Selling coffee as cherry (or the fruit of the coffee plant) has become increasingly popular in certain producing countries. In regions where access to dry mills is limited, the practice has become more appealing to smallholder farmers.
In the short term, producers are paid quicker and don’t need to invest in complex processing set ups. But in the long run, selling parchment coffee (green beans which have a thin layer of protective skin intact) typically has more benefits.
Buying in cherry is also more affordable for traders, which then begs the question of who really gains the most value from this practice. Moreover, as arabica and robusta prices are unlikely to drop anytime soon, will more traders be incentivised to buy cherry to keep costs down?
Alejandro Cadena, co-founder and CEO of Caravela Coffee, and Juan Pablo Campos, founder of Lohas Beans, provide their insight.
You may also likeour article on why cherry sorting is essential to improve coffee quality.
Why would producers want to sell in cherry?
Compared to other businesses in the coffee supply chain, producers don’t typically hold much capital at any given time – especially smallholders. This means they must manage maintenance and operational costs with limited liquidity.
Selling coffee as cherry is a viable option for producers who need quicker cash flow. They can save time on processing, or may not be able to invest in the required infrastructure and resources in the first place. The practice also eliminates the risk involved in processing, which can be costly if there are missteps or unfavourable conditions which result in defects.
Depending on the region, some producers may have no choice but to sell as cherry. Across East Africa, for example, the majority of farmers process their coffee at centralised mills. In contrast, most producers in Colombia have the resources and equipment to process up to dry parchment.
A centralised mill model has its benefits. A bigger mill can mean more accountability for environmentally-sustainable practices, such as proper waste water management, but producers often lose value.
Why the industry considers buying in cherry as bad practice
On the surface, selling coffee as cherry can seem like a straightforward solution to improve producers’ financial return.
Alejandro Cadena is the co-founder and CEO of B Corp specialty exporter Caravela Coffee. He says it’s not that simple.
“Buying coffee in cherry form often disadvantages producers, leading to several long-term challenges,” he tells me. “A recent study in Uganda shows that farmers who process coffee themselves are more financially resilient than those who sell as cherry. Selling parchment is more profitable, provides greater financial security, and improves the quality of life for growers and their families. Contrastingly, selling cherries at lower prices can lead to increased poverty in rural communities.
“When producers process their cherries into parchment, they add value through their labour and skills, which allows them to command higher prices, especially for higher-quality coffee,” he adds. “Selling as cherry, however, transfers this value addition to processors, who have little incentive to share it with growers. It’s no coincidence that the poorest coffee growers are often those who sell cherry.”
As they don’t acquire the skills to process their own coffee, producers are often unable to improve quality and pass on their knowledge to younger generations of farmers. Moreover, selling an undifferentiated product means its value is determined once it’s out of producers’ hands, so they could lose out on higher prices.
“They also have diminished bargaining power because they are selling a highly perishable product, limiting their ability to negotiate better prices,” Alejandro explains. “Transporting cherries is more burdensome for producers, as they must move five times more weight than if they were selling parchment, and they need to do this daily.”
Harmful rather than helpful
Traders also run the risk of “commoditising” specialty coffee. It’s more difficult to maintain traceability when processing coffees at a centralised mill, and the risk of lower-quality coffees entering the supply chain increases as different lots are mixed together.
“Wet mills aiming for economies of scale may prioritise processing large, homogenised lots,” Alejandro points out. “This benefits large commercial roasters, but is detrimental to specialty roasters who value diverse and unique cup profiles.”
A good way to combat high coffee prices?
Buying coffee as cherry rather than parchment is generally much cheaper for traders and roasters. In the wake of ever-growing coffee prices, we could see the practice become more widely adopted.
On 24 August, Forbes reported that London robusta futures, the global benchmark for prices, reached a record US $4,971/tonne. New York arabica futures, meanwhile, hit US $2.49/lb – almost their highest level in decades.
“As prices have surged in recent years, some traders and roasters have advocated for producers to sell coffee as cherry, citing the challenges associated with processing,” Alejandro says. “It’s a cost-saving strategy. By purchasing cherries, traders can reduce their expenses since growers have less bargaining power at this stage of production. Additionally, the economies of scale achieved through processing larger volumes can lower costs further, benefiting traders and roasters by offering them lower prices.”
This then raises the question of whether buying coffee as cherry is more about making life easier for farmers, or taking advantage of their lack of infrastructure and resources at the expense of maintaining margins.
Juan Pablo Campos is the founder of Colombian specialty coffee exporter Lohas Beans. He agrees that price volatility encourages buying in cherry, but provides a different perspective.
“High prices incentivise traders (whether middlemen or exporters) to buy cherry and process it themselves,” he says. “In my opinion, this allows exporters and roasters to scale the volume of standardised coffees in international markets. In the US, Canada, EU, Asia, and Oceania, I see growing demand for these coffees.”
Traders and roasters can manage coffee prices in other ways
As coffee prices rise, margins are squeezed even further. Buying in cherry is an attractive strategy to reduce costs, but Alejandro emphasises that there are other practices which have less impact on producers.
“Instead of sourcing from multiple regions, concentrate on three to five origins,” he says. “This allows for deeper relationships and more streamlined logistics, reducing costs while maintaining quality.
“Buying bigger volumes from fewer suppliers can be more cost-effective,” he adds. “This strategy works even better when combined with purchasing multiple quality grades, not just top-scoring micro lots.
“Utilising forward purchasing and long-term contracts can save costs and reduce risk across the entire value chain,” he continues. “By securing prices and quantities in advance, roasters and traders can foster greater resilience at farm level.”
Possibilities for value addition
The general consensus is that farmers can retain more value when they have the ability to process their own coffee, or through a co-operative.
But Juan explains that in Colombia, new centralised mills are helping some producers to receive higher prices and scale processing.
“Buying in cherry can be an important step towards improving quality and standardising processing,” he says. “It’s a drastic shift away from how we usually process coffee in Colombia, but it’s certainly necessary for us to supply growing volumes of washed coffees to roasters around the world.
“I’m aware of a few cherry processing stations which were set up to pay higher prices to producers, particularly for varieties like Pink Bourbon, Tabi, and Sidra,” he adds. “A processing station established by Jhoan Vergara in Acevedo, Huila is one example, as well as another set up by Nestor Lasso in Bruselas, Huila.”
Juan emphasises that these mills also share insight and knowledge about coffee fermentation and can help improve market access – potentially benefiting farmers in the long term.
Buying in cherry is generally cheaper, so it can be an effective way to immediately mitigate high coffee prices – but it doesn’t add value in the long run. Instead, it’s more beneficial for traders and roasters to secure prices in advance so they can manage stock more efficiently.
In certain producing countries, however, it seems there is potential for producers to retain value from selling as cherry. There will always be risk involved, but if farmers have the bandwidth, it could help to standardise coffee quality.
Enjoyed this? Then readour article on a day in the life of a coffee cherry picker.
Perfect Daily Grind
Want to read more articles like this?Sign up for our newsletter!
The post While coffee prices remain high, will buying in cherry become more acceptable? appeared first on Perfect Daily Grind.
