Aldea Development announces new profit-sharing model for coffee purchasing
March 30, 2015
As we buy coffee from this year’s harvest in La Unión, we do so with a new model of purchasing that will give back to farmers and provide even more incentive for them to produce high quality coffee.
In our new model, which we call the Farmer’s Hand Pricing model, we are sharing our profits back with the farmers who grow the coffee we sell.
How does it work? We will continue to pay farmers a minimum of $2 per pound of green (unroasted) coffee, which is 70% more than what they would receive by selling their coffee to a local intermediary. We add $1 per pound to the total cost of the coffee so that we can pay expenses and continue growing purchasing in future years. Beyond this, we split all profit 50/50 with the farmer who harvested the coffee.
The highest quality coffees from La Unión sell for the highest prices. Our new model ensures that farmers share in these profits. For the best coffees, a farmer can get an estimated 35% profit-sharing bonus on top of his or her initial contract price, meaning many farmers can make more than double what they would make selling in the local market.
“We are able to sell our best coffees at higher prices, and it only makes sense that farmers should share directly in these profits. Starting this profit-sharing model is an important step forward in supporting farmers and their families,” said Patrick Hughes, president of Aldea Development.
Not only will this new model help us put more money into the hands of farmers and families, it also opens new opportunity for buyers: “This is a way in which roasters can play a more active role in supporting the farmers with whom they have established relationships,” said Aldea’s Green Coffee Director Tsuyoshi Domoto. "There are few models out there that directly tie the price a roaster pays to the money that goes back into the farmer’s hands."
We will continue to pay farmers the same amount as last year upon signing their contract despite the significant decrease in the coffee market price over the past year.
An important part of the Farmer’s Hand Pricing model is that we directly pay farmers at the moment they give us their coffee.This means we do not pay farmers months later and we do not include taxes, shipping, or processing expenses in the amount that we report farmers receive -- both of which occur frequently in other purchasing models.
“The farmers we work with think this model is a good idea because they will receive recognition for the additional effort and time they put into preparing a quality coffee,” said Pedro Hernández, coffee purchasing director for Aldea Development. “For example, upon hearing about the new model, one farmer reviewed his coffee that same day to make sure there were no bad beans.”
We will continue to share news about the Farmer’s Hand Pricing model and other ways to support the farmers, families, and communities of La Unión.