What Is Commodity Coffee? (Solved & Explained!)

Coffee terminology can get a little confusing and when you’re trying to buy the best beans at the right price you want to know what it all means. The terms “commodity coffee” and “specialty coffee” in particular are often used when talking about the coffee trade and they are actually very important within the industry.

Commodity coffee is essentially describing the trade of coffee when it is simply viewed as a commodity and all of the different products are treated equally. Specialty coffee is an alternative trade concept which identifies the value of the beans based on their quality rather than simply based on the quantities that are available around the world.

This article will go into detail about the meaning of commodity coffee and, by contrast, specialty coffee and will explain more about the things that you need to know regarding the different terminology used within the coffee trade and how it affects consumers and producers.

What Does Commodity Coffee Mean?

The majority of coffee that is consumed around the world is treated as a commodity – as a uniform product like oil or gold. Commodity coffee is traded on the New York Coffee Exchange and its value as a product is determined by market factors, so the origin and quality of the coffee do not affect what it is worth.

How Does Commodity Coffee Affect Farmers?

Commodity coffee is simply bought and sold at market cost, so there is no commitment from buyers to individual sellers and no incentives or rewards for higher quality beans. Farmers are at the mercy of volatile prices and a market outside of their control and are not compensated based on their hard work, expertise, or reliability.

How is Specialty Coffee Different from Commodity Coffee?

Specialty Coffee is an attribution given to coffees of a high quality, which is denoted by a score of 80 on a 100-point scale. This means that specialty coffee has been recognised as having value because it is a superior product, grown by a professional, that deserves a price based on its quality rather than its availability.

When Did Specialty Coffee Start?

As early as the start of the 1900s people have been wanting coffee that comes from specific farms in particular parts of the world that were known for their superior beans. In the 1970s the term “specialty coffee” was first used in the Tea and Coffee Trade Journal to describe beans with great flavour grown in special micro-climates.

Is Specialty Coffee Becoming More Popular?

While commodity coffee still makes up for the majority of the world’s coffee trade, an increased focus on quality and fair trading practices has seen a significant rise in the sale of specialty coffee. In the UK, Allegra recently reported that the specialty coffee market is growing by 13% each year and that growth is likely to increase.

Where Does Specialty Coffee Come From?

One of the initial factors that defined specialty coffee was the region in which it was grown and traditionally the higher quality beans come from countries like Ethiopia, Kenya and Colombia. More recently, other countries, like Guatemala and El Salvador, have been getting into the specialty coffee market and making a name for themselves as exporters of fine coffee.

Does Commodity Coffee Taste Worse?

Because commodity coffee doesn’t take into account the quality of the beans there are much lower standards for taste and higher instances of defective beans. Specialty coffee has a required standard which means it will almost always make a superior brew with a better taste, and you are far less likely to get a bad batch.

Does Specialty Coffee Cost More?

Specialty coffee is generally going to cost more for the consumer than commodity coffee because it is bought from farmers above the commodity price. The whole purpose of specialty coffee is recognising and rewarding a quality product by paying more than the basic market value, because customers want to pay more for better coffee.

How is Specialty Coffee Graded?

There are two main aspects to the grading process when a coffee is being assessed to see if it meets the “specialty coffee” standard: defective beans and cupping. Defective beans are counted from a sample and too many defects disqualifies the coffee, whereas cupping involves a skilled taster assigning scores to the flavour of a simple brew.

What Are the Different Ways that Coffee is Traded?

There are many different ways that coffee is bought and sold which affect the farmers, the buyers and the consumers. Commodity coffee is generally bought and sold through conventional trade, whereas specialty coffee is most often sold through certification, like Fairtrade, or direct trade, so that the higher value of the product is recognisable.

What is Conventional Trade?

Commodity coffee is traded by speculators and the prices are set by the market value, which fluctuates as the market shifts and changes. This trade starts with farmers but involves middlemen, exporters, brokers and more before eventually it is imported into the country where it is sold as a consumer product.

How Does Certification Help Farmers and Growers?

There are lots of types of certifications for farmers that put emphasis on different values, like the environmental, social, or economic factors that affect the industry. Certification awards farmers and sellers with a recognisable “badge” of quality that allows buyers to seek out a product that is superior because they are willing to pay a higher price.

What Does the Fairtrade Certificate Mean?

Fairtrade certification is all about getting a better, fairer price for farmers that is consistent and reliable, so they can always make a living from their work. The core concept is that a baseline price is set for beans, with an additional social premium, and there are standards to ensure that the process is environmentally, socially, and economically responsible.

What Does Direct Trade Mean?

Direct trade is a slightly more recent trading practice in which direct communication is established between roasters and farmers. Although it implies a long-term relationship that is mutually beneficial to both parties, there is not a universal definition of what this looks like so standards and compensation can vary greatly within this model.