Green coffee contracts and Incoterms, explained for roasters
A green coffee contract decides the price, the quality you are entitled to, when you pay and where the risk passes to you. The clauses that matter and the Incoterms you will meet.
8 min read Updated October 9, 2026
When you buy spot coffee from a UK importer, the contract is usually a simple confirmation: lot, price, quantity, delivery. Buying forward or from origin needs more: how the price is set, what quality you are buying, when you pay and who carries the risk in transit. Trade bodies publish standard contracts, such as the European Contract for Coffee and the Green Coffee Association contract used in North America, and many buyers work on those terms.
Price
| Type | How it works |
|---|---|
| Fixed price | A set price per kg or per pound. Common for specialty lots. |
| Differential, price to be fixed | Price = the futures market (arabica: ICE New York, US cents per pound) plus or minus an agreed differential. The futures part is fixed on a date chosen by the buyer or seller within an agreed window. |
| Fixed differential, fixed later | The differential is agreed now; the futures part is fixed later. You carry market risk until it is fixed. |
Check the unit and currency carefully. A price in US cents per pound converts to US dollars per kg by multiplying by 2.2046 and dividing by 100.
Quality
- Approval sample: the contract should say the delivered coffee must match an approved pre-shipment sample, and how a dispute is settled.
- Description: origin, region, variety, process, screen size, grade and crop year.
- Claims: the time limit for a quality claim after arrival, and whether disputes go to arbitration under the standard contract.
- Moisture and defects: specify limits if they matter to you. See grading.
Incoterms
Incoterms, published by the International Chamber of Commerce, define who arranges and pays for each part of the journey and where risk passes from seller to buyer. Always write the version, for example Incoterms 2020, and a named place.
| Term | Seller delivers | Risk passes | Who pays main freight |
|---|---|---|---|
| EXW | At the seller's premises | At the seller's premises | Buyer |
| FCA | To the buyer's carrier at a named place | On handover to the carrier | Buyer |
| FOB | Loaded on board the vessel at the port of shipment (sea only) | When on board | Buyer |
| CFR | On board, freight paid to the destination port | When on board at origin | Seller |
| CIF | As CFR, plus the seller buys minimum cargo insurance | When on board at origin | Seller |
| DAP | At a named destination, not unloaded, import not cleared | At destination | Seller |
| DDP | At destination, import duties and taxes paid | At destination | Seller |
Green coffee from origin is very often sold FOB or FCA, with the buyer booking freight. Note that under CFR and CIF the risk passes at origin, even though the seller pays the freight: if the coffee is damaged at sea, it is the buyer's loss, so insurance matters. Spot coffee in the UK is usually sold ex-warehouse or delivered.
Payment
Payment terms you will meet
- Prepayment: simplest for the seller, riskiest for you
- Cash against documents: you pay when the shipping documents are presented, through banks
- Letter of credit: a bank guarantees payment against compliant documents; costlier, more secure
- Open account terms: usually only with importers or long relationships
- Pre-finance to producers: paying part before harvest; agree it in writing
Where Roastnet helps
Questions roasters ask
- What does FOB mean for coffee?
- Free On Board: the seller delivers the coffee loaded on the ship at the named port of shipment, and risk passes to the buyer there. The buyer pays the ocean freight and insurance.
- What is a differential in coffee pricing?
- The amount added to or taken from the futures market price to reach the price of a specific coffee. Higher quality and scarcer coffees carry higher differentials.
- Which Incoterm is best for a small roaster buying direct?
- Many small buyers prefer a term where the seller or an importer delivers to the UK, or they appoint a forwarder they trust under FOB or FCA. Choose the term that matches who can best manage freight, insurance and customs.
Official sources
- International Chamber of Commerce: Incoterms rules
- European Coffee Federation: European Contract for Coffee
Rules change. These sources were checked on October 9, 2026; always confirm the current position with the body that publishes them before you act.
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