Our Sourcing Model
Mercanta is not a charity - but we believe that buying quality coffee for fair prices, negotiated directly with the producer where possible, makes sound business sense.
Our approach to sourcing starts with the coffee itself. We seek out the best quality beans we can find, and so we logically expect to pay premium prices in return. And when we find a coffee we like, we seek to build a lasting relationship with that producer in order to establish a reliable supply chain for the future, away from the unpredictability of the commodity market.
We strongly believe that in order to promote long term, sustainable business for farmers, prices must be linked to the quality of the coffee they produce. This benefits not only the producer, but also the coffee drinker and everyone else along the chain from tree to cup. This approach involves understanding fine coffee not as a generic commodity, but as a unique product with distinctive flavours, varieties and personality (wine is a useful comparison). With this in mind, we have invested heavily in education and training for roasters, baristas, producers and consumers. Our challenge is to show people just how outstanding and diverse coffee can be!
When Mercanta negotiates prices with growers the following factors come into play:
- What price is available to the grower in the local market for partly processed coffee parchment or cherry? (This rate generally fluctuates in line with the commodity price).
- What price are other buyers paying for specialty beans, thus benchmarking a level for that farm?
- What is the production cost for the farm? Typically Mercanta will be paying from 30-150% more than the cost of production.
- What is the grower’s quantity expectation? Mercanta can pay just about any price for coffee - but if the grower seeks a substantial premium for his product, there may well be a quantity impact on what we can afford to buy.
Our basic policy is to reward our growers for the production of specialty grade coffee with prices above their production cost and above the internal or external commodity grade price. Invariably our prices are higher than the available Fair Trade price - and usually they are substantially above this level.