Having to talk about the economy and related aspects might be a challenge for many people. Being asked questions to which you don’t know a sure or immediate answer can be quite uncomfortable, but seldom it’s worth keeping a mental note that not all of the topics are plain and simple.
As a coffee enthusiast, humans are more often aware of the properties of the beverage itself and don’t really concern themselves with the economic aspects of coffee.
Specialty Coffee Buying Models: Fair and Direct Trade
Fair Trade Buying Model
This Buying Model entails that money transactions are ordinarily made with a cooperative. Cooperative is an organization of farmers that got together and decided to manufacture a product. This means that every person in that cooperative has to invest a lot less than one person would in the Direct Trade Coffee Model. It also means that it’s harder to earn money, but even if you fail, you all share the cost. When it comes to the customers and what they get, the brew can range from average to amazing.
When it comes to local roasters, they aren’t in the chain – the company is the one that gets to handle the money transactions.
The cooperative itself can even have thousands of farmers. Since the collective costs can be high, and there are some additional costs involved, less money goes to the farmers.
Since farmers aren’t in uninterrupted touch with their customers, they face a very tricky situation. They aren’t aware of what people think of their coffee because they can’t get any feedback.
Direct Trade Buying Model
When it comes to the Direct Trade Buying Model, it’s a model that can make a higher profit than the Fair Trade. The important distinction is that in this case, the money transactions are done directly through the farmer. The coffees that are offered can sometimes be of incredible history or origin, rarity and it includes many limited editions. Because money flow isn’t regulated and doesn’t involve anyone other than the buyer and the farmer, farmers can make a bigger profit – there aren’t any situations where you have to split the income with others, for example.
If they want, farmers can make a deal and collaborate with another farmer that is also independent. This may lead to the development of new products. Many of these features of the Direct Model results in the improved quality and the ability of the farmers and roasters to benefit from the direct trade and also to improve it. Trade can also be direct and indirect, but we won’t get into details about the difference here.
If you want to support quality coffee and independent farmers, then you know what to watch out for. Opt to get the product from the farmers themselves. You may have to pay a little bit more ( or not, really depends on the coffee and farmer ) while getting better coffee and helping independent businesses. You can improve your coffee experience simply because you decide to support independent farmers. You may feel good about yourself, and a bonus, or perhaps a motivation for action, is that the coffee you get will be amazing.
When it started, like any other idea, it was messy and it grew and evolved during the try and error process. It’s important to mention that collaboration that happens between farmers and coffee roasters is also one of the most important features which also result in better coffee and also the consistency from the batch to batch.
There are many reasons why many farmers are in cooperatives, but they can create amazing coffee themselves. Some of those reasons include that they think it wouldn’t work – they have done all the analysis and it gives negative unfavorable numbers. Another problem is that you have to invest and cover some costs when you start, and generally, even when you are consistent farmer which a regular income, you have costs that may be tied to your accountant or to direct trade coffee roasters or to the farm itself. This is why stepping out and getting in the Direct Trade process is a risky move – you may not be able to pay out all of the costs and you lose two things – you aren’t any longer a member of cooperative and you have to cover the costs since the sale didn’t.
If it works out, the pay can be much bigger than it was in the Fair Trade Model. Since the income is higher, so is the possibility to invest in better equipment and specialists. When it comes to this model, there is also some criticism present because of the taxes and the economy – for example, if the market collapsed since the fair-trade offers the smallest price, other farmers would have to stop their businesses. Those, and many other problems had caused many people to argue about what is fair trade coffee, why is it an ethical issue and trying to balance fair trade problems and solutions, in hope that it will make a more fair model of trade.
The market changes, competitors come and go. Some of them stay for very, very many generations. With the need of the market and development of technology, there came a moment when the way that we think about coffee and it’s purchase changed. We aren’t buying coffee only from the supermarkets, we go to stores that are specialized for coffee and buy it there. Afterward, the coffee farmers themselves open the shop and we shop there, directly contributing to their craft, effort, and vault.
Why do we do This, Even When we Don’t Think About it?
The reason is simple – coffee is very good but it’s usually also very affordable. It may be a little bit higher in the price than the one that you would get at the supermarket, but the differences in prices aren’t big and they don’t make a difference on the day-to-day basis.
