"Fair" Versus "Direct" Trade -- What Does It All Mean?

Cartel Coffee is one of several local companies that prefer to work directly with coffee farmers.
Cartel Coffee is one of several local companies that prefer to work directly with coffee farmers.
Zaida Dedolph

When it comes to buying coffee most people are completely clueless. Shade Grown? Rainforest Alliance certified? Bird Friendly? Organic? There's no reason to be afraid of these labels, but there are some pretty understandable reasons to be skeptical of them.

For many people, there is a certain amount of mysticism regarding where that Coffee stuff actually comes from and how it gets here. Coffee is not a local crop. It won't ever be a local crop. Coffee plants require a very specific set of needs in order to grow and produce coffee cherries, and a whole other set of criteria in order to produce good coffee beans. But beyond quality, there's another issue that needs to be discussed, which is that coffee producing regions tend to be some of the most impoverished places in the world. This week we'll be debunking the issue of Sourcing, or in simple terms, where coffees come from and how the people who grow, harvest, and produce them are compensated.

See also: 5 Reasons to Get Excited about the Phoenix Coffee Scene That Have Nothing to Do with Pumpkin Spice

Coffee is a commodity, and is traded on the commodities market. As a response to exceptionally low C-Market prices for coffees, several models have been developed to increase sustainability, ensure a steady means of production even when coffee futures are low, and promote welfare among producers. Within this movement, there is a big divide between supporters of Fair Trade certifications and Direct Sourcing of coffees. Here's a little breakdown of each camp, complete with pros, cons, and local suppliers.

Fair Trade

Fair Trade certification was developed in the mid- to late-1990's in an effort to promote farmer welfare and environmental sustainability. Certification guarantees farmers a price per pound of green coffee high enough to cover all costs of production. According to Fairtrade International, this price is currently $1.35 for natural-processed coffees and $1.40 for washed coffees. Farmers add 30 cents per pound to their price if their coffees are also organic, and an additional 20 cents as a "fair trade incentive," which is essentially a fee for investing in farm projects and personnel.

Pros: Fair Trade certification offers certified farmers protection from variations in the commodities market for coffee. (At present, arabica beans on the commodities market are fetching prices pretty much equal to those paid out for a Fair Trade certified, organic, washed coffee.) Certification also prevents potentially exploitative short sales for coffees. And certifying agencies strictly monitor for and prohibit child and slave labor.

Cons: Though it was designed as a way to lift farmers from poverty, Fair Trade certification is actually super duper expensive to obtain, and can take years. Producers who can't afford the fees of certification stay poor, and those with more means have the potential to earn more per pound for the same product (depending on C-Market values.) There are also no product quality standards associated with Fair Trade products - so super tainted or defective coffees will fetch the same minimum price as clean, delicious ones.

Also: until recently, the certification was only available to cooperatives. This meant that small-scale producers, small shareholders, and family farms were exempt from Fair Trade protections. As of last year, a pilot project has been developed to test the model with these smaller producers.

Where to find it locally:

Fair Trade Cafe. Duh.

 

A whole lot of work goes into those getting these grounds.
A whole lot of work goes into those getting these grounds.
Zaida Dedolph

Direct Trade / Direct Sourcing

The "Direct" phenomenon developed as a response to Fair Trade. This term means a lot of different things to a lot of different companies, but basically breaks down to this: importers / roasters / wholesalers visit origin directly and establish relationships with producers. In a perfect world, these relationships function as such: roasters and cuppers visit regularly, see the farms, and provide farmers with feedback on their products. In exchange for making quality-centric adjustments, farmers are paid a higher price that correlates to the value of their product. Direct trade relationships also sometimes have some kind of correlating community component; sometimes an importer or roaster will agree to assist with the completion of some sort of infrastructural element that the producing region needs (a school, a library, etc.) There is no agency that regulates direct trade though, so really it kind of means whatever a company says it means.

Paul Haworth of Cartel Coffee Lab differentiates between the terms "Direct Trade" and "Direct Sourcing." To him, the difference between these terms corresponds to who is responsible for the importing (the roaster directly, or an intermediary):

It may seem counter-intuitive to want to include more hands in the process, but after years of industrial experience, using the services of an importer has become our preference by far.

The advantages are two-fold. First, importers are just like farms in that they are often headquartered in some capacity at origin. Many employees of big importers are also farm owners and many farm owners explore importing/exporting. Buying direct only benefits the roaster in the short term, and can actually hurt the local economy if quality jobs are circumvented.

The second great advantage to buying through an importer is insurance. Coffee commerce is volatile and relationships can be more steady state when there are companies dedicated to maintaining long standing relationships that transcend commodities issues. This also allows a green buyer at the roaster level a right of refusal (even post-contract) since the importer has resources available to move coffee into many different hands.

In conclusion, being able to travel to farms and build solid relationships is key, but the more jobs that can be created for the implementation of this process, the better. When specialization takes place, all parties are able to focus on what they do, and do it well. When things become overly vertically integrated, it may not always provide the healthiest system as there can almost be a sort of monopolization that takes place. Importers offer a service which we see as just as crucial as farmers and roasters.

Pros: Farmers get far higher prices, on average, than they would via the C-Market or Fair Trade certification. There is no cost to farmers. Roasters (and ultimately, consumers) get better coffees. Generally speaking, direct trade relationships develop over years between roasters and farmers, so there is unregulated but ongoing reliability and accountability between parties.

Cons: There are no rules or stipulations for "Direct Trade." There is no oversight over these relationships. It's a trust-based system between producers and roasters, and it basically means whatever a company wants it to mean.

Where to find it locally: Cartel Coffee Lab, among others. Haworth recommends the El Salvador Sihuamonta, produced by his dear friends the Pacas family.

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