Coffee grower offers to formulate pricing mechanism

Business, Main Stories

The National – Tuesday, June 21, 2011

COFFEE grower and chairman of Daulo Smallholder coffee growers in Eastern Highlands, John Inerehu, has offered to develop and establish a price formula for coffee growers in the country.
Inerehu said he was willing to develop a price formula that “will be used as a standard guide to set the prices of coffee that buyers will follow to avoid underpayments”.
“I will push for this in consultation with the Independent Consumer and Competition Commission, Coffee Industry Corporation and other relevant bodies,” he said.
He said the proposed price formula mechanism would ensure growers benefited 80% of the free on board (FOB) or “coffee contract value” for all grades.
This FOB was worked out from New York coffee prices converted to kina on current exchange rates less the CIC levies, which currently should be around K7 per kilo.
“If growers are paid 80% of this money, the 20% remaining for coffee buyers is still healthy because at the moment, growers are missing out on the grade price,” he said.
Inerehu explained that coffee was sold in its cherry and parchment form and after processing into green beans, they were then graded according to seven different grading, each with their own values as dictated by global prices.
“Eventually, buyers end up with more than they initially paid out to the growers. This is why I want a set price formula as a guideline so growers can be paid according to these grades,” he said.