Process of sourcing and dispatching coffee for our clients
In coffee dealings, the most common terms of shipment are: – FOB (free on board), CIF (cost insurance and freight) and C&F (Cost and Freight). The commonly used FOB is explained below:
(FOB) SHIPMENT – is a regulatory term where the seller’s liability of the goods ends once the goods are received and boarded on the vessel. The following are the processes involved from purchase to boarding:
Coffee Purchase – Coffee is either purchased through Nairobi coffee auction or directly from a licensed coffee agents; which is referred to as Direct sale.
Purchase from the Nairobi coffee auction
Step # 1 – Pre-auction sample – Marketing agents present samples of each coffee lot scheduled to be auctioned at the main sample room at Wakulima house(in Nairobi) 7 days before the auction. Every dealer is allowed to purchase at least 250g of each sample at a cost in line of average auction price sale of the day.
Step # 2 – Auction days – Unless otherwise, all Coffee Auctions are held every Tuesday of the week throughout the year. Coffee dealers in this case “Eagle crown coffee ltd” are referred to as the buyers while Marketing agents are referred to as the auctioneers. The marketing Agents list to date includes:- Sasini coffee mills, Thika coffee marketing ltd, Tropical farm management Kenya ltd, Meru county coffee marketing agency, Kenya co-operative coffee exporters’ ltd, Coffee management services ltd, Oakland’s coffee marketing ltd, Sustainable management services and Classic coffee ltd.
Step # 3 – Payment
Once Coffee has been bought through the auction, payment must be made on or before the next auction with a grace period of seven days. The prices are in US Dollars per 50KG. Payment is either by cash/cheque or funds wired to the marketing Agent through respective bank account as reflected on the invoice. After payment, dealer is issued with a Coffee warehouse Tittle referred to as (warrant) to show ownership transfer of the coffee to the dealer.
Step # 4 – Warehouses to Warehouse transport
With the warrant, the dealers can engage a trusted transporter to move purchased coffees from agents’ warehouse to theirs; Coffee can only be moved during the day and with a valid movement permit issued by the Coffee board of Kenya (CBK). This entails:
Make movement instructions to the warehouse in advance
Buying of movement permit from CBK @ 1 $(dollar) Present the coffee warrants for cancellation
Collect the coffee for delivery to dealer’s warehouse.
Eagle Crown Coffee provides cost effective service to the respective customers by means of mitigating price variations, inland shipping expenses, expedition shipping documents thereby hasten liquidation of cash against documents.
In order to complete a sale, we offer samples to our customers, this can either be:
Stock lot sample – sample of coffees already in the warehouse
Type sample – a presentation sample of what the market offers for approval of purchase.
Value additions – Once the coffee is in dealer’s warehouse, they can add value as per customer’s specifications by means of blending to achieve certain quality. Services in value addition processes include: Hand picking, gravity separation, re-grading, color sorting, blending & bulking.
Loading and stuffing the Container
Booking of the container -When the coffee is ready for shipping, a container is booked from a shipping line company of customer’s choice.
Container Inspection – while at warehouse the container is cleaned and disinfected under the supervision of SGS Internationally recognized quality control Company.
Fumigation – Coffee is fumigated while in the shipping bags for a period of 24 hours before sealing the container. A certificate to this effect is issued by the government regulatory body Kenya plant Health Inspectorate Services.
Loading and container sealing – Coffee is stuffed into the container leaving room for air circulation in and out of the container. A special seal with a unique number is then used to seal the container and photo evidence taken. All this is done in presence of the seller, warehouse agent and SGS representatives.
Transportation to Mombasa port – clearing and loading to the vessel on arrival.
Eagle Crown Coffee ltd noted low performance on the international market owing to challenges with management of price risk, high transaction cost resulting from the extensive nature of the supply chain and the numerous actors and processes therein, challenges with quality control and low productivity of growers’ fields. To mitigate on these factors and improve upon our export performance and ensure continuous growth in exports, prices and production, Eagle Crown Coffee has invested in yield-enhancing innovations, devising and implementation of measures to improve quality control in the supply chain, address issues with price risk, minimize transaction costs, increase and ensure continuous support to the farmers by payment of fair prices to growers and appropriately transmit future increments, motivate farmers to increase current area under cultivation to enhance efficient utilization of the abundant labor and attract more export-oriented foreign/local direct investments
Direct sale/ Auction sourcing: Step # 1 – Identifying the Coffee Cupping session with the seller to identify a match to customer’s preferenceStep # 2 – Send samples for approval Upon identifying the samples, the seller sends the latter to the buyer for approval.
Step # 3 – Loading and stuffing the Container
Booking -When the coffee is ready for shipping, a container is booked from a shipping line company of customer’s choosing.
Container Inspection – The container is brought to the warehouse cleaned and disinfected under the supervision of the SGS Company.
Fumigation – Coffee is fumigated while in the shipping bags for a period of 24 hours before sealing the container, a clearance certificate is issued by Kenya Plant Health Inspectorate Service a regulatory body to that effect.
Loading and container sealing – Coffee is stuffed into the container leaving room for air circulation in and out of the container. A special seal with a unique code is then used to seal the container and photo evidence taken. All this is done in presence of the seller, warehouse and SGS representatives.
Payment – done before the coffee leaves the sellers warehouse.
Transportation to Mombasa port – for clearing and loading to the vessel upon arrival.