This is why the Fair Model may not be as good: it offers coffee, usually, that is worse in quality but not that different in price. Though it doesn’t make a big difference, for some people that can’t afford to get their coffee from a farmer and join the Direct Trade Train, getting the coffee from the market it the only option.
This might be the reason why Fair Trade Model is sustainable – it’s more affordable. Cooperatives are groups of people that join together and created their products. They can sell it to the companies, and since it’s the coffee-based product it’s most often sold in Europe and America. Another feature of this model might be a reason why it’s more often practiced. When a cooperative and company that they want to sell their product to make a deal, they also come up with a price. Both sides have to agree on the price and once they do, the company usually pays the cooperative half the price upfront. This means that the part of the manufacturing and other costs is covered. Once the product is done, the other part of the price is paid. This means that the company will pay full price to the cooperative once they finish their product and farmers can invest that money directly back in the coffee manufacturing process, or since it’s a good chance that they come from the countries that have problems, they might invest in education, health or another similar field.
Direct Trade also has another difficulty to endure – thought not direct – the places where the best, most quality coffee beans grow are often the countries that have a problematic economy, politics or another issue which makes direct trade uncertain and even riskier choice for manufacturers.
So, What do Those Two Models Have in Common?
-There isn’t anyone in between the farmers/cooperative and the company/people that want to buy their product.
How do They Differ?
-Fair trade is a model which, since it includes cooperatives, allows farmers to better their coffee or their surroundings or elements of their lives. The direct trade model is the one that places their full attention on the quality of the coffee beans and the product that their customers get. This isn’t to say that the first model can’t produce a coffee of notable quality.
Direct trade coffee club is a collective that does several things regarding the coffee market: they source, roast and deliver direct trade coffee. Their mission is to make quality coffee and its growers more available to the consumers.
Direct trade isn’t a certification – it’s a buying model that’s a lot different than its competitor model. Fair trade gets certified by some other fair trade association, but direct trade is yet to be defined which means that the logo of a direct trade won’t be found on any package. This is why it would be wise to research before buying a package of a coffee that’s “direct trade”. Read about how they source their coffee, how they function and the experiences of other buyers. So, what are the brands that we would be able to sort when it comes to the models that they belong to?
- Direct Trade brands: Intelligentsia Coffee, Passenger Coffee
- Fair Trade brands: Larry’s Coffe, Pure Vida coffee, Conscious coffee
Frequently Asked Questions: FAQs
Is Starbucks a Fair Trade Coffee?
Starbucks has been cooperating with the Fair Trade since 2000. They have been using Arabica coffee. Fair Trade coffee, besides going over a specific path from the farmer to the consumer with its consequences and implications, also has its mark. This is how you will be able to recognize some other brands of the Fair Trade coffee when you are at the market or store and stuck in the wide spectrum of choice.
Should I Buy Direct Trade Coffee?
Direct trade coffee offers stronger relations between roasters and farmers which, in return, results in more quality coffee. Communication doesn’t go through any channel, so it’s clear and everyone knows what they’re getting. The farmers can also learn what people think of their product and improve it accordingly.
Direct trade manufacturers produce only specialty grade, directly sourced coffee, which means that it targets certain buyers. Also, Direct Trade farmers can’t always afford that – logically, there are a lot of people who can produce small amounts of coffee but not enough. They can’t get any benefits from this model of trading since it requires investment.
This means that you should buy direct trade if you understand and support the model itself. There isn’t a one-size-fits-all answer, it’s highly personal.
Both Direct Trade and Fair Trade buying models have something to offer. Goals might differ from model to model but that’s not a reason not to dive deeper into the trade model of a brand. Why? Simply because knowing the way coffee is produced, you are more responsive to your health and environment. By finding out which way they function, you can make an educated decision and buy the brand whose values you want to support, or hardships that you want to help.
Being aware of the environmental and economic factors when it comes to the viands that we buy every day can make a significant difference in the way we behave in the store – which product we will buy, when and where. This not only helps you but also supports local businesses or companies with a notable cause.
Which Trade Model you will choose to support is entirely up to you. If you are here, reading this, it means that you are aware of how thoughtful purchases can have a big impact on cooperatives, companies, manufacturing processes, people and planet.