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IISD Publications Centre

Trading Practices for a Sustainable Coffee Sector: Context, Strategies and Recommendations for Action

» Jason Potts, Guido Fernandez, Christopher Wunderlich, IISD, 2007. Book, 50 pages, copyright: IISD

The past decade has given rise to a growing number of voluntary standards for sustainable agriculture production. The coffee sector has proven to be one of the most vibrant and dynamic commodity sectors for standards development during this period, with standards being designed to serve distinct specialty and mainstream markets. For the most part, sustainability standards in the coffee sector have focused on specifying criteria for "sustainable production"—and yet, it is widely recognized that many of the greatest challenges facing the sustainability of the sector as a whole, and smaller producers in particular, are related to the sustainability of the trading relationships between producers and buyers in international markets. This paper, one of the first of its kind, takes a detailed look at the issues and range of options available for the integration of "sustainable trading practices" within existing coffee supply chains.


Notes

Table of Contents

1. Introduction
2. Principal Challenges to the Economic Sustainability of Producers

2.1 Declining Prices
2.2 Market Instability
2.3 Poor Access to Market Information
2.4 Limited Savings and Capital
2.5 Limited Access to Financing
2.6 Limited Bargaining Power

3. The Trading Context

3.1 Market Drivers

4. The Role of Trading Practices in Building Economic Sustainability for Producers

5. Conceptual Relationship between Trading Practices and the Producer Context

5.1 Enhanced Voice in Supply Chain Management Decisions
5.2 Enhanced Access to Market Information
5.3 Enhanced Predictability and Transparency for Producers Through Contracts
5.4 Enhanced Producer Autonomy through Relationships of Trust and Cooperation

6. The Potential of Specialized Trading Arrangements: Examples from the Field

6.1 Contracts
6.1.1 Delivery, Quality and Passing of Title
6.1.2 Passing of Title
6.1.3 Quality and Weight Claims
6.1.4 Delivery Times
6.1.5 Long-term and Outright Price Contracts
6.1.6 Minimum Price Arrangements
6.1.7 Price to be Fixed Contracts – Sellers Call

6.2 Financing

6.3 Cooperative Business Arrangements
6.3.1 Direct and Long-term Trading Relationships
6.3.2 Market Analysis Reporting
6.3.3 Preferential Sourcing Arrangements
6.3.4 Cooperative Marketing Arrangements
6.3.5 Shared Hedging Operations
6.3.6 Price Sharing Arrangements

7. Sustainable Trading Relationships: The Foundation of Sustainable Trading Practices

7.1 Building Relationships of Trust
7.1.1 Communication
7.1.2 Flexibility
7.1.3 Producer Knowledge of Market Situation and Conditions

7.2 Recommendations for Action

Annex 1: Basic Elements of Sustainable Contracts

Annex 2: Price Fixation in Futures Markets