Commitment to Buy Definition
A farmer, producer or exporter may request a signed commitment to purchase from the buyer well in advance. This commitment will come with varying degrees of legal binding depending on the terms.
This can enable the supplier to secure credit up-front for the costs of processing and overland shipments, for example. Coffee growing and processing is often seen as a risky investment by bankers, thus financing options can be limited for farmers without a committed buyer.
Commitment to Buy explained in simple terms:
A farmer wants to know that they will sell their coffee before they grow it. So they may ask a buyer to promise to buy a certain amount of coffee from them before it is even grown. This can help the farmer get money to pay for things like growing and shipping the coffee. But sometimes banks think growing coffee is risky, so this promise can help the farmer get money from the bank.