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49. More perspectives on Direct Trade

Last month at SCAA, I had the pleasure of accompanying a few smallholder farmers who had never been to the big show.  To help prepare them for the experience, we collaborated with our friends at Cooperative Coffees to create a farmer’s guide to SCAA.  I also combed the list of exhibitors to create a short list of don’t-miss companies along with a description of each one.  I spilled more ink on the direct traders than anyone else.

I struggled to synthesize the Direct Trade approach into a coherent and balanced paragraph.  How to draw enough of a distinction with other “sustainable” and disintermediated approaches to sourcing to articulate Direct Trade’s unique value proposition without exaggerating the extent to which Direct Trade departs from other models?  How to convey the way that Direct Trade companies position themselves in the marketplace while also doing justice to the thoughtful critiques of the model?  How do Direct Trade relationships emerge?  Whew.  Here is what I wrote:

The emergence of the “Direct Trade” model was driven by a desire to help coffee companies get greater control over the coffee chain, and to expand and sustain access to truly exceptional coffees.  While there is no centralized standard, most Direct Trade approaches include the following elements: direct relationships with coffee producers (smallholder, medium and estate), an overwhelming focus on quality control throughout the chain, and a pricing system that creates clear incentives for quality, with premiums that generally exceed the guaranteed minimums for Fair Trade Certified coffees by 25 percent or more.  Direct Trade companies work directly with smallholder farmers to ensure access to lots that satisfy their rigorous quality standards, and often seek exclusivity in these relationships.

An important critique of the model is that the selective purchase of exceptional micro-lots deprives farmer organizations of their best coffees and weakens their organizational structures by going around traditional sales channels and creating divisions between members.  In some cases, the quality of Direct Trade coffees reflects years of investment by farmer organizations.  It is not clear how or whether Direct Trade companies compensate cooperatives for these investments.

In the end, I was not confident that I had “gotten it right” and not sure how helpful my description was for the CAFE Livelihoods project participants I was accompanying.  The truth is, I myself am still working to understand Direct Trade and how we should advise smallholder farmers to approach it as a development agency working to promote more sustainable and fair trading models.

I came into the specialty coffee fold as the director of the CRS Fair Trade Coffee Project in the company of fully committed Fair Trade roasters — a crowd that hasn’t traditionally shown a whole lot of love for the Direct Trade approach.  It was in these circles that I first heard concerns expressed around the impact of direct sourcing of small lots of extraordinary coffees on local cooperative structures — something I have continued to hear from other thoughtful people who aren’t necessarily hard-core Fair Traders.  I suppose I had developed a kind of mild predisposition against Direct Trade before I had ever encountered it on the ground.  For better or worse, the “100-percent Fair Trade” standard was my point of comparison for Direct Trade or any other approach to sourcing coffee.

Since then, I have had some (limited) interactions with Direct Trade chains, from farmer organizations at origin to roasters in the marketplace, and have been moving toward a more informed perspective.  Most of all, I have been favorably impressed by the depth of engagement of Direct Trade companies with the farmers who grow their coffee and their sensitivity to the challenges of producing Direct Trade-caliber coffees.  That hasn’t led Direct Trade buyers to lower their quality standards, and to be sure, some groups have fallen out of the Direct Trade ranks when they have been unable to maintain quality over time.  But the intimate contact does seem to influence the way they engage and invest at origin.  In most cases it has led to support for developing key production and business skills; in some cases it has also led to additional social investment.

Furthermore, I think that there are additional benefits to farmers in the Direct Trade system that are underappreciated.  In building a narrative around exacting focus on quality single-origin coffees sourced directly from farming communities, Direct Trade roasters invest in telling the market about the farmers who grow their coffees.  In building their own brands, Direct Trade roasters build the equity of the cooperatives they source from — an asset those groups can trade on in the marketplace.  These benefits are not generated by your average roaster, even the quality-obsessed roaster that manages to source some distinctive coffees.

Are these benefits exclusive to Direct Trade?  No.  That small community of deeply committed Fair Trade roasters I mentioned earlier (think Cooperative Coffees, Equal Exchange, etc.) has been paying more than 25 percent above Fair Trade minimums for many years and working as a matter of principle for decades to bring their producer partners out of the anonymity of coffee commodity systems.  But Direct Trade roasters do better than most on these counts.

Direct Trade’s long-term impacts on smallholder cooperative structures seems to be one issue on which the verdict may still be out.

