The Factors That Determine the Price of Certified Premium Grade A Shea Butter
Written By Prachel Carter
***This article addresses the factors that determine the price of Shea Butter that has been rigorously tested and certified as Certified Premium Grade A through an independent testing lab such as the American Shea Butter Institute. This article does not address the factors that determine the pricing for Grade B, C, D, F, ungraded and/or Refined Shea Butter. Any references to “Shea Butter or “Butter” in this article are referencing Certified Premium Grade A Shea Butter.***
The quantities of the Certified Premium Grade A Shea Butter being purchased in the market can vary from a few ounces, to a ton or more. If one is in the business of handcrafting skincare products from Shea Butter, or just importing the butter to re-sell, the price of the butter can be anywhere from 3-50 lbs with the price varying from $7/lb to $25/lb.
What factors determine the price of Certified Premium Grade A Shea Butter, and why is there such a large variation in the price?
The price of Grade A Shea Butter depends on several factors. These factors, not in any particular order, include:
- Quantity being purchased
- Where it is coming from (direct from Africa, or from a warehouse) and the age of the Shea Butter
- Infrastructure/Conditions in the country that the Shea Butter is coming from
- Relationship of the buyer and the seller
- Import Duties
- Cost of shipping
- Season of the year
- Markup Percentage
We will examine each of these items individually.
Quantity being purchased: Usually, the more butter being purchased, the better the pricing one can get. If one would like to purchase a ton of Shea Butter, they will get a better deal than the person that is purchasing 100 lbs and they will in turn get a better deal than the person that is purchasing 10lbs. Purchase by the by the ton is the lowest price.
Where it is shipping from (direct from Africa, or from a warehouse) and Age of Butter: A good batch of Grade A Shea Butter has a shelf life of 1 year. Grade A Shea Butter should be used within that timeframe to ensure that the healing properties of the butter remain intact.
If a customer is ordering more than 100lbs of shea, more than likely that it will need to be shipped direct fromAfrica. Customers ordering in large quantities should ask their Shea Butter vendor for a Lab Analysis Certificate containing the DATE the Shea Butter was tested and the ASBI Grade. The older the butter, the better the price discounts as the wholesaler just wants to get that butter off of their hands. But, the older the butter, the lesser quality that butter is and ultimately that customer is the one that loses in the deal.
Infrastructure and/or condition of the roads in the African country that the Shea Butter comes from: Shea trees do not grow near the coastal ports inAfrica. And, unfortunately, in most Shea Butter producing countries, the infrastructure does not always support heavy trucks traveling on the roads. Also, some Shea Butter varieties are grown inEast Africa. Even though this Shea Butter is softer, and somewhat more desirable to consumers using the raw form, it is more expensive to attain, due to political instability in those countries. All of these factors can contribute to higher transportation costs of the butter.
Relationship of the buyer with the seller: Sometimes, sellers will give price discounts to buyers that have been doing business with them for set periods of time. It is a good idea to build a solid relationship with one or two reliable suppliers. That way, one can enjoy the benefits of consistent, high quality butter and favorable pricing every time.
Import Duty: Shea Butter coming from African Growth and Opportunity Act (AGOA) approved countries has no import duty on as part of the AGOA agreement. AGOA offers incentives for African countries to continue their efforts to open their economies and build free markets. However, a few African Shea Butter producing countries are not AGOA approved and Shea Butter coming from those countries maybe subject to an import duty. Because unrefined shea butter is an agricultural product)( i.e., unmodified vegetable fat) , It is likely to enter the US duty free , from AGOA or non- AGOA countries..
Cost of shipping the Shea Butter: This is one of the biggest factors concerning the price of Grade A Shea Butter. At the time this article was written, the approximate cost to ship anywhere from one to 18 tons of Shea Butter fromWest Africa is about $5,000 USD for shipping via the sea and about twice that by air. The actual butter itself costs between $6 USD and $8 USD per pound. To import 1 ton of Grade-A Shea Butter into theUS can cost between $6,000 USD and $13,000 US depending on how many tons in the shipment.
Grade A Shea Butter is lab tested and “fingerprinted” before leavingAfricaand is re-tested and fingerprint verified when it enters US ports to assure it meets quality standards and the butter that one has ordered is the same butter that arrives. This is also an aid to discourage “bait and switch”. There is a cost to this testing, but the benefits far outweigh the cost, as the testing will ensure that the butter is the highest quality available—with the longest shelf life.
The cost of shipping also has to take into consideration the USseaport that the Shea Butter arrives in. The seaports vary, but Shea Butter can arrive in the ports of New York, Seattle, Baltimoreand Los Angelesjust to name a few. Once the butter arrives from Africa, it has to be delivered by rail, air or truck to its final destination. As one can imagine, it is more expensive for the butter to be delivered to the West Coast, than to the East Coast since Africais a shorter distance to the East Coast than the West.
Season of the year: If one orders Shea Butter during the hot US summer months, the Shea Butter needs to be transported on refrigerated trucks. Although not prohibitively expensive, this cost is added to the cost of the butter, steering it more towards the $8 – 20 USD per pound.
Markup percentage: An importer of Shea Butter has the freedom to markup their freshly imported Shea Butter however much they desire, but usually, its $1-$3 USD per pound. So, if one is interested in importing 1 ton (2200lbs) Certified Premium Grade A Shea Butter, the expected pay will be between $7 USD and $13 USD per pound from Africa to your warehouse. This justifies the cost of Grade A Shea Butter being between $14 USD and $22 USD per pound retail.
Of course, there are other factors that determine the cost of Grade A Shea Butter, but the ones listed above are the most important. The prices quoted in this article reflect current market values (as of March, 2011) and it should be noted that the price of Grade A Shea Butter fluctuates by present market conditions.
It is advisable to call the American Shea Butter Institute to verify that your supplier is an approved Certified Grade A Shea Butter Supplier. Keep in mind that Shea Butter can be bought and sold several times before it gets to your retailer’s shelf (or online store) so always look for the American Shea Butter Institute Seal of Approval. This seal should be verified with the Institute, as in the past few years, there have been a number of falsified seals and false Lab Analysis Certificates by unscrupulous suppliers.
Once you receive your Shea Butter, it should be stored in a cool, dry dark place.
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Prachel Carter received her American Shea Butter Institute Certified Shea Butter Technician designation in 2003 and is the owner of Soulshea, a retailer/wholesale or Certified Premium Grade A Shea Butter. Parts of this article were derived from the American Shea Butter Institute Shea Butter Workbook.
The Certified Premium Grade A Shea Butter designation was created by Dr. Samuel Hunter, a physician with a specialty in Internal Medicine, a biochemist and Founder/Executive Director of the American Shea Butter Institute. In the 1990’s, after making over a dozen trips toWest Africato study Shea Butter, Dr. Hunter quickly discovered that the consistency of a good quality Shea Butter varied from producer to producer.
After carefully analyzing many samples of the biological components of top quality Shea Butter, Dr. Hunter went to work on coining a designation for top quality Shea Butter. This top quality Shea Butter retained most of its natural healing AND moisturizing properties after being produced.
To further review the importance of purchasing Grade A Shea Butter, reference http://www.soulshea.com/whygradea.html .
To receive information on the American Shea Butter Institute, visit www.sheainsitute.com .
For information about Soulshea, visit www.soulshea.com .