Direct Trade Model Coffee


SEATTLE — Global coffee production in 2014 was around 8.5 million metric tons, with around 1.5 million tons imported by the U.S. In 2012, 40 percent of the coffee produced complied with a third-party standard, such as the ethically-focused Fair Trade. The Direct Trade model is another ethical coffee movement which eschews the need for third-party standards and uses the idea that a company can set its own standard for transparency and social responsibility while producing a superior cup of coffee. Here are five benefits to the Direct Trade model:

  1. Certification Independence: The Direct Trade model does not require certification from Fair Trade or other certifying organizations, eliminating the costs associated with maintaining the certification. This means the buyer can afford to pay more for the coffee they buy, which greatly benefits the producers, who can then put the increased revenue towards a better-quality coffee crop. Tools like bicycles for transporting coffee and training for workers allows producer organizations to increase their productivity and the quality of their coffee.
  2. Pricing Independence: Similar in concept to a global farmer’s market, the Direct Trade model allows buyers and sellers to set their own prices, rather than going by a standard set by certifying organizations or the commodities market. This often means bypassing cooperatives and other producers’ organizations. As is the case with Intelligentsia Coffee and Counter Culture Coffee, the price is higher than the average price set by Fair Trade standards. These higher prices don’t come automatically, however. The model’s prices are directly linked to the methods used to create the coffee, from fertilizer to transportation, all of which add to the quality and value of the coffee.
  3. Ethical Independence: Roasters have greater control over choosing producers and producer organizations whose principles align with their own. This also requires more research and oversight on the side of the roaster to identify producers who follow these principles, including inspections to verify compliance. Also, the model puts greater flexibility on the goals of the roaster, such as the percentage of coffee which is shade-grown versus sun-grown, or more rigorous standards for bean quality.
  4. Relationship Dependence: The Direct Trade model requires that more time is used to build relationships with individual producers, partly because it bypasses the middlemen and their connections in the trade. This could include trekking to each farm across the world to sit down for a cupping session to assess the flavor profile of the farm’s coffee. The goal of direct trade, in this respect, is to constantly identify ways in which the produce can be improved, for example by comparing the quality of coffee grown in different areas of a farm.
  5. Consumers and Self-Auditing: Because the Direct Trade model lacks a common auditing mechanism, consumers are required to identify roasters which follow their own principles. Due to the lack of an ethical category sticker, such as Fair Trade, consumers must trust in the roaster to adhere to the principles which they espouse. Because of this, companies who care about supply-side issues and their image often publish annual transparency reports and use analyses of their producers’ operations.

It was Geoff Watts of Intelligentsia Coffee who popularized the term Direct Trade, and the company continues to embody that philosophy today. According to Intelligentsia, it has employees at grower sites “virtually every day of the year” working to build relationships and improve coffee production through data analysis. Producers are paid at least 25 percent above Fair Trade prices, and Intelligentsia hosts an annual workshop to bring together growers for collaboration. The company also requires that growers “be committed to sustainable environmental and social practices.”

Counter Culture Coffee is another roaster using the Direct Trade model. The company focuses on building long-term relationships with its suppliers for mutual benefit, an idea it refers to as “shared value.” Employees visit each producer every two years and maintain open lines of communication using technology. The company also issues an annual transparency report which includes the percentage of organic coffee it sells, weighted FOB prices (the metric used for price comparison with standard commodities market prices), and other statistics which provide accountability.

To quote Intelligentsia: “Perfection doesn’t lie in the result; it’s forged in the pursuit”. These words represent the core of what the Direct Trade model means because companies recognize that a good cup of coffee only comes when the producer, the roaster and the customer stand together in solidarity.

Lucas Woodling

Photo: Flickr


Comments are closed.