How is green coffee beans bought and sold?

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Before becoming a delicious cup of specialty coffee in hand, coffee beans have to go a long way. In addition to the processing stages, the process of buying and selling them also requires many complicated stages of negotiation, contract, …. Are you curious about the ways to buy and sell green coffee beans? Let’s find out with 43 Factory Coffee Roaster now!

Popular green coffee beans buying and selling model

There are quite a few models of buying and selling green coffee beans on the market today. In which, the model of exporter/exporter and direct trade are the two most popular types.

Importer/exporter model

Importer/exporter is one of the oldest and traditional models in the coffee industry. Accordingly, green coffee exporters in producing countries will sell goods to importers in consuming countries, and then sell them back to roasters or other coffee processing companies. Exporters can be private manufacturers, cooperatives or third-party exporters. They will deal with importers or directly with roasters. In which, in order for green coffee to be purchased through import/export transactions, importers need to keep a large amount of inventory containing information about each producer with whom they are doing business. The information may include the harvest season, the variety of coffee being grown, and the number of containers of beans that the producer has available. Importers also need to ensure this amount of information is accurate and transparent to provide traceability and quality of products to roasters and millers. This means that the coffee quality of the roasters will depend on the importers.

Disadvantages: Import/exporter model is likely to incur many costs, high risks and difficult to control product quality. In addition, the importer/exporter model can also cause disparities between the price of green coffee beans and the price of roasted coffee, affecting the interests of stakeholders.

Advantages: Importers can also benefit manufacturers. As they are large-scale businesses, possessing powerful resources to handle bulk logistics, international obligations and complex processes can be daunting for roasters. Importers also represent a longer supply chain of multiple parties. They can support each other in operating processes that make buying and selling procedures simple and easy to follow and help roasters access many different markets.

Direct Trade

Direct trade is one of the modern and sustainable models in the coffee industry. Under this model, roasters or coffee processing companies will directly purchase goods from farmers or agricultural organizations in the producing countries. Transactions are done through online channels or in person when visiting the farm.

Pros: Roasters can see the source directly, evaluate products, and establish relationships with farmers. This model eliminates middlemen and importers, thus increasing transparency and traceability. It can also create cohesion and trust between parties, reduce costs and risks, improve product quality and ensure transparency in the supply chain.

Cons: Direct trading is also very risky. Without the authorities that regulate the process, the success of a transaction depends more on trust among the participants and is more likely to fail. Roasters and producers also need to educate themselves about business procedures, international import procedures, and logistics. Moreover, the contract in direct trade is not clear, there are many loopholes that make it easy to fake the farm’s brand, affecting consumers.

Some forms of buying and selling green coffee beans

Green coffee beans can be purchased in the following forms:

Spot purchase contract

Spot buying is one of the popular methods of buying and selling coffee in the market. This is the way in which roasters buy coffee from importers without any prior commitment to quantity, quality or delivery time.

Advantages: The buying and selling process in the spot purchase contract is very quick and direct. This helps roasters to buy coffee according to their actual needs in a convenient and flexible way, saving time. They just need to go to the importer’s warehouse, choose the type of coffee they want and pay immediately. Moreover, the spot purchase contract also allows roasters to directly check the quality of the coffee before purchasing, ensuring customer satisfaction. They are also not bound by long-term contracts or affected by price fluctuations in the market.

Cons: Spot contracts have the disadvantage of higher costs compared to other trading methods. In addition, the price of coffee when purchased on the spot can also fluctuate according to the price C (international reference price of Arabica and Robusta coffee), so roasters may have difficulty in forecasting and stabilizing. Production expense. Therefore, when deciding to buy spot, roasters need to carefully consider the benefits and risks of this method, compared with other forms of trading such as deposit, futures or contracts. choice. Roasters should also learn carefully about the reputation and quality of the importer, to avoid buying poor quality coffee or being scammed.

Forward contracts

Unlike a spot purchase contract, a forward contract is a form where the roaster plans to place orders with suppliers in advance and pay after receiving the goods. They may cooperate with importers or contact manufacturers directly.

Pros: Transparency in the futures makes it easy for them to trace the origin of their coffee and ensures freshness. At the same time, it also brings safety to farmers. In this form, the roaster can also guarantee a stable supply and a fixed price for a certain period of time. This provides stability and security and helps roasters anticipate their demand and revenue and can better borrow to improve their coffee infrastructure and quality in the future. future.

Cons: Futures are risky for roasters. If the coffee market price fluctuates sharply and falls below the contract price, the roaster will incur a loss. In addition, if the coffee quality of the farmer is not up to the standard or does not match the customer’s requirements, the roaster will have difficulty in consuming the product. Therefore, when entering into a forward contract, roasters need to take measures to minimize these risks, such as participating in quality certification programs, increasing communication and advice to farmers, or use insurance and derivative instruments.

Auction

Selling green coffee through auction is a unique business form and attracts the attention of many people around the globe.

Pros: Coffee auctions are an opportunity for coffee producers to promote the quality and origin of their products. At the same time, coffee auctions help build lasting relationships with roasters and customers. This contributes to enhancing the value of the coffee industry and increasing transparency in the supply chain. Latin American countries are home to some of the best green coffees sold at auction. Here, the auction system helps manufacturers to assess the needs and trends of the market. It allows them to know the prices and preferences of the roasters, thereby adjusting their business strategy.

Cons: Due to the session auction and the coffee here is of exceptionally good quality, their prices are often higher than average.

The best way to buy and sell green coffee beans

There is no perfect method to buy and sell coffee. To choose the right form, individuals or organizations trading coffee need to understand the advantages, disadvantages, and ways to minimize the risks of the models. Marta Dalton, founder and CEO of Coffee Bird, in Guatemala also said that “The best way to trade coffee is to choose the way you are willing to perceive and accept the risks that they bring. .”

To do that, businesses need to consider their own situation, including budget, resources and experience. They need to figure out which model fits your level of knowledge and comfort in negotiation. In addition, Business Owners also need to clearly define and stick to their internal goals, develop relationships relationship. That way, businesses will be able to buy and sell coffee efficiently and sustainably.

Green coffee is an important ingredient for roasters. To get the best coffee quality, roasters need to understand and choose how to buy and sell green coffee efficiently and economically with the business’s finances and business model. 43 Factory Coffee Roaster hopes that this article will help businesses and users get an overview and choose the right choice for their needs.

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