a primer on direct coffee trade: The 'New' Way to Trade.

Leigh B. / 22 February 2019

Fair Trade began as a collective of individual companies forming the Alternative Trade Organization (ATO) to foster partnerships with indigenous communities and market their products directly to consumers, allowing farmers a just price for their product, and the ATO a competitive product.  In attempts to maintain grassroots fair trade standards, some coffee buyers are looking for direct trade partnerships, rather than Fair Trade certified beans through a broker. These partnerships form long-term relationships between buyer and grower, together they establish fair rules for their transactions. Direct trade partnerships are not necessarily fixed terms, but rather, are dependent upon various conditions and adapt to address those conditions. For example, a bad crop year means there will be less supply of coffee beans at farm x, and that coffee farmer will need to increase the sale price to the coffee buyer z. Since coffee buyer z understands the conditions, including risks of the long-term relationship, she agrees. At home, coffee buyer z recommends her company raise the price to their consumers or lose profit margin. Through the powers of marketing, this may come across to consumers as a specialty lot with minimum quantities, which demands a premium in the traditional marketplace. 

On a large scale, Equal Exchange is a US-based, national coffee distributor. Equal Exchange used to certify with Fair Trade USA, until the rules were altered to allow large-scale plantations fair trade certification. To maintain their commitment to ethically-sourced beans, Equal Exchange now opts for direct trade or authentic fair trade via Fair Trade International. Direct Trade allows Equal Exchange to seek and maintain long-term relationships with individual farms or cooperatives, eliminating the middleman and costs associated with carrying the Fair Trade certification label. These relationships provide a constant source of beans to Equal Exchange and a consistent, reliable buyer for the coffee producers, with all the terms worked-out between each party. Additionally, Equal Exchange seeks direct positive impact in the local community it sources its beans from. This can range from investing in sustainability measures at coffee farms, to microloans for farm improvement or education opportunities for the community’s children. According to Equal Exchange, authentic Fair Trade isn’t just about profit from trade, but also advances social, environmental and economic goals, including:

  • Raising and stabilizing the incomes of small-scale farmers, farm workers, and artisans
  • More equitably distributing the economic gains, opportunities and risks associated with the production and sale of these goods
  • Increasing the organizational and commercial capacities of producer groups
  • Supporting democratically owned and controlled producer organizations
  • Promoting labor rights and the right of workers to organize
  • Promoting safe and sustainable farming methods and working conditions
  • Connecting consumers and producers
  • Increasing consumer awareness and engagement with issues affecting producers

These goals are made reality by:

  • Direct trade relationships and long term contracts between importers and producer groups
  • Sourcing from small-farmer or artisan co-operatives
  • Higher than conventional market prices, either through above-market premiums and/or price floors
  • The provision of affordable credit
  • Adherence to the policies of the International Labor Organization, especially those concerning child and forced labor and the right to collective bargaining
  • The prohibition of the use of the more dangerous pesticides and herbicides
  • Substantial price premiums for the production of certified organic crops
  • External monitoring, auditing, and certification of these practices by independent third-parties

See Equal Exchanges’s full, unwavering commitment to authentic fair trade standards here.

At the small scale, Velodrome Coffee Company in Marquette, Michigan, located on the southern shores of Lake Superior is committed to small-scale, direct trade relationships with coffee growers. Velodrome’s entire business model is ambitiously centered around, well, doing good. They do this by visiting coffee producers’ farm and community, and forming long-term relationships with coffee growers, learning about their farms, hardships, the environment and the farmers as people. To Velodrome, it’s not just about business, it’s about people. The folks at Velodrome consider the human lives and their environments in their business model. Velodrome is a very small roastery and cafe, yet commit to this way of doing business for the integrity of their product and the kind of impact they want their business to have in the world. Their procurement process yields an impeccable cup of joe, with exquisite flavors distinctive of the coffee bean’s source. As a consumer, I feel really, really, really good about purchasing Velodrome coffee because I know they have worked hard to make it happen in accordance with their mission. Not that we can change the world just through consumer habits, but if we measured our purchases based on impact, maybe the world would be a little more just.

Brice Sturmer (Left) of Velodrome Coffee Co.

The most challenging aspect of direct trade for coffee roasters is how to even find coffee growers to source from. Brice, from Velodrome Coffee Company used simple social connections to tap into. For example, Brice asked friends at Cat and Cloud in Santa Cruz, California for a sourcing connection and got one, Bella Vista in Guatemala. He visited Bella Vista in Guatemala, an upcoming coffee farm outside of Antigua. Bella Vista is just in the beginning stages and won’t have a finished coffee bean for a few years, but Velodrome is looking forward to purchasing those beans when they are ready. Velodrome gets a specialty product, Bella Vista has a purchaser. The downside for many small roasteries is that it’s expensive to travel to usually remote, international places to secure direct trade deals. Additionally, there is no one to oversee standards of productions, e.g. sustainability measures being met. That’s why the actual human-to-human relationship is so important.

How will coffee consumers know what they are supporting through their purchases? The simple answer would be to ask. If you purchase whole beans from a big chain or local supplier, inquire through an employee or department representative, and ask for information about their sourcing practices. Research the brand you’re purchasing, it will take 5 minutes to read their ‘about’ section and mission statement. If you regularly buy fresh brewed coffee at a cafe, ask your barista about their sourcing standards. For most of us, our individual purchasing choices determine our impact, whether we want it to or not. Knowledge is power, so if we understand and know where we are placing our impact power, we might just change our minds and our intentions to support that which is fair and just. It’s about doing what you can, from where you are right now.

Leigh B.

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19 thoughts on “Coffee Trade

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