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Coffee Sustainability: Fair Trade and Direct Trade

Coffee Sustainability: Fair Trade and Direct Trade

If you are an avid coffee drinker or even just familiar with specialty coffee, then chances are that you have heard about fair trade or direct trade coffee.

However, there is a lot of information floating around, and unfortunately, not all of it is fact.

The sad fact is that these two coffee sourcing strategies aren't always accurately represented.

As an example, you may have heard information that suggests that fair trade and direct trade coffee are competitors.

That isn't the case; they aren't rivals, they're just different.

Let's dive into the myths and false perceptions of these sourcing strategies and determine which works better, and is more sustainable. You are most likely here reading this because you want to make sure that your well-earned coffee money is well spent; making the world a better place.

You probably are aware of the many struggles that coffee farmers have to deal with and want to help. I'm so glad that you care! You can impact real people through your buying habits, so let's begin.

What is better for sustainability: Fair Trade or Direct Trade?

What is Fair Trade?
Fair Trade is not only specific to coffee farmers; they are a non-profit organization that wants to improve the agricultural lives of all farmers across the globe.

However, for a coffee farm to receive this certification, they have to cohere to their standards. For instance:

  • Their workers must be paid a fair livable wage
  • They have to show effective strategies for environmental sustainability
  • They must have healthy and ethical business practices

Although we could go in-depth on how the organization enforces these standards, there isn't the need to do so here.

All you need to know is that every farm has its struggles, and has to comply to achieve the certification. Because of this certification, farmers can sell their products at a higher price.

The reason for this is that the Fair Trade certification proves that they have a sound business that is good for the environment and treats their workers well.

A small portion will also go to Fair Trade USA; which is then allocated to community needs. The efforts of this organization have changed the lives of millions of coffee farmers for the better.

However, unfortunately, Fair Trade does not have a regulation on the quality of the product. While Fair Trade farmers are rewarded for having a good business practice and fair treatment, they don't need to have great coffee.

While Fair Trade USA is working towards adopting more of a "quality control" program, this won't be implemented for a few years.

Additionally, coffee farmers will still need to pay for someone to export their goods, which cuts into their overall revenue.

What is Direct Trade?
As the name implies, direct trade is more of a straight forward approach. Instead of dealing with coffee importers from around the world, Direct Trade roasters will work out business deals with coffee farmers directly.

This bypasses the middlemen and allows for these coffee roasters to build connections and relationships with the farmers.

Generally, farmers will be compensated very well for their crops when using this sourcing strategy, especially if they have a high-quality coffee bean.

Some roasters will even guarantee coffee farmers more than 25% of what Fair Trade USA offers. Although seldom roasters can afford this, a lot come close.

The basic business principle of direct trade is to seek out the best coffee, build relationships with the farmers, and pay an increased price that is good for the economy and community.

Although this sounds good, there is an issue: no standardization; which means there is little in the way of accountability. There is no system in place that is considered a standard operating procedure.

This means that one trade from a certain roaster can be different than the next, or you may have one relationship between the roaster and farmer that is done completely online.

I believe this method works best if there are representatives from both sides that are mutually entering into a business arrangement face-to-face. In most countries around the globe, this means going to the farm in person to meet with the farmer; although in some cases this can entail a farming co-op.

There is not any way to measure or regulate this, because there is no type of structure that oversees the process. Alternatively, Fair Trade USA has hundreds of trained employees that are utilized to support local communities and projects.

Direct trade roasters have no real support and lack the necessary educational benefits in this.

The Similarities and Differences
To begin, let's go over when Fair Trade and direct trade have similarities:

  • They both aim to empower and put money in the pockets of coffee farmers and their employees
  • They seek to end risky practices that are hazardous to the environment
  • They both want to eliminate poverty through fair wages, education, efficient business models, and healthcare

For the Differences:

  • Fair Trade aids in eliminated poverty by set guidelines for wages, business practices, and environmental awareness
  • Direct trade works on poverty by rewarding farmers for their excellent coffee
  • Fair Trade USA features a certification that can only be obtained by adhering to strict policies and guidelines
  • Direct trade uses various methods (which are not all effective)
  • Fair Trade roaster purchase coffee beans from importers or larger businesses
  • Direct trade roaster deal directly with the farmers

Michael Sheridan is currently the Director of Sourcing at Intelligentsia, but before that, he was a coffee development strategist with Catholic Relief Services. His voice is one that will be heard in the world of coffee sustainability.

In an article that he wrote published by Daily Coffee News, he states that the gap between these two sourcing models is shrinking.

For instance, Fair Trade USA is working to make the quality of coffee one of its standards for certification; while direct trade is trying to organize to improve accountability.

Both groups are moving towards a more united front; which will make coffee farming more sustainable for all parties involved.

Which is Better for Sustainability?
Simply because of the differences, it is hard to say which method is better for sustainability.

Both have pros and cons but have different effects on the communities and economy.

To be honest, we need both of them: Fair Trade is needed for the organized working force for poverty alleviation, and direct trade is needed to put quality first and innovate coffee sourcing.

This may not be the definitive answer that you were seeking, and it would be easier if one was strictly better but it simply isn't that cut and dry. We need both for the future of coffee sustainability.

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