If you have had any exposure to specialty coffee you’ve probably heard some terms get thrown around without a firm understanding of what they really mean. Within the specialty coffee world there is a comically long list of acronyms and industry speak that can sometimes feel like trying to learn a new language. For me, a relative newcomer to third-wave coffee, “Direct Trade” has always been one of those terms. I’ve worked in the specialty coffee industry for the last 2 years and still have trouble sussing out its exact meaning. You know why? It doesn’t have an exact meaning. Direct trade relationships between roasters and producers are unique; each ideally structured to best benefit the people who are producing and drinking the coffee.
‘Direct Trade’, ‘Direct Sourcing’, or ‘Relationship Coffee’ are all terms that are used to indicate partnerships where roasters buy green coffee beans as directly as they can from coffee producers. Because there is no official organization that regulates or standardizes what these designations entail, we asked our specialty coffee roasters how they define their direct trade partnerships. What we found is that the trade partnerships don’t all look the same, but in all cases, it came down to forming partnerships defined by the following values:
- Transparency & traceability
- Long-term sustainability
- Ensuring that producers are making living wages
Some roasters such as Alma Coffee Roasters own their own farms, some work directly with farmers and importing partners like Zoka Coffee, and others work directly with farmers and work to import it themselves like Red Rooster in Floyd, VA. With all of these variations of the direct trade structure, for MistoBox, the designation is not defined by an outright set or rules and regulations, but by how well these values are upheld throughout the sourcing process for the betterment of the coffee, the producers, and the consumer.
What is Conventional Trade Coffee?
The majority of coffee that is consumed in the world is bought and sold on the global commodity mark-[et. This is your gas station, generic store brand, diner, and office coffee. Coffee produced worldwide that is not deemed “specialty grade” is viewed as an interchangeable product that is sourced from a variety of places and farmers, mixed together to standardize flavor, and sold at the lowest possible price. In conventional trade supply chains, there are a lot of players involved in getting coffee from farm to cup and with each step, quality and transparency can be lost. Because of this convoluted journey, there is no way to trace your conventionally traded beans back to where it came from, who grew it, or how much those producers were paid
The price of this coffee is highly variable as well. The New York Coffee Exchange sets the market price for coffee and as that price ebbs and flows over time, coffee farmers are at the mercy of the market. Because of this volatility and uncertainty in the price, it’s difficult for farmers to predict profits and plan for the future. Even if prices were as high as they were in 2012, much of that money goes to the other people involved in the processing, transport, and storage of the product before producers ever even see it.
None of this is to say that all conventionally traded coffee is inherently bad, but only to provide insight into the traditional supply chain and the vulnerability of coffee producers across the globe. Alternative trade agreements such as direct and fair trade seek to stabilize pricing and provide full transparency to ensure the people who are doing the hard work of producing coffee are fairly rewarded for their work.
Direct Trade Coffee and Transparency
True direct trade partnerships center transparency and traceability. These agreements seek to shorten the supply chain by working directly with producers themselves and/or the companies that import the coffee to ensure complete visibility from farm to cup.
Jesse Rabe from Ruby Coffee Roasters says of their direct trade partnerships: “We have a number of sourcing relationships where we directly negotiate prices and quantities with the farmers themselves, and we have other relationships where we connect to farmers through the work of our export and import partners in some coffee-growing countries. The important thing to us is that we know what the farmer is being paid for their coffee as it leaves the farm, and we know how that farmer is being supported: either directly by us or by our sourcing partners who help complete the chain.”
Olympia Coffee Roasters in Washington have developed their own in-house sourcing standards called Fair For All, which requires them to annually publish the quantities and prices paid for every coffee they buy, the length of the relationship with the producer, and the cupping scores for each coffee which determines the price.
Similarly, Onyx Coffee Labs in Springdale, Arkansas publishes exactly what they paid for each of their coffees along with comparisons to the Fair Trade minimum and the commodity market prices. As this kind of radical transparency becomes more common in the specialty coffee industry, it empowers us, as consumers, with the information we need to better understand the true costs of coffee when it’s not being artificially manipulated by the market.
