How has technology helped to democratise green coffee trading?
Over the past century, the coffee industry has evolved in a number of different ways. From the increasing reliance on technology to a growing emphasis on sustainability, there have been significant developments across all areas of the supply chain. This includes sourcing and trading green coffee.
It’s fair to say that historically, the global trade of green coffee has typically favoured larger and more established importers and roasters. Moreover, it was often a complicated process – with plenty of logistics and bureaucracy to navigate.
However, thanks to the growing prevalence of technology and online platforms in the coffee industry, it is now easier and more streamlined than ever to buy green coffee. This is true for small and medium-sized coffee businesses, too.
To learn more about how green coffee trading has changed over the decades, I spoke with three people at Covoya Specialty Coffee. Read on for more of their insight.
You may also like our article on what a green coffee trader does.
How has green coffee been traded through history?
The way we buy and sell green coffee has changed dramatically in the past 100 years. However, in order to understand how, we first need to look back at the history of the global coffee industry.
The coffee trade as we know it today is traced back to colonial structures in the 17th, 18th, 19th, and early 20th centuries. For hundreds of years, European colonial powers established commercial systems to grow and export coffee in Caribbean, Asian, Latin American, and African countries. In many cases, this was to the detriment of indigenous and local communities, as colonial powers often forced them to work as slaves on coffee plantations.
Many of these former colonies have since gained independence and we have largely abandoned colonial trade structures. However, the effects still linger in parts of the modern coffee industry. This is especially apparent when we consider that millions of smallholder coffee farmers are unable to earn a living income.
Alongside this, over the past few centuries, the trade of green coffee has largely been exclusive to a small group of larger multinational importers, exporters, and roasters who dominated the global coffee market.
Mike Ferguson is the Chief Storyteller at Covoya Specialty Coffee – formerly known as Olam Specialty Coffee. The company rebranded in November 2022 to better represent its values and mission.
“Since 1956, traders bought and sold coffee in very large lots by the container,” he says. “In previous years, nobody would sell to you if you couldn’t buy coffee by the container.
“Today, however, it’s difficult to imagine such a steep barrier to entry for small to medium-sized coffee roasters,” he adds. “But it wasn’t that long ago that if you wanted to be in the exclusive club, membership dues were counted in containers and not bags of coffee.”
One of the most prominent people to help change this system was Erna Knutsen – who coined the term “specialty coffee” in the early 1970s. While working at coffee brokerage B.C. Ireland in San Francisco in the 1980s, Erna saw the opportunity to sell coffee by the bag, rather than just by the container. Ultimately, this had a huge influence on direct trade as we know it today, where roasters can buy as little as one bag from a farmer or co-operative.
Moreover, Erna also was a pioneer in making the global coffee industry more inclusive for women. Historically, the industry – especially on the green coffee trading side – was heavily male-dominated.
What about transporting green coffee?
Phil Schluter is the Managing Director at Covoya Europe.
“The transportation of coffee has undergone major change,” he explains. “In my great-grandfather’s day, everyone used boats to transport coffee.
“If you wanted to visit coffee farms or overseas clients to buy or sell coffee, you had to take a boat, which would take weeks,” he adds.
The introduction of steamships and railways across Europe and North America helped to facilitate the transport of green coffee from producing countries to major ports in both continents. Furthermore, while most coffee today is still transported by boat (albeit faster than it used to be), air freight is also emerging as an option.
Ultimately, more accessible transport has played a profound role in the global trade of green coffee. Since the 1970s, containerisation has become the most common way to transport coffee by freight. This is when you use large containers to stack and transport goods.
When roasters transport coffee this way, they usually have to pay for the entire container – whether it’s full or not. However, roasters can partner with other companies to spread the costs, making it more affordable.
“Now, in the specialty coffee market specifically, there is often no need for futures or hedging, little need for currency hedges, and margins are sufficient to cover what can sometimes be minimal overhead costs,” Phil tells me. “We have also seen a proliferation of smaller traders who only offer coffee from as little as one or two origins.
“This helps to forge more direct trade links and allows companies to trade smaller volumes of coffee at respectable profit margins,” he adds. “Conversely, the more commercial end of green coffee trading has become less accessible – it continues to operate on much thinner margins, requires traders to buy and sell certain volumes, and there are increasingly complex compliance regulations.”
How has technology helped to change green coffee trading?
Alongside these major changes in green coffee trading, technology has massively shaped how the global coffee industry operates. As well as making importing and exporting more streamlined and efficient, technology has also improved sustainability and transparency in the coffee supply chain.
The biggest change by far has been the emergence of the internet. Almost any coffee professional with access to the internet can now see plenty of relevant real time data. These includes market prices for coffee.
