The Factors That Determine the Price of Certified Premium Grade A Shea Butter

***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. 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 Grade A Shea 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, or just importing the shea butter to re-sell, the price of the butter can be anywhere from from $7/lb to $25/lb.

The price of Grade A Shea 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 Butter
Infrastructure/Conditions in the country that the product 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 being purchased, the better the pricing one can get. If one purchases a ton of Shea, 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.

Where it is shipping from (direct from Africa, or from a warehouse) and Age of Butter: A good batch of Shea Butter has a shelf life of 1 ½ to 2 years. It 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 it will need to be shipped direct from Africa. Customers ordering in large quantities should ask their Shea Butter vendor for a Lab Analysis Certificate containing the DATE the Shea Butter was tested. 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 product comes from: Shea trees do not grow near the coastal ports in Africa. 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 in East Africa. Even though this Shea is softer, and somewhat more desirable to consumers using the raw form, it is more expensive to obtain, 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 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 producing countries are not AGOA approved and Shea Butter coming from those countries is subject to an import duty.

Cost of shipping the Shea: 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 from West 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, or $6,000 USD to $8,000 USD. To import 1 ton of Shea into the US it costs approximately between $11,000 USD and $13,000 USD.

Grade A Shea is lab tested and "fingerprinted" before leaving Africa and 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 US seaport that the Shea arrives in. The seaports vary, but Shea can arrive in the ports of New York, Seattle, Baltimore and Los Angeles just 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 Africa is 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 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 USD per pound mark.

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 (1000lbs) Certified Premium Grade A Shea Butter, the cost for the importer will be between $7 USD and $13 USD per pound from Africa to their warehouse. This justifies the retail price of Grade A Butter being between $14 USD and $22 USD per pound retail.

Of course, there are other factors that determine the cost of shea, but the ones listed above are the most important. The prices quoted in this article reflect current market values (as of March, 2010) and it should be noted that the price of the product fluctuates by present market conditions.

Prachel Carter received her American Shea Butter Institute Certified Shea Butter Technician designation in 2003 and is the owner of Soulshea, a retailer/wholesale of Certified Premium Grade A Shea Butter. Parts of this article were derived from the American Shea Butter Institute Shea Butter Workbook. You can visit Soulshea at http://www.soulshea.com.

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