However, at 40%, no other country dedicates such a large percentage of their budget to it. Peru : Harvest-time labor is this country’s biggest expense out of all the countries surveyed, only Ecuador spends more on it in real terms.
Supplies make up a larger percentage of the budget but, in real terms, are relatively inexpensive. Nicaragua: One of the few countries where coffee production costs less than the international market rate (barely), administration is less expensive but infrastructure costs more. (At US $1.91/lb, it is significantly higher than the international market price for commodity coffee of US 110.72¢, as of the 16th of July 2018.) Renovation costs are slightly lower than average.Įcuador: Administration is Ecuador’s biggest cost, in a country where the cost of production is already high. A country-by-country guide to production costsĪbove all, the data points to the need to treat each country individually as costs and sustainable prices differ from country to country.Ĭolombia: Around one-third of costs go on administration, and another third goes on harvest-time labor, meaning that labor shortages or changes to workers’ rights could have a significant impact here. Luis says that specialty coffee will typically cost more as pickers are paid more for selective picking, and more is invested in wet milling and drying.Īs we can see, there is a difference in production costs between geographically close countries.
This is because infrastructure includes the drying facilities and they have pay by the pound for a mill to dry coffee. Nicaragua has the lowest costs overall but allocates more for infrastructure – something that evident when we look at cost distribution by percentage. El Salvador spends the least on labor but the most for renovation. Combined labor costs explains much of the variation. Here’s how costs vary across six countries for three hectares.Įcuador has the highest production costs and Nicaragua the lowest. However, it’s important that it’s updated and that every producer, trader, roaster, and more is aware of the impact of local changes. The situation for the producer has changed.”Ĭaravela Coffee’s data is a useful starting point. Luis says, “In El Salvador, the minimum salary at country and the city level are the same. So, the money that the producer gets is affected.” In Colombia, one dollar used to be 3,000 pesos but has gone down to 2,800 pesos. Luis says, “The fluctuation of the exchange rate affects the producers when the payment per pound is made in dollars – which is what happens. Yet Luis says, “This study made the key assumptions in order to calculate what would be ideal to invest in a farm of a given size, so as to derive the best output.”Īdditionally, some things will affect the model and may fluctuate over time. Consequently, different farm structures and production methods mean that the costs cannot be completely accurate for every farm (this is where the app will help).
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