Magazine article International Trade Forum

Coffee Growers Discover That Quality Pays

Magazine article International Trade Forum

Coffee Growers Discover That Quality Pays

Article excerpt

The coffee market is oversupplied, with the price of coffee at its lowest in a century. Over the years, ITC has supported several projects and initiatives to help coffee producers. One of the most innovative projects was the world's first Internet coffee auction, the origin of what is today the Cup of Excellence® programme.

Convincing producers to add value to their product, and thus earn more revenue, is a commonly proposed solution to the current coffee crisis. While this proposal is neither simple nor realistic for many producers, ITC supported the efforts leading up to the Cup of Excellence programme. The programme takes advantage of current market trends towards quality and has resulted in some producers finding their reward in higher prices.

The Cup of Excellence programme takes advantage of the gourmet coffee market, aiming at discerning consumers worldwide. By doing this, the programme has lifted several small , farmers out of anonymity to gain not only fame in the exclusive world of professional "cuppers" (coffee tasters), but also fortune as they obtain better prices. In the oversupplied coffee market, this initiative is proving that quality pays.

A PIONEERING APPROACH

The idea of an Internet coffee auction was born in 1999 as part of the Gourmet Coffee Project (1998-2000), which was initiated by the International Coffee Organization and ITC, and financed by the Common Fund for Commodities. ITC was the operational and practical partner in the project, which supported the development of gourmet coffee from Brazil, Burundi, Ethiopia, Papua New Guinea and Uganda.

Frustrated at the inability of Brazilian coffees to tempt specialty buyers in the United States, project participants recalled the excellent products that had been uncovered during the life of the project. They decided to link up with the already existing annual competition process to select the best coffees in Brazil and offered to sell the top ten coffees from "Best of Brazil 1999" at an Internet auction. Some 310 farmers entered the competition and 14 international cuppers selected 900 bags (5,400 kg) of coffee from ten farms.

The winning coffees were sold at the world s first online coffee auction held in December 1999, involving 23 bidders from four continents who participated in the 48-hour auction.

Significant preparatory efforts were put into this experiment in 1999. The Gourmet Coffee Project sponsored several of the most active partners, parts of the web site design and also legal advice on contracts between the parties. But farmers were very sceptical, given the experimental nature of the Internet auction, and several were tempted to abandon the programme. In the end, however, all agreed to join when ITC offered to guarantee a minimum sales price. A lump sum was deposited in Brazil as a guarantee to keep the farmers on board.

The auction was a huge success. The technology worked and prices were considerably above expectation. Some coffees fetched more than double the expected price. ITC s guarantee was returned from Brazil to Geneva a few weeks after the auction - and the funds could thereby be used for other activities in the project.

Those behind the successful experiment developed the concept further and created Cup of Excellence, a regular competition run today by the Alliance for Coffee Excellence, a nonprofit organization. Brazil has hosted the Cup of Excellence auction every year since 1999; El Salvador, Guatemala, Nicaragua, Honduras and Bolivia have joined since then and more countries are likely to participate in coming years. Details are available on the web site, at http://www.cupofexcellence.org

The amount of coffee sold at the Cup of Excellence auctions is "a drop in the ocean", says Peter Smit, Chief of ITC's Market Development section. But the positive impact of the programme and its potential far outweigh the pounds of coffee sold. "This programme can be duplicated and can make a huge difference worldwide. …

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