Blog It Café

WEDNESDAY, JANUARY 20, 2016

What is Direct Trade!?

 

The other articles were about the many sustainable initiatives existing; these ones establish standards and have third party verification. As an alternative to that some roasters started to do Direct Trade (DT), which very shortly means when roasters source their coffee directly from the farm, usually creating a long term relationship with farmers.

 

Therefore, it is usually mistaken by Fairtrade coffee since these roasters usually pay higher prices for farmers, frequently higher than official Fairtrade price. Also, through these long term relationships roasters sometimes help producers improve farming practices and increase quality. It is a great initiative and there are many successful stories but there are also many challenges to be faced by DT.

 

First of all, since it is not an officially stipulated standard and, in the great majority of times, has no third party verification, what happens is that many roasters or other market players are not completely sure about what the term stands for and it is hard to distinguish between those actually doing a beneficial contribution for farmers and those just describing themselves as using the DT model. 

 

Actually, the development of the Direct Trade model was driven by the desire of coffee companies to get a greater control over the coffee chain, and to expand and sustain access to truly exceptional coffees.  While there is no centralized standard, most DT approaches include the following elements: direct relationships with coffee producers (smallholder, medium and estate), an overwhelming focus on quality control throughout the chain and a pricing system that creates clear incentives for quality. In principle, companies work directly with smallholder farmers to ensure access to lots that satisfy their rigorous quality standards and often seek exclusivity in these relationships.

 

In building a story around these single-origin coffees sourced directly from farming communities, these roasters invest in telling the market about the farmers who grow the coffee, creating a valuable equity for cooperatives they source from. But direct trade requires a complex chain of support, including contractors that connect buyers with farmers, processing facilities, quality controllers, exporters, freight forwarders, and customs navigators; it is not only farmers and roasters but a group of people and companies acting together.

 

I sometimes wonder if it wouldn’t be better to invest in a coffee producing region as a whole and not just in one specific farm? One way to incentivize a broader range of farmers to improve production methods is creating programs such as the Cup Of Excellence, which encourage producers to invest in quality and compete for the prize of best coffee in a specific crop. In general, when a farmer or a group of farmers in a cooperative are able to produce exceptional coffee and sell to a DT company, that is a great outcome and they will probably be fairly compensated but what about developing the best strategy for the many other small-scale farmers, the ones that still lack information to produce these specialty coffees? Unfortunately, DT still has limited prospects as a development strategy since demand for high quality coffee is not big enough to generate fair prices to all coffee producers. 

 

I believe that it is extremely important to keep all Sustainable Initiatives in mind since the Coffee Supply Chain is much more complex than most people think. More than just focusing on DT, everyone involved in the coffee field should focus on maintaining a more cooperative and transparent relationship with each other. 

 

Anyway, I really like the topic and that is actually the reason why I came to Europe: to study all these sustainable initiatives. I think each of them has its own contribution but for sure the best way to increase sustainability and quality is cooperation among market players and to increase consumer awareness about where coffee comes from. So pay attention to the coffee you are buying! wink



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