Coffee Purchase & Sale Margin Calculator

The most common mistake when calculating the margin of a coffee operation is to subtract the purchase price from the sale price and assume that difference is the profit. In practice, the real margin depends on variables that are rarely included in a quick calculation: the lot yield factor (which determines how many net kilos you actually obtain), hulling and drying costs, freight between warehouse and port, storage, and financial costs when advances or credit are involved.

When these costs are omitted — or estimated with averages instead of real per-operation data — the margin you think you have can be very different from the margin you actually earned. And the difference surfaces at the end of the month, when there is nothing left to adjust. Trading companies that calculate the margin per operation in real time make better purchasing and selling decisions — because they see profitability before closing, not after.

Costs lost in manual calculation

Hulling (which varies with the type of coffee and the mill), mechanical drying (when the lot humidity requires it), freight from the origin warehouse to the destination warehouse or port, storage per day in the warehouse, shrinkage from handling and transport, financial costs of advances, and intermediation commissions when they apply. Each of these line items reduces the real margin — and each one omitted inflates the apparent margin. The only way to have the correct number is to include every cost per operation, not at the end of the period.