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What is Direct Trade, Really? A Question for Coffee Consumers and Roasters Alike

Direct trade is a fuzzy concept, even for those people who make a living among coffee supply chains. So it’s no wonder the concept can be completely mystifying to consumers.

“A lot of people ask us how we meet these farmers, and they have a perception that we’re like Indiana Jones going into the jungles going past old tombs looking for this one indigenous farmer who’s growing this one bush,” says Chuck Patton, owner of San Diego’s Bird Rock Coffee Roasters. “But actually, it’s all about contacts and relationships.”

(related: Counter Culture Buyers Ionescu and Hill on a ‘Coalescing’ Direct-Trade Philosophy)

This is the message that the Bird Rock team is hoping to convey in a new video that takes viewers through a direct trade journey from Guatemala to San Diego — one that naturally makes several stops, including to private contractors, farmers, exporters and importers.

“While our customers know we travel to origin to ‘get coffee,’ I think there is a misconception or a lack of information about how exactly we go about doing that,” Patton tells Daily Coffee News. “There are many moving parts.”

(related: Why and How Coffee Can Command More Value From Consumers)

One caveat: Patton stresses that the trade model documented in the video is just one example of how a “direct” trade relationship can work. “Every company has a different idea about the concept,” he says. “The video is our attempt to frame how we define coffee we sell as ‘Direct Trade,’ which is different from coffee we buy at origin through an exporter.”

In this way, the video presents not only a learning opportunity for the more conscientious consumer, it also underscores the ambiguity among various labels — “direct trade” among them — that are widely used throughout the specialty industry by coffee companies of all kinds.

“The term is used so often now, I think it is time for the coffee industry to talk more in-depth about the meaning of direct trade and other terms like ‘farm to cup’ or ‘relationship coffee,’ says Patton. “These terms are heavily used in specialty coffee, but the meaning of these terms seems to differ from roaster to roaster, if they are defined at all. While it is terrific that so many roasters now are sourcing at origin in a sustainable way, without clearly defining these terms, there is a potential for the terms and labels to be misused.”

(related: Sustainable Values Combined with Market Tools: A Future for Specialty Coffee)

Here’s the Bird rock video, which features Patton, private contractor/relationship builder Gabriela Cordon, Fernando Diaz of Finca Santa Ana, Genero Batrex of exporter Servex, and Steve Sims of importer/green seller Bodhi Leaf:

Comment

13 Comments

Len

There needs to be a formal declaration by the SCAA as to what designates the stamp of “Direct Trade” coffee, and also a major public relations campaign by the SCAA to inform the public of such so that there will be total clarity on the issue.

Len
http://www.BeanVillage.com

Price Peterson

What is “sourcing at origin in a sustainable way”? Does that really mean something?

chuck

So sorry for the delay in commenting as I missed this post thing. Anyway, may be moot now but by “sustainable way” I meant in a way that allows a farmer to re-invest in their farms — in concept, though does not always work, our feeling we want to pay more than the amount that would just allow the farmer to support their family but to do that AND improve the inca-structrure of their farm.

Brian

“Direct” according to Merriam-Webster
2
a : to regulate the activities or course of
b : to carry out the organizing, energizing, and supervising of

If one took “Direct Trade” literally then there would be no exporter or importer, just a green buyer and a farmer. The green buyer assumes all the risk once cash is handed over for the coffee, then they arrange to get the coffee in a container and on a ship, then file all customs paperwork once it reaches the USA, and finally pay all costs to store it in a warehouse or store the whole container in their roastery. I realize this is a brief list of the many tasks it takes to export/import coffee.
So what roasters out there really perform all these functions of the chain themselves? If they don’t is what they are doing really direct traded or just buzz words to dazzle customers???

chuck

Again, very late here. Your suggestions might work to a point — if a roaster is buying an entire container. Most small roasters cannot fill an entire container, however.

We define Direct Trade by those transactions we make directly w/ the farmer – not via a broker. In all these cases, we MUST still work with an exporter and an importer. There is simply no way around it.

Even if we could do a full container, we would need need and exporter and importer for logistics.

Kevin Knox

The great coffee grower Price Peterson asks one of the more important questions here, and Brian’s comments about the dictionary definition of “direct” are also helpful.

I’ve written about this extensively for years. As with most marketing slogans, it’s a safe bet that those who promote “direct trade” most loudly are probably doing nothing of the kind, while those who have the volume and sophistication to actually DO IT – i.e. who buy all of their coffees in full containers, offer pre-financing to their farmers, have QC and QA staff at origin, don’t need exporters to hold their hands or importers to act as banks – are far too busy running their businesses to spend much time in self-congratulatory marketing.

While I don’t for a minute doubt the sincerity and passion for coffee of microroasters who travel at origin, meet some farmers and with the aid of their importers and exporters negotiate to buy a few bags of coffee at a good outright price, that’s not (for the reasons Brian mentions) “direct” trade in the way that the consumer is going to understand it – which, let’s face it probably comes from a Tom Shane/Shane Diamonds “we cut out the middleman so you save” type of advertisement. Far from cutting out the middleman, small roasters are adding substantial and pretty much entirely unjustifiable expense by making their customers pay for their entirely unncesseary travel to origin, with (unlike larger players) said costs being spread over very few pounds of coffee.

Here’s one of many posts I’ve written over the years that touch on this topic:

http://coffeecontrarian.blogspot.mx/2013/05/traceability-certification-elitism.html

To Len’s idea: I wouldn’t hold my breath waiting for SCAA to define “direct trade,” since in all its decades of existence it hasn’t even managed to define specialty coffee in a way that means anything to consumers or asks members to actually deliver it as a condition of membership.

chuck

Hello, sorry for the delay. I think when it comes to “marketing” you are correct but I would argue that better terms to not exist for what we are defining in this video.

