In this article:
- What’s coffee procurement?
- Why ask for samples that are not on offer lists?
- How to write about quality
- How to price an offer: differentials and specialty benchmark
- Defining the delivery month
- What to ask about milling
What’s coffee procurement?
Green coffee procurement is the process of finding and buying unroasted coffee from producers. It starts with defining and communicating what you need, from physical and sensory attributes to price, and delivery. Think about it as writing a cake recipe. The more precise you are, the better the cake.
Procurement is a technical term used by coffee traders when they request offers from producers. It often involves formal written requests, also known as “invitations to tender”. To put it simply, it’s business jargon. Most young companies prefer to just use the word sourcing instead.
So, whenever you see the companies talking about procurement, they’re basically talking about sourcing the raw materials they need to supply their customers with the coffee they want. So why are we using it here? Because you might come across this type of language when talking to traders and producers.
Why ask for more samples when you have offer lists?
To make it easier to go beyond the offer list, Algrano created a online tool that any roaster with an account can use to broadcast a request to all verified sellers. It’s called Requests. Producers and our team get a notification to help you find the coffee you need. All you need to do is fill out a brief form.
When a producer receives a request they can do one of two things: send you a link to an existing offer, if they believe it’s a good match, or create a new offer just for you. As the main filter is origin country, your request goes to many producers, so you can get many samples to compare and choose the best one.
What to write in your request?
Quality, volume, and price are the main information a producer needs. But we’ve seen vague requests that producers ignore because they feel the roasters don’t really know what they’re looking for.
After talking to some of the producers who sell coffee on Algrano, we came up with a list of what they want to see from roasters. This is useful for any conversation with a farm or cooperative, online and offline.
Write the ideal cup profile and say how you’re using the coffee
Different cuppers score the same coffee in different ways. With this in mind, avoid asking for a set cup score, like 83 points. For a producer, it’s a lot easier to find a coffee when you provide your idea of the sensory profile and how the coffee will be used (espresso, filter, automatic machines, etc).
You can provide a quality range or group the quality score, like from 82 to 84 points. You can also use "jump scores" as a guide. For example, if you ask for something below 85 points, a producer knows you need a standard lot, maybe a blend. At 87 points, they know you need a special process.
Consider how prices change per origin
We know that sometimes roasters are not looking for a particular origin. They’re looking for a sensory profile that their customers enjoy. So the country feels secondary. But you’ll also have an idea of what type of coffee you want and how you’re going to use it, and that can help you narrow things down.
For example, if you want smallholder-certified coffee, you can target Mexico, Peru or Ethiopia. If you want a low-acidity coffee for espresso at a lower price point, you can choose from Brazil, Honduras or Peru. For a espresso with more fruit, you may try Colombia, El Salvador or Rwanda.
Even if origin is not your main criteria, it’s important to consider that the same quality range is sold for different prices from country to country. This is affected by production costs, differential prices, and market dynamics. You can see the sort of prices listed on Algrano for the origins you’re interested in.
"Sometimes, roasters make a request that covers too many countries. But prices are very different from one country to the next. It would be good if roasters could know, for example, the NY market price and the differentials for conventional coffees. At a minimum, those price levels should be respected."
Jonathan Durán | International Sales Manager, Coopeagri, Costa Rica
Use differentials as a price floor
Requests are a great way to discover price options from different suppliers. And while some roasters pay price premiums for quality, others need to find an affordable deal. There’s nothing wrong with that. But producers won’t consider requests with prices that are below that of the futures market with the added differentials as a minimum. And that happens a lot.
"To give you an idea, we had a request [in 2022] for a coffee at US$2.27/lb. We just sold a Hard Bean Quality (78 points) at US$2.90/lb. So US$2.27 in Guatemala would maybe get you a Washed Robusta? When we saw that, we didn’t reply because there was no way we could offer something for the price."
Adrián Cabrera | Commercial Manager, San Miguel Coffees, Guatemala
The futures price plus the origin differential is the absolute minimum a producer will consider. But how much is that? Let’s start by looking into the ICO’s Composite Indicator Price (I-CIP). That’s a good benchmark for current prices.
The International Coffee Organization publishes data about the price paid for commodity coffee close to the delivery date in four categories: Colombian Milds, Other Milds, Brazilian Naturals, and Robustas. Unlike what you see on ICE (International Coffee Exchange), these are not paper trades. They’re real contracts for real coffee.
