Cup of Excellence auction system

coffee competitions, auctions, best of panama, etc

Cup of Excellence auction system

Postby Edwin Martinez on Thu May 31, 2007 3:54 pm

I've never been on a jury before for a CoE auction.

Does anyone know if the score each coffee gets is an average of scores from international jury? from national jury? or avg of both? It seems to me the two groups could very well yield diff results. National jury will have much more experience with their own coffees and int'l jurors cup more diverse coffees.

I wonder because the highest rank tends to get highest price most of the time. Probably apropriately so, but it does become more interesting as the cost of bragging rights goes up.
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Postby Steve on Sat Jun 02, 2007 1:25 pm

Hi Edwin

The score given to a coffee is from the international jury only. But the international jury can be made up of local cuppers too (in my experience this has always happened but I'm ready to be corrected).

My personal opinion (and I'm careful to point this out personal) is that only the international jury scores are used as quite often national and international jury's look for different things, this could potentially throw the results out. It is also done over a number of cupping's At least twice for an award winning coffee and three times for the top ten) where the national jury is one sitting so perhaps is not as focused?

The scoring system can be quite complicated to compile as it is lets not make it more difficult than it already is :)
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nicaragua coe "profit sharing"

Postby sweetmarias on Mon Jun 04, 2007 4:00 pm

i just received this notice from COE - in light of recent panama prices and the huge divide between top and bottom, this seems like a great idea - tom

"Dear Thompson Owen,

Beginning with the Nicaragua auction and in an effort to help provide much needed funds for the in-country organizers for the Cup of Excellence† program, it was decided that those farmers receiving the highest prices would be charged a small incremental commission on their auctioned coffees. Any coffees priced at $5.00lb. and under will still be charged at the same 15% commission. However, any auction price between $5.00lb. and $10.00lb. will be charged an additional 5% commission and a price above $10.00lb. will also be charged an additional 5% commission.

For example a coffee receiving $12.50lb. will be charged at the rate below:
- first $5.00 will be charged a 15% commission
- second $5.00 will be charged a 20% commission
- the additional $2.50 will charged a 25% commission

When looking at previous auctions this new commission structure garners on average about 17-18% commission vs. the 15% in the past.

There has never been a charge to enter the COE competition so it was felt that farmers receiving the most money and benefitting the most from the program should help provide a little more of the necessary funds to help pay for it for the long term.

On the website there will be a page indicating how each of the farmer commissions are broken down."
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Postby Mark Prince on Mon Jun 04, 2007 4:04 pm

I likey. I likey a lot.

But I'd like it even better if some of the monies went back to the farmers who don't make the final cut - if not directly, at least into marketing their offerings a bit more to a wider audience.

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Postby sweetmarias on Mon Jun 04, 2007 4:18 pm

Mark Prince wrote:I likey. I likey a lot.

But I'd like it even better if some of the monies went back to the farmers who don't make the final cut - if not directly, at least into marketing their offerings a bit more to a wider audience.

Mark


there's been controversy with brokers who buy up the "coe rejects" and offer them. i know susie wants to make sure there is no tie to coe, no use of the name. but the fact is, there are some incredible microlots that can be found by recupping these. many times they are rejected at the coop level by cuppers who may not know what the buyers are really looking for, or perhaps because there are flavors they havent encountered before, but they arent necesarily bad. i was offered nicaragua microlots from 6 former top 10 farms that didnt make the cut. all were very good coffees, one was extremely good. -tom
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Re: nicaragua coe "profit sharing"

Postby mstone on Fri Jun 08, 2007 10:06 am

sweetmarias wrote:For example a coffee receiving $12.50lb. will be charged at the rate below:
- first $5.00 will be charged a 15% commission
- second $5.00 will be charged a 20% commission
- the additional $2.50 will charged a 25% commission


I didn't realize how much they charged! WOW that is a lot of money. I don't want to post how little Stoneworks charges by comparison so not to be self promoting... but WOW that is a lot of money!
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Re: nicaragua coe "profit sharing"

Postby nick on Fri Jun 08, 2007 11:32 am

Malcolm Stone wrote:I didn't realize how much they charged! WOW that is a lot of money. I don't want to post how little Stoneworks charges by comparison so not to be self promoting... but WOW that is a lot of money!

