How can producers use green coffee to barter for other goods and services?
Across the Bean Belt, the vast majority of coffee farmers sell their coffee (either as cherry or parchment) in exchange for income. After providing for themselves and their families, producers can reinvest profits back into their farms to purchase equipment and resources – such as fertilisers and irrigation systems – and carry out necessary repairs and maintenance.
However, research has found that farmers (particularly smallholders) sometimes receive as little as US 40 cents per cup of coffee. This means they often have little money left over to invest back into their farms and improve coffee quality – potentially restricting their income even more.
But is there a way for coffee producers to improve their access to goods and services without exchanging money?
One way they can do so is by bartering. This is where two parties directly exchange goods and services for other goods and services – meaning no money is exchanged during the transaction. In coffee production, this often involves providing producers with the products and services they need, while the farmer agrees to provide a certain amount of green coffee in return.
So how exactly does a barter system work in coffee production? To find out, I spoke with three Brazilian coffee farmers who work with Nucoffee. Read on to find out what they had to say.
You may also like our article on whether it is possible to get good quality coffee from unripe cherries.
What is bartering in coffee production?
To understand barter systems in coffee production, we need to know what bartering is.
The Merriam-Webster dictionary defines “barter” as “to trade by exchanging one commodity for another” or “to trade goods or services in exchange for other goods or services”. For instance, two businesses may barter goods or services with each other rather than providing payment – particularly if the two companies specialise in different industries (such as carpentry and welding).
In coffee production, bartering often involves the exchange of farm inputs (such as pesticides and fertilisers) and other goods, or services such as technical assistance, in exchange for a set amount of green coffee. Farmers typically provide the coffee at an agreed upon date.
José Carlos Bacili is a producer at Fazenda Coito in Minas Gerais, Brazil.
“In coffee production, a barter system allows farmers to use their coffee as a bargaining tool to obtain the goods, services, and technologies they need to produce coffee,” he tells me.
Márcia Takiuti is a coffee farmer in Monte Carmelo, Brazil.
“In coffee production, bartering is used to acquire supplies in exchange for bags of coffee,” she says.
Francisco Sérgio de Assis is a producer at Fazenda Água Limpa in Alto Paranaíba, Brazil.
He explains that farmers can trade green coffee for “farming inputs, machinery, and services”.
While a barter system may be more common among smallholder producers who typically have less access to financial resources (such as credit facilities and long-term loans), coffee farmers around the world can use bartering as means of acquiring the resources and services they need.
How does bartering in coffee production work?
Márcia explains more about Nucoffee’s barter system, which extends beyond more traditional coffee barter models by working closely with producers to deliver as much value to them as possible.
She tells me that producers can visit warehouses which offer a number of goods, including equipment, as well as fertilisers, pesticides, and other farming inputs.
Márcia adds that in order for the producer to receive the required goods, they must agree on a set date by which they need to provide a certain amount of green coffee. Once the transaction date is finalised, the producer receives the goods and will usually provide the trader with the required amount of green coffee accordingly.
However, it’s important to consider the risks involved with bartering green coffee. Farmers (especially smallholders who produce less coffee) need to ensure that they only commit to providing feasible volumes of green coffee.
In addition to bartering, Nucoffee also offers resources and training to support more than 4,000 Brazilian coffee producers to improve their coffee quality and yields. Ultimately, this can create more demand for their coffee and potentially help to increase their income, too.
Moreover, Nucoffee provides farmers with up-to-date market information, which can allow them to keep track of fluctuations in the price of coffee, as well as any emerging trends in the coffee industry.
In fact, the company was one of the first to pioneer the green coffee barter system. Since its establishment in 2017, Nucoffee has been offering services such as technical consulting and workshops to inform farmers on how they can identify areas to improve their businesses – prioritising the needs of producers.
“We receive equipment and support for post-harvest processing, especially for producing specialty-grade coffee,” José Carlos says.
Márcia also tells me that through Nucoffee’s barter system, she has received support which allowed her to understand more about fermentation in processing, as well as how it can affect quality and sensory profiles.
This is especially important, as it’s estimated that post-harvest activities (including processing) can be responsible for up to 60% of final coffee quality.
In 2009, Nucoffee was one of the first green coffee traders to provide educational workshops on harvesting and post-harvest techniques for specialty coffee – which involved around 80,000 producers. The following year, in partnership with the Coffee Quality Institute, the company helped to establish the first-ever group of Q graders in Brazil.
Alongside this, Nucoffee also works with the Federal University of Lavras (UFLA) in Brazil, which houses an educational centre on post-harvest activities and coffee quality – sharing knowledge on how to improve coffee quality.
