Spotlight On: Direct Trade
Direct Trade is a phrase commonly used in the coffee world, but what does it really mean? Does a term so commonly used actually mean anything or have any real value?
This week in our Spotlight On blog series, we’ll be exploring Direct Trade: what it means, how it differs to other types of trade, and what it means for the coffee farms, coffee roasters, and end consumers.
What is it?
Direct trade is a way of sourcing certain products (in this case, coffee beans, but it is also used for cocoa beans) directly from the farmers that produce them. Direct trade cuts out the traditional “middle men” that buy from the farms and then sell to the coffee roasters. It also cuts out the organisations that control certifications, such as Fair Trade.
The idea behind it is to build relationships with particular farmers, with the view to nurturing these relationships to build mutual trust. This mutual trust leads to a strong relationship, and enables both parties (the farmer and the buyer of the beans) to look to the future and make more long-term plans. The direct negotiations of both price and quality mean that both parties can have a better understanding of the realities and opportunities, so can set common goals that will be beneficial for both.
Direct Trade is often referred to as “beyond fair trade” since it goes beyond the standards established under Fair Trade. The coffee is ethically sourced, often much better quality, and designed to establish and nurture relationships between the farmers and the buyers.
How is it different to other types of trade?
As mentioned, Direct Trade is a term used when coffee is bought directly from the farmers, cutting out the middle men of the buying process. Unlike with Fair Trade, there is no single set of standards for Direct Trade, however, it is seen by the people that practice Direct Trade as being mutually beneficial and a very transparent way of trading.
Fair Trade promotes the protection of farmers, direct trade is seen as offering ‘aspiration’ to farmers. Fair Trade prices are fixed and do not increase for a higher quality product, meaning that farmers don’t necessarily have the incentive to grow the best possible crop. Direct Trade, however, means that the pricing can and does change depending on the quality of the crop. A better quality crop means a higher price for the farmer.
What does it mean for the coffee farm?
Direct Trade is seen by many as being the best model as it builds mutually respectful and beneficial relationships between the farmers and the roasters. By meeting directly with the farmers and not dealing with “middlemen”, coffee roasters are able to form personal relationships with the farmers.
Forming relationships nurtures a mutual trust and respect. With Amokka coffees, our suppliers trust that we will buy their coffee beans over and over, and we trust that they will provide us with a consistently high quality product. This trust and relationship also means that we can ensure our workers proper working conditions, and we can earmark some payments for projects that improve the lives of the farmers or enhance the quality of their products. By working directly, we are able to see when there is a potential problem or particular need and we can address it before it has an impact on the quality of the coffee.
When farmers receive a fair price for their crop, it means they are able to invest in their whole production process to make sure they consistently produce the best quality beans.
What does it mean for the roaster & end user?
For some roasters, the decision to start direct trade partnerships stems from dissatisfaction with the quality of the coffee they buy, and for others it may be down to environmental or social concerns.
Roasters benefit from Direct Trade as it means they have more control over the type and quality of the coffee beans they buy. It ensures a high quality end product, which means a better tasting coffee for the consumer.
In short, the prices may be higher, but the quality is much better.
Amokka Coffee Range
All of our Amokka range of coffees are Grade 1 Speciality Coffees, and come from our partner farms all over the world, from Ethiopia to Peru. To read more about our coffee, click here