Coffee Growers Try Online Auction
Nov. 21, 1999
BARRANQUILLA, Columbia (AP) _ Colombian coffee growers almost canceled their first online coffee auction Saturday because only three virtual bidders logged on, officials said.
But the country's National Federation of Coffee Producers, or FEDECAFE, was quick to claim that the experiment was a success, explaining that one participant stayed on line throughout the 45 minute attempt, eventually buying all three container loads of specialty coffees on offer.
``We have proved that it is possible to sell coffee this way,'' said Gustavo Esguerra, head of strategy and marketing for FEDECAFE.
Seven of 15 buyers invited to register for the sale had earlier confirmed their participation, Esguerra said.
``High market volatility in the last few days spread uncertainty among the buyers, so many who said they would participate just didn't appear,'' he said.
After monitors from Colombia's National Agrarian Exchange ruled that there was no minimum number of participants, the lone Internet buyer bought the three containers at each load's base price of 65 cents, 47 cents and 22 cents above the New York Coffee Sugar and Cocoa Exchange ``C'' coffee contracts.
The shipments, one of organic beans, and two gourmet loads, were each equivalent to 250 60 kilogram bags. The official couldn't confirm the buyer's identity but said all the invited participants were from the United States. Members of the audience at the sale, held as part of the Cafe '99 trade fair in Barranquilla said they were surprised that FEDECAFE had held its internet trial at the weekend, when commodities world wide are closed.
``It's unfortunate they chose a non trading day. For this to work it's got to be Monday to Friday,'' said audience member Douglas Carpenter of the Speciality Coffee Institute.
Esguerra said the fair's website ``www.cafe99.com'' would remain posted on the internet, so the experiment could be repeated on a trading day, but he didn't say when the attempt would be made.
Market observers say that internet auctions could become an important mechanism for trading specialty gourmet and organic coffees, because they offer traders a way of fixing realistic premiums for high quality crops.
According to FEDECAFE, Colombia exports around 500,000 60 kilogram bags of specialty coffees annually, although U.S. traders quote a higher figure, as they often include supremo beans which are larger but not necessarily gourmet quality.
``In a country with such a high volume of quality coffee, how can you separate the cream of the crop, and pay the right price for it?'' Carpenter asked.
``The answer is with auctions,'' he said.