The Roast: Green Buying Terms of the Trade

A Brief Overview of the Language and Processes of Buying Green Coffee

This week, along with our sister company Casa Brasil, we will finalize selections for our first shipment of Brazilian coffees for the 2018–2019 harvest. As roasters, we obviously want to get our hands on the best coffees we can find, but it is equally important that the coffees we select arrive quickly and are accurately represented throughout the supply chain. Coffee is an agricultural product that begins to degrade the moment that is it harvested, so the sooner we can get it roasted and brewed, the better. Coffee that is contracted at origin will go through multiple processes and can change hands several times. We sample our selections at various steps along the chain to ensure that quality is maintained throughout and that the coffee we select at origin is the same coffee that arrives in our Austin warehouse. The following is a brief guide to some of the purchasing, sampling, and shipping terms critical for navigating the world of green coffee buying.


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Contracts: Futures, Forward, and Spot

Coffee is the second most traded commodity in the world behind crude oil, and thus there are many approaches to the way it is bought, sold, and traded. Future contracts (or “futures”) are legal obligations to purchase a standardized amount of a product at a fixed price on a predetermined date. In coffee, futures are typically sold by the container (37,500 lbs), and delivery months are March, May, July, September, and December. These contracts are bought, sold, and traded on the New York Stock Exchange and their movement along with supply and quality projections play a big role in determining the “C-market” value of coffee at any given time. Futures traders, even if they will never see an actual coffee delivery, have great impact on the value of coffee and nearly every contract written in the industry, large or small, is calculated based on coffee’s C-market value.

Forward contracting is a broad term that encompasses the way many roasters purchase green coffee. Like futures, forward contracts require a set price to be paid on a predetermined delivery date, but unlike futures, these contracts are not traded on an open exchange and are usually between an actual buyer and seller, not just speculators who will never touch the product. While forward contract pricing is often based on futures, it does not have to be. In Brazil, for example, we attempt to operate outside of the C-market. Under this very simple model, we request a certain quantity and a quality threshold and agree to a fixed rate in advance, assuming our requests are met. This way the producers know what we expect from them, and they know what they can expect from us in return. This greatly reduces unexpected risk on both sides from volatile market swings and allows producers to invest in quality improvements without the fear of financial losses due to factors out of their control.

The most simple contract and perhaps the most common among small roasters is a spot contract. “Spot” refers to the purchase of a product for immediate payment and delivery. Coffees purchased spot are typically available in the seller’s warehouse and are ready for immediate release to the buyer. While these transactions are fast and easy, relying on spot coffee is risky as there is no guarantee that a roaster will be able to fulfill all of their needs this way. The most sought after coffees are typically forward contracted, and thus much of the coffee arriving from any given origin is already spoken for. For roasters looking to maintain consistent flavor profiles and quality year-over-year, forward contracting is strongly recommended.


Samples: Type, Offer, PSS, Arrival

Throughout the buying process we receive samples of green coffee at various stages. Each green sample that arrives in our Austin warehouse is visually inspected for defects and then roasted for cupping. During the cupping process we assign each sample a sensory score determined by evaluating attributes like aroma, flavor, aftertaste, and acidity. In addition to determining overall quality, samples are evaluated for a host of other purposes. The following are a few of the most common sample types:


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A type sample is representative of the quality and/or flavor profile that a seller can provide. These are often used to establish new relationships and to introduce a potential buyer to an unfamiliar product line. Contracts can be established using type samples, but they are typically followed by offer samples once the parties narrow down profile and quality needs.

An offer sample is representative of an actual lot of coffee that is available for purchase. The coffee could be at origin, in transit, or ready for immediate spot purchase. Once a buyer approves an offer sample, further terms are then set for additional expectations and sample approvals.

A pre-shipment sample (PSS) is a sample sent for approval just before a contracted lot of coffee is shipped from origin. The PSS should be an accurate representation of the entire lot as it will arrive. Many contracts are subject to PSS approval and can be rejected if the buyer is unhappy with their evaluation.

