Risk Management in the Coffee Supply Chain

A promising trend is emerging in the global coffee supply chain that deserves recognition.

Sustainable Harvest Coffee Importers, based in Portland, Oregon, is an importer of high quality specialty-grade coffees from over 15 countries around the world. As pioneer of the “Relationship Coffee Model,” it has championed the direct trade model and the creation of closer connections between farmers and consumers.

As part of this mission, they have come up with a unique pricing mechanism designed to protect growers and roasters from exploitation and exposure to sudden shifts in market forces.

According to the group's founder, David Griswold, the model integrates coffee sourcing and importing with farmer training and capacity building, collaborative innovation, and community development at origin.

Regional “Let’s Talk Coffee” events focus on teaching price-risk-management techniques, as well as other effective coffee growing practices.

Price insurance protects against a drop in price for roasters and a rise in price for growers. The majority of cooperatives and other producer organizations that Sustainable Harvest works with have committed to taking out price insurance on their contracts for this harvest, and it has been paying off significantly.

When the C-market price swung upward, many producers redeemed their insurance payout for tens of thousands of dollars. With this unique program, Sustainable Harvest is helping producers increase their ownership of the product by allowing them to reinvest in their crops with the insurance payout, ensuring a sustainable supply for years to come.

Price risk management is one of the key trainings this group – representing one of the biggest private sector investors – delivers to the producers in its supply chain.
They source coffee from more than 100 producer organizations representing over 200,000 growers, and its price risk management trainings has reached hundreds of those growers, primarily in Colombia and in Peru.
With so much recent news on “fair trade” violations and continued abuse of workers in this industry, the supply chain management community will no doubt welcome this innovative solution.

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