Traceability is important to the roaster and the consumer to ensure fairness along the supply chain, but it also benefits the producers. “I’ve heard many times that producers like to know where their coffees are going (which is information that they lacked in the past). “ says Colectivo Coffee. When the farmer has knowledge of where their coffee is going and who is drinking it, they can get more direct feedback on how all of their hard work is affecting the coffee.
Michael Van Tuyl, Head Roaster at Panther Coffee Roasters, says “we are able to keep a conversation going with the goal of best serving the final consumer. Our green [coffee] buying team is in direct communication with the producer(s) and we talk about quality and goals for the future throughout the year. If we find that, for instance, there were drying issues in coffee preparation which led to off-flavors a few months down the road, we can address these issues directly with the producer and find solutions.” Transparency leads to improvements over time that allows producers to make a better product and negotiate better rates for it.
Direct Trade and Sustainability
Another key value that defines the direct trade partnerships our roasters have is the fostering of the long-term sustainability of the people, communities, and land that produce coffee. Jon Dolin, the Co-Owner of Barefoot Coffee Roasters, cites this as a large part of the reason they choose to trade directly with farmers. “[We get to] understand sustainable practices and other initiatives at farm level that improve the environment and workers’ lives,” said Jon.
Harry & Leticia Hutchins, owners of Alma Coffee, also know this first hand. As 5th generation coffee farmers, they are as direct as you can get, sourcing from their own farms in Honduras and have expanded their operations to buy coffee from their neighbors as well. “With so many coffee farmers abandoning their farms, direct trade is the only way they will continue caring for their coffee and encourage their future generations to continue the family legacy.” In Honduras, Harry and Leticia see the pressure farmers are under to convert their land from growing coffee, as they have for generations, to other more profitable land uses like cattle grazing because of the fall of coffee prices in the last few years. Cattle grazing is particularly devastating to the environment because it requires complete clear-cutting of all vegetation, limiting biodiversity and leading to erosion of fertile soil. Specialty coffee farmers that practice sustainable farming methods like Alma and their neighbors are able to earn a living while protecting the biodiversity of their homes and traditions of their families.
Beyond the economic pressures to convert their farms to more profitable land uses, coffee farmers face a number of other challenges such as poor growing seasons, political instability, and logistical and transportation barriers. It’s only with sustained direct trade partnerships that come with a guaranteed buyer for each harvest year after year that farmers can think beyond survival and plan for their futures. Jose Lepe, the Director of Sourcing and Quality Control at Sightglass Coffee, calls this ‘Relationship coffee.’ “Having a direct relationship with Sightglass allows producers to reinvest continuously on their farm. With the premiums paid they are able to renovate the farm, upgrade their processing equipment, or expand.” If a farmer knows they have a reliable buyer for top-grade coffee in 10 years, they can justify making more sustainable choices for long-term gains.
Direct Trade and Living Wages
The last value that defines a direct trade partnership is ensuring that producers are earning living wages. “The coffee market is in crisis with prices below the production costs. We need to do our part to make sure that coffee farmers actually want to continue to grow coffee. They need to make a living wage so they can continue to produce the high-quality product we’ve come to rely on,” says Haden Polseno-Hensley, Co-Owner of Red Rooster Coffee in Floyd, VA.
When purchasing conventionally traded coffee, very little of what you pay actually makes it back to the people that did the truly hard work of producing it. I had the privilege of being able to help this spring with a coffee harvest in Colombia and can personally assure you it is the hardest physical labor I have ever done in my life. For a single day of crouching and bending over on a 45-degree incline carrying all of my coffee in a bin on my hip, I had picked enough to earn myself $3.25. The talented pickers earned themselves between $8-10. Let me assure you that even the thriftiest of families in Colombia will struggle to raise a family on $10/ day for seasonal work.
Jeff Babcock from Zoka Coffee in Seattle sheds light on the economic impact even more: “They’re getting two to three times more (with direct trade) than on the open market for their coffees. Let’s say the break-even cost is about $1.50 and the open market is usually in the range of $1.60 to $1.70 (right now the market is down so the open market price is even lower – between $1.00 and $1.60). But with our relationships, we pay the same amount every year. Regardless of what’s going on in the economy or the world we still pay the same year after year ($3.25 to $7 for single origins). Direct trade allows farms to become more profitable, re-invest, innovate, and live a more successful middle-class life.”