The final sample we will receive before our coffee is delivered to Austin is an arrival sample. This sample represents the lot that has arrived in the U.S. and is ready or being prepared for release to us. We prefer our coffee to be shipped to Houston, but sometimes logistics require it to go through busier ports like Oakland or Newark. Regardless of where the coffee lands, a lot can go wrong on its journey. Storage or weather conditions can affect the coffee, bags can break, spill, or even be lost. An arrival sample is used to ensure that the approved PSS is the same coffee that has arrived in the U.S. Some contracts are subject to arrival sample approval and if rejected can result in no sale or an obligation for the seller to replace the rejected coffee with an approved lot.

Shipping Terms: FOB, FOT, FAS, and EXW

Another important element to consider when contracting and shipping coffee internationally is liability. Who pays for what and who is responsible if something goes wrong? The following terms are used to establish when the coffee will change hands—more specifically, when the cost of logistics and risk are passed from the seller to the buyer.


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The most common form of International shipping is called FOB, or Free on Board. Under this model, the seller relinquishes all risk and expense to the buyer once the freight is loaded onto the ship. In simple terms, once the coffee is on the boat, the seller’s obligation is complete. The buyer will handle import and additional warehousing and delivery costs as well as assume all risk if the freight is lost or damaged in transit. Similar freight models include FOT (Free on Truck) if the freight is being shipped by ground transportation, and FAS (Free Alongside Ship) where the seller delivers the freight to the port but the buyer is responsible for loading fees and risk.

Another common contract type is  “EXW, Ex Works, or Ex Warehouse. This one is simple. The seller fulfills their obligations when the goods are available for pick-up at their premises. This could be at warehouse at origin where the buyer would be responsible for pick-up, loading, export/import, etc. but more commonly it means the coffee has already been imported and is ready to be released to the buyer. Spot contracts, for example, are usually EXW.


International trade and shipping are clearly complicated, but understanding some basic terms and, more importantly, building relationships throughout the chain can be the difference between a smooth transaction and a logistical nightmare.

The Roast: Grackle

Everyone deserves a great cup of coffee. Fresh, seasonal, roasted to perfection. But what about your coffee flavor profile? The abstract mumbo jumbo flavor notes on the front of a bag and the nonsensical copy on the back (looking at you John) don't really tell us much about the coffee itself unless we understand the jargon. The number of times I’ve been asked if a coffee is flavored because of the flavor notes could make a grown man cry—and sometimes I do. We do our absolute best to provide a cup for everyone. Every blend fits a profile for any coffee drinker ready to take the training wheels off.

Over the years I’ve had a lot of time face-to-face with customers. As a barista, I really tried to help people discover their favorite drink or coffee. Not too dissimilar from Tom Hanks in the Davinci Code, this involved deciphering what people were trying to describe. “I don’t like acidic coffee,” could mean multiple things. It could be the literal acid quality of a bright washed coffee or perhaps the oils from a dark roast coffee that upsets their stomach. Helping people find their favorite coffee always brought me great joy. 

We knew we wanted to make a new blend and just weren't sure what it should be. So the only way to make a good, logical decision was to stop and take inventory of where we were and why. Like usual, I rejoined the never ending conversation between the Wolf and myself regarding our current blends. If you’ve participated in a tasting or class with me, you will know I refer to flavor profiles in relation to processing method first, then origin. For our blends we also add roast profile. So we started mapping out our blends using the X axis for Processing and Y for Roast.

X Axis

  • Washed Acidic 
    • 10 = Highly Acidic – Microlot quality 86+ (Kenya coffee for example) 
    • 5 = Medium Acidity – Washed Colombian blender
    • 2 = Low Acidity – Washed mild (close to a pulped natural profile)
  • Pulped Natural 
    • 0 = Coffee flavored coffee – Chocolate, caramel, nutty
    • Can fluctuate toward the acidic side or natural side 0–5 points 
  • Natural 
    • 10 = Ethiopia Natural – Bright and fruity
    • 5 = Brazil Natural – Medium fruit, heavy chocolate
    • 0 = Chocolate, caramel, pulped natural profile 

Y Axis

  •  -10 = Under roasted 
  • -5 + Microlot profile 
  • - 3 = Light roast
  • 0 = Medium roast
  • +3 = Medium dark 
  • 5 = Dark 
  • 10 = Charcol 

We have devised a set of blend profiles that allow us to visually plot flavor [or sensory] components and create blends that are truly distinct, resulting in a blend for every palette.
 