The key, I would argue, is defining the terms you use and to take on the responsibility of saying “hey, this is how we define it and it might be different than how roaster X defines it.” OR, come up with a new term, which i am not smart enough to do.

As for costs etc. The root of doing this is to find something exclusive, and tasty, and to do so with transparently and sustainably in mind. One cannot do this on a consistent and broad level without traveling to origin so, yes, that is part of the cost a consumer will pay and one that absolutely is necessary. We are still guided by market principles, however, and cannot simply charge a ton more for our coffee than a roaster who got coffee from a broker.

For more, we published a transparency report for the coffees we bought as “Direct Trade” from Central here:

http://birdrockcoffee.com/direct-trade-video/price-transparency/

We cannot control how others view the concept. We are simply attempting to define how we use it and to back up what we say. It would be great if the industry would consider the concept of a definition but until that happens we are taking the lead with our customers.

Chuck

Martin Mayorga

The Specialty coffee industry and trade publications are pandering to the romanticism of craftsmen sourcing something exotic and distinctive when the reality is that most “direct trade” depends on brokers, agents, exporters, etc. This video alone shows the misconception/misleading that surrounds this VERY SIMPLE premise. If you’re dealign with brokers and agents, you’re not even close to dealing directly. Flying somewhere wearing your company t-shirt and putting together a video is NOT direct trade. I’ve been doing this for 17 years and am getting so fed up by the narcissistic “look at me” approach that so many roasters rely upon for marketing. Please get over yourselves and actually DO something real for farmers.

P.S. most farmers get really frustrated by the micro-lot buyers who think they’re rock stars for paying an extra $.75/lb while doing nothing more than making demands and and needing to be catered to during origin visits.

dean cycon

Well said, Martin! I have looked at the explosion of claims of “Direct Trade” and most of it is just business as usual. Small roasters jetting off for a few days at origin and even within that, just a few hours at the farms. Then just buying that coffee from a broker. It seems that the concept (which I firmly believed started as a way for certain too hip roasters to get around participating in fair trade or just paying more and shutting up) has turned into another “gee, let’s use these words in our marketing!” activity. It is ironic that in the old days, we were all concerned about the large companies taking leading edge concepts and turning them into mainstreamed meaningless marketing fodder, but now it is the new wave of roasters doing it, not the Big Boys.

Another piece of this that has bothered me for years is the misrepresentation even within the misrepresentation that these roasters are buying all of their coffee under some sort of direct trade arrangement. most that i see are buying some more directly than other coffees they purchase. it is clear from their websites if you take the time to dig, but to the average consumer the language seems to infer that ALL of their coffee are purchased directly, which for the most part is simply not true.

I also find it odd that supposed direct trade roasters often buy their coffee from the fair trade coops supported and nurtured by fair trade roasters for years, with the new guys coming in and cherry picking what they think are the best beans. that creates a lot of pressure within the coops.

Also, how the hell can some of these guys justify selling their beans for 17-25 dollars per pound, even if they did pay a dollar more? Ask the farmers what they feel about this.

As one of the founders of Coffee Kids in 1988 and perhaps the longest continuous participant and innovator in farmer-focused development work, I applaud sincere efforts to address the inequities of the coffee market and to try and make a real difference. But self serving and self-enriching claims that do not deliver at the farm level are self and consumer deluding. Those of you who are involved in these things know in your heart whether what you are doing is about real change or about pocket change.

chuck

Not sure if you got the message here.

Our point is that our definition of Direct Trade must start with the farmer: price negotiation, farm investment, supporting experiments, etc BUT good luck getting that coffee without the help of an exporter and an importer. It is not a simply process as one is dealing with not only a farmer, but international logistics that are time-sensitive. It takes more than just the roaster and a farmer to ensure that a “Direct Trade” relationship will be successful. That is the point of the video.

To clarify, the only broker in this video is Bodhi Leaf but we are not buying the coffee from him.

In this case, we are using Bodhi Leaf for import and paying him to import. We have worked directly with Finca Santa Ana, the farm in this video, for five years now regardless of how we exported and/or imported the coffee.

If you have a moment, you may want to read this: http://birdrockcoffee.com/direct-trade/ as we are probably in agreement with what you are arguing here.

Chuck

Ruth

Myself.. As a coffee grower and from my personal experience… I believe They KEY and most IMPORTANT thing of Direct Trade is not about how many people get involved in the logistics chain (exporter, importer, etc) but that Us growers really will benefit from: 1. Getting the credit for growing outstanding beans. 2. Receiving a premium price for the quality beans. 3. Building relationships with roasters. 4. Knowing who roasts and brews our beans. 5. Customers knowing where the beans come from and our story!

What’s NOT Direct Trade according to my point of view: In the past my coffee got sold as ‘Direct Trade’ and I wasn’t aware of that. The roaster sold it as a single origin with my farm name, he traveled to Origin and source it from a local miller… The miller got the premium, the credit, everything! The roaster didn’t bother to meet me or my farm even though he was in my Country. So if any roaster gets on a plain and visits me for at least 3 hours… The least I can do is to welcome him and caterer him for taking the time and effort to come meet me and visit my farm.

It is great that Chuck clearly defines the way he sources the coffee from Guatemala! Customers get an idea of the hard work that’s done at Origin and all the ‘road’ beans must travel to get to your daily cup of ‘Joe’.

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