The Direct Trade-v-Fair Trade debate resurfaced here last week. I weighed in on that debate here yesterday.
Today I want to explore a related idea: that the leading proponents of these two trading models may have communicated themselves into corners from which they can’t easily extricate themselves even though they desperately need to.
Direct Trade has put cup quality at the center of its value proposition while Fair Trade has positioned itself as the ethically superior option in the marketplace. Direct Trade means quality, Fair Trade means justice, and never the twain shall meet.
But what if the success of Direct Trade requires deeper commitment to social impact? And the success of Fair Trade requires improved performance on quality? What then?
THE DIRECT TRADE CORNER
I talked recently with the Director of Coffee for a leading Direct Trade roaster that is working to develop a more robust sourcing program—one that involves more and longer visits to origin, new approaches to trade that more effectively align interest all along the chain, and investment in community-led projects. But the company has focused so overwhelmingly on quality in its communications—and communicated that focus so well—that it is not sure how to pivot in communicating its new, expanded focus to its customers.
This roaster’s situation is emblematic of the communications dilemma for Direct Trade: it has defined itself so relentlessly against the social justice focus of Fair Trade that talk of social justice has become a liability and code for poor quality; but a more explicit focus on social, economic and environmental impact may be just what Direct Trade needs to build better supply chains—and continue to deliver on the promise of cup quality that is central to Direct Trade’s identity.
THE FAIR TRADE CORNER
Similarly, I have spoken with Fair Trade roasters who want to source higher-quality coffee but are concerned. Concerned about how to create incentives for quality without compromising their commitment to social justice. And concerned about how to communicate their new commitment to coffee quality in ways that don’t disrupt a narrative that has emphasized fairness. The Fair Trade communication dilemma? Fair Trade roasters have worked so hard to separate themselves from Direct Trade’s obsessive focus on cup quality that it has become the third rail of Fair Trade communications; but they may need to raise their game on quality to compete effectively in a marketplace flooded with extraordinary coffees—and to deliver on the promise of social impact at origin that is central to Fair Trade’s identity.
How hard is it to make the communications crossover in this context? It isn’t clear, but it seems that roasters in each camp have two challenges: deal with the constraints of their own making in embracing messages they have run away from, and prepare for challenges from the other side among roasters not ready to cede ground on the values that are central to their identities.
Dean Cycon is one of my favorite coffee radicals and most certainly an authentic Fair Trade roaster. When Vice News asked Dean this spring for his perspective on Direct Trade, he had this to say: “The direct trade guys aren’t bad people. But they’re a bunch of young, neo-liberal, arrogant hipsters in skinny jeans who have no understanding of the dynamics of underdevelopment and poverty.”
The message to Direct Trade is clear: you don’t know jack about the coffeelands, so don’t even think about talking social justice. While this perspective may not be representative of the broader sentiment in Fair Trade circles, my experience has been that when there isn’t open hostility toward Direct Trade among Fair Trade roasters, it is often lurking just beneath the surface.
And Direct Trade can give as good as it gets. It challenges Fair Trade’s claims to superior social impact while giving short shrift to its claims regarding coffee quality.
There are some encouraging examples out there. Fair Trade roasters like Conscious Coffees and Kickapoo Coffee who take quality seriously enough to have won Roast Magazine Microroaster of the Year honors. And Direct Trade pioneers like Counter Culture who take their responsibility to growers seriously enough to examine the social impacts of their sourcing model. More of this kind of crossover will be necessary if each side of the debate is to embrace what is extraordinary about the other to enrich its own model and drive the coffee trade toward the next generation of business model innovation.
Great assessment, Michael. Though my experience with both FT and DT worlds is comparatively meager, I’d say the two groups will have to accept their mutual categorization as “specialty coffee” as designated by the broader coffee industry. Staunch Fair Traders perhaps aren’t far off when they accuse some Direct Traders as being as pious as they are out of touch with the realities of production. I can only imagine how frustrating, discouraging it might be for producers changing up processing methods or even variety at the behest of a buyer only to be left in the cold when a roaster’s tastes can change with the weather (an increasingly erratic proposition these days). I think a DT roaster’s obsession with scooping the crosstown roaster and dealing in unhealthy competition could be its undoing. If establishing strong, lasting partnerships isn’t on par with their desire to do the same with the final consumer, roasters could find themselves at a loss, particularly in the face of supply deficits.