In sum, I feel like the Fair Trade v. Direct Trade debate — to the extent that people are still having it — is fueled by caricatures of each approach that may reflect some grain of truth but ultimately misrepresent the realities of both.  Fair Trade’s focus on issues of social and economic justice have fueled the idea that Fair Trade quality is marginal.  Roast Magazine‘s recognition of Fair Trade roaster Kickapoo Coffee as the 2009 microroaster of the year seems to be pretty strong evidence that the social-justice-or-quality dichotomy is false.  And Direct Trade’s primordial focus on quality has led to charges that its commitment to social justice is thin.  The social concern of the Direct Trade companies I have encountered, as well as the durability and positive economic impact of many Direct Trade relationships on farm families, makes me think that some of the critiques of this approach are similiarly distorted.


  • Michael,

    Thanks for this posting. As the program advisor on CRS’ Fair Trade coffee project, I’ve heard this question about Fair Trade vs. Direct Trade coming up more frequently. And I admit that I too haven’t had the best understanding of what Direct Trade is doing at origin, particularly around social justice issues. I’ve tried to get passed the FT vs. DT comparisons, acknowledging that each may serve a different purpose for different farming communities. However, what I’m still struggling with is a question you mention above, and that is how do we approach DT as a development agency?

    I know development agencies can be obsessed with “going to scale” at times, but wouldn’t DT be limited in its effectiveness by its model? If you’re one of the few farmers with exceptional coffee that can sell to a DT company, that’s great. But aren’t we really trying to develop the best strategy for the many small-scale farmers who don’t? To me, DT at origin seems like a nice niche for a few farmers, but the model has very limited prospects as a development strategy. That’s not to say it can’t be one piece of the puzzle. There certainly needs to be collaboration around the variety of ways coffee farmers can have a more sustainable livelihoods. I just wonder how big the DT piece of the puzzle can be.

  • Emily says:

    These are the arguments I see between FT and DT.
    Fair Trade argues:
    Fair Trade offers transparency to the ethical consumer that at this point DT cannot because there is no third party varifying their claims. Can’t any roaster claim DT status at this point? Third party varification is crucial to maintaining high ethical standards and transparency.

    On the other hand DT argues:
    Fair Trade wastes it’s money on FT certifcation bureaucracies rather than spending it on finding the best quality and offering higher wages to farmers. Fiar Trade is often watered down compared to the relationships that DT’s have wih their producers.

    Considering that both direct traders can become corrupt at any point (or flat out false for that matter) and FT certifiers can (or have) also become corrupt, the choice can be difficult.
    Currently, I’m still in the Fair Trade boat because I like the transparency, but nervously respect some personally investigated DT companies.

  • Michael-

    Thanks for the thoughtfulness and for taking the time to put all of your thoughts out there. Your perspective- as a development person working in coffee- is extraordinarily valuable, especially for us coffee people who wind up involved in development!

    It’s interesting to see your evolving perspective on these terms. Here is my take.

    Direct Trade is a part of the Fair Trade movement. It might surprise some to hear me say that, but that’s the fact. The principles of Direct Trade were developed in the context of lots of work within the Fair Trade structure. The whole concept of “microlots” was born in a Fair Trade co-op in Nicaragua, as this co-op tried to find ways to incentivize quality production among farmer partners. Base price, the importance of cupping, focus on the farmer, transparency, etc. etc… you’ll find much in common between well-designed direct trade programs and fair trade programs. “Fair” and “Direct” are not mutually exclusive terms; in fact fair trade advocates regularly cite the importance of direct relationships with farmers, just as those who self-identify as “direct trade” emphasize the importance of fairness.

    That said, and as an aside, there is tremendous diversity within the fair trade community, and there is as well within that subset of the fair trade community calling itself “direct trade”. As we well know, a company selling Fair Trade Certified coffee is not necessarily completely aligned with the principles of Fair Trade, and it is becoming so with Direct Trade as well.

    You’ll also notice that those who have most invested in “Direct Trade” as a concept (you have cited my company and two others) are strongly philosophically aligned with the overriding purpose of fair trade coffee: to redress the inequities created by the establishment of coffee as a colonial crop, grown by people kept poor in the global south and consumed by the wealthy in the northern, “developed” countries.

