- An increasing number of coffee producers are selling their crop as cherry, rather than parchment
- Many buyers are positioning this as a move that supports coffee producers
- But it is important to note that this also allows them to add more value
SELLING COFFEE as cherry has become increasingly popular in coffee-growing regions around the world.
Several factors are driving this shift. One to note is the requirement for dry mills which allow producers to process their coffee and sell it as parchment. Without this, selling cherry becomes much more appealing.
Karl Wienhold, author of Cheap Coffee and a researcher of coffee economics at the University of Lisbon, highlights a number of factors that lead to exporters purchasing cherry. These include how coffee-growing regions were formed (e.g. state-led planning and/or redistribution of colonial estates); farm size and available capital; institutional guidance; and historic power dynamics between farmers and downstream links of the value chain.
Karl explains that a producer’s ability to mill their own coffee depends hugely on the region.
“In Colombia, for instance, there was a massive institutional effort to equip small farmers to process up to dry parchment,” he says. “In some Central American countries, forced and voluntary land redistribution converted old landowners into mill operators.
“In much of East Africa, meanwhile, colonial dominance well into the 20th century followed by centrally planned coffee economies have maintained centralised mills.”
In countries where dry mills are more difficult to access, selling cherry to exporters will be more appealing – and possibly necessary.
Coffee producers are increasingly selling cherry
Many coffee producers choose to sell their coffee as cherry either to save time on processing or because they don’t have the infrastructure. Alternatively, some farmers may sell a portion of their crop as cherry, and concentrate on processing the rest to sell for a higher price.
In contrast, selling coffee as parchment gives producers more information about the quality of their crop, as well as potentially adding more value.
“Different levels of urgency between buyers and sellers is a source of bargaining power,” Karl says. “Given the structurally superior position of coffee farmers selling a dry product versus cherry, it is remarkable to see them devolving back to selling cherry.”
So, why are they shifting back?
Daniela Maya is the CEO of Specialty Coffee Factor. She says farmers began selling cherry to improve working conditions, offering a chance to lessen the workload on what can be a tiresome day. She adds that it also gives coffee producers the opportunity to minimise processing-related labour costs.
Furthermore, every step up the value chain presents a new risk. For example, selling cherry makes producers less responsible for any defects discovered during milling and processing.
Many producers also lack the institutional knowledge and resources needed to process their coffee and maximise its value. For them, selling cherry may seem like the most straightforward option.
However, it isn’t as simple as that.
When you purchase coffee as cherry, you are buying an undifferentiated commodity. As quality is assessed after milling, this means the potential value of a lot is determined once the farmer is no longer involved.
For the buyer, this can be hugely beneficial, as they get the opportunity to add more value. This, in turn, increases their percentage of the final sale price.
“Buying cherry at the commodity price equivalent and selling exclusive and differentiated specialty coffee can be extremely profitable and carry little risk,” Karl says.
Equitable trading relationships
This is where the question of social responsibility comes in. Buying coffee as cherry is cheaper, broadly speaking, which raises an important question: Is this shift more about making life easier for farmers, or taking advantage of a lack of infrastructure?
Buyers use various models to price cherry. Most often, this includes converting cherry weight to parchment weight – and paying the equivalent market price. However, Karl warns that the weight conversions can vary significantly in the field, creating risks for both parties involved.
An alternative would be to wait and see what price the coffee eventually fetches at market, and share that equitably. However, given that smallholder farmers specifically often lack liquidity, this option is not likely to be viable for many producers.
“It sounds like a great deal,” Karl says. “Unfortunately, the possibility exists that the buyer processes the cherry into a higher-priced coffee than the producer expected, but never distributes the profit to the producer.”
For Karl, buying cherry does more harm than good. It creates more opportunities for buyers to exploit trade terms and weaken producers’ bargaining power, despite the immediate benefit from short-term income.
He believes a more equitable distribution is only guaranteed when farmers have the ability to process their own coffee (or through a cooperative), which ensures they add value.
“Losing control of the wet mill processes that dictate the sensory profile effectively shuts them out from ever accessing differentiated markets for specialty coffee and the possibility of earning above-market prices,” he says.
Ultimately, whether or not it can be beneficial for coffee producers depends on each individual supply chain. As Karl says, there are risks for the producers, and bargaining power is a factor to consider. But in a scenario where producers receive a share of the final sale price rather than a flat fee based on cherry weight, there could be advantages.
Want to read more articles like this? Sign up for our newsletter here.