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After mapping our current drip coffee blends, it was immediately apparent that we were missing a dark component with a natural fruity attribute. To fill that gap we needed to blend coffees that have the smooth dark chocolate body, floral aromatics and stone fruit flavor. After trying a few variations with our LC base dark and our LC natural blender, we decided on 70% LC base dark and 30% LC natural blender.

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We named the resulting blend...

THE GRACKLE!

 

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The next step in creating blends is likely the hardest, at least for me. We had to write copy for the bag sticker. But what can you say about a blend named after a dastardly bird that no one really likes? Here are a couple of our attempts.

 

  1. “The grackle is a black bird whose song crescendos to an irresistible chorus as she flocks with her peers in treetop clouds. Like this coffee, the collective spectacle is a natural delight. The Grackle Blend brings dark chocolate, almond, and blackberry voices to the ensemble, and our roaster's alchemy renders a rara avis indeed: a natural-inflected dark roast coffee that will hold your attention through a second cup and counting. Who cares why the black bird sings when she inspires such things!” - John Outler

    • Nice try, John, but this let the grackle off way too easy. We were looking for something a little (a lot?) more edgy.

  2. “That loud rusty gear and shattered glass cacophony overhead is a flock of grackles that want to darken your horizon and peel the pain off your car. That's why we named our new coffee The Grackle Blend. It's a natural dark roast with almond, blackberry and dark chocolate notes, so of course it will remind you of a terrifying flock of black birds that loom in illogically large numbers so they can gut you when you turn your back. Everyone deserves a great cup of coffee.”  - John Outler

    • OK, maybe this is too edgy? There’s got to be a happy medium.

  3. “The dark full bodied flavor covers the pallet like the black birds at the HEB parking lot. While the smooth chocolate and blackberry finish gleams through the darkness like the violet on the grackles coat. For as many similarities the bird may have with this blend, we are sure this coffee will have you singing a softer tune. “ - Ian Myers

    • Good one, Ian, getting there, but I’m struggling with the image (and flavor) of black birds on my palate. 

  4. The grackle teams, swarms and shreiks; they are like a slow-moving avian train wreck you can't look away from; their attraction is entirely negative, if utterly compelling. They raise more questions, some bordering on existential, than answers... why do they do what they do? why the fucking parking lot, FFS? what did we do to them? and why, in the name of all that is logical, did you name a coffee after them? seriously... Answer. That. Question.” - John Outler

    • OK, John, now you’re just showing your ass. Relax and have a cup of Grackle Blend.

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Eventually landing on:

 

The Grackle—dark chocolate and ripe berries that will give you the confidence to ruffle your feathers, raise your beak, and shriek at the sky. Well, maybe not, but we're confident that one day the Grackles will not be content to scare the hell out of us when we go to the supermarket, so we figure we better start currying some favor.  

 
 

The Roast: The Art of Skim

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At Little City we cup a lot of coffees. Cupping is the step-by-step process used for evaluating a coffee’s individual attributes to assess its overall quality. Its steps are numerous and steeped in guidelines and protocols. A cupper at source in Ethiopia or Indonesia should theoretically follow the same procedures as a potential buyer in Austin. It is an international language that connects the industry and aims to keep all points of the supply chain on the same page when discussing a particular coffee’s quality and value.

Read more about cupping protocols here!

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One step in the cupping process that is rarely discussed in terms of protocol is the skim. After the coffee has been brewed (8.5g of coffee per 150mL of water at 200-205 deg F for 4 minutes) and the crust of grounds formed on top has been broken (with the bottom side of a spoon in 3 swift motions), the foam that remains on the surface of the cup must be removed. This step is strictly functional, ensuring that the cuppers get a clean spoonful of liquor - the term used for the brewed coffee that will be slurped by spoon during evaluation. Aside from washing dishes, skimming is likely the most monotonous and time consuming step of the entire cupping process.

In our years of daily cupping and travel we have skimmed a lot of cups and have seen a lot of cups skimmed. Below are some videos of the various methods we’ve encountered:

The two-spoon method

The most common skim. Two spoons are placed together and slowly fanned out around the inside edge of the cup to collect the foam from the top. Here Randy makes it look easy though it will take some practice for new cuppers to be able to remove all of the foam in one motion.

