Sustainable Coffee Trade: The Role of Coffee Contracts

By Jason Potts, Peter H. May, Gilberto C.C. Mascarenhas, Jason Potts on October 24, 2004
This paper provides an overview of the feasibility of using contracts generally, and specific contractual elements in particular, as instruments to catalyze sustainable development within the coffee sector. Conventional contracts maintain stability and predictability in international coffee trade, but generally do little to support coffee production and processing methods critical to sustainable development. An overview of three alternative contracting systems (Utz Kapeh, Fair Trade and the Starbucks Preferred Supplier Program) highlights the potential for using price, contract length, risk distribution and preferred supplier status as tools for reducing producer exposure to the market risks and uncertainties which threaten the livelihood of millions of small coffee producers around the world.

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