To check out the previous post on the coffee price crisis, click here.
Last week we started this series with some background to the current coffee price crisis. This week we wanted to dive into the coffee we buy, and how we buy it. We’ll also look at the pros and cons of our approach.
In the commodity market, coffee is largely treated as one single product, with very little room for differentiation. Therefore, if the farmer can differentiate the coffee in some way, they can potentially receive a higher price for that coffee. This is a trend for just about every food product in the world, and coffee’s no different. There are many ways to achieve this, but one is by selling coffee based on its quality or flavour characteristics. That’s where we come in!
What do we buy?
We buy high-quality coffees that have special characteristics; in short, coffee that we want to drink lots of. We buy these coffees from farmers around the world, depending on the time of year and what is in season. There has been a trend towards really niche experimental coffees in the industry, and we occasionally go in for those, but they tend to represent a very small portion of a given farmer’s crop, and so we’re more interested in the really great everyday coffees that reflect the reality of specialty coffee.
In return for higher quality coffee, we’re able to pay much higher premiums than market rates, or even premiums for certified coffees. Some of the farms we buy from have certifications and they’re definitely one option for gaining higher prices for coffee, but for many it can be costly to get certifications, and for the farmers that we work with, the quality premium is higher than the possible premium for certified coffees.
How do we buy it?
Everything we buy happens through one person - Steve Leighton. He’s been a part of 3fe in one form or another since day one, and alongside Monika & Simon in the roastery, he’s responsible for buying the coffee that we roast at 3fe, as well as a few other roasteries that he’s a part of. This happens in a few different ways:
- In countries like El Salvador or Guatemala, he buys coffee directly from the farmer. They then pay to have the coffee processed and exported. Sometimes he uses an importer to get the coffee into Europe, and sometimes it’s done in-house.
- In other countries like Costa Rica or Bolivia, he buys coffee through an exporter. They essentially manage the relationship between Steve and the farmer, and take care of the export logistics for both the farmer and us. This also allows us to buy from smaller farms, as we can use the exporter to group small amounts of coffee into a container to ship.
- Finally, in certain situations such as Brazil, we buy coffee through importers. They basically take care of the whole process and get the coffee to Europe, where we buy the coffee from them.
In all three of these scenarios, stability and transparency between all of the parties is the goal. We aim to buy coffee from the same farms year after year, and build relationships with the farmers, exporters and importers that we work with. No one method is better than another; each situation needs a different approach!
What are the pros?
- The farmers receive much higher premiums than the market or certification prices.
- Because of the long-term relationships, prices are stable and farmers can plan and invest in the future
- We have high quality coffee to sell, and have a lot of information and traceability about the product
What are the cons?
- The demands on farmers are higher; costs and risks are also higher. For example, high quality coffee varieties can be more susceptible to disease, and the labour costs are much higher to produce specialty coffee
- Access to market is hard; we naturally gravitate towards farmers that have a good knowledge of the industry, and have the skills to market the coffee
- The lack of framework like a certification makes it difficult to communicate to the end-customer, and to back up what we say that we do
We are really proud of the coffees that we buy, and the way that we buy them. We definitely don’t want to dumb down the nuances of the coffees and farmers we buy from, but we do want to find clear parameters that represent our principles when it comes to coffee-buying, and put more structure to these principles. We also want to keep those cons above in mind, and find ways to communicate coffee sustainability issues to customers.
More to follow on both of these in the coming weeks!