Have you ever wondered what the difference is between Direct Trade and Fair Trade?
Our friend Joel Jeschke is taking us on a three part mini journey to educate ourselves a bit more on the subject.
The first week we had an introduction to each which you can find here. In week two we touched on some of the failures and drawbacks to the FLO. (click here to read that)
This week we are introducing the Direct Trade model and how it complements FT and how it differs from it.
ENTER JOEL————————————————————————————————————————————– Direct trade provides a way to pay farmers higher and more sustainable prices. Not unlike fair trade, direct trade cuts out the middleman in order to work directly with farmers. Direct trade differs from fair trade in several areas.
– First, direct trade does not require participating producers to be members of co-ops, which, in turn, allows smaller farms to benefit from the higher prices.
– Secondly, direct trade pays based on the quality of the beans picked rather than a set price like fair trade offers.
Part owner of Edmonton-based direct trade practitioners Transcend Coffee Roasters, James Schutz, states, “we’re after the very best quality and want to pay sustainable prices to the farmers, so we’re willing to pay the higher prices”. Dennis Macray, former director of global sustainability at Starbucks Coffee Co. also acknowledges the new direct trade model:
“The model for sustainable coffee that was popular five years ago has changed quite a bit. Years ago it was common practice to just go out and buy certified coffees and check the box; and today it’s about integrating sustainability and transparency into your supply chain. Companies are making it a core way of doing business”.
In 2012, Starbucks says they paid an average price of $2.56 per pound of green coffee. In 2013 Transcend is paying an average price of $4.82 per pound of green coffee. Paying nearly double the price of the already ethical and sustainable practices of Starbucks, Transcend provides an example of how much more sustainable buying direct trade coffee can be.
Although coffee producing organizations and import/export companies play a huge role in the economics of the coffee industry, it is ultimately the consumer who decides the price and sustainability of the product through his/her purchasing habits. Since the fair trade movement began in the late 20th century, awareness of the affects of coffee purchasing has increased significantly. According to Fair Trade USA, the percent of American households aware of Fair Trade coffee went from nine percent to fifty percent in the year 2005 alone. Representatives from major brands such as Starbucks and Green Mountain Coffee Roasters also report a growth in the interest of consumers