What are direct trading relationships worth?
Based on some data we have collected in Nicaragua, it looks like direct trading relationships this harvest were worth about 50 cents a pound, and Direct Trade relationships even more.
Under our CAFE Livelihoods project, we partner in Nicaragua with five farmer organizations — three have direct trading relationships with U.S. importers and roasters, and two do not. I am busy preparing a report for the donor who funds the project, and have been poring over some comparative data on what they earned for their coffee this harvest.
The average price earned by the coops with direct relationships was $2.58 per pound (this does not include some renegotations I am aware of), compared to $2.09 a pound for coops that sold locally to intermediaries (who don’t generally renegotiate).
When I refer here to “direct trading relationships,” I just mean negotiating with and selling coffee directly to the U.S. businesses that import and/or roast it. I do not necessarily mean Direct Trade, which of course encompasses a whole lot more. The three coops with direct trading relationships also have a few bona fide Direct Trade relationships, which tended to be the ones where the highest-quality coffee sold for the highest prices — up to $3.53 a pound.