What is a Coffee Trader?

It is deemed right and proper to say that his vocation is simply that of a coffee broker, one of that numerous fraternity whose business it is to please both buyer and seller, and who should be informed not only as to the present crop, but, to satisfy some, should have an opinion, when it is called for, as to all coming crops when chatting in the odd moments pending so momentous a transaction as a purchase or a sale of coffee.

-Robert Hewitt, writing about himself in the Preface to “Coffee: It’s History, Cultivation, and Uses,” 1872.

When Robert Hewitt was writing his book and trading coffee for Hewitt & Phyfe in New York, green prices had been relatively stable, an average of 15 cents a pound for Brazil’s and 21 cents for Java’s ($3.84 and $5.38 in 2024 dollars*). Consumption in the U.S. was in a period of dramatic growth, going from 1.9 million bags in 1869 to 2.5 million bags in 1871. That would change throughout the decade and the 80’s would open with a market crash as supply dramatically outpaced demand. A good time to have an experienced coffee trader on your side.

Only 600,000 of those 2.5 million bags came from somewhere other than Brazil in 1871, so 75% of coffee imports came from Brazil. This ratio would continue to increase as artificially high prices led Brazil to plant more coffee. More on that later.

While the coffee trade had long understood that Brazil’s ability to compete in terms of price and volume was driven by slavery, the world had only recently learned that farmers in Java were forced to grow coffee, for which they were paid very little and then heavily taxed, after the Dutch novel that exposed these practices, Max Havelaar, was translated into English in 1868. Hewitt makes it clear that he finds both slavery and forced labor deplorable, but in an act of cognitive dissonance that is not exactly unfamiliar in the world 150 years later, he doesn’t say anything about plans to change his buying practices for Brazil or Java.

All of this information above, from prices and volumes to the conditions found in coffee growing countries, comes from Hewitt’s book and is a good snapshot of the entire book, which goes into significant detail on farming and processing practices in several coffee growing regions. The book is only 100 pages but 20% are given over to educating the reader about coffee growing and processing around the world. Hewitt spends 14 pages explaining various methods for brewing coffee (his favorite being something that resembles a Moka stovetop brewer), 14 pages on the history of coffee (without mentioning Kaldi or dancing goats), and 14 pages writing about adulteration (adding anything to coffee that is not coffee but less expensive than coffee and not telling anyone you did it). Apart from the preface and introduction, the rest of the book is given over to historical statistics around prices, imports, and the history of coffee tariffs around the world. 

The book does a fairly good job of demonstrating what it was that coffee traders did then and what it is that coffee traders do now. Above all else, a coffee trader’s job is to know stuff, a lot of stuff, while keeping both sellers and buyers happy. I’m not being flippant.

Let’s say a trader is at their cousin’s wedding and someone finds out they work in coffee importing and inevitably asks, “What is your favorite coffee?” Veteran coffee folk will not try to explain why this is a bad question or do anything fancy like refusing the terms of the question. Those are rookie moves. A worse than rookie move is to say something like, “Well, there’s this small farm in a rainforest in Coban, Guatemala, that produced five very special bags last year and that was my favorite coffee for almost a week in May.”

The veteran will have a practiced and polite answer followed by a deflection. My favorite is, “It changes all the time. What is your favorite coffee?” More often than not the friend of a friend’s friend will then name a country. Let’s say they name Guatemala. The trader will then ask what they like about Guatemalan coffee. As the person answers, the trader’s mind bifurcates. One part of their brain is listening politely, the other part of their brain is thinking about how it is impossible to like “Guatemalan” coffee because: Where was it grown and by who and under what conditions and when? How was it processed and to what standards? How does it cup? And don't even get me started on the who, what, when, where, why and how of roasting.

All of this happens instantaneously, before the person even gets to say they like Guatemalan coffee because it is so “rich.”

These questions that fly through a trader’s mind—multiplied by several regions within dozens of countries—just scratch the surface of answers coffee traders need to have. I’m not saying the answers are always top-of-mind, but they need to be always at their fingertips. For example: 

Logistics—How and when (and sometimes why) does a coffee move through time and space from point A to point B and then C, D, E, F and G? Again, multiply by numerous regions and circumstances seen, unseen, anticipated and unanticipated. Trust but verify and apply Murphy’s Law at every transition in the chain of custody and plan accordingly. Also, the correct answers six months ago may not be the correct answers this month or next week. Also, Mother Nature.

Price—What is the price, what should the price be, what can the price be at every transaction point in the supply chain? And 1) What’s happening in New York? 2) What’s happening in New York? 3) What’s happening in New York? How can we proactively work with roasters to use the market for purchase price planning? Apply these questions and answers to hundreds of coffees and customers.

