A New Approach To Working On Price Risk Management

by | Apr 17, 2017

Category: Events | Markets

Key Insight

Truth be told, this is probably the easiest barrier to address.  Producer organizations need to understand how price risk affects their business – from the price to purchase coffee from farmers, the rates that their lenders can offer them, to how to negotiate (or not!) the terms and prices for contracts.

If you have been following us in this space, you know that one of the topics that has been at the front of my mind has been Price Risk Management (PRM).   PRM refers to a set of strategies and practices for farmer organizations that minimizes the negative impact of drastic changes in the global price of coffee. If you are new to this topic, or want a quick review, I have written several pieces on this topic previously.

A few weeks ago, Oikocredit announced the start of a new, 3-year PRM project funded by the SAFE – Platform, and to be implemented with partner organizations – FairTrade USACatholic Relief Services and Keurig Green Mountain. What’s different about this project from previous PRM projects? This project focuses on addressing and overcoming the barriers for producer organizations to design and implement effective price risk management strategies.  Through our initial work on this topic, we’ve identified the following three principal barriers.