    OK, you say, since these philosophies share the same roots, why the different names? Well, there are lots of reasons. You have correctly identified one, which is the idea of quality. When I was first traveling to origin as a coffee buyer, visiting fair trade co-ops, these co-ops had developed their Fair Trade Certified “marks”, which was a homogenized quality coffee they were selling at the fair trade base price to any coffee buyer who wanted it. This coffee was available to any roaster who wanted FT certified coffee. This included fast-food type coffee roasters, big-box commercial retailers, etc. who do a very small business in FT, and who do not have a strong quality drive. They were buying the coffee mainly on the basis of being FT certified, not for any particular quality proposition. Meanwhile, the co-ops were trying to incentivize their farmers to do better quality. The win-win solution presented itself immediately- allow me, as a buyer, to pay more- helping the co-op to incentivize quality among its members- which in turn allows me to sell a better quality, and compete with a higher-priced product against the cheaper, marginal-quality generic FT coffees out there. As a smaller, more nimble company, I could also sell the coffee more transparently, recognizing the actual producers of the coffee, rather than some moniker like “Fair Trade Organic Nicaraguan” or something. The idea had appeal in the marketplace, and resonated with consumers.

    This approach did trigger some controversy, however: some saw in that buying pattern something that reminded them of the colonialist past: a powerful coffee buyer picking over the quality and leaving the co-op to deal with the rest. While I understand the critique, I think it is simplistic and inaccurate. Here’s why: quality is not accidental. We’ve found that any farmer can dramatically improve the quality of their coffee, through simple interventions like ripe picking, clean processing, and swift drying. By providing incentives for higher quality, and helping give farmers access to good techniques, co-ops create more and more coffee of better quality. This allows the smart co-op to develop multiple levels of quality, that they sell to various customers: big-box low-price roasters buy the base-level quality at a FT base price, and co-ops sell higher quality coffee to buyers with a higher quality standard at a higher price. I call that economic empowerment, and it’s driven by the roaster’s desire to be engaged with the co-ops in driving higher quality. I don’t know why that gets called “cherry-picking”.

    Now, co-ops are groups of human beings, and sometimes it does trigger human feelings like jealousy and competitiveness among co-ops. A good roaster works with the co-op to minimize these feelings and build a sense of solidarity and teamwork, while still recognizing an essential truth: better coffee is worth more money in the marketplace. A narrative has emerged among some that looks like a glitzy coffee buyer coming in and pushing around the co-op, making demands and walking away with treasure. Let me assure you that it doesn’t work like that- a good direct relationship is a collaboration between farmers, millers, agricultural experts, exporters, importers and roasters, and it is based on equity and transparency within that chain. These relationships work best when all realize that the roaster/buyer is an important part of that chain, given their access to the consumer market, but is still at the end only a participant in a team.

    Anyway, I offer all this in the spirit of discussion and collaboration. Thanks for your final recognition that the reality is much less simplistic than the labels indicate. Sometimes the simplification of categories is itself misleading. At the end of the day, I feel that there is really no Direct Trade vs. Fair Trade- that implies a conflict that should not exist.

    Peter G

  • Bob Walz says:

    I am familar with several “direct trade” coffee vendors in the Twin Cities area, e.g. Velasquez Coffee ( I am also familiar with Peace Coffee ( In the case of the latter, some of the proceeds go to benefit organizations in Minnesota and through the cooperatives in the source countries go towards literacy, public health, and improvements to the coffee production. In the case of the former, direct trade, “Coffee prices on the open market fluctuate widely, and are often even below the costs of production. Our coffee sales here in Minnesota and around the United States provide an important source of income, making it possible for the Velasquez Family to continue farming. All profits remain in the family.” The bottom line is that the producers make more money through direct trade, but all segments of the coffee production community, the planters, the pickers and their families may benefit more from the social benefits (literacy, health services etc) from CRS models of fair trade. I personally prefer the value-added approach or socially responsible approach of CRS models of fair trade, but I also see value in the direct approach in providing the farm owners more income enabling the farmer owners to pay their help higher wages. The question that must be asked is do they? Both approaches are preferable to the BIG COFFEE COMPANIES that look for cheap labor to enable them to sell coffee at the LOWEST possible prices.

  • Katy-

    Your question about scalability is a good one. For reference, here’s the model for our Counter Culture Direct Trade Certified program:

    1. Coffee will be of exceptional quality- at least 85 points on the cupping scale.
    2. Prices will be negotiated and shared transparently between all parties, and higher quality coffees will earn higher prices. There is also a base price below which coffee purchases will never fall.
    3. There will be personal interaction and relationship building between buyer and seller.