Coffee—How is it cupping and what does that mean for a wide variety of coffee roasters? Again with the multiplication. 

Market—What is the business climate like for coffee at all points of distribution and what is impacting coffee roasters right now, in the near-term, and further down the road?

Like I said, know stuff, a lot of stuff, and this is something of an abridged list. 

Much has changed since Hewitt wrote his book. Advent of The New York Coffee Exchange was almost a decade away. Espresso was decades away. Roasting technology was evolving rapidly and the “science” of coffee was still in its infancy at best.

Aged coffee was considered high quality coffee when Hewitt was trading and writing about coffee and would be considered highly favorable for at least another 50 years. It’s slow fall from grace and into a niche would correspond with the rise and standardization of “cup testing,” what we know as cupping today. When coffee buyers stopped judging quality by how coffee looked and started tasting coffees side-by-side as more high-grown centrals became available, the mellow and musty aged coffees couldn’t compete with bright and flavorful coffees.

In 1871, coffee from Central America, Mexico, and Africa combined to make up less than one percent of imports into the United States while imports from South America and Indonesia combined to make up 93% of coffee imports. 

Much has changed but much remains the same. Here is a paraphrase of Hewitt’s short “job description” at the beginning of this article. When you leave out the old-timey language, I think it’s a description most trader’s would agree with today:

As coffee traders, they belong to a segment of the industry that must have strong and trusting relationships with both their customers and suppliers and ensure both are happy with the business they do together. Coffee traders must have as much information as possible about coffee on-hand, coffee yet to arrive, and even coffee yet to be harvested. And because purchasing green coffee is almost always the largest and riskiest cost for a coffee roaster, a coffee trader must share as much information as they have with roasters. Likewise, because coffee traders are close to consuming markets, they must share as much information about those markets as they can with coffee suppliers. 

One last note/lengthy aside about Hewitt’s book and the work of being a coffee trader.

Hewitt somewhat extravagantly dedicates his book to Benjiman Green Arnold (see below…so fancy), known in the trade as B.G. Arnold, a.k.a “The King of Coffee.” A Rhode Island native, he moved to New York in 1836 at age 23 to take a job as an accountant in a grocery business. Having a head for numbers he moved steadily up the ladder. By age 38 he was a made a full partner and in 1868, at age 55, he took charge of the company. His business acumen had earned him the trust of bankers and he apparently had access to what was then a massive line of credit which he began using, along with two other speculators, to gain a corner on the coffee market and drive-up coffee prices. It worked. W.H. Ukers tells us in All About Coffee that in one single year B.G. earned over 1.2 million dollars in the coffee market (almost 30 million today). What the entire strategy was, exactly, seems a little unclear but included, at least in part, B.G. accumulating and then sitting on a ginormous stockpile of Java before coffee rust attacked the island in the 1870’s and then not selling even when the price for Java had doubled.

“For ten years,” writes Ukers, “he maintained his mastery of the market, and in that time amassed a fortune.”

Now, if you are experienced with the green side of the coffee business you might be doing some math in your head right now. How many years did it take B.G. and his partners to effectively corner the market or portions of the market PLUS the time it took for these efforts to have a significant impact on prices PLUS the number of years between planting new trees and full-yield harvesting. Yup, 10 years sounds about right.

B.G. was about to learn the lesson that is seemingly never learned in coffee. Prolonged high prices lead to planting which leads to over supply which leads to lower prices. As the increased volumes of coffee, mostly from Brazil, arrived by the shiploads B.G. and his partners could not buy enough coffee to maintain control. He must have tried because when the market collapsed in 1880 and B.G. declared bankruptcy he was over 2 million dollars in debt (61 million today).

A year after the “corner collapsed” B.G. help established and then became the first president of the New York Coffee Exchange, created to discourage people from attempting what he had just recently attempted. I don’t know if there’s irony, regret, or penance in this part of the story but according to Ukers, B.G. never lost his reputation as a straight shooter even among those who disagreed with his attempt to corner the market. 

Hewitt dedicated his book to B.G. during the speculator's early days as a “daring trader” and the King of Coffee. Since he had long been an executive in a grocery business, and since Hewitt's business partner, James Phyfe, had worked for B.G. Arnold and Co., I think it likely, that B.G. had been a customer of  Hewitt & Phyfe. I suppose his frenetic speculation required assistance from more than one trading house. 

Perhaps the ornate dedication page is just a little bit of olden days salesmanship. Afterall, another one of the things that coffee traders must know about is how to sell coffee. 

*Your periodic reminder that the annual average floor price for green coffee over the last 200 years has been at least $3.00 more often than it hasn't when adjusting for inflation.