In one of the previous articles on the topic “What is direct trade in the world of coffee”, we explained what the “direct trade” scheme is. Let’s briefly repeat: it is a way of buying high-quality specialty coffee directly from farmers at high prices, compensating them for improving the quality of their product in exchange for receiving high-quality beans. Buyers interested in a specialty product are willing to pay 5-10-100 times more for it than the average market price for coffee in the coffee producer’s region. Therefore, farmers have a financial interest in improving their farms, equipment and work processes to produce such extraordinary coffee.
In the world, in addition to direct trade, there are other coffee labels that are often used on product labels:
• “bird-friendly”;
• “organic”;
• “rainforest alliance”;
• “fair trade”.
All these labels on coffee packages only indicate how the coffee is grown, and this may somewhat persuade the end consumer to pay a little more for the beans. But they do not provide any guarantees about the taste or quality of the coffee that the consumer receives.
On the other hand, direct-trade coffee companies consider the ecological and improved cultivation of specialty and other coffees, compensating the improvements directly to the farmers at a higher price than any other specified labels can guarantee.
Therefore, it is fair to consider direct trade to be the smartest business practice today when it comes to obtaining specialty coffee with the best taste directly from farmers.
Now we will explain all the concepts mentioned above so that you do not get confused between direct trade and the rest.
1. Bird-friendly. This label indicates that the coffee has been grown in a way that contributes to the preservation of the habitat of local birds (does not harm them, does not reduce their habitat, does not force them to migrate, etc.). Farms that have this certificate plant coffee in the shade of trees where birds live, ethically, contributing to the preservation of biodiversity, a healthy ecosystem on coffee plantations and minimizing the negative impact of monoculture on forest and bird life.
2. Organic. This means that the coffee is produced without synthetic pesticides, herbicides, and fertilizers, with minimal or no mechanical damage during harvesting. Organic farming methods prioritize soil health and biodiversity, reduce pollution, and promote sustainable agriculture. Certification ensures that the coffee meets strict organic standards, which benefits the environment and the health of the end consumer.
3. Rainforest Alliance. This means that the coffee is grown on farms that meet environmental and social criteria adopted in specific regions, where people and organizations are committed to the enhanced protection and conservation of rainforests. In many ways, this certification is similar in quality to the previous two, including preserving biodiversity, protecting ecosystems, promoting the well-being of farm workers and local cooperatives, and maintaining sustainable agricultural practices: all of which contribute to the preservation of important rainforests.
4. Fair Trade. The mark guarantees that coffee has been produced and sold in a way that ensures fair prices, working conditions and the development of the farming community. It differs from direct trade in that fair trade almost never offers the same high prices for exclusive coffee, and in general is not aimed at the exclusivity of the product. Here there is mainly a desire for financial, informational, cooperative, legal and infrastructural support for farmers who grow any (even average) product, in order to simply increase their level of well-being in general, creating a more just society. This may also increase the financial well-being of their region of residence, but does not guarantee this.
In addition to direct trade and fair trade, the most common method of purchasing coffee in the world is wholesale.
Its features are:
• The presence of a large number of intermediaries in the supply chain, each of which is responsible for its own section (purchase from farmers, centralized processing and homogenization of coffee, delivery to ports of departure, loading, shipping by sea, shipment to warehouses in recipient countries, sale to wholesalers, sale to roasters and coffee shops);
• Given the large number of participants, there is an increase in prices at each stage, and farmers who directly grow coffee get less money;
• Minimum purchase prices, which are formed by rigid market conditions based on supply and demand on exchanges;
• Opacity and minimal accountability at most stages;
• There is no tracking of coffee quality, and coffee can deteriorate at any link in the chain;
• There is no focus on farmer development - only on maximizing profits for the final participants in the scheme.
in Our blog