Issue link: https://read.dmtmag.com/i/491365
STiR tea & coffee industry international 57 roaster buys from the importer's position. The risk and the liability all falls with the importer to the roaster." And while the new-found relationship brings the producer and the roasting cus- tomer closer together, it most often does not exclude an importer/exporter from the equation. The import/export expert takes on the role of facilitator to ensure the transaction is completed. In the direct model, however, the roaster deals directly with the producer. "But it can be a very tricky business so you really need a good importer or ex- porter who can help you put this togeth- er," she said. When sourcing, consider these options: Direct trade • The roaster negotiates the quality and pricing directly with a coopera- tive or producer. • The roaster pays the "freight on board" or "free on board" (FOB) cost. • The roaster assumes risk related to quality of the beans. • The exporter and importer are re- sponsible for logistics and transport. Direct source • The roaster negotiates the quality and pricing directly with a coopera- tive or producer. • The roaster enlists an importer. • The importer pays the FOB cost. • The roaster assumes risk related to quality of the beans. • The exporter and importer are re- sponsible for logistics and transport. Direct relationship • The roaster maintains regular com- munication with the cooperative or producer including discussions about quality and pricing. • The roaster buys the coffee from an importer in the standard supply chain. • The roaster retains the right to reject or simply not buy coffee that does not meet expectations. Direct trade benefits each group in the transaction. Producers have the op- portunity to secure better prices and develop long-term commitments with roasters. There's also transparency in the transaction. And, by having relationships with roasters, negotiations can include unique lots and smaller sizes. Roasters can establish exclusivity on some lots and better understand both the sourcing and the story behind the products. They also have price transparency. Importers and exporters also benefit. Sales are driven by producer and roaster demand, transactions are transparent and new supply chains are created. The model is not without its challenges, however. As emphasized during the session's discussion, there are often additional parties in a transaction. A group of small producers may work together on a sale just as roasters may band together for a purchase. There's also a need for a standardized green coffee contract that works across the supply chain yet remains flexible enough to accommo- date multiple participants. Attorney Marshall Fuss emphasized the complexities involved in developing a common contract that works for the diverse interests along the supply chain. "There are allocations of risk that have to be talked about," Fuss said during the session. "There could be damage (to product), fraud where lots are switched or neg- ligence." Input is being sought to determine how to deal issues such as language barriers, the lack of Internet access in some locales and the effect of sudden price fluctuations on direct agreements. "Everyone should be careful who your partners are," Trindle Mersch said. "You need to know who's reliable, who's ethical." "We're still working out the kinks," she said. "The model has been used for more than a decade and I think it's a great model. I wish we could get a model contract completed so we have adequate legal protection, however."