By Fernando Patino, Direct Trade, Fazendas Klem

In the realm of specialty coffee production, where dedication and sustainability go hand in hand, a cloud of uncertainty has long loomed over the industry due to the peculiar workings of the Coffee “C” Contract. This contract, often seen as a distant and complex force, wields the power to sway coffee prices based on speculation, leaving producers puzzled by its influence.

Understanding the Coffee “C” Contract

The Coffee “C” Contract, a futures contract that allows trading of coffee as a commodity, has been a cornerstone of the coffee industry for decades. However, it doesn’t take much scrutiny to see how this system often fails to reflect the true dynamics of coffee production. The most baffling aspect is how external forces, with limited to no connection to the coffee industry, can significantly manipulate coffee prices through speculative trading. It raises the question: why should an industry as specialised as ours be at the mercy of speculators who may not even comprehend the intricacies of coffee cultivation?

Source: https://www.investing.com/commodities/us-coffee-c-streaming-chart

Beyond Production Costs: A Complex Reality

When we delve into the intricate process of specialty coffee production, it becomes evident that the “C” Contract doesn’t take into account the full spectrum of factors that contribute to the cost of producing high-quality beans. Specialty coffee is more than just a commodity; it’s the culmination of sustainable practices, meticulous cultivation, and a commitment to environmental and social responsibility. These aspects, which inherently drive up production costs, are scarcely acknowledged by the “C” Contract’s mechanisms.

Pricing for Sustainability and Fairness

Healthy and sustainable pricing models require a departure from the speculative approach. It’s high time we embrace a pricing structure that respects the efforts and investments made by specialty coffee producers. Such models should consider not only production costs but also environmental conservation, fair wages for labor, and support for local communities,

and a fair profit. When the focus shifts from short-term speculation to long-term sustainability, the entire industry benefits.

Stability for All: The Roasters’ and Retailers’ Perspective

If you’re a coffee roaster or run a café, you know the rhythm of the coffee world. Your menu features carefully curated beverages with set prices, allowing you to plan and budget with confidence. But when coffee prices dance to the unpredictable tunes of the market, your well-structured profit model starts to wobble. A fixed pricing approach offers stability, allowing you to focus on perfecting your brews rather than anxiously watching market charts.

Embracing Fixed Prices: A Step Forward

As we reflect on the present state of the coffee industry, it’s clear that the time has come to embrace a more equitable pricing model. A fixed pricing system, grounded in collaboration between producers and buyers, can create a win-win scenario for both parties. By negotiating prices that reflect true production costs and enable sustainable practices, we can nurture a coffee industry that is both thriving and responsible.

Conclusion

In conclusion, It’s time for specialty coffee producers, roasters, and consumers to stand united in their pursuit of fairness, sustainability, and stability. By adopting a fair price determined for each coffee lot traded among seller and buyer, we can ensure that the true essence of specialty coffee is honoured and preserved for generations to come. Acknowledging that the current system is pretty rooted and changing it is tough, a constructive starting point involves engaging with buyers who align with the same principles, with agreements grounded in the concept of fair prices, fostering a foundation of equitable trade.