    I don’t see anything non-scalable about this model. But it seems like your real question is the following:

    “If you’re one of the few farmers with exceptional coffee that can sell to a DT company, that’s great. But aren’t we really trying to develop the best strategy for the many small-scale farmers who don’t?”

    Two things occur to me with this post: First, we want to make sure the farmer with exceptional quality coffee is indeed fetching an exceptional price for his quality. Next, we need to spread the knowledge of what makes better coffee possible. This is one way to address the many small-scale farmers who don’t yet have great quality coffee. This goes back to something I said in my earlier post: it’s important to realize that quality is not happenstance. A farmer/miller is in a tremendous amount of control of his own quality, more than you might think. There is the attitude among some that a farmer’s coffee quality is totally determined by his farm’s altitude. That’s misleading. Altitude is indeed important, but great processing, great picking, great shade, great management in general have the power to improve ANY coffee from ANY altitude. When you’ve got ALL the farms in a co-op producing the best quality they can, and you’ve got a buyer who is willing to pay top prices for the top quality, and you’ve got a co-op who is finding the right coffees for the right customers at the right prices, you have a much better situation then you would have had otherwise.

    A co-op can engage with direct trade roasters, who tend to engage with the co-op to invest in quality, invest in marketing, etc. etc. For example, I buy 5 containers a year from a co-op in Peru which sells us a wide variety of quality, from the tip-top 92+ microlots, to a 85-level quality coffee. This portfolio of coffees fetches a portfolio of prices. The sub-85 containers get sold to other roasters at base FT prices. This is way better for the co-op than the alternative of selling plain-jane FTO certified coffees to the FTO market. This way, they can have their cake and eat it too- a great alternative if you ask me.

    I’m happy to answer any questions you have about our Direct Trade program- we’re completely open about its successes and failures. I really believe it can be a great tool for farmer groups, as a component to a diversified Fair Trade approach.

    Peter G

    • Thanks to everyone for your great comments here. There were three themes that jumped out at me immediately when I read them: transparency, scale and diversity, but the greatest of these is diversity.


      Thank you for raising this issue, Peter. I think it is fundamentally important to this discussion. I would apply the concept of diversity at both the market end of the chain and here at origin.

      In the marketplace, Peter, you are right to note that the proper names we use to designate a trading approach – Fair Trade, Direct Trade, etc. – tend to obscure very important diversity within those categories. I think this is particularly true in the case of Fair Trade, which encompasses such extraordinary diversity that I know lots of thoughtful people have been asking for a long time whether it is even a single coherent concept. It is hard to imagine more dissimilar business models than those of the big-box retailers on the one hand, and pioneering mission-driven cooperative enterprises like Cooperative Coffees and Equal Exchange on the other. Yet each one of them labels their coffee “Fair Trade.”

      (It is my impression that the Direct Trade concept is tighter and more coherent and that Direct Trade practices are less diverse. But I will defer to Peter and the other Direct Trade roasters here and acknowledge that my more limited familiarity with the Direct Trade community may lead to a certain myopia on this count.)

      In the end, I appreciate the recognition of the common ancestry of Fair Trade and Direct Trade and the suggestion that direct-trading Fair Trade companies may have more in common with Direct Trade roasters than companies that sell Fair Trade Certified coffee but don’t make it a habit of buying direct or even spending a lot of time at origin. (Bob helps you make your case, in my mind, in referring to the Fair Trade roaster Peace Coffee as a “direct trade coffee vendor”, precisely because it is one of those organizations for which Fair Trade does not make sense in the absence of direct trading relationships with farmer organizations.)

      For us at CRS, the developmental appeal of Fair Trade lies less in the compliance of retailers or roasters with the formal requirements for Fair Trade Certification than in the direct relationships with farmer organizations that drive many of the Fair Trade roasters we work with. In many cases, we collaborate at origin with companies that are not “100 percent” Fair Trade precisely because they are here at origin building direct relationships with farmer organizations.


      I think the diversity issue is relevant to the issue you raise, Emily, about transparency. I appreciate that the transparency of Fair Trade Certified coffee is appealing – when you see the seal on your coffee, you have confidence that certain standards were met in the way that coffee was brought to market. Fair enough.

