Commercial Aspects of the Coffee Trade

Coffee is often claimed to be the second most traded commodity after oil. While this might have been accurate in the 1960s and 1970s, it is now little more than a myth. In fact, measured by its value or volume, green coffee trade does not even make it into today’s top five. Nevertheless, the size of the international coffee trade is massive. More than 130 million coffee bags are exported annually. This is the equivalent of roughly 400,000 20-foot container loads. 

The international coffee trade would be impossible without general agreements on the basic sale conditions. Otherwise, it would endlessly be necessary to repeat every contract stipulation for every transaction – a very time-consuming process that is open to mistakes. To avoid this, the coffee trade has developed standard contracts. Those issued by the European Coffee Federation (ECF) in Europe and the Green Coffee Association (GCA) in the United States are the most frequently used. Many individual transaction details must be agreed upon before a contract is concluded.

However, the basic sale conditions can be covered simply and easily by stipulating the applicable standard form of contract. Even so, an offer to sell (or a bid to buy) must stipulate the quality, quantity and price, the shipment period, the sale conditions, when the offer or bid is valid, and so on. This methodology has been curated repeatedly and has proven to be both fair and transparent. Details are precise, so they leave little room for misinterpretation. Facts are transparent and understandable for all parties involved. There is also space for individual adjustments, allowing flexibility. 

Commercial details of a contract

Useful tools and resources

Here, you'll find a curated collection of tools, data, and insights designed to help you grasp the intricacies of the global coffee market. 

How to prepare green coffee samples for promotion            

Green bean sampling at a coffee farmers' cooperative in Brazil

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Samples allow green coffee buyers to discover the qualities of a certain coffee batch, so they can assess whether it will meet their portfolio requirements. For producers, samples can make – or break – their sale.  

The sampling process is important but can be tricky and sensitive. Many factors can determine whether a sample accurately represents a coffee batch on offer, and timing is critical here. Knowing whether expectations have been met at both ends often only occurs at the last minute. 

Coffee importers and roasters receive many coffee samples from producers and exporters, and it’s important to get that step right.  

What can go wrong? 

Often the samples are too small to roast and cup (minimum 300 grams required) or the bags are broken so several samples have been mixed. The information about the coffees and the supplier may also often be lacking, so the samples are dumped. 

Tips to approach buyers with a green coffee sample 

Coffee producers who decide to send an unsolicited sample to a potential buyer should prepare an information sheet like the form below. Leave the form visible inside a transparent sample bag. Provide one form for each sample, together with information about the provider and the area where the coffee was grown. 

Performing a quality analysis that examines moisture yields from parchment to green, the percentage of defects present, and other parameters is also key to a good green coffee sample. 

Note: Names and other data in this example are invented, but realistic.  

Further information to be provided with the coffee sample if available: name of producer/exporter, address, contact person, e-mail, phone, location where coffee is grown (address or description), GPS (N/S - W/E), altitude, annual rainfall, area (hectares or acres) and of which coffee, other activity on the area, sustainability (including possible certifications or memberships), types of coffee, annual production, availability of coffee during the year (estimate of number of bags in each quarter) and location of the main buyers in the past three years. 

Source: Adapted from Morten Scholer (2018), Coffee and Wine: Two Worlds Compared, by ITC-Alliances for Action (2021). 

Container seals

Green coffee containers are precious cargo that must be carefully protected against any possible tampering, theft or damage. 

Apart from locks, the numbered seals the shipping company provides to seal a container’s doors are the first defence against tampering. If a seal is broken or damaged, it may well be that someone has tampered with the container. But instances have been recorded where traditional seals have been broken and replaced without any visible sign of this having occurred. Because of this, some exporters add locks of their own to physically secure container doors.  

Ensuring the security of containers is not only to protect the coffee from damage. In recent years, illegal drugs have been found in coffee containers. The international coffee trade and the shipping community are actively working with customs authorities worldwide to help stop the use of coffee shipments as a vehicle for illegal drugs. Container seals are the first line of defence in this battle.  

The ‘receipt trail’ across the supply chain 

Containers and their seals must be physically checked each time a container changes hands – for example, from origin terminal to ship, from ship to arrival terminal, from arrival terminal to truck and from truck to roasting plant.  

Ideally, each transaction should generate a Container Interchange Receipt that records the seal’s condition, the seal number and the exterior condition of the container itself. This receipt trail can be very useful in case it turns out that something is wrong with a container load, as it will help pinpoint at which point the damage occurred, enabling a claim to be lodged if necessary.  

The last check takes place just before the container is opened. Shipping lines also use these receipts to claim redress for any physical damage to the container itself.  

Effective security measures depend on fair play and careful monitoring 

Modern seals incorporate increasingly sophisticated technology that makes undetected tampering much more difficult. However, physical verification is still required. Seals alone cannot prevent containers from being opened – they are not a deterrent, but rather a means to verify tampering or damage, if it happens. 

The effectiveness of container seals depends on the trustworthiness and diligence of the person in charge of securing them. ‘Fake’ placements of seals have been known to happen as a result of corruption. One solution is to use clear seals that reveal the mechanism, with the number printed on the inside under a clear elevation that works as a magnifying glass.  

However, intact seals prove only that the cargo seems not to have been interfered with after the seals were affixed. Bulk containers have been known to be attacked by forcing a pipe through the rubber door seals and into the liner, after which coffee is simply siphoned out.  

This can be prevented by placing a plank upright on the floor inside and in front of the doors before shutting them. However, there have also been instances where containerized cargo has disappeared during inland transit to port, yet doors and seals were perceived as intact. If this becomes a regular occurrence, shippers really only have one option: to invest in heavy security measures such as having trucks travel in escorted convoys, only allowing night stops in authorized locations, etc.  

Conditions and protocol for claims and responsibility 

If a container’s seal and seal number are sound and correct on arrival of a full container load (FCL) shipment, but the condition or weight of the coffee is not, then the receiver will claim from the shipper/exporter. The same will apply if stuffing took place under supervision.  

When goods are shipped as FCL, the responsibility lies with the person supplying them, unless the bill of lading shows the container was accepted as sound, but at destination it is delivered damaged. The burden of proof always lies with the shipper.  

For goods shipped on a less than container load (LCL) basis, shipping lines can be held responsible only for the number and the apparent good order and condition of the bags. This means that if the seal and seal number of a container shipped on an LCL basis are sound and correct on arrival, but the condition or number of the bags is not, then the receiver will claim from the shipping line.  

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