Coffee Trading Resources

Trading coffee is serious business.

Whether you have decades of experience or you’re just getting started, JAWiC is ready to support your continuing growth and education.

We’re curating a selection of research and reports from industry leaders that may be especially useful for prospective, beginning, and intermediate traders.

If you are more experienced in coffee trading, would you consider sharing some professional insights with the group? We'd love to hear from you!

 
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Comprehensive Reports

 

“This overview has been prepared as part of the World Bank’s Agriculture Global Practice Discussion Paper on improving the risk management and access to finance in the coffee sector. It provides a brief review of the sector as a whole, together with pricing aspects, an example of the coffee value chain and summary information on individual coffee producing countries.”

 

“Millions of coffee farmers and coffee trading enterprises lack sufficient credit. This is partly due to myriad challenges and considerable costs that formal lending institutions face serving rural, often isolated markets. It is also often perceived to be the case that the inability of coffee farmers and enterprises to manage risk contributes to keeping risk-averse lenders at bay. A better understanding of coffee sector risks is needed to respond with strategies, training, and tools that can help farmers, and enterprises, mitigate their exposure to risk and strengthen their resilience against inevitable shocks. Such efforts might also assist in increasing the upstream flow of credit, catalyzing new productivity-enhancing investments, and contributing to more profitable and more sustainable livelihoods for coffee farmers.”

“This report explores the role that producer associations, governments, non-profit organizations, the private sector, and other intermediaries can play in making risk management and financing tools more accessible and more workable for smallholder coffee growers.”

 

Articles and Research

 

“Evelio Francisco Alvarado Romero is a general manager at Anacafe. He tells me that the recent drop in price means that producers can’t afford to invest in their farms and that this will have long-term impacts.

‘Since the beginning of the year, speculators have been heavy sellers in the agriculture sector, betting for lower prices because of uncertainty with US/China tariffs and record crops in Brazil. But speculators are not taking into account higher producing costs, like coffee that is below producing costs. [This is] forcing countries to devalue [their coffee] to compensate for price decline.’

“He continues, ‘In the coffee industry speculators selling side contracts reached an all-time record of 106,000 contracts last August, almost 35% of total open interest. Producers are not taking proper care of plantations and eventually the industry will face higher prices because of production decline.’”

 
 

“When the international price for coffee (or C-Price) fell below US $1 per pound in August, many were alarmed. Even outside of the industry, the drop was hitting headlines, and for good reason. It reached its lowest level in 12 years on September 20th and the impact could be devastating.

“An exceptional crop in Brazil and the weakening Brazilian real have been highlighted as contributing factors to the recent crash, but plummeting prices highlight a truth that the industry already knew. Coffee is not economically sustainable – or at least, not for producers.”

“In the 1980s, coffee prices averaged US $1.20 per pound. The September 2001 low of US 41 cents per pound was the lowest in real terms in 100 years and part of a four-year decline.”

“Price uncertainty makes it difficult for small farmers to invest in infrastructure that would improve their crop quality and output, and the situation becomes entrenched. In countries where coffee is more than half of export revenues, fluctuation in the C-Price can have a devastating impact.

“We also need to consider futures contracts, in which parties agree to buy and sell a future amount of coffee at the current C-Price. While this in itself is not a bad thing (it can offer protection from fluctuating prices), the ICE sets a futures contract at 17,000 kilos (37,500 pounds) of green coffee. This is much more than most smallholder farmers’ yearly production and so excludes them from this market.”

“Since the 1980s, some producing countries have been encouraged by some governments and NGOs to grow coffee in greater volumes than ever before. In addition, Vietnam underwent economic reforms in 1986 that newly allowed privately owned enterprise. By the late 1990s, the country was second only to Brazil in global coffee production. The subsequent oversupply directly contributed to the 2001 crisis.”

“As the global supply of green beans increases, speculation leads to plummeting prices. Without money to invest in labour, materials, and infrastructure, producers are likely to bring lower-quality beans to the market, which reduces prices even further.”

“‘The ICO Council could and should be the perfect platform to discuss the coffee crisis, as well to design and execute the actions needed to work together with all the players in the coffee chain.

“‘It is needed in the coffee industry, where businesses involve billions [of dollars] and the growers are poor because they are being badly paid – maybe worse than 30 years ago? And as incredible as it is, from each cup of coffee sold at US $2.50, the waiter receives a 25-cent tip, but the grower who has all the responsibility and the higher risks receives 4 cents.’”
(Ricardo Arenas, President of Anacafé and President of the WCPF)

“‘We need urgently to start a publicity campaign aimed at consumers all over the world to create consciousness of what is happening. [They need to know] that coffee can, in a short time, start to disappear. [This is because] the growers aren’t economically sustainable, nor socially and environmentally.’”
(Ricardo Arenas, President of Anacafé and President of the WCPF)

 
 

“The specialty coffee industry is built on a great vision: high-quality coffee produced by fairly paid farmers. And there’s no doubt that roasters and consumers set out to have a positive impact on all elements of the supply chain. However, even while roasters pay premium rates for quality coffee, and producers experiment with fermentation and improve infrastructure to access better-paying markets, some farmers are left behind.

“And unless we acknowledge this, and the complicated relationship between specialty coffee and producer income levels, we risk increasing those very wealth gaps we want to close.”

“Blanca Castro is a Chapter Manager of the International Women’s Coffee Alliance (IWCA). She believes that helping producers to become aware of the quality of their coffee is key to rebalancing the scales of financial inequality. In order to demand better prices, farmers first need to know their worth – and it is the lower-income producers who are often less aware of their coffee quality.

“Another step is connecting producers with buyers. Since access to buyers is one of the biggest negative impacts of the wealth gap, this is an area that can see great results. Blanca shares the details of potential coffee buyers with members of the IWCA. It may be an unglamorous portion of the coffee chain, but it is through these contact exchanges that important business connections are developed.”

 
 

“‘Why do the prices they pay us change?’

“I was stood in front of 50 farmers in an un-airconditioned one-room K-12 schoolhouse in Espinal, Tolima, central Colombia. I had been explaining how to leverage international supply chains to reach lucrative foreign markets. But this one question shocked me.

“The woman who asked it had depended on this pricing system her entire life, but no one had ever explained to her how it worked. I hadn’t thought to explain it, because I couldn’t imagine that this information gap existed. But it does – and not just in Latin American farms.”

“This is something that farmers need to know, that importers/exporters need to know, and that consumers need to know. 25 million smallholder farmers are made vulnerable by the fluctuations of the coffee market, and it’s our responsibility, as ethical consumers, to be aware of this when we purchase our drinks.”

“…while the industry is able to hedge market volatility to an acceptable level of risk, most of the 25 million small farmers that produce 80% of the world’s coffee do not have that capacity. This leaves farmers the most vulnerable to price fluctuations while the least able to weather them.”