Why Early Contracting is Crucial for Specialty Green Coffee Buyers

Discover why early contracting in Ethiopian specialty coffee ensures quality and gives a competitive edge

Courtney Smith
September 19, 2023

Pictured: Tropiq Ethiopia Lab Manager Sisay ensuring quality control while visiting a supply warehouse

As we all know, Ethiopia's specialty coffee sector offers a mosaic of flavours, stemming from a rich coffee heritage and diverse growing regions. As buyers vie for the prized beans, understanding the nuanced approach to contracting—specifically, the importance of early contracting—is paramount. Below, we discuss the benefits and importance of contracting early, which is especially crucial when dealing with fluctuations of political instability, climate concerns, and other economic factors that may affect the market.

Benefits of Early Contracting

Financial Leverage for Suppliers

Advanced contracts (not to be confused with futures contracts) are more than just an agreement; they're financial instruments. They enable suppliers to secure favourable bank loans and, in turn, empower us at Tropiq to source coffee more efficiently. By showcasing commitment through early contracts, suppliers are granted better loan terms, making it feasible to procure and produce more coffee.

Guaranteeing Quality

Early contracts provide buyers with a security blanket. We get to cherry-pick from the latest arrivals from our extensive network of producers, suppliers, and shippers. This ensures we're procuring the best beans every time. They also can be a safeguard against potential moisture issues, which occasionally arise due to post-harvest weather patterns.

Priority Access and Streamlined Allocation

Early contracting is a declaration of trust in our suppliers' coffee. This established faith translates into a multitude of benefits: from privileged access to premium samples to a fast-tracked allocation process when the coffee reaches our Addis Ababa warehouse.

Furthermore, with an early contract, we're often granted exclusive entry to suppliers' warehouses, enabling us to handpick the finest coffees upon arrival and promptly identify stock lot samples. This holistic approach not only provides insights into a washing station's quality but also propels us to the forefront in shipping these choice coffees. In essence, an early contract in the Ethiopian coffee realm is a VIP pass, ensuring preferential treatment and reflecting the deep-seated trust in our business relationships.

Essential for the Supply Chain

Early contracts aren't merely a purchase order; they're pivotal for the Ethiopian coffee ecosystem. As stated above, both exporters and Ethiopian banks rely on these contracts as collateral for loans. This financial backing facilitates exporters to quickly secure the best red cherries at the onset of the harvest. This speed is crucial for several significant reasons:

Maximising Quality

The initial period of the harvest typically yields some of the best cherries. By securing them promptly, exporters can guarantee a batch of coffee that meets the highest quality standards.

Competitive Edge

In a fiercely competitive market, quick procurement ensures that exporters are not left with leftovers after other proactive players have had their pick. In other words, they won’t have to make do with cherries that might not be of the highest quality available.

Consistency in Supply

By procuring quality cherries early on, exporters can maintain a consistent supply of premium coffee throughout the season, satisfying the demands and expectations of discerning buyers.

Predictability & Planning

Early procurement enables exporters to better predict their stock for the season, allowing them to plan logistics, processing, and shipments more effectively.

Ensuring Prompt Shipment

Washed coffees are processed first (by regulation), leading them to be the initial ones shipped. An early contract ensures buyers are at the forefront of this queue, potentially saving weeks in shipping time and associated costs.

Because of this, it is much better to contract a full container of one type of process. For example, contract the full container of washed coffees for shipment in February and (if you don’t want a full container) additional bags of natural coffees to either be consolidated with other roasters in your area or to be sent in a short container later (at a slightly increased cost).

Demonstrating Commitment & Trust

It’s always good to remember contracts aren't just about beans; they're about relationships. They signify a commitment to what often is quite an intricate process. When a buyer knows the exact profile, grade, quantity, and region they desire, our role is streamlined. We identify and allocate coffees swiftly, ensuring buyers can quickly approve pre-shipment samples and receive their coffees without delay.

Early contracting in Ethiopia's coffee industry is more than just a strategic decision; it's an investment in quality, trust, and mutual growth. By understanding the manifold benefits, buyers can ensure a steady flow of premium Ethiopian coffee from the farms to the cups of specialty coffee consumers worldwide. Commit early, roast and sip the best!

Discover the differences between early contracting and futures contracts in our quick breakdown.

Courtney has 10+ years of experience in creating, building, and scaling strategies, brands, and content.