Fairtrade Vs Direct Trade – What Are The Differences?

Posted by Two Chimps on

Fairtrade Vs Direct Trade – What Are The Differences?

Posted by Two Chimps on

Terms like Fairtrade and Rainforest Alliance are mentioned a lot when raw ingredients such as coffee are concerned.

We are going to delve in a little deeper as to what these mean, along with talking about Direct trade too. Get yourself a brew as we prepare to dive in.

Direct Trade and Organisations – Together we can all make a difference

Fairtrade, Organic and Rainforest Alliance are organisations that only want to do the best for producers and growers around the world. They are good, and they have a place in society to make things better. The question is: When should we insist on choosing only Fairtrade, Organic or Rainforest Alliance, and when could we be more flexible and give Direct Trade a go?

 

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We’ve put together some examples and explanations about the world of direct trade and how the similarities are incredibly close with organisations such as Fairtrade, Organic and Rainforest Alliance.

Let’s start with Direct Trade. What is it?

So, direct trade is pretty much what it says on the tin. It’s trading as direct as possible with the producer, grower or farmer of a product. In our instance it’s coffee.

We do not have a two-chain direct trade with the producer. As smaller, more bespoke coffee roasters, this would limit our choice on the coffee we could provide to you. It would not be possible to go directly to the farmer and buy say 50 sacks of one coffee, then 50 from another farm in another country. We would need to buy a whole harvest of coffee at one time. At Two Chimps HQ – we’d have the same coffee for too long and not be able to offer the choice and variety that we pride ourselves on.

 

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With this in mind, we do the next best thing. Our direct trade is completed through an importer and exporter. The importer in the UK is usually the same as the exporter in the country of origin. They work directly with the washing station, estate or farms to build a relationship and negotiate coffee sales. This means that there are three people in the chain; us, the importer/exporter and the grower. With such a short chain, there are fewer people that the money has to travel through and therefore more money should find its way into the farmer’s pocket.

How Speciality Coffee Comes Into Play

For speciality coffee, direct trade is very fair. Speciality coffee is a higher grade of Arabica coffee.

The care and quality taken to grow, harvest and process these coffees ensure that they hold no impurities and they are even hand sorted for any defected beans. Once tasted and scored, the farmers will receive a score, 80 points or higher and it is awarded the title of speciality coffee.

Speciality coffee will yield between 30-150% more than the asking price for commodity grade coffee. Farmers are never underpaid for their speciality coffee; they are rewarded through a higher price for their hard and fantastic work.

 

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We have picked green coffee importers who care about maintaining good relationships with the producers. We receive photographs of the harvest, processing and the farmers hard at work.

It has been said that direct trade sometime focuses more on the quality of the coffee than the mission to improve the lives of the farmers.

However, quality of product will ensure better living conditions for the farmer, because, with coffee, a better product like speciality coffee will return a higher price with an organisation involved or without.

Direct Trade Investment

So, if direct trade is the direction the farmer would like to go in, what’s next? How much is it going to cost them?

Well, the answer to that is in the crop. If they invest time into their crop they will be rewarded. The more they invest, the more they stand to gain. The more they gain, the more they can invest next time and so on. It sometimes seems like a win-win. Similar to when you rent something and eventually own it, rather than renting and not owning it at the end.

 

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Next, we’ll flip and talk about the organisations in place to support growers and producers.

Fairtrade, Organic or Rainforest Alliance to name a few.

These organisations are in place to ensure that growers receive a fair price for their product. It gives consumers the peace of mind that the grower has sustainable working and living conditions too.

Commodity coffee is a cheaper grade of Arabica coffee. It’s harvesting and processing routine is more relaxed, and defected beans can be included in batches for export. With this in mind, Fairtrade is good for commodity grade coffee.

The price of commodity coffee is set on an average, depending on the market at the time. If farmers are part of organisations like Fairtrade, it guarantees that they will get a reasonable price for the coffee they are farming. No matter how low the commodity grade price goes, they will always get their fair price.

 

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With speciality coffee, the farmers are already guaranteed a very good price for a good crop. This means that organisations like fair-trade and organic are not needed to negotiate a fair and equal price for the farmers. They have achieved this themselves – the proof is in the crop!

The investment for Organisations

Because of the points aforementioned, Fairtrade, Organic or Rainforest alliance are not ‘badges’ that we look for when deciding on our coffee choices. However, after reading we found this from the Huffington post:

“To be eligible for certification, producers must meet certain requirements, apply for the program and pay a fee to be licensed as a Fairtrade company. In return, they receive exposure to a large market of consumers who seek out the label and receive discretionary funds designed to help advance their business.”

 

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So it seems that there is some investment for the grower, importer and roaster to be certified. For commodity coffee, this small investment may yield into a more successful harvest each year and therefore have a place.

The Outcome

The outcome is that direct trade, fair trade, rainforest alliance, organic and so on are all wanting to achieve the same result. They all want a better life for farmers and producers, they want a fair price for those under their certification and they want consumers to care about the hard work and dedication that made the coffee sitting in their cups.

 

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For us, it’s direct trade all the way, because we only buy speciality coffee; but high five to all of you organisations out there – keep up the good work!

Ready for a cup of direct trade? Head to the shop now.

 

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