WHAT IS TEMPLE’S RTO (RETURN TO ORIGIN) REPORT?
We created our RTO reporting system in order to show factual information that represents the supply chain before roasting. Although the “Return to Origin” is paid before a coffee is roasted and sold as a retail product, it’s returned to origin through and based on retail coffee purchases and their MSRP price.
Paying better prices for quality coffee and transparent transactions are two of the most important aspects of purchasing sustainable coffee, and our RTO report displays our efforts in both of these areas.
Historically, it has been the coffee producing side that has received the short end of the financial stick. However, it does not help the situation to pay more for low-quality coffees. In the specialty coffee world, coffee quality is directly linked with sustainability. Even assuming that a producer has good land (elevation, climate, etc.) it is nearly impossible to produce high-quality coffee without sustainable farming techniques, good social standards for workers, and not being fully aware of the costs of production. With this in mind, a buyer should pay for the quality that one receives, equally and fairly. This end result is that a higher quality coffee should have a higher RTO% in order to compensate and reward the work and time spent to produce a finer coffee.
Every coffee we have purchased to date is listed on our RTO report. You will notice origin country, farm/mill, coffee type, cupping score, retail MSRP, RTO based on C market price, RTO based on a certified Fair Trade Organic, and Temple’s RTO.
HOW DO WE CALCULATE RTO?
RTO is calculated by using the (FOB) green coffee price and dividing that by the retail MSRP of the coffee. To keep things fair, we have to go through a few steps to make sure we are measuring apples to apples. Warning: it’s about to get real mathy, but hang with me.
Step one is to convert the green coffee weight to roasted coffee weight. *The process of roasting coffee removes residual moisture in coffee which typically decreases the roasted coffee to weigh about 15.2% less by volume then its green, unroasted counterpart.
FOB Price + (FOB x *1.152) = actual FOB price per pound (AFOB)
Step two is to convert price per pound to price per ounce, then convert price per ounce to 12 ounces, Temple’s retail bag size.
AFOB / 16(oz) x 12(oz) = Retail FOB (12oz)
Lastly, we can calculate RTO.
Retail FOB / MSRP = RTO%