The one-spoon method

This method was captured at a Coffees of the World class given by Joel and Eric in Varginha, Brazil and was the catalyst for this extremely specific and geeky blog post. Here Jorge Assis of Monte Alegre uses a one-handed scoop to corral the foam and then a swirling motion on the surface of the cup to coax it in to the spoon. One may argue that this amount of motion could cause excessive agitation and potentially over-extract the sample, but who are we to argue with a guy who has been cupping longer than half of our company has been alive? Plus it looks super cool and leaves a perfectly clean cup!

The Blow Method

Finally a look at the rarest of the skim methods we’ve witnessed - the blow technique. In this video Joel took at a local coffee competition in the state of Parana years ago, a contestant floats all of the foam to one side of the cup with a gust of breath before gently scooping it out with his spoon. This technique is rarely seen in Specialty Coffee and is more commonly seen with old-school cuppers who use the Brazilian COB (Classificação Oficial Brasileiro) system, where the roast is lighter and the grind coarser, thus facilitating the blow, if you will. We’re not sure if it is critical to the technique, but the Sam Elliot stache definitely doesn’t hurt.

There you have it - three videos that prove the skim worthy of our attention and appreciation. We encourage our fellow cuppers to practice these techniques and turn us on to your own special skim methods. Be sure to tag us in your videos and use the hashtag #artoftheskim.

The Roast: The Challenges of Storage

Welcome to The Roast, where we detail the journey of unroasted green coffee through storage, transport, roasting at our facility, and eventually to your door as the brown beans you know. In this first piece, we look at the technical coffee storage challenges that inspired us to rethink our methods.

Heraclitus famously claimed that you can’t step in the same river twice. Maybe the same could be said about coffee roasting—you can never roast the same coffee twice. But you can sure as hell try! 

Why can you never roast the same coffee twice? Coffee is so many things—a plant, a stimulant, a ritual; but when you boil it all down, coffee is a seed (OK, we promised puns, so there you go. Never boil your coffee!) And, like all seeds, it is living entity that is constantly changing and adapting to its environment.

  • Coffee seeds, or beans, are hygroscopic, meaning they actively exchange moisture with the environment around them. Put coffee in a humid place, it will get wetter; put it in an arid place, it will get dryer.

  • Many of the components that give coffee the flavor we so love are preserved in the cell walls of the endosperm. If the coffee is not stored properly then those reserves will be depleted through processes such as respiration and oxidation. As temperature and relative humidity increase, the rate at which these activities occur also increase, further depleting these reserves and thus decreasing the quality of the coffee.  

  • Depending on a seed’s chemical composition, it will need to be dried to a different moisture content level in order to be safely stored. Simply put, moisture content is the amount of water in the seed and is either calculated in “wet basis” terms, meaning the the amount of water divided by the total weight of the seed (dry matter + water) or “dry basis” terms, meaning the amount of water divided by just the amount of dry matter. While water is necessary for the life of the seed, it can also be a bad hombre, leading to rapid deterioration from mold, fermentation, or a high rate of metabolic activity that consumes the cell reserves. This degradation happens through reduction in sugar levels, and increases the levels of polyphenols, electrical conductivity and potassium leaching, among others (Borém et al, 2008).

  • Seeds that are oily need to be dried more. Why? Since water and oil don’t easily bind, the water in these seeds is less bound to the seed, and is more available to do its bad hombre activities such as fermentation or mold formation. On the opposite end of the spectrum, starchy seeds can be dried less, since water binds to starch and is therefore less available.

  • Coffee seeds lie in the middle - not too oily, not too starchy. Empirical evidence suggests that the ideal moisture content to store coffee is 11% wet basis (Corrêa et al. 2003; Afonso Junior et al. 2008). The best way to maintain this is to store the coffee at less than 70% relative humidity at the coldest temperature possible above freezing (Borém et al, 2008).

As Guy Clark sang (and Steve Earle wrote), “they say in Texas the weather is always changing, and one thing change will bring is something new.” Over the years, we have struggled with the changing weather in our efforts to keep constant temperature and humidity. Sometimes the summer heat and humidity have inspired our AC to kick on and maintain a wonderful homeostasis at 65° F and 60% relative humidity. Other times, not. Similarly, a cold winter dry spell many a time has left our humidifiers struggling to keep pace with the dry air.

