Direct Trade Coffee

Vietnamese Coffee Exporter
Direct-trade-coffee

Direct-trade-coffee

Trade coffee producers relationship

Coffee direct trade is a form of purchasing coffee from the origin (farm) made by coffee roasters, without going through an intermediary company or exporter/ which import. The concept of direct commercial coffee is gradually replacing equal trade coffee in the substantial transformation of the third wave of coffee.

Direct-trade-coffee
A farm participating in direct Trade

The series explores some of the Certifications currently available for specialty coffee, including a review of the mission, scope of standards, charging criteria, and other essential requirements you may require. I need to know. You can read previous articles about Fair TradeRainforest Alliance/UTZNon-GMO or Organic certification.

Brief about Direct Trade

Before we begin our exploration of live trading, here is a list of the most commonly seen aspects of the Direct Trade program.

  • There is no single, global, third-party verified Direct Trade certification and no regulatory body that establishes, monitors, or enforces  Direct Trade standards. 
  • Direct Trade – Direct Trade is a sourcing method designed to increase transparency in the supply chain, especially regarding paying farmers’ prices (known as farm prices).
  • There is often an expectation of long-term commitment in Direct Trade in general – a relationship, with or without a long-term contract.
  • In an ideal world, Direct Trade is becoming more and more popular in risk-sharing, including price transparency and traceability.

The Origin of Direct Trade

The second half of the 21st century has seen the emergence of Direct Trade, a coffee sourcing concept designed to evolve the certification schemes that already existed in the coffee industry. That, namely Fair Trade/Fairtrade. The benefits of such certifications seem obvious; Organics certifications – environmental protection, Fair Trade offers financial protection – But most of these certifications lack an essential ingredient for specialty coffee companies: Coffee quality.

The-Origin-of-Direct-Trade
Direct Trade has led a wave of specialty coffees – Buy directly from the source.

The Big Three – The three roasters believed to have promoted the direct commercial model are Intelligentsia Coffee and Tea in Chicago, Counter Culture Coffee in Durham, NC, and Stumptown Coffee in Portland, Oregon. These three roasters are quality-oriented and sustainability-focused. They seek to capture existing social and ecological certifications with ‘something’ that will encourage and reward outstanding quality. Imagine that if a producer could make more money from selling better-tasting coffee, they could reinvest in their farm and practices to continue to improve. If buyers continue to buy from that manufacturer, a mutual investment will be beneficial.

While each company has its vision and personality in the specialty coffee sector, these three companies share some critical aspects of their sourcing philosophy:

  • Farmers should be rewarded for growing high-quality coffee.
  • Farmers need to have access to transparent information about the price of their coffee.
  • Coffee buyers should be able to negotiate prices directly with farmers.
  • Long-term buying is based on a stronger relationship and encourages higher quality.

Counter Culture (CCC) established its in-house direct trade certification in 2008 became the first of three to create verifiable, third-party standards for its market dynamics. The CCC released the first Direct Trade Transparency Report in 2009, and it provides a better view of their approach at the time.

To view the highlights of Intelligentsia’s Direct Trade program, including an analysis of the pricing structure, you can visit their website. Meanwhile, Stumptown Coffee’s website says that “direct trade is our way of saying – we’re going to work long,” explaining that they reserve dates for the coffees they purchase. They also pay higher prices for at least three consecutive years, transparently, based on taste quality.

the-origin
Direct Trade Certification is not a “Certificate.”

A lot has changed in the nearly 20 years from when these three companies popularized live commerce. Still, one fundamental thing that hasn’t changed – which makes live transactions different from other certifications. in our series – is that it has not yet been standardized globally. With the multitude of variations of the Direct Trade certification, you may see it in the form of one sticker or another, this logo or that logo, and with one name or another.

What you need to know about Direct Trade

One of the most significant expectations of Direct Trade is that it directly eliminates “intermediaries” in the supply chain. This claim that coffee is somehow – miraculously the result of a simplified commercial transaction that eliminates the need for an intermediary between the farmer and the roaster – is not valid. Coffee always needs to be exported and always needs to be imported. These are the intermediaries required no matter who buys the coffee, from where, or how. The Big Three’s first direct commercial coffees were sourced from imported coffee.

What-you-need-to-know-about-Direct-Trade
Also, while the big roasters can import themselves, almost none of them can export – Chain also meets expectations, Farmer – Roaster, which is unrealistic in terms of dear tomorrow.

Supply chain expectations

However, using the term “middleman” in this way implies one of the primary purposes of direct Trade, which is to remove any obstacle that prevents roasters and farmers from coming into contact with each other. Closer. Usually, that means negotiating the price of the coffee with the farmer and arranging the purchase and shipping of the coffee through an exporter and importer. This is in contrast to traditional buying behavior; Importers tout their products and buy coffee based solely on quality, the list price, or volume.

