An influx of specialty roasters entering the market has made sourcing high-quality green beans increasingly difficult.
As the specialty sector continues to develop, consumers have taken a greater interest in the story behind coffee, and the farmers who produce it.
In turn, concerns over the even distribution of profits have increased. To counter this, Fair Trade sourcing was designed to support the livelihood of producers through a minimum floor price.
However, this route has been critiqued for many reasons, including its ability to deliver quality coffee. For instance, organisations have to undergo costly and rigorous examination periods in order to earn a Fair Trade certification. This may put membership out of reach for local roasters who are trying to better their communities.
More so, Fair Trade costs may be high because of the higher administration costs that occur at a retail level. These additional costs are not passed along to the cooperative or workers, meaning exploitation is likely still occurring.
As such, there has been a shift towards a direct trade model in recent years. This model is centred on the idea of building long-term relationships with producers, helping improve quality and develop ethical values within the coffee industry.
To find out if roasters should buy from Fair Trade farmers, I spoke with Daria Vorslova, the sales account executive for green coffee import company, Ally Coffee.
What is Fair Trade coffee?
Fair Trade is a certification programme that ensures coffee farmers receive above-market prices – provided they meet a specific economic, social, and environment criteria.
This model helps to protect farmers from fluctuating market prices as it aims to cover their average costs of sustainable coffee production. Fair Trade also pays an additional “premium”, which can be reinvested in the business or community, or provide access to credit and micro-financing.
Micro-financing refers to a category of financial services that targets individuals and small businesses who lack access to conventional banking services.
Fair Trade certifications are well-established and widely recognised, which has helped it garner consumer confidence. More so, this has made it the ideal model for international coffee businesses, such as Starbucks.
A number of “Fair Trade” organisations exist that have similar objectives, but often differ in focus and approach.
“Fair Trade certification was created as a third-party certification,” says Daria, who is also a WBC judge and Q-Arabica Grader. “This was to ensure a farmer gets a minimum fair wage, a premium to a market price.
“However, the cost of production grows, so how can we be sure a farmer is receiving sufficient funds to improve their livelihood?”
Daria explains access to these certifications is still limited to many farmers in terms of information and finances.
“Certifications imply additional costs for all subsequent players along the coffee chains – especially on those responsible for educating consumers about the use of these certifications, such as roasters and baristas,” she adds.
The cumulative costs of meeting the certification criteria may outweigh the benefits of the model, with little being gained by the farmers.
Daria believes this all takes a lot of effort that may be better suited for providing tools to improve the lives of farmers and provide customers with better coffee.
While Fair trade has had a significant positive impact on the lives of many, it seems the model may need refining before it can truly realise its goal.
One issue is quality when global coffee prices rise above what Fair Trade pays, including the premium. This often encourages farmers to sell their lowest quality crop through the model and find a private buyer for higher quality beans to increase profits.
Conversely, when prices drop below the Fair Trade premium, it encourages more farmers to sell through the model. This, in turn, reduces the amount individual farmers can sell at the Fair Trade price.
What is direct trade?
Direct trade is a process whereby roasters purchase green coffee directly from the producer or farmer, instead of through intermediaries.
There is no regulatory body with direct trade, meaning the contract’s particulars, such as price and delivery times are negotiated by the parties involved.
Also known as “relationship coffee”, it is typically based on interpersonal connections, mutual trust, price transparency, and a commitment to quality improvement beyond a single harvest.
Ultimately, a direct relationship humanises the producer-roaster relationship in which farmers are treated with the respect and fairness they deserve.
While the essence of direct trade is simple enough, in some cases, a roaster may be limited by how “direct” it can be.
For example, some farmers may grow, process and sell their own coffees. In other situations, multiple smaller farms may sell their cherries to a washing station, which then sells the green beans to a roaster.
Regardless, the beans are not sold through “coffee traders’ who would generally absorb a significant percentage of the profits.
Therefore, the direct trade model has the potential to be a rewarding relationship for players at both ends of the chain.
Farmers who sell direct may receive about 25% more than in other models. Additionally, they have the opportunity to create stable business relationships that introduce an element of security.
Guaranteeing repeat business allows farmers to reinvest in their operations and upgrade processing facilities.
Should roasters buy from Fair Trade certified farmers?
One of a roaster’s many responsibilities is sourcing high quality green coffee.
Admittedly, there are many things to consider when doing this. However, when does the farmer’s well-being become a significant enough factor to influence a roaster’s purchasing decisions?
Demand dictates supply, and as long as coffee roasters prioritise cost over sustainability, then lack of intent becomes an obstacle to progress.
Both Fair Trade and direct trade have their pros and cons. For example, Fair Trade may often give consumers a false idea that their purchase is helping enact positive change. In reality, many believe it is only succeeding in maintaining a status quo.
While the model generates awareness, any positive outcome resulting from this can be diminished if the only action it provokes is to purchase Fair Trade.
“As a green coffee import company, we haven’t dealt with certified coffees such as Fair Trade,” Daria explains. “The main reason is because many of our local customers are not quite ready to pay extra for such an abstract concept.”
Additionally, there are dangers with direct trade. For instance, as agreements are made between individual entities, the model’s success hinges on how well the respective parties understand each other.
Growing, processing, transporting, and shipping coffee across the world leaves ample opportunity for complications without factoring in whether the quality and consistency are as promised.
That said, having a direct link to the producing farm may significantly increase a roaster’s understanding and appreciation of the coffee.
Regarding the ethical and progressive side of green bean purchasing, it seems the industry is yet to establish a practical model to safeguard the supply chain.
So, it remains the prerogative of individual businesses to hold themselves accountable.
At MTPak Coffee, we understand the hard work that both coffee producers and roasters do in creating great coffee.
We offer a range of custom-printed coffee bags made from 100% recyclable materials, such as kraft or rice paper with a LDPE or PLA lining. More so, we allow our roasters to have complete control over the design process by allowing them to build their own coffee bags.
We are also able to digitally print onto a range of sustainable coffee packaging, with a quick turnaround time of 40-hours and 24-hour shipping time.
MTPak Coffee also offers low minimum order quantities (MOQs) to micro-roasters who are looking to remain agile while showcasing brand identity and a commitment to the environment.