Forward Contracts & Direct Access
Contract Overview:
Whether you see them or not, contracts are the backbone of the coffee supply chain, upholding the framework for every transaction that occurs from producer to roaster. At Homage, a big part of our job is facilitating the contracts between producers, millers, exporters, importers and roasters. Although contracts are not all that exciting, we see them as the unsung heroes of equitable partnerships, and we are dedicated to utilizing contracts that maximize opportunity for our partners throughout the supply chain as well as ourselves.
Forward Contracts:
Generally speaking, a forward contract is an agreement between a buyer and seller of a good, where the transaction and exchange of goods are set to take place at a future date. So, by their nature, forward contracts are especially useful with goods that have not yet been produced or are not currently available for delivery. Due to the timelines and seasonality of harvesting, processing, exporting, and importing green coffee, the forward contract is an effective tool allowing roasters access to desirable coffee in advance. Through direct trade, forward contracts, roasters can secure coffee from our producer partners prior to export, and sometimes before it is even harvested or processed.
How Does It Work?
At Homage, our desire is to partner with producers for the long haul, working together to implement sustainable practices that increase quality and productivity. As we continue to work with each producer throughout the year, we can forecast realistic expectations for each upcoming crop, and keep our roaster partners updated as expectations come to fruition. Through direct trade, forward contracts, roasters can commit to coffee in advance, based on reputation or past experience, or wait to receive a pre-ship sample before making a decision.
We understand forward contracts require a great deal of trust, and trust is the foundation of the equitable partnerships we are building locally and abroad, even in a competitive market. We believe in each producer and roaster we partner with, and we are committed to upholding transactions that are worthwhile for all parties involved at each point of connection.
Benefits Of Buying Forward:
Increased Access & Expanded Timeline: Secure the best coffee for your lineup on a timeline that makes sense for your operation through increased access to high quality lots at peak freshness, and the potential for exclusivity in your market.
Improved Price & Reduced Risk: Receive price cuts through our volume-based pricing model, and reduce the risk of warehouse storage and interest fees with immediate accessibility upon arrival.
Confident Preparation & Streamlined Operation: Plan ahead with early access to information and a clear understanding of harvest, shipment, and arrival timelines. Streamline green buying and optimize cash flows with a clear expectation of future transactions.
Roaster Consistency & Producer Stability: Direct trade, forward contracts make it easy for roasters to buy the same coffee from the same producer on an annual, recurring basis (if they so choose). Consistently securing the same coffee year after year effectively establishes and strengthens bonds between roaster and origin, and allows the producer to operate with confidence, knowing where their coffee is going.
Strengthening Our Supply Chain: Buying coffee on a forward basis helps Homage work more effectively too. With a refined understanding of demand earlier in the season, we can:
- Dig deeper at origin, investing more in our current producer partners, and building new relationships.
- Plan second payment & origin projects earlier and with more confidence, maximizing resource allocation & impact.
- Streamline the movement of coffee throughout the supply chain.
At Homage, our goal is to sell all coffee on a forward basis, as we believe it creates the most opportunity for roasters and our producer partners. To strengthen our supply chain, and further increase access to our producer partners coffee, Homage established export operations in Burundi and Uganda in 2017. As the exporter of our producer partners coffee, our direct trade, forward contracts provide unhindered access to coffee at its source, and the opportunity to secure coffee at FOB in Burundi and Uganda.
We are working hard to uphold and improve the supply chain we operate within; lets get in touch to refine how we can partner to reach our common goals.
- Jake and Keaton