I think you need to re-read what that money goes to. You can't compare it to Stoneworks... unless you're telling me that Stoneworks did all of the in-country work in Panama, set up all of the samples, cupping, screening, etc., in addition to online hosting of the auction.
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Postby Mark Prince on Fri Jun 08, 2007 11:34 am

Malcolm, the commission isn't for CoE.

IIRC, It's for the national associations to run and organize their programs internally, sort through the hundreds of coffees submitted, get them down to the set numbers (I think it's anything that scores over an 85?).

It also covers the cost of getting the international jury there, and other associated costs, and probably a lot of other things as well. I don't think CoE themselves makes very much of this dough for operational expenses in the US.

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Postby mstone on Fri Jun 08, 2007 6:34 pm

Mark Prince wrote:Malcolm, the commission isn't for CoE.

IIRC, It's for the national associations to run and organize their programs internally, sort through the hundreds of coffees submitted, get them down to the set numbers (I think it's anything that scores over an 85?).

It also covers the cost of getting the international jury there, and other associated costs, and probably a lot of other things as well. I don't think CoE themselves makes very much of this dough for operational expenses in the US.

Mark


Sure I realize that. But doesn't COE charge the country for everything anyway including the auction, hotel accommodations etc, etc? These commissions are on top of that. In previous years, Panama paid for everything up front including the auction and shipping to Oakland. There is no additional commission charged to buyers. At least not to my knowledge. The farmers are charged according to the SCAP association rules. I have heard the difference in cost to the country is $50k vs. $100k.

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Re: nicaragua coe "profit sharing"

Postby mstone on Fri Jun 08, 2007 6:45 pm

nick wrote:I think you need to re-read what that money goes to. You can't compare it to Stoneworks... unless you're telling me that Stoneworks did all of the in-country work in Panama, set up all of the samples, cupping, screening, etc., in addition to online hosting of the auction.


I don't think COE pays for any of that. All charged to the country.

I'm not saying that the extra cost is not worth it. COE is a very valuable benefit to both buyers and sellers because of the prestige of the award.

It is a decision by the country to have COE handle all the arrangements instead of doing it themselves. There is definitely a value in that. It is sort of like having people mow your yard, clean your house, and wash your car instead of doing it yourself. It costs more money to do it that way but each customer decides the relative value of that convenience for themselves.

But last year's Costa Rica auction is an example of what can happen when you don't make the right decision to let the pros handle it.
Last edited by mstone on Fri Jun 08, 2007 8:01 pm, edited 1 time in total.
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Postby Mark Prince on Fri Jun 08, 2007 8:01 pm

Malcolm Stone wrote:Sure I realize that. But doesn't COE charge the country for everything anyway including the auction, hotel accommodations etc, etc? These commissions are on top of that.


Maybe Hasbean can jump in and clarify this, but afaik, the commissions cover the auction costs, logistics, hotels, and other associated costs. So afaik, it's not "on top of" - the commissions are there to cover the cost of running the national CoE programs.

And again, someone correct me if I'm wrong, but the commissions go mainly into the national programs where the commissions are raised - I don't know this, but if ACE takes part of the cut, it's probably administrative costs only. AFAIK, ACE makes most of its budget from membership dues.

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Postby mstone on Fri Jun 08, 2007 8:10 pm

Mark Prince wrote:Maybe Hasbean can jump in and clarify this, but afaik, the commissions cover the auction costs, logistics, hotels, and other associated costs. So afaik, it's not "on top of" - the commissions are there to cover the cost of running the national CoE programs


Accountants can add up the numbers various ways, but the bottom line is how much does the country pay COE, and how much do the buyers pay for the coffee, above the posted price, including samples, shipping, commission, importer fees, warehouse storage, handling, advertising materials, and membership.

This is how I would paint the picture:
The growers chip in $50k
The in country government program another $50k
Then the buyer premium $50k in commission, dues, etc
And sometimes USAID for another $50k

My assertion is that the growers' contribution alone is enough to cover all the hard costs of the competition and the auction as has been demonstrated many times in the case of Panama. Where does all the rest of the money go? I'm pretty sure it doesn't just evaporate into thin air but instead lands in some very real pockets.