With respect to a Direct Traders hardline opinion of Fair trade, I can see how Fair trade can be a regarded as welfare system, an increasingly delicate one at that, in the face of supply deficits caused by pathogen and labor attrition. What good is selling low-profit margin coffee when your cooperative cannot produce the necessary volumes to make good on contracts? I think it’s important for Fair Trade to better define stratification of quality and actually reward individual producers for good work. I remember talking to a producer from the Cinco de Junio cooperative in Nicaragua, and he welcomed the FairTrade USA Acopio program, because it opened the door for compensating individual producers based on what each one deserves. In this case I think he was talking more about being more specific with quantities brought to the purchase point by a given producer, because co-ops can be kind of a haystack if not managed properly. But that’s not to say quality premiums for individual producers is impossible within the FairTrade framework, is it? Ultimately, I think it’s a question that can be answered only with added transparency, an arena where both Direct Trade and Fair Trade could and should convene.
As we more accurately define transparency in the coffee industry, my hope is that the triple bottom lines of sustainability (social, financial, environmental) eventually merge and gain recognition as part and parcel with one another, a concept of singular importance for both Direct and Fair Trade Coffee. My greater hope is that this doesn’t happen too late for the sake of coffee that is deemed to be both good and fair. Good on the coffeelands project for working to avoid the more dire scenario.
Thanks for kind words, the detailed comment and your careful consideration of these issues.
As you suggest, I think both sides in the Fair Trade v Direct Trade debate find things on the other side to object to. I am just not sure they are the same things you suggest they are.
A pioneer in Direct Trade once told me that millennials in the Direct Trade space hate Fair Trade but they don’t know why. The suggestion was that they inherited their disdain from folks who were present at the creation of Direct Trade and objected to what they characterize as Fair Trade’s “holier-than-thou” narrative.
The biggest critiques I have heard of Direct Trade from Fair Trade partisans is that it “skims the cream” of the coffee crop (cherry pickers), leaving coops with lower-quality coffee to sell, reducing coop competitiveness and social cohesion in the process (union-busters). What I haven’t come across so much—and would object to based on my experience—is the idea that Direct Trade roasters aren’t in it for the long haul or aren’t interested in developing long-term relationships with growers and farmer organizations. I find the opposite to be true: when they find suppliers who have the right stuff or the potential to produce it, they double-down and try to dial-in the relationship. Why? Because competition is fierce and stable long-term relationships with growers committed to quality are worth investing in.
Funny you should mention 5 de junio. I lived in that area as a volunteer in the mid-1990s and worked with them from 2008-11 on a CRS project. They were naturally inclined toward quality when we started working with them in 2008, having already reached out to Counter Culture through their own networks. We supported some special-process and single-varietal sorting efforts with them in support of their relationship with Counter Culture, but ALSO encouraged them to pursue Fair Trade Certification and seek buyers in that segment of the market. We saw—and continue to see—FT and DT as important complements to one another for smallholders—a vision that is informed by our committment to suport separation, segmentation or what you call stratification for different segments of the market.
Continuing the 5 de junio conversation, Michael, you put a graphic on this blog a few years ago plotting sale prices and volumes of coffees from CRS program participants across Central America that demonstrated how, on the farm side, it’s almost never an either/or decision between fair and direct trade but rather a both/and market situation (at least it is when things go well). Though 5 de junio sold coffee to a direct trade buyer for the highest price on the graph, the volume they sold at that price was tiny and their fair trade volumes were much larger. I referenced that graphic regularly in conversations and presentations to dismantle the fair-vs.-direct false dichotomy and it might be worth revisiting if we want to continue building bridges between neo-liberal hipsters and aging revolucionarios!