Accessing new and interesting coffees
We work with many farmers who want to create their own routes to market. They have established places to sell their coffee. However it is important for any business to have a mix of ways to sell their product. Traditional means of sale may be reliable, but may not be sustainable. A long recurring contract is useful, but is it sustainable? Does it pay quickly? Many producers have relationships with importers and organisations who provide finance and the development of the crops.
Through our work promoting the auctions running on our auction platform we speak to producers all the time. They all want to expand the opportunities available to them. However, for a variety of reasons, it is not always the best or quickest way to sell the coffee.
An auction provides a wide audience a window into a range of available coffee. But this is also the case for direct trade. The price discovery mechanism is different but outcomes can be the same; new relationships are created. If all goes well, repeat business can be agreed the next year.
How we work with direct sale:
- We have an offer list which we update as we meet farmers, coffee are removed as they are sold. Coffee is added as we find producers we want to work with.
- We circulate the list to our buyers.
- We discuss the quality of coffees with the buyers: Its suitability, volume and price.
- We also talk to them about shipping and develop an understanding what will work for both the buyer and the seller.
- We arrange for samples to be sent direct from the producer to the buyer.
- Once the quality of the coffee is understood we usually agree a FOB price on the farmers behalf.
- We do this in a way that suits everyone. We have already agreed reasonable margins on which to base the discussions based upon volume.
- We then introduce the buyer to the seller who agree the contracts and other details, such as shipping.
- We can also help the buyer with payments if they are nervous and want to make sure the money they invest in the coffee reaches the farmer. Sometimes this is key to a deal being agreed. It is valuable for both parties in the sale.
To broker these trades we charge the producer a commission (%) once the sale has been agreed.
In the same way we operate our auctions, we put buyers and sellers together. It is a natural extension of that process. In some cases we help bring new and interesting coffees to the market for the first time.
The size of the supply chain is reduced: buyers can buy directly from the producers. This means more of the purchase price of the coffee goes back to the farmers. This means they can re-invest in future crops and create a more sustainable environment for the development of their coffee and their workers production of the coffee.