Is ‘Direct Trade’ Always Direct?
What you’ve probably gathered by now is that there are as many types of direct trade partnerships as there are options of coffee to try in our store (a lot). Coffee can be sourced from their own farms, they sometimes work directly with a single farmer or a co-op of producers, and sometimes roasters use importing partners who work with farmers to buy coffee directly from farmers. Each roaster has found ways that work for them to ethically source the best quality coffee, but because there are no universal standards that define a ‘Direct Trade’ partnership, one must always do their research on what a company’s standards are when claiming to be direct trade. Like any other term that isn’t an official designation like USDA Organic or Fair Trade Certified, there are brands that can use the term for truth-stretching marketing ploys. Be assured that when our roasters claim ‘Direct Trade,’ it means they source with transparency, sustainability, and living wages for producers in mind.
Why do Roasters Use Importing Partners?
Most roasters need to use importers to import the coffee they’re buying directly from farms they’ve contracted with, and some use importing partners to source their coffee. Metric Coffee, for example, buys mostly through direct to farmer relationships, but for the coffees not purchased through those networks, they rely on select importing companies that provide full transparency and meet their direct trade standards to help. Why can’t all coffee be bought from farmers directly? “Beyond the obvious of language, social, and cultural differences, really great relationships take time, energy, and resources to build in a sustainable way,” says Colin Frew, Roasting and QC Manager at Metric. Small batch specialty roasters are mostly small businesses and not all have the resources and time to take trips and build relationships with coffee producers on 3 continents while trying to manage a business with employees in the US.
“When we can’t make it to farmer regions, like Sumatra because the trip is so difficult, and we buy in a small volume, we buy through trusted importers. There are some really good importers who help us to find great coffees. We have built solid relationships with them over the years and we trust them. In Africa, there can be some corruption and exporting challenges in buying direct so we use an importer to help the relationship. We visit African farms and choose our coffees, but the importer helps ensure we get what we ordered to the states,” says Jeff Babcock of Zoka Coffee in Seattle.
There are other circumstances too that may require importers to facilitate some direct trade relationships as in the case of Panther Coffee Roasters. “Since most smallholder farmers are not able to export their own coffees and we do not have an import license so we work with import companies to move the coffee and manage logistics,” says Head Roaster Michael Van Tuyl. Working with importers that share the same Direct Trade values can help small roasters connect with small farms that they may not have been able to otherwise.
What to Look for When Buying Direct Trade Coffee
Direct trade partnerships can be equitable, empowering business arrangements between roasters and coffee producers. Whether a roaster is calling it ‘Direct Trade’, ‘Direct Sourcing’, or ‘Relationship Coffee,’ all that matters is that you, as the coffee buyer, understand what that means to the roaster and producers and have answers to the following questions:
- Can the roaster tell you what farmer or co-op grew the coffee?
- Does the roaster use an importer to source and contract the coffee? If so, why did they choose to source through an importer?
- How long has the roaster had the relationship with the producer or importer of the coffee?
None of the above should be viewed as “gotcha questions,” but instead conversation starters to learn more about the relationships that have been formed between roasters and producers to bring the coffee you’re drinking to life. Trading directly with producers is not an easy endeavor, but for our roasters it ensures that they’re ethically and sustainably sourcing the same coffees year after year to see improvements in the quality of life for the people involved and the quality of coffee we get to drink. We very much appreciate their hard work.
Check out Coffee Tasting Series articles on Mistobox Coffee blog to learn more about how to create that perfect coffee you love.
- Understanding Taste & Coffee Flavor Notes
- Main Elements of Coffee Flavor
- Strong vs. Rich vs. Bold Coffee
- What influences the Taste of Coffee?
- How Roasting impacts the Taste of Coffee
- How Brewing Impacts the Taste of Coffee
- Coffee Brewing Methods Compared
- Milk in Coffee