      But here again, I think it is important to keep in mind the issue of the diversity of businesses associated with that label. What does a Fair Trade Certified label tell you about a big-box retailer’s overall business model, values or – most importantly from my perspective as a development professional working with coffee farmers – commitment to social and economic justice for smallholder farmers? Certainly not as much as the Fair Trade Certified label plus an indication that a company sells exclusively Fair Trade coffee. Perhaps more than the (unaudited) claims of Direct Trade roasters to visit their producer partners three times a year, invest in quality and pay 25 percent more than the guaranteed Fair Trade Certified floor price. Or perhaps not.

      (Incidentally, Counter Culture does have its compliance with its Direct Trade Certified principles audited and verified by an independent third-party. So not all Direct Trade requires a leap of faith.)

      Fair Trade Certification does, as you suggest, give the consumer some assurance that everyone who uses it meets certain minimum standards in their trading practices. But it is a kind of “lowest common denominator” indicator that, on its own, does not necessarily give a consumer a lot of information about the company behind the seal or how one company (a big-box retailer, to revisit the example above) might differ from another (Equal Exchange). Consumers need to get that information for themselves, and not every bit of info they turn up will be audited or independently verified.

      SCALE (and DIVERSITY).

      Thanks for raising this point, Katy. As you know, we spend a lot of time with our partners and other allied institutions looking at new business models and evaluating which ones are most likely to make sustainable impacts on poverty. In that context, scale is one of the most important criteria – even the model with the deepest impact may not be our first choice from a developmental perspective if it can only reach a small number of people.

      But in the context of smallholder coffee, it isn’t clear that there is a single approach to sustainable trade that can be taken to the kind of scale you are talking about. Even Fair Trade Certification – often held up as the most scalable approach to “sustainable” trade in coffee – accounted for only 259,000 smallholder farmers as recently as 2006.* The most common estimate I have heard of the number of smallholder coffee farmers worldwide is 25 million. If it is accurate, it would mean that Fair Trade Certification is serving right around 1 percent of all smallholder coffee farmers. Fair Trade Certification, in other words, would probably fail the scale test. That hasn’t stopped us from working at origin for the better part of the last decade to help the farmer organizations we accompany build relationships with commercial partners that are fully committed to trading relationships that embody Fair Trade principles across the board. Why? Because we and the farmer organizations we accompany see this brand of “fully committed Fair Trade” as a powerful developmental approach to smallholder coffee. Fully committed Fair Trade companies are just a small subset of the broader coffee marketplace, however.

      This is where diversity at origin comes into play. Farmer organizations that are commercially successful tend to develop a diverse portfolio of trading relationships. The similarity to investment language is not coincidence — diversification of relationships minimizes the risk to farmer organizations in the very same way diversification of investments reduces the risk to investors. Diversification can also permit an organization to match its differentiated offerings to the specific needs of each of its diverse trading partners, along the lines of what Peter described in his response to the scale question. Increasingly, our accompaniment of smallholder farmer organizations has involved supporting the kinds of activities — cupping to better understand of what an organization has to offer, improving traceability and handling to align specific lots with established quality profiles, etc.

      In sum (and to borrow from the Community Agroecology Network’s Chris Bacon), the approach to trading models may be best likened to jazz — chaotic and improvisational, with lots of innovation and experimentation — precisely because there isn’t any dominant model that answers the scale question convincingly.

      – – – – –

      * This incredible data point comes from Giovannucci, D., P. Liu and A. Byers (2008). “Adding Value: Certified Coffee Trade in North America.” In Pascal Liu (Ed.) “Value-adding Standards in the North American Food Market – Trade Opportunities in Certified Products for Developing Countries.” Rome: FAO: 41.

    • Hello, Peter. Thanks so much for taking the time to post not one but TWO lengthy, thoughtful, illuminating comments here. (When do you find time to run your company and preside over SCAA?)

      In addition to the comments I just posted in reaction to all the great comments here, I have two specific questions for you.

      First, you make reference on a number of occasions to quality as a unique part of the Direct Trade value proposition and suggest rather explicitly that it is not a priority in the broader the market for FTO coffees. I think you won’t get much of an argument if you are taking the 30,000-foot view of the Fair Trade market as a whole. But what happens when you get a tighter focus on some of the direct-trading Fair Trade roasters who have been taking quality seriously (and getting recognized for it)? How does the emergence of quality-obsessed Fair Trade companies shape your work at origin in cases like the Peru example you cite here? Is this another one of those cases in which the distance and distinctions between Direct Trade and Fair Trade are shorter than some of the comparisons of the two approaches like to suggest?