“All information which you would need to set up and run a coffee business is now widely available online,” Phil says. “This ranges from how to choose and source your green coffee to how to roast, brew, and serve it.”
Furthermore, the growing number of green coffee ecommerce platforms has made the trade of coffee much more accessible. People would trade green coffee over the phone or on paper prior to online platforms.
Today, roasters and importers of any size have access to a wide range of coffees, including information on:
- Processing method
As part of these platforms, green coffee buyers can quickly purchase coffee, as well as ordering samples and downloading paperwork.
Ross Nicholson is the Ecommerce and Marketing Manager at Covoya Europe.
“The transfer of ownership of coffee is still the same as it was,” he says. “We are bound by central coffee contracts like the GCC (US) and ESCC (Europe), so when a roaster buys coffee online, the coffee is effectively ‘contracted’ to them.
“With our website, there is no need to exchange signed contracts to purchase, or exchange multiple emails with a trader to find out the information you need,” he adds.
Technology & sustainability
Ross explains that online platforms like Covoya help to provide buyers with more information about green coffee.
“Information which adds value to specialty coffee – origin, farmers’ stories, and cup profile – can now be found in many places online,” he says. “Alongside cup quality, this added value can be passed onto consumers, which helps to differentiate specialty coffee from ‘commercial’ coffee, and means farmers can receive higher prices.”
With direct trade becoming more prominent in the coffee sector, facilitating a closer connection between roasters and producers has never been so important. Communications technology (such as WhatsApp and video calls) help with this when in-person visits might not be possible.
“A factor that has not changed is that the trade of green coffee has always been primarily about relationships,” Phil tells me. “To do it successfully, we need to understand both those who grow and supply the coffee, as well as the people we sell to.
“Green coffee suppliers like Covoya can only do that if we build relationships and trust,” he adds.
Why is it important that we democratise green coffee trading?
The global coffee industry’s increasing reliance on technology has been instrumental to its changes for the long term. However, why is it still so important that the trade of coffee green coffee remains open and accessible?
“Many coffee farmers still live in poverty, while many coffee professionals in the Global North occupy positions of relative privilege,” Ross says. “One of the most effective ways to change this is to diversify market access and scale our ability to share the stories and relationships which add value to coffee.
“If the barriers to entry in the specialty coffee sector are lowered, and the voices we hear can become more diverse, then coffee professionals can thrive and innovate sustainability for many decades to come,” he adds.
Mike agrees, saying: “The more information and data that is shared across the supply chain, the more equitable the coffee industry can be.
“Covoya’s online green coffee platform plays an important role in this way as it dismisses the historic concept of exclusivity, and helps to break down barriers for small and medium-sized roasters who want to buy bags of coffee,” he adds.
Mike emphasises that green coffee trading has become much more straightforward for small and medium-sized roasters over the past few decades.
“Even if you are new to roasting, or operate a very small roastery, you can buy green coffee,” he tells me. “Fifty years ago, there was almost no such thing as a start-up coffee roaster.
“Technology allows us to serve those very small roasters as they grow from selling bags of coffee to pallets to containers,” he adds.
Naturally, scaling is important for a roaster of any size in order to stay profitable. However, the level at which each individual needs and wants to scale can differ widely.
Improving access for smaller-sized roasters
“The process of buying green coffee has been simplified to make discovering new coffees and finalising a purchase far more efficient,” Ross says. “Covoya’s platform streamlines this process. Firstly, with ‘discovery’, roasters can browse our full catalogue with live available inventory.
“Every coffee has a unique page with information about the lot, terroir, producer, and region, as well as accompanying photos,” Ross continues. “Roasters can also request free samples, and when they are ready to buy, they can arrange delivery to their roastery with all logistical costs included at checkout.”
In turn, accounting for these differences is essential to keep green coffee trading accessible and inclusive – which Mike Ferguson discusses on the Getting Started with a Green Coffee Supplier episode of Covoya’s The Exchange Extra Shot podcast.
“Covoya aims to support our suppliers and buyers as they grow,” Phil explains. “We share our collective knowledge with those we work with to ensure that we trade in an equitable way.”
It’s no understatement to say that technology has revolutionised how we buy and sell green coffee. Coffee trading is now arguably more efficient and transparent than it ever has been. Moreover, there are certainly fewer barriers imposed on smaller roasters and importers than in previous years.
Similarly, we can also bridge the gap between producers and roasters.
“The farmers we work with around the world have their own experiences and challenges,” Phil concludes. “Roasters and consumers do too, so the more we can connect the supply chain and share stories, the more value we can add to coffee.”
Enjoyed this? Then read our article on simplifying green coffee grading.
Photo credits: Covoya Specialty Coffee
Perfect Daily Grind
Please note: Covoya Specialty Coffee is a sponsor of Perfect Daily Grind.
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