The core principles and standard practices of our Direct Trade program contribute to the resilience of our supply chain partners by insulating them from risk.
Our commitment to direct engagement with growers and our investment in the annual Extraordinary Coffee Workshop reduce the market risk of our partners by giving them information and skills that help them meet the requirements of the world’s most demanding buyers.
The mutual commitment to quality on which our Direct Trade relationships are built it itself a hedge against both price risk and market risk, and our standard fixed prices and multi-grade contracts help our supply chain partners mitigate those risks even further.
But these principles and practices are most powerful when married to our commitment to long-term trading relationships.
My first few buying trips for Intelligentsia were to countries where I used to live and work. During one of them, I made a point of meeting up with an old friend, an old codger who happens to also be an award-winning coffee grower. We were exploring the idea that he might start selling to Intelligentsia, and his son began interjecting excitedly, selling me on the virtues of this special-process lot or that varietal lot. When he persisted, I suggested he misunderstood. He was trying to sell me a specific fresh-crop coffee, but I wasn’t looking for a coffee from the current harvest. I was looking for a partner with with whom we might build coffees together over many harvests.
It is easy for roasters to get great coffees every year. That might sound flip, but it is true. Roasters, that is, who don’t care about relationships, aren’t willing to commit to multi-year purchases, and don’t want to bear any of the risk of agriculture. What is harder is committing to a grower or a group of growers and sourcing great coffee from them year after year.
Relationships are hard. Agriculture is harder. Building and sustaining lasting, mutually beneficial relationships in agriculture is very hard indeed, especially with a crop like coffee.
Achieving and sustaining quality in coffee requires investment. And it and involves risk. My experience in the international development space and as a coffee buyer has taught me that growers are more likely to take risks and make investments this year if they have commercial partners who can be counted on to show up next year. And the year after that. And the year after that. We made our first purchase of a fully traceable lot from CEPCO in Oaxaca all the way back in 2002, and have been showing up ever since.
But committing to a relationship with a coffee grower means coping with risk, accepting occasional disappointments and even absorbing a flat-out failure now and again.
These are just part of the Direct Trade territory. Sometimes this means just buying coffees that don’t perform as well as any of us would like. Other times it means working with growers to structure innovation pilots on a small scale and committing explicitly to purchase the results of joint experimentations — even when those experiments don’t work out. We have purchased some coffees that were less-than-spectacular as a result of these commitments. While it was never fun to do so, it was always important. Those purchases insulated our partners from risk. They sent a clear signal of our commitment. And they represented strategic investments in the future of our relationships — the risk capital that generates future returns in the form of steady access to amazing coffee and keeps the Direct Trade engine humming.
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This is the final installment in series of seven posts summarizing our participation in the Sustainable Food Lab 2018 Leadership Summit and exploring the ways our Direct Trade model helps to reduce the risks faced by coffee growers.