What FOB Means in International Trade
FOB—Free on Board—is an Incoterm (International Commercial Term) that specifies the point at which a seller’s responsibility and cost obligation ends and the buyer’s begins. In a coffee FOB transaction, the seller (typically an exporter or trading house) is responsible for delivering the coffee loaded onto the vessel at the named port of export. From that point, the buyer assumes risk and cost of ocean freight, insurance, unloading, import duties, and domestic logistics to the destination warehouse.
In coffee, FOB price is quoted in U.S. dollars per pound (occasionally per kilogram) and functions as the standard reference for green coffee pricing in most trade relationships. When an importer publishes a price sheet listing lots from Ethiopia, Colombia, or Guatemala, those prices are FOB origin port. A roaster reading a price of $4.50 per pound for a washed Ethiopian Yirgacheffe knows that figure covers the coffee through loading at Djibouti or the Addis Ababa dry port, but not the six to ten weeks of ocean freight and port handling that follows.
What the FOB Price Actually Includes
The FOB price is not the farmgate price. It aggregates several layers of cost that accumulate between harvest and export:
The farmgate price—what the producer received—is the starting point. Above it sits wet or dry milling costs, which convert cherry to parchment and then to exportable green coffee. Transportation from farm or cooperative to the export mill adds cost, as does storage. Export preparation—sorting, grading, bagging, and documentation—is included. The exporter’s margin sits on top. In a coffee cooperative model, some of this value is returned to member farmers through dividends; in a trader model, the difference between farmgate and FOB is captured by intermediaries. Depending on origin and supply chain structure, the farmgate price may represent 40–70% of the FOB price.
The C-Market and Differentials
The Coffee C Futures contract, traded on the Intercontinental Exchange in New York, is the global commodity benchmark for Arabica coffee. Most green coffee transactions—including specialty coffee—are quoted as a differential above or below this benchmark. A Colombian Huila coffee might be quoted as “+120 to C,” meaning $1.20 per pound above whatever the current C-market price is at time of contract. A Brazilian natural might trade at or slightly below C. A washed Ethiopian might be quoted at “+180 to C.”
These differentials reflect origin-specific supply and demand dynamics, quality reputation, local currency effects, and competition among buyers for specific lots. Differentials fluctuate independently of the C-market: when strong buyer demand concentrates on a particular origin, its differential rises even if the C-market itself is moving in the opposite direction. For specialty lots traded through direct or semi-direct channels, the C-market reference may be abandoned entirely in favor of a fixed price per pound negotiated between buyer and seller based on cost of production, quality, and relationship.
Reading a Green Coffee Price Sheet
A standard importer price sheet lists available lots with origin, producer, variety, processing method, altitude, SCA cupping score, available weight, and FOB price. Some importers now add a farmgate price column—or a “price at mill gate” figure—as a transparency measure. The absence of this information in most conventional listings means that a roaster cannot determine from the price sheet alone how much of the green cost reaches the producer.
Forward contracts—agreements to purchase coffee at a specified price for a future delivery date—are also quoted on price sheets, often with a separate column for spot (immediately available, warehouse-held) versus forward or afloat (on a vessel en route) pricing. Forward pricing typically carries a modest premium reflecting the importer’s cost of capital for early commitment. Roasters purchasing forward can secure pricing certainty; in a rising C-market environment, forward commitments made several months prior can represent significant savings.
FOB vs. Farmgate: The Transparency Gap
The specialty coffee industry’s transparency movement has made FOB pricing data widely published—several importer websites list lot prices publicly—but this has not resolved the underlying transparency problem, which concerns the farmgate-to-FOB gap rather than the FOB-to-roaster markup. Perfect Daily Grind and Transparent Trade Coffee have both argued that FOB price alone is an insufficient disclosure if the goal is to demonstrate that producers are being paid fairly. A $6.00 per pound FOB Ethiopian coffee could reflect a $3.00 farmgate price or a $1.20 farmgate price depending on who controls the milling and export chain.
Some specialty importers and roasters have responded by publishing full price breakdowns: farmgate paid, milling and export costs, importer margin, and landed cost to roaster. This level of disclosure remains the exception. The industry norm is FOB as the primary reference, with farmgate data shared selectively and inconsistently across trading relationships of different formality and duration.