In the past few months we completely remodeled our green warehouse space. First, we increased its size so that we can bring more coffee in-house at once, thus bringing under our control even more the quality of our coffee. More importantly, we added (lots) more insulation, an oversize AC, and mist-aspersion. We can’t stop the aging process of the seed, but I’ll be damned if we won’t die trying!

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New improvements to our storage facility.

New improvements to our storage facility.

We have always been searching for the best packaging to transport and store the coffee. I have had the good fortune of participating in some pioneering studies for coffee packaging (Ribeiro 2011; Ribeiro et al. 2013; Andrade 2017).

The sensory analysis team for the scientific research behind a recent innovation in coffee packaging - lower cost high-barrier bags. (Fabricio Andrade’s PhD dissertation which is listed in the references below.)

The sensory analysis team for the scientific research behind a recent innovation in coffee packaging - lower cost high-barrier bags. (Fabricio Andrade’s PhD dissertation which is listed in the references below.)

Our very first coffee was Daterra’s Pearl Reserve which came to us in vacuum-sealed bags as part of their Penta system. When we started importing ourselves, we used vacuum-sealed and then Grain Pro ® bags. Now we are an early adopter for a new packaging technology that provides high-quality moisture barrier bags at a reduced cost for growers (the same ones referenced above in the photo of the sensory analysis team).

A photo of a much younger me at Daterra’s warehouse in Patrocinio, learning about their Penta System for quality control, including the vacuum-sealed boxes.

A photo of a much younger me at Daterra’s warehouse in Patrocinio, learning about their Penta System for quality control, including the vacuum-sealed boxes.

One of the earlier containers we brought in, with vacuum-sealed bags inside boxes.

One of the earlier containers we brought in, with vacuum-sealed bags inside boxes.

Another recent innovation we have implemented with our Brazilian export partner Sancoffee is the use of high-barrier big bags, a method proven to provide better protection for the coffee.

A photo of our coffee in a high barrier big-bag awaiting export.

A photo of our coffee in a high barrier big-bag awaiting export.

Growing up in Iowa, the sight of grain silos was common, but nothing I gave much thought to.  Yet when completing my masters in Agricultural Engineering, one of my favorite classes was on grain silos—calculating systemic pressure, dimensioning fans, determining when to aerate or not based on relative humidity, external temperature and grain mass temperature... I know, I know, it doesn't sound too interesting, and I’m still not sure how I got from loving coffee for coffee’s sake to applying the Janssen equation to determine wall stress in silos.

But perhaps in this awkward interest I have company. After all, you, dear reader, are still reading :) Let's not think about it too much. As a reward for getting through it, here are Guy Clark and Emmylou Harris singing Steve Earle's Ft. Worth Blues.

Cheers!

Joel

 

References

Afonso Junior, P.C., F.M. Borém, P.C. Corrêa, and V.C. Siqueira. 2014. “Physical and Thermal Properties of Coffee Fruit and Seeds.” In Handbook of Coffee Post-Harvest Technology, edited by F.M. Borèm, 1sted., 30–47. Norcross: Gin Press.

Andrade, F.T. 2017. “Qualidade Do Café Natural Especial Acondicionado Em Embalagens Impermeáveis E Armazenado No Brasil E No Exterior.” UFLA.

Borém, F.M., E.P. Isquierdo, F.C. Ribeiro, J.T Almeida Neto, and A. Piagentini. 2014. “Coffee Storage, Milling and Sorting.” In Handbook of Coffee Post-Harvest Technology, edited by F.M. Borém, 1sted., 143–72. Norcross: Gin Press.

Corrêa, P. C., P. C. Afonso Júnior, F. S. Silva, and D. M Ribeiro. 2003. “Qualidade Dos Grãos de Café (Coffea Arabica L.) Durante O Armazenamento Em Condições Diversas.” Revista Brasileira de Armazenamento 7: 137–47.

Ribeiro, Fabiana Carmanini. 2013. “Métodos Alternativos Para Armazenamento de Cafés Especiais.” Universidade Federal de Lavras.

Ribeiro, Fabiana Carmanini, Flavio Meira Borem, Gerson Silva Giomo, Renato Ribeiro De Lima, Marcelo Ribeiro Malta, and Luisa Pereira Figueiredo. 2011. “Storage of Green Coffee in Hermetic Packaging Injected with CO2.” Journal of Stored Products Research. doi:10.1016/j.jspr.2011.05.007.