The price of coffee can be a sticky subject. It actually has been for ages. In a complicated value chain like coffee, information about price developments for farmers can make the difference between having power and having none, between being profitable and being shit poor. 

The price of coffee is high and fluctuates daily (source nasdaq.com) 

 

 

Wakuli is here to de-commoditize coffee and break free from the so-called C-price (global coffee price set on the New York stock exchange) and give more power to producers in setting a price based on cost, making income in the future far more predictable. You can read more about our pricing strategy here [link link]. But we want to explain a bit more about current price developments and what that means for our partnership with producers.

A lot of the reasons for price fluctuations lead back to Brazil, the biggest coffee producer in the world. And very recently the implications of that fluctuating price were a big part of our talks with our partners in Brazil. So let’s take a closer look at what is happening and what we try to make happen when it comes to price.

The current c-price is at a record high. This means farmers could get an amazing price based on the global price of around $2,60 per pound of green. Just last year this would have been $1,70. This increase of over 50% is for a large part caused by current serious droughts in Brazil that can cause serious supply issues next season are part of that price increase. Drought in the wrong time of the season leads to coffee plants not flowering and not developing cherry. The market anticipates and the price goes up. Now farmers could sell their coffees for that high price but buyers will tend to wait for prices to drop as they usually do eventually. This effect is enlarged and made more volatile by speculation on the stock exchange. 

Wakuli wants to break free of this dance. Because on a multi-year average farmers will always be on the losing end.

We believe paying a price based on the real costs and needs of farmers is the only way to save our industry. We have been buying our Brazilian coffee for a less fluctuating and far higher price than the c-price for the last few years. And farmers were on board with that. It meant that we bought the coffee way above the market and took out some of the volatility. And assuming that when crazy spikes occur farmers would understand we can't go all the way up but they would on average stay better off selling coffee to Wakuli. 

Discussing quality with quality and export managers at Coopervass

 

 

So the proof of partnership pudding is in the eating. Would the cooperation and individual farmers feel the same about partnership as Wakuli? Or would they be tempted to fold and sell their coffee to the highest bidder?In October 2024 we discussed exactly this with our partners at Coopervass and with individual farmers. In ALL of these conversations we saw we were on the same page as farmers and Felipe, Leandro and Alessandro, the leadership at Coopervass, and that spreading risk by selling a percentage of one's coffee for a more or less fixed price that is above the average, historical price makes perfect sense to them.

Looking at the effects of drought, one of the causes of price fluctuation

  

For us it is super valuable to see our assumptions about partnership and price work out in real life. It is rewarding and motivating for the future that we are truly on the right track. You can never lean back and we need to be in a constant conversation, look each other in the eye. In that way our partnership are like any healthy relationship.