But then we wouldn't know would we? People seem to think that COE is a charity. Just because you are registered as a Not for Profit Corporation, doesn't mean you can't make money. With no share holders, no annual report, no auditing and no transparency, no one would know if there were accounting irregularities or not - we should not forget what happened at the SCAA.

When we started this auction thing back in 1999 it was all about returning 100% of the profit back to the farmers. But when you have a couple hundred thousand dollars changing hands, the bureaucrats are not going to let that much money pass through their fingers without scraping some off the top for "administrative fees".
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Postby Goatherd on Fri Jun 08, 2007 11:06 pm

Where does all the rest of the money go? I'm pretty sure it doesn't just evaporate into thin air but instead lands in some very real pockets.

But then we wouldn't know would we? People seem to think that COE is a charity. Just because you are registered as a Not for Profit Corporation, doesn't mean you can't make money. With no share holders, no annual report, no auditing and no transparency, no one would know if there were accounting irregularities or not - we should not forget what happened at the SCAA.


uhhhhhhhhh...this seems a little out of left field. Malcom, are you accusing COE of something here? You are certainly in a better position to know than I am, but Jezzus! What are you saying?
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Postby mstone on Sat Jun 09, 2007 5:39 am

Goatherd wrote:are you accusing COE of something here?


No not really, just reexamining the elements of the popular theory:

Government Grant + Non-Profit + Coffee Auction = Better World

I was once a believer. But after 8 years in the business, being hoodwinked, lied to manipulated and swindled on a number of occasions, I've come to subscribe to an alternate theory which can be expressed as:

Government Grant + Non-Profit + Coffee Auction = Corruption

Of course if both statements are true, when you do the math, the implication would derive a very suitable NGO motto.
Last edited by mstone on Sat Jun 09, 2007 8:00 am, edited 1 time in total.
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Postby Steve on Sun Jun 10, 2007 10:56 am

Malcolm Stone wrote:

Government Grant + Non-Profit + Coffee Auction = Corruption


WOW easy there Malcolm lets clear up some confusion. As a recently added Board member to ACE I'll try and field some of the questions as best I can.

1. the new farmer commission structure has nothing to do with the cup of excellence- it is to help the organisers pay for the COE and help the farmers. ACE will not receive any more than it has since the beginning- This new increase helps provide much needed funds for sustainability for COE and is posted on the site. In fact if you knew the internal funding problems at times you would really have a different point of view.

2. Aid is non existent for these kind of projects in the world we live in today. Lots of funding goes else where, and from my first look into the board I was amazed at how little aid there is and how many hoops have to jumped through for these small pickings. Trust me on this ACE and COE is not funded to any great extent by Aid. It's certainly not the aid and commission senario as you suggest Malcolm. The Bolivian competition this year is aid funded (USAID) but to the best of my knowledge the only other aid is for the expansion over the next few years from a European organisation to look at Africa.

3. ACE has not raised its price to the producing countries since we started, ever, full stop. It's the same as it was at the beginning even with all the things that have been added on and as the program has become more successful. It has a voluntary board and a couple of full time people running it, yet in my opinion its one of the most iconic organisations in the specialty industry at the moment and is amazingly successful at promoting coffee for an origin country.

4. The auction returns back twice-sometimes over 3 times the cost of the event but it goes to the farmers, not to those that pay for the program. This is why the adjustments needed to happen.




Malcolm Stone wrote:My assertion is that the growers' contribution alone is enough to cover all the hard costs of the competition and the auction as has been demonstrated many times in the case of Panama. Where does all the rest of the money go? I'm pretty sure it doesn't just evaporate into thin air but instead lands in some very real pockets.

But then we wouldn't know would we? People seem to think that COE is a charity. Just because you are registered as a Not for Profit Corporation, doesn't mean you can't make money. With no share holders, no annual report, no auditing and no transparency, no one would know if there were accounting irregularities or not - we should not forget what happened at the SCAA.


I find this quite offensive to be honest, COE doesn't make money, in fact COE covers it costs and that's really it, I've seen the treasures report. The program has grown but its staff has not. COE and ACE are doing great things with very little resources.

I think comparing what happened with the SCAA and with ACE unfair unfounded and completely out of order. I also think commenting on accounts of which you have no knowledge on information insulting.