Understanding the benefits of bartering
Naturally, the biggest advantage of bartering in coffee production is providing an alternative trade model for producers who might otherwise struggle to save up the capital for fertiliser, equipment, training, or other supporting goods and services.
Improving producers’ access to resources, such as farming inputs and technical assistance, is vital – especially if they have little financial resources available to them. In this case, without the barter system, coffee farmers would not be able to receive the goods and services which they may urgently need.
“The main advantage of the barter system is that producers don’t need to have working capital to pay for the goods and services at the moment of acquisition,” she says. “Producers are guaranteed to have the product when they need it.”
Without access to finance, many coffee producers struggle to invest in their farms, ultimately making it difficult for their businesses to be profitable in the long run. Unforeseen repairs and maintenance, food insecurity, and family emergencies can also exacerbate coffee farmers’ economic vulnerability, and leave them trapped in a cycle of poverty.
Moreover, as coffee is a seasonal product, many farmers receive lump sums of money on an annual basis. This means financial management in the long term is key, but planning ahead until the next harvest can be difficult; coffee farms can require unforeseen maintenance at short notice for a number of reasons.
Márcia explains how bartering can support producers with financial management.
“Coffee plants [need a lot of care and attention], so we work on them during the whole year, and then harvest cherries once a year,” she says. “There are many different kinds of products we need to use in order to do this.
“The coffee barter system works well for all parties involved,” she adds. “For us, the producers, it helps us to buy all of the products we need in advance, as we already know which products we’ll need throughout each harvest year.”
José Carlos agrees, saying: “[Bartering provides producers with] better visibility of the year ahead and [allows them to carry out] more efficient planning.”
Alongside this, both Francisco and José Carlos say that barter systems help producers retain more of the value from their coffee by giving them more flexibility to bargain.
Furthermore, with climate change becoming a more pressing issue in the global coffee industry, all three producers tell me that changing weather conditions are resulting in more unpredictable harvests. Ultimately, this makes it more difficult for producers to plan ahead for the future.
“When a harvest is affected by climate change, producers can often lose some of the capital they need to deliver the coffee to traders,” Márcia explains. “We also lose some of the money we need to operate a farm.”
José Carlos adds to this by saying that changing weather patterns can have detrimental effects on both coffee quality and yields, and that these effects can vary year to year.
When facing issues such as climate change, bartering is an option to help producers receive the resources and support they need.
How can coffee farmers retain more value?
When talking about sustainability in the coffee industry, we often consider three key pillars: social, economic, and environment. When it comes to economic sustainability, one of the biggest concerns is ensuring that farmers receive more money for their coffee, as well as retaining more value.
To further these efforts, Nucoffee launched its Direct programme, which offers coffee farmers customised services and solutions – ensuring more of their needs are met. The programme has four elements: transparent trading, coffee quality, sustainability, and logistics.
Ultimately, by closely following new trends and technologies in the coffee industry (such as sustainably-grown coffee), programmes like Nucoffee Direct can help to create new market opportunities for producers. Not only does this potentially improve coffee quality and yields, but also farmers’ income.
“This is a unique selling point for coffee,” Francisco says. “By improving traceability, you are providing more sustainable coffee to the end consumer.”
José Carlos mentions that this also can add value to roasters and coffee shops as consumers are demanding more transparent and traceable coffee, too. Ultimately, programmes like Nucoffee Direct improve consumers’ access to more sustainable and high-quality coffee.
“Through the programme, we improved the traceability of our coffee,” Márcia explains. “We were able to track harvests and farming inputs used.
“We are able to record data when applying fertilisers, as well as knowing how long to wait for the next application,” she adds.
Improving access to farmer education is also another way for producers to retain more value.
Nucoffee’s Sustentia programme can help farmers to implement more sustainable agronomic practices on their farms, as well as supporting them in achieving Rainforest Alliance certification.
“The Sustentia initiative helps us with audit fees, which are expensive,” Márcia tells me. “The company also helps us to maintain our Rainforest Alliance certification.”
When implemented effectively, certification programmes can have a number of benefits for producers – including receiving more money for their coffee.
For coffee producers, the barter system can be a useful alternative to traditional financing models. Not only can it allow farmers to access products and services when they need them, it can also help them retain more value in the long run.
Alongside this, for some smallholder producers who may find accessing finance a challenge, the barter system can provide a safety net to make sure they receive the support they need.
To learn more about Nucoffee, visit the website here.
Photo credits: Nucoffee
Perfect Daily Grind
Please note: Nucoffee is a sponsor of Perfect Daily Grind.
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