34) to negotiate with roasters, buyers, and strategies that have worked for others. Speaker 2 (10:38) And ultimately, give you the confidence to ask for the prices that would make your farm sustainable in the long term. Speaker 2 (10:55) Let's start with the basics. What is the C-Market? You need to understand it because every conversation about coffee has something to do with it or is based around it. And we need to understand what it is before you can decide what you want to do about it. Speaker 5 (11:07) So to explain the C-Market, I wanted to speak to somebody who actually uses it every day. And so I went to one of our partner sponsors for the series, Inter-American Coffee Europe. They're a coffee trading company. And their view and the reason they supported us to make this educational series. is that it's important for the survival of the coffee industry that producers like you have long-term sustainable businesses. If your farm doesn't thrive, there is no coffee industry. Speaker 2 (11:33) As producers, we think about prices in terms of the C market. We check the C price and assume that that is what our coffee is worth. But that's the habit that James and I want you to break in this episode. Because as we're about to show, the C price is not the right way to value our coffee. It is, if anything, a starting point. But it's definitely not the final price. Speaker 5 (11:53) And to show you why, I spoke to a trader for Inter-American Coffee Europe, Agnieszka Thieleke. Speaker 1 (11:59) I'm Agnieszka. You can call me Agnes. And I started my coffee journey back in 2000 as an apprentice. And apart from a few years off for my family, I have spent my whole career in the coffee world. Speaker 5 (12:13) So first things first. Technically speaking, what is the C-Price? Speaker 1 (12:17) So the C price is the exchange price for the coffee C futures contract for Arabica. So coffee traded, this is like international exchange ice in New York. And one coffee C contract represents roughly 17 tons of exchange grade Arabica coffee. So Speaker 3 (12:36) there's a lot in there. Let's just break it down. Speaker 1 (12:38) This is an electronic exchange taking place on computers. So the trading take place digitally on the ice in New York. There are Speaker 2 (12:47) no physical human beings talking to each other. The central computer that processes all of these trades sits in New York. Speaker 5 (12:53) Now, the minimum contract size is roughly a container. And the specific coffee being traded in New York is for one, Arabica, and two, and this bit's really important, it is exchange-grade coffee. Exchange-grade coffee has to meet a minimum quality level, right? So not too many physical defects, not too many in-cup flavor defects. Now, in theory, you could trade award-winning Panama Geisha coffee on this exchange, but for this exchange to function, all the coffee has to be interchangeable. It has to be standardized. It has to be commoditized. Now, technically speaking, there is a small quality premium and quality penalty, depending on which country the coffee is grown in. Speaker 1 (13:38) So you have a differential. This is already set by the origin. Speaker 5 (13:43) But beyond that, the system is designed to treat all coffee the same. All coffee has to be interchangeable coffee for this exchange to work. Speaker 2 (13:52) Now, producers, notice what James didn't mention. He didn't mention your quality, your story. This is an exchange that has fully commoditized coffee. Almost every container of coffee is treated the same, almost regardless of how it tastes and who grew it. Speaker 5 (14:07) Right. The whole point of this exchange is to commoditize coffee, and for a very good reason. This exchange is incredibly helpful for many people in the supply chain. But to understand why, let's go a step deeper. The coffee exchange is, funnily enough, not a place where actual, real coffee beans change hands from buyer to seller. Agnes explained to me that it's a place where buyers and sellers come together to trade coffee in the future. So Speaker 1 (14:34) most of what is traded are paper contracts, futures. You are calling them futures. So only on a small portion ends in physical delivery. So most contracts are closed before expiration. Speaker 5 (14:46) So Agnes then offered me an example of how her company, Inter-American Coffee Europe, would use the exchange. Speaker 1 (14:51) So I'm the buyer. I'm sourcing Peru. So, for example, I will buy today one container. Speaker 3 (15:00) Let's imagine Agnes is importing a container of coffee from Peru. So she's buying a container from... a Peruvian exporter. She agrees the price for that exporter. For simplicity, let's say the price she agrees is $2. But she's not actually going to get that coffee until months later. Because, you know, it takes a long time for coffee to travel over the sea. The thing is, in the meantime, the coffee price might change. The price could drop. Maybe the coffee price went from $2 down to $1.50. And then suddenly, when she finally gets her container, she discovers she overpaid for the coffee. She now has to sell the coffee at a 50 cents loss. This... can actually represent a very big loss for her company, InterAmerican. And there are so many cases of coffee importers like hers going bust because of these huge price swings. So she has to protect herself. And she does this by going to the C-market. Speaker 1 (15:55) And I'm selling one lot paper contracts, one lot at the exchange. Speaker 3 (16:01) Okay, look, this next bit is quite tricky to wrap your head around. It took me a long time. What I'm going to explain here is... a very simplified version. The coffee exchange, this is a place where people buy and sell promises. These are promises on paper, okay? Agnes goes to the coffee exchange and she finds somebody else and she promises to sell them a container of coffee in the future. Physical coffee beans are not being traded here. It's just promises of future coffee beans. Now, of course, we need a price. What's the price of coffee going to be in the future? Agnes says, hey. let's use the price of coffee today, $2. And the other person says, great. They both sign this piece of paper that says Agnes will sell them a container of coffee for $2. And then they put this piece of paper to one side. Let's fast forward. That container of coffee from Peru that she bought from the exporter, it finally arrives. And she discovers her worst fears. The price of coffee actually fell. And now all the coffee in that container is only worth $1.50. She has lost 50 cents. But on the paper contract, the story has flipped because she promised to sell somebody a container of coffee for $2, but the price is now only $1.50. So