      Second, I really appreciate your recognition that incentives for quality can be the source of tension within smallholder farmer organizations. I don’t think many people would argue with the general precept that improved quality is a win-win for growers and buyers alike (when those quality improvements are tied to price premiums, of course). But moving from the general to the specific, of course, is tricky. There is one cooperative we work with that always comes to mind in this context. It has almost 500 members drawn from more than 20 communities, some of which have very distinctive microclimates and potential for some mind-bending coffees. But the organization markets a single FTO coffee blended from all the communities it serves that is good and consistent and representative of the region. It is making some strides toward recognizing differentiation — in part based on its recognition of the potential for premiums and in part a natural result of moving toward regionalized collection — but it is not clear whether the group wants to go down the road of developing a larger number of differentiated offerings. Part of the anxiety, of course, is around the social and organizational fallout of moving toward a stratified system. It seems awfully tricky to me, especially trying to respect the organization’s history (long, marked by trial and tragedy) and values (egalitarian). I know you can’t give away your secrets, but it would be instructive to know in a bit more detail how you would work to achieve the ideal you write about:

      “A good roaster works with the co-op to minimize these feelings [jealously and competitiveness] and build a sense of solidarity and teamwork.”

      Thanks again for the thoughtful comments. I look forward to your replies.


  • Great discussion!

    In all this talk, we keep coming back to a basic truth: there is so much diversity in the Fair Trade movement. Some take the “big is beautiful” approach, saying that the more farmers included in any fair trade system the better. Some emphasize the importance of the cooperative business model. Some emphasize transparency. Some emphasize collaboration and communication with farmers. Some emphasize quality. Some emphasize price. Most roasters emphasize a few of these areas, and may compromise on others.

    I have to re-emphasize my point; that Direct Trade is a subset of the Fair Trade movement. There is no Direct Trade vs. Fair Trade because Direct Trade is a kind of Fair Trade.

    For us at CRS, the developmental appeal of Fair Trade lies less in the compliance of retailers or roasters with the formal requirements for Fair Trade Certification than in the direct relationships with farmer organizations that drive many of the Fair Trade roasters we work with.

    Reads to me like you’re saying you’re interested in those Fair Trade roasters who may or may not comply explicitly with the formal requirements of Fair Trade, but who work directly with farmers. That describes Direct Trade perfectly!

    If we can get past the nomenclature, we can recognize that the best possible solutions for farmers always include:

    -Fair Prices
    -Quality improvement (in many areas: quality of life, quality of product, etc.)

    Seems to me, it’s better to rate roasters in these areas rather than conformance to abstract notions of “Fair” or “Direct”. For us, “Counter Culture Direct Trade Certified” is simply shorthand that gets us to talking about what we want to talk about: building long-term, sustainable, fair relationships to produce amazingly delicious coffees, and improve everyone’s quality of life.

    So, getting to your specific questions:

    First, you make reference on a number of occasions to quality as a unique part of the Direct Trade value proposition and suggest rather explicitly that it is not a priority in the broader the market for FTO coffees. I think you won’t get much of an argument if you are taking the 30,000-foot view of the Fair Trade market as a whole. But what happens when you get a tighter focus on some of the direct-trading Fair Trade roasters who have been taking quality seriously (and getting recognized for it)?

    There is no provision for quality in the FLO standard. Most of the “generic” fair trade coffee out there is of generic quality. The roasters who are out there direct trading and taking quality seriously are doing the best work out there, in my opinion!

    How does the emergence of quality-obsessed Fair Trade companies shape your work at origin in cases like the Peru example you cite here?

    Well, my company is a quality-obsessed Fair Trade company. I’m not sure who you mean when you ask this question. The various roasters who buy coffee from this co-op all have various levels of commitment, price tolerance, quality expectations, communication, etc. We feel a very positive sense of competition with these other buyers, because we seek to be the most valuable buyer to all of our partners. At the same time, we collaborate with those other buyers and the co-op, to improve the experience for everyone. We have traveled with and collaborated with many of the buyers of companies you cite, and many you haven’t. Lots of great companies doing great work out there!

    Is this another one of those cases in which the distance and distinctions between Direct Trade and Fair Trade are shorter than some of the comparisons of the two approaches like to suggest?


