Direct Trade or Fair Trade?

Let’s face it, coffee ethics and sourcing are complicated. Two decades ago, a savvy connoisseur only had to choose between Robusta and Arabica, regular and decaf. Today, a sophisticated drinker faces a myriad of options each time they purchase a pound or cup of coffee. One of those options – and one we find is often misunderstood – is Direct Trade or Fair Trade? On the surface, Direct Trade and Fair Trade have similar objectives: to ensure coffee growers receive a fair, market-based price for their coffee. However, once we get into the nitty gritty, there are great differences in how “fair” is defined by each group and the impact each designation has on the growing community.

Direct Trade occurs when coffee roasters purchase beans directly from the grower at a price determined by the grower. The grower may be an independent grower with their own farm, such as Princesa Janca farm, or an independent grower that works as part of a larger co-op, like Miguel, who manages his own plot in the El Eden co-operative. This direct relationship between the grower and the roaster ensures the farmer is compensated at a price he feels is fair and reflective of the quality of his beans. In most cases, famers participating in Direct Trade only produce high quality, single crop coffee and because of this intense focus on quality, receive above-market prices for their beans. Direct Trade relationships generally have reciprocal, longer-term benefits for both the roaster and grower, assuming their relationship extends beyond the initial purchase. The grower receives feedback from the roaster and the roaster can request specific processing and / or drying methods for their lot. While there are no mandates or requirements for a Direct Trade, Direct Trade growers often take exceptional pride in their coffee and their land, ensuring eco-conscious and sustainable farming practices.

Direct Trade, while wonderful, comes with its own set of complications and ethical risks. Firstly, a good Direct Trade assumes that both parties understand the value of the beans they are negotiating. Growers with little exposure to the market or first-time sellers with no history of export may find themselves just breaking even if they are dealing with a roaster who values the price per pound more than the farmer’s best interest. Likewise, given the lack of regulation or standards surrounding Direct Trade, roasters need to trust that the grower employs the practices the values (be it sustainable and/or community-based) s/he verbally promotes. While Direct Trade usually works out well for both the grower and roaster, there is greater risk for both parties than with a Fair Trade sale.

Fair Trade is a paid certification with established economic, social, and environmental standards that is regulated by Fair Trade USA, a non-profit third party. To qualify as Fair Trade, growers must join a democratic co-op, demonstrate a sustained standard of quality, and collectively pay annual fees starting at $10,000. Whereas Direct Trade creates a focus on the quality of the coffee, Fair Trade focuses on the conditions in which the coffee is grown. Fair Trade certification guarantees growers a minimum, market-based price per pound and gives them access to a much wider buyer network through Fair Trade Certification listings. Finally, Fair Trade USA distributes discretionary funds to farms to help with desired initiatives.

While Fair Trade has done a great deal to raise awareness around sustainability and worker protection, the certification fee can be a burden for small farms, either prohibiting them from participating or forcing them to join with farms that embrace a different sales approach. It can also lead to a focus on quantity over quality. The minimum price guarantee, while fantastic for ensuring a base compensation often discourages growers from trying to create an exceptional coffee as they are unlikely to get much above that minimum and far less than what their coffee could be sold for on the retail market. Additionally, the annual fees often force unlikely partners to pool their crops, again diminishing the desire to create a quality bean – if I put great care into my coffee and it is mixed with my neighbor’s, who put little care into cultivating their coffee, my efforts are wasted. That said, when a Fair Trade co-op is well-run and organized, it can offer growers wonderful opportunities, a collective voice, and a sale price well over the cost of production.

As a roaster, we support both Direct Trade and Fair Trade but will choose Direct Trade where possible. In our experience, Direct Trade gives the grower a greater voice, the freedom (and desire) to create an exceptional crop, and strengthens all parties’ ties with the growing communities. It also leads to innovation and increased sustainability. Growers often live within or close to their farms. They, at least from what we have seen, maintain sustainable, natural processes because they want to preserve the integrity of the land they’ve always known and loved. Direct Trade gives them the power to preserve their history, sell their coffee, and share their stories from a place of empowerment. Fair Trade, while offering greater security, cannot offer the same degree of empowerment, financial opportunity, and / or autonomy as Direct Trade.