But when you’re asking producers for coffee, whether the harvest is ongoing or about to start, the coffee will only be shipped months later. And the price you calculate should reflect the shipping period because producers are paid once the coffee is on the boat.
This is how you work what the floor price is. Take today’s futures price from ICE and subtract that value from the latest I-CIP. Don’t use the average indicator price. Use the one representing the origin(s) you want to source from. Here’s a reminder:
Brazilian Naturals: Angola, Brazil, Ethiopia, Indonesia, Philippines, Thailand, and Vietnam.
Colombian Milds: Colombia, Kenya, and Tanzania.
Other Milds: Bolivia, Burundi, Cameroon, Costa Rica, Cuba, Democratic Republic of Congo, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, India, Jamaica, Madagascar, Malawi, Mexico, Nicaragua, Panama, Papua New Guinea, Peru, Rwanda, Sri Lanka, Uganda, Venezuela, Zambia, and Zimbabwe.
The result of that subtraction will give you a differential. Next, you check the futures price for the month closest to your preferred shipping time. You’ll be able to see prices for March, May, July, September, and December on ICE.
Let’s say you want to buy a coffee from Central America for shipping in March 2025. ICE’s price is US$2.386/lb. The last available I-CIP for Other Milds is US$2.5288/lb. The differential is around 14 cents per pound. The futures price for March 2025 delivery is US$2.232/lb. Adding the differential to that gives you US$2.374/lb. That’s your minimum.
Differential = Latest I-CIP - today’s c-price
Floor price = c-price closer to shipping month + differential
Check specialty coffee price benchmarks
Knowing the price floor doesn’t mean you should use commodity prices as a guide for specialty coffee. It’s to say that’s the bare minimum offer a producer will entertain for a full container of commercial grade coffee. For differentiated coffees, there is another great resource, the Specialty Coffee Transaction Guide.
The SCTG has its own version of differentials for the specialty market. They calculate adjusted FOB price differences across countries based on the three previous harvest years. The guide breaks down median prices per region (Africa, South America, Central America & Mexico), quality range and volume.
Adding the median price for the quality and volume you want to the adjusted price difference of the country you’re sourcing from gives you a good indication of an average specialty coffee price.
Specialty benchmark = median price + adjusted FOB price differences
Define a realistic delivery month
Producers ask for at least one month to ship coffee even when the bags are already in the warehouse. So, asking an exporter to have the coffee at your warehouse next month is unrealistic.
Even when things move fast, three months is the quickest turnaround to get coffee when you buy a volume that can be shipped alone, of 100+ bags. For small volumes sent in shared shipments, order to delivery will likely take at least four to five months.
Below is a summary of how long it takes to receive coffee according to each stage of the harvest:
Before the harvest: minimum of six months (custom shipments) or eight months (shared shipments). Processing typically starts at the end of the first harvest month. Drying can take anything from 10 to 40 days. Resting takes around two weeks. In this period, coffee is stored in parchment to estabilise moisture.
During the harvest: three to four months (custom shipments) to five to six months (shared shipments). There will be some early crop coffee ready here and you’ll only have to wait for dry-milling and shipping.
Milling: ask about grade and defect count
Dry-milling is the final production stage, where coffee lots are separated according to screen size and defect count. Each coffee-producing country has its own grading criteria. The Coffee Guide lists some examples and the ICO also illustrates classification with useful guidelines.
There is no exhaustive list currently online and standards change over time, as you can see in this article. If in doubt, list partial characteristics such as altitude, screen size and cup quality to give suppliers the necessary information.
When it comes to defects, the count is directly related to how the green was sorted at the milling stage. Fewer defects imply more sorting, therefore higher milling costs. Specifying the number of defects will help suppliers know if they can offer the coffee you want at the price you required.
For reference, the European Preparation (EP) standard stipulates a maximum of eight type-two defects per 300g sample. The American Preparation (AP) allows for 23.
Make the most of direct trade
This is not an extensive checklist, but it’s enough to get the right samples on the table. Algrano already does a lot of this legwork for you when we discuss offers with producers. But we know the offers on the marketplace are only the tip of the iceberg. There is so much more coffee to choose from…
Using traders’ language feels removed from the reality of a specialty roaster. We get it. But speaking the jargon and understanding standards will put you in a great position to buy coffee from any producer. And we want you to make the most of direct trade.
