Since its initial release, I’ve featured over 70 Direct Trade roasters in CoffeeGuru. But what is “Direct Trade”? It’s a term most of the public has not heard of and those that have offer various definitions.
Arguably Direct Trade is a response to the Fair Trade movement and what some roasters view as weaknesses within this system. The philosophy behind Fair Trade is that farmers should be paid a fair price for their labor. The US consumes 20% of the world’s coffee but few of us realize that workers in the field can make less than the cost of production. Fair Trade guarantees farmers a consistent price that guarantees of a living wage no matter how volatile the market prices are. For example, during the last twelve months, coffee prices declined 41 Cents/lb to the current price of $1.50 with forecasts predicting $1.25/lb later this year.
Within the Fair Trade system, farmers get a $1.40 per pound “floor price’’ - a minimum maintained even if commodity markets go lower; an additional “social premium,’’ which pays for communal benefits like health clinics or schools, and an extra 30 cent premium if the coffee is organic. It is not directly tied to quality of the coffee beans. Some roasters feel that this model doesn’t work, and want to work under a standard where the best prices are paid for the best quality beans.
Currently there is no governing body regulating what Direct Trade should be. As things are, the public can be easily confused, often relying on claims made on websites which are often lacking in information. Some Direct Trade roasters have taken the initiative and have worked together attempting to set an industry standard. For example PT’s and Intelligentsia have established specific Direct Trade criteria: 1.The coffee quality must be exceptional 2.The verifiable price to the farmer must exceed market and Fair Trade by at least 25% 3.The farmer must be committed to healthy sustainable, environmental and responsible community practices 4.Roasting representative must visit the farms at least once per harvest season 5.All Direct Trade participants must be open to transparent disclosure. Counter Culture’s approach is similar with some slight differences such as the minimum price paid. They also add 3rd party certification to insure transparency.
Can these business models work for the entire industry? Perhaps, it depends on the resources of each roaster. Some are quite small and it’s always a balance in trying to do the right thing and maintain a viable business. Certainly Counter Culture, Stumptown, PT’s and others are setting the standard by example, pushing the industry in the right direction. So what’s the next step?
There needs to be a reasonable and certifiable Direct Trade standard that both large and small roasters can afford. Looking to the wine industry, the evolution of “Meritage” wines is an interesting example.
Meritage is used mostly by California wineries to denote red and white Bordeaux-style wines. It is a blend of grapes using at least two specific bordeaux varietals. In order to display the term on a bottle, winemakers must license the Meritage trademark, a proprietary name, from its owner, the Meritage Alliance.
Begun in 1988, the Alliance initially focussed on policing their trademark. Eleven years later there were only 22 members. Shifting its focus to education and marketing, the Association grew to over 250 wineries by 2009. Fees for membership are $1.00 per case of wine, capped at $500 per vintage.
So what can we learn from this example? Here’s what I think Direct Trade roasters should consider:
-Establish standards set by roaster representatives within the industry. They should be fair for roasters of all sizes and, at the same time, acknowledge the goals of protecting the enviornment and livlihood of farmers and producing the world’s best beans.
-Trademark a term. Establish a proprietary name that represents Direct Trade
-Keep fees low
-Educate and market to the public using an association of Direct Trade roasters, in other words a “Direct Trade Alliance” paid for by fees collected.
In conversations with Direct Trade roasters one of them told me that CoffeeGuru should be in the forefront of establishing what the term stands for. While I believe that all of the roasters that have been chosen as Direct Trade producers are meeting these criteria, the standards should be set, policed and marketed by those within the roaster community who do the hard work of seeking the best beans, improving lives and changing the way we think about coffee.
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