Cost of production: The sum of all costs incurred by the producer in growing and processing the coffee up to the point of sale

Direct costs: Costs that are directly linked to the production, e.g. labour, seed, fertilizer, etc.

Indirect costs: Costs that are not directly accountable to but affect the total cost of a product, e.g. administration, insurance, utilities

Supply stream: The sequence of processes involved in the production and distribution of a commodity

Value stream: An end-to-end view of how value is achieved for a given stakeholder

Upstream: All parts of the Value or Supply stream towards the Producer

Downstream: All parts of the Value or Supply stream towards the Consumer

Coffee C contract: Benchmark contract for Arabica traded on ICE Futures exchange

C price: Price on a given day for the C Contract on the ICE Futures Exchange , expressed in $/lb

ICE Futures Exchange: One of a number of financial institutions owned by ICE, predominantly deals in commodity futures and options

Futures: Contracts to buy a given commodity and a set price an a date in the future. The value of the contract will vary during its lifetime and tends towards the product vale as the completion date nears. They are a primary instrument for Hedging.

Options: Traded as a right to buy or sell a stock or commodity, and so can be sued on Futures. Unlike Futures, no obligation is held to either purchase or take delivery.

Hedging: An investment taken to reduce the risk posed by varying prices. In coffee, both buyers and sellers can hedge by setting the price in advance to ensure price security.

Internal price: The price paid for cherry/parchment at the mill/station in a growing country. Internal price is usually set by a national federation or association and linked to numerous factors as well as the C price.

FOB (Free On Board): Incoterm relating to the exchange of obligations from Buyer to Seller. In this case, at port in Origin. While this does not tell us how much a farmer was paid, it’s a measure of how much value remains in the producing country.

Incoterms: Pre-defined terms of sale that relate to International Commercial Law. Incoterms inform sales contracts defining respective obligations, costs and risks involved in the delivery of goods from the seller to the buyer.

Milling: The process of dehulling and sorting the dried parchment coffee

Farmgate: A basic price with the ‘farm gate’ as the pricing point, that is, the price of the product available at the farm, excluding any separately billed transport or delivery charge