Yes and no. But commercially, no….
Yes, in the sense that the well-known Cup of
Excellence program - see www.cupofexcellence.org
- conducts regular Internet auctions to sell small amounts of
coffee that have been selected on quality through annual in-country
competitions. However, these are promotional activities that
serve to introduce award-winning coffees to the market in the
expectation that small purchases, often as little as twenty bags
shared between a number of buyers, will serve to generate regular
commercial business in future. The organization of such
competitions and auctions is both complex and costly, whereas
advance samples are always provided. They involve huge publicity
and do not offer a platform for the regular marketing of green
(specialty) coffee. *
No, in the sense that the only serious attempt
at setting up an Internet-based specialty coffee auction system,
Q-auctions initiated by the Coffee Quality Institute - www.coffeeinstitute.org
- in the end did not succeed. The initiative was based on the
Institute's Q-grading system of quality assessment that offers
buyers an indication of the quality on offer. Even so this did not
achieve the intended results and the initiative has, at least for
the time being, been discontinued.
Why has the Internet not managed to attract coffee
auctions other than the Cup ofExcellence program?
There are a number of reasons…
Buyers want to test samples of the coffee on offer themselves.
If this is not arranged then the only alternative is to sell 'on
description'. This is not suitable for specialty coffee.
Most specialty roasters buy coffee 'delivered roasting plant'
- this is difficult for a grower/exporter to accommodate, if not
impossible. The reason why importers exist…
Most specialty roasters buy coffee 'subject to approval on
receipt' - this is entirely impossible in an auction system that
aims to bring producer and roaster together. Again, this is why
importers exist…
Most specialty roasters buy coffee on (extended) credit terms
- the importer again…
Many specialty roasters buy small lots, i.e. less than a
container load. This complicates shipping and usually calls for the
intervention of exporters/importers.
The above reasons are specific to specialty coffee but,
also for mainstream or 'commodity type' coffee no electronic
auctions or even market places have evolved. Whereas
electronic trading of contracts representing a standard type of
coffee takes place on the futures markets of New York and London,
roasters generally do not appear to be interested in going beyond
the pricing of green coffee at a differential to those futures
markets. This is one of the reasons why different and otherwise
great initiatives have not succeeded to advance from electronic
documentation into actual green coffee trading.
Other initiatives, generally known as electronic market
places, aim to bring sellers and buyers together and
execute legally binding contracts. However, such market places
require complex and demanding systems and, at least for coffee,
still do not resolve the issues identified earlier. Electronic
market places are as yet therefore not in active use in the coffee
industry.
This leaves one with what we would call electronic
market platforms. These allow sellers and buyers to make
contact and to exchange information, after which some might proceed
to initiate actual transactions directly. See for example www.leatherline.org , www.greentrade.net or www.eFresh.com that operates a
coffee portal.
* The Cup of Excellence was originated by the Gourmet Coffee
Project, a joint undertaking by the International Coffee
Organization (ICO) and the International Trade Centre (ITC),
operators of this website, with funding provided by the Common Fund
for Commodities (CFC). To learn more about this go to www.tradeforum.org and search
for Cup of Excellence. Obviously recent information is to be found
at www.cupofexcellence.org
but the articles in question provide a good background and
overview. See also topic 06.02.01 of the Coffee Guide.
Posted 23 October 2008