In the past, there was a lot of skepticism surrounding exporters and importers in the industry – and in many cases, it is due to the lack of transparency about pricing structures the long-term attachment to the industry. commodity markets (C-markets) for price-setting and other trading strategies not designed to put farmers first – cafe imports

Supply-chain-expectations
Eliminate intermediate links in the core of Direct Trade; It originates from the roaster wanting to control the quality of their coffee.

One of the other prerequisites that many companies put in place for their live trade show is exceptional quality. Historically, since the model was based on encouraging quality improvement at the farm level, there was a built-in expectation that the resulting coffee product would be excellent. In a perfect world, this is always true, but the world we live in is far from perfect, which brings us to one of the essential elements of a Direct Trade relationship: Risk sharing.

Sustainable relationships against risks

The respect for long-term relationships, quality-based pricing structures, and quality expectations that improve year after year create some difficult situations for some partnerships – farmers & roasters. The problem is that the nature of agriculture is beyond farmers’ control; the crops are not as expected. It can be affected by weather, a year down in the production cycle, delay in a coffee flowering cycle or transportation, quality loss after farm renovation. All of this adds to the difficulty for producers. The fact is that nothing in coffee is completely guaranteed, regardless of the level of investment.

So, what happens to direct Trade if the one-year crop is substandard? Would the roaster reject it and damage both their relationship and the reputation of their live trade show? Or do they buy it and risk leaving the customer with a significant deterioration in quality? 

Sustainable-relationships-against-risks
Farming risk issues may be Direct Trade’s weakest point.

These are the risks that roasters and farmers share through Direct Trade, and sharing this risk is an essential part of the procurement model: After all, farmers need buyers. Trusted for their coffee and Direct Trade can help them find security in a long-term partnership that eliminates the need to find new buyers every year. However, for such partnerships to work, there also needs to be an understanding of what a roaster can and cannot accept in terms of quality and price, and those terms need to be communicated and complied with by both parties.

This inadvertently brings us to somewhat arbitrary direct commercial standards enforcement. Without reliable third-party certification, consumers with limited ability to judge the success or consistency of a given roaster’s direct commercial relationship would not be standard requirements behind the “Direct Trade” label. Therefore, it will result in two roasters purchasing coffee directly from the same producer who may have different quality, buying behavior, and results.

Certification – no fees

For some roasters, the lack of a standardized set of regulations and requirements means tailoring a sourcing program to meet their own needs and vision, which is true. Out is a potent tool. In other words, there are fewer costs involved in being “certified.” On the other hand, it also creates the potential for consumer confusion, who may not realize that there is no set of guidelines, minimum price floor, or general safeguards in place—coffees bearing the “fair trade coffee” seal.

There is no official direct trade certification, so there is no application form to fill out, no paperwork to submit to inspection, and no periodic re-evaluation of your business practices to maintain this seal.

However, interested roasters green beans can take the time to write down their direct commercial requirements and standards, hire a third-party organization to review the documentation, write reports and assist in maintaining internal expectations for their company’s proprietary seal.

This, in the end, leads us to the question. Is direct commercial coffee better?

Is Direct Trade Coffee better?

There is much debate about whether direct commercial coffee benefits producers, and opinions have been expressed on both sides of the argument. While we can’t necessarily claim that plain commercial coffee is better or worse than coffee sourced through other commercial methods, there are a few things you can look out for before choosing one. Choose your coffee:

Direct-Trade-Coffee
One of the original meanings of direct trade coffee was ‘Quality’ which other trade certifications have no binding standards.
  • Paying higher prices both encourage quality improvement and allows producers to reinvest in their farms, their families, and their communities – all with broad benefits that go beyond simply Enjoying a delicious cup.
  • Long-term trading relationships are more beneficial to coffee farmers than a one-time sale and continuing to find new buyers for their coffee.
  • Committed to being a trusted partner means “accepting the good with the bad, the sickness and the health,” as Andrew Miller, founder, and partner of Cafe Imports, often puts it.
  • Transparency and communication are vital to maintaining a true partnership over time. There’s no substitute for sharing information, having conversations, and connecting face-to-face with people we all work with.

Finally, one of the blessings and curses of direct trade coffee is that technically anyone can sell “direct trade” coffee. Still, suppose you are committed to transparency and care about developing your own set of verifiable, quantifiable, and relevant standards. In that case, we will be happy to assist you in any way we can to pursue a fairer coffee industry for everyone.

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