It may take 5-10 minutes to enjoy a cup of coffee that was served by a Barista from your favourite coffee shop. But the journey of the coffee in the cup you’re drinking wasn’t as simple. There’s a long process starting from the farm, building relationship, quality control, negotiations until suppliers/producers are able to give the best green coffee to you.
There are many methods in buying and selling coffee in this industry. As part of coffee supply chain, understanding all method is definitely helpful to determine what’s the right method for your business. We all agreed that lots of people are familiar with direct trade system now. But, what about other methods of buying and selling coffee? Let’s take a look at what other methods out there that may be useful to help you make any decision for your business.
The Importer/Exporter Model
This method is applicable to those (individual or coffee company) having the ability to buy green coffee in large quantity and has detailed information such as harvest season, varieties, and how many of the green bean is available. In specialty coffee, a lot information about the coffee is needed. If this information is accurate, it will provide confidence in the quality of beans. Even though direct trade is more popular now, importer/exporter is still very much needed. They give benefits to coffee producer because they have the resources to handle and manage all aspects in the logistic. It’s their advantages and they also work hard to make sure of transparency. Overall, this method of buying and selling runs based on the right procedure and has many advantages that give more benefit to all parties, from farmers to roasters. Through a long process of searching for quality coffee beans from around the world, as an importer and exporter they are able to guarantee the products offered are the best. Helping small roasteries that have limited purchases ability is also one of the many pros. So, through this method importer/exporter try their best to give you the best quality of green coffee beans.
For those who prioritise transparent transactions without the presence of third parties, this method is good for you. You can directly see coffee farms and evaluate product quality. What is needed in this method is trust between buyers and farmers. However, there are consequences for each method. Since there are no third parties, no legal procedure, there is more potential for a failed agreement. Direct trade also requires way more time for small roasteries that only need small quantity of coffee beans.
Spot Buying & Forward Contracts
For Roaster, besides buying coffee through importer/exporter or direct from coffee farmer, there are another ways of buying the green coffee: spot buying and forward contracts. Spot buying means buying coffee without prior commitment. The green coffee is usually already in storage or warehouse and ready to ship. With forward contracts, it gives benefit to both roaster and coffee farmers. Roaster can make sure that coffee bought is always fresh. Coffee farmers will not have to worry who is buying their coffee.
In Country Buyers
Has a reputation of a profit seeker, In Country Buyers do not buy coffee from producers, they act as a third party between producers and buyers and profit from these sales made. Coffee offered is also usually of low quality and sold at low prices.
Speculation on The Future Market
This method makes coffee a commodity, meaning that it is traded based on "market prices" or known as price C. This figure affects the price of buying coffee. All coffee is considered the same, no matter the origin and other inherent factors. This is the reason why prices of coffee aren’t stable.
Nowdays, we can say this is quite popular in the industry. By conducting auctions surely it provides an opportunity for all producers to promote their products, build relationships between fellow coffee industry players and strengthen this industry. The green beans that are auctioned are definitely high quality, you will definitely required to spend more to get your hands on it.
So, what’s the best method of buying and selling coffee? There’s no perfect method. All method has pro and cons, the best method will depends on your capability (situation, budget, and resources).