Hey were on the same team here, let's not paint pictures when we don't know what the subject looks like.
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CoE commission structure...

Postby Edwin Martinez on Fri Jun 15, 2007 9:36 am

I'll post more as I find out what commission is deducted, we just sold some coffee via CoE yesterday.

Susie Spindler has come across to me as extremely organized in many ways, she's been prompt in her reply to my questions via email.

Hmm.. before I bother Susie with another Q.. I'm feeling a bit ignorant about another topic, but maybe someone here can help me.

I just noticed Panama is not a country on the CoE site. I thought it was odd the minimum amounts of coffee in their auction were so much less... who runs, manages and provides accountability for this auction?
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Re: CoE commission structure...

Postby Jeff Jassmond on Fri Jun 15, 2007 3:06 pm

Edwin Martinez wrote:I just noticed Panama is not a country on the CoE site. I thought it was odd the minimum amounts of coffee in their auction were so much less... who runs, manages and provides accountability for this auction?


I am very curious about this myself. Does Stoneworks do more than host the online aspect of the auction? If not, who is responsible for the administration of the BOP?

Thanks,
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Pilot program El Salvador national lots

Postby Andi Trindle on Tue Jun 19, 2007 1:32 pm

Hi there,

I'm kind of new to jumping in on this forum board, so thanks for letting me on.

I'm actually working in collaboration with cup of excellence and the El Salvador Consejo, on a USAID funded project for Boot Coffee to help sell the national COE El Salvador lots. Everybody follow that?

Basically, as part of our contract work with USAID/Fintrac, Boot Coffee has coordinated the purchase of the lots that did not make it to the international auction. When we suggested the program and had meetings in El Salvador, Susie Spindler, COE, stated COE was already thinking about a way to make this type of program work. I think they will be flushing out the program for future countries and auctions, but for this time around, we have helped to coordinate the purchase of all of these coffees for sale as national COE lots.

Kentaro from Japan picked up about half of the lots for Japanese buyers and VOLCAFE has picked up the remaining lots for US buyers. Part of my contract work with Boot Coffee on this project includes a gathering and preparing information on the farms and coffees to help make the direct connection with buyers and to help make the program sustainable for future auctions. They do see the value that Thom brings up.

We have not finalized any language with COE about how final buyers may advertise these coffees, but I can almost guarantee that the official COE logo will not be allowed. I will be confirming what language is appropriate as I work on the marketing materials for facilitating the sales to final buyers. Our most important goal in proposing this project to USAID was to ensure that farmers, who had put extra effort into submitting their lots for the competition, still had opportunity to sell their small lot selected coffee at good prices. Pricing is $1.50 FOB, FYI. (Anyone who works with me on green, knows I work very transparently on pricing.)

Best wishes,
Andi

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Re: Pilot program El Salvador national lots

Postby Jeff Jassmond on Tue Jun 19, 2007 6:09 pm

Andi Trindle wrote:Our most important goal in proposing this project to USAID was to ensure that farmers, who had put extra effort into submitting their lots for the competition, still had opportunity to sell their small lot selected coffee at good prices. Pricing is $1.50 FOB, FYI. (Anyone who works with me on green, knows I work very transparently on pricing.)


Andi,

That sounds like a really good step in the right direction. Has any thought gone into paying/charging a premium to build infrastructure to help these farmers cup coffee and build a more competitive/lucrative backdrop to the competitions?

I'm looking forward to hearing more. $1.50 seems like a nice place to start though.

Best Regards,
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Cupping for producers

Postby Andi Trindle on Wed Jun 20, 2007 8:33 am

Hi Jeff,
Actually, there is a lot of work happening in El Salvador and other producing countries through the USAID project work I'm involved with around providing opportunity and access for producers to cup. It's not specifically tied into Coe, though.

In El Salvador, there is a project to build out a full-scale school, which will have barista, Cupping, Roasting, and business curriculums for producers. There are also smaller Cupping Labs being developed regionally.

In terms of Coe coffees in particular, there are no premiums specifically tied into this type of project development, but anyone who is interested can talk to me about paying and designating transparent premiums for the national lots. I'm willing to put the work in if roasters can invest in this way.

Best wishes,
Andi

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