    You go on to talk in some detail about the challenges some co-ops face when they seek to recognize the diversity of quality among their members.

    First, we have to remember that co-ops are political entities, and good function of political entities is universal: good governance, transparency, and trust are essential. A good roaster works with the leadership of a co-op to emphasize the importance of these things. One way they can do this is to support a third-party standard like the FLO standard. A roaster can be very proactive about transparency, too: a willingness to share helps build confidence and trust.

    We’ve found that spending time in the communities where we work, and bringing to the table a sense of true humility and collaboration are the key to building trust, frienship, and buy-in throughout a co-op. We decided this was so important, we designed a special job function just for this sort of thing. You may have met Kim Elena Bullock, our Producer Relations and Sustainability manager. Among Kim’s many talents are wonderful communication skills, in both English and Spanish, an ability to relate to lots of different kinds of people, and an ability to develop cooperation and collaboration. I have seen Kim lead a meeting of five communities, who each wanted the coffee to carry their name. In the end, we collaborated on a name, and each of the communities feels ownership and pride. The roaster needs to be present, however, to be able to engage in that kind of diplomacy, which is why frequent travel on the roasters point is so important. I also think it is important for roasters to do a lot better in learning languages and cultural norms, and practicing sensitivity to those norms.

    When negotiating a price scenario with a co-op, we always bring flexibility to the table. We insist only that the prices must meet our minimum floor price, they must be transparent to all co-op members, and that they reward quality development in some way. After that, we’re open to collaboration. In some cases, a co-op has asked us to increase the quality premium to further incentivize quality. Another co-op asked us to reduce the quality premium and increase the base price to reduce jealousy. In both cases, we collaborated on a strategy, and wound up developing a compromise that met all of our values.

    Is that specific enough?

    Enjoying the conversation,

    Peter G

    • Ha ha ha…Plenty specific! Thanks for the generous response, Peter — it is very helpful.

      I appreciate your patience in making the case that Direct Trade is a kind of Fair Trade. I think I need to reflect on your comments here a bit further before I am ready to equate the two concepts as fully, perhaps, as you have.

      I would say, however, that my perspective is evolving. During the nearly four years that I directed our Fair Trade Coffee project, I worked to promote Fair Trade in general, and relationship-driven roasters in particular. Now that I have been at origin for nearly three years accompanying smallholder farmers, the “relationship-driven” part of the equation seems to weigh more heavily than the “Fair Trade” part. This is not to say that Fair Trade is unimportant to us or that the organizations we accompany are not excited by what it offers – it isn’t and they are. But the developmental impacts of the sale of Fair Trade Certified coffee through remote, highly intermediated relationships can be less significant than those of sales of non-certified coffee in the context of the kind of direct and long-term relationships you describe here.

      Finally, thanks for noting that there is a lot of great work going on out there beyond “the Big Three” Direct Trade roasters. I don’t mean to suggest otherwise. The range of variations on the relationship-driven coffee theme out there is extraordinary – Farm Friendly Direct, Farm Gate, Relationship Coffee, and lots of others that don’t have proper names – and each of these models is driving innovation and moving the market in a direction that has positive developmental impacts at origin. I have chosen to focus here on Direct Trade only because I see it as the most coherent and recognizable among these varied approaches.

      Thanks again for the good discussion.


  • Rodney North says:

    Despite this & the previous post, and a total of 10 long thoughtful comments, there’s still a point that I didn’t see explicitly addressed (though it was alluded to, especially in the preceding post and with Jonathan’s comment).

    As I’m with Equal Exchange we’re really focused on farmer co-ops as powerful tools that can help transform whole communities. Consequently we’re concerned about the prospect of Direct Traders working directly with one, or a handful of farmers who belong to the local co-op, and _by-passing_ that co-op for the export of that coffee. That would deny the co-op some of its best coffee and could lead to internal divisions within the community.

    Also – if in fact the Direct Trade concept does scale up, what happens when more & more Direct Traders separate more of the best farmers from their co-ops? While that would definitely be good for those individual families, what would be overall effect for the co-ops, and the surrounding community?

    HOWEVER, in all of Peter’s comments he talked about working WITH, and through the co-ops, not outside of them. (I’m assuming the farmer’s primary co-op). If so that would matter.

    It would also be good to know if Direct Traders always go around the co-op (it doesn’t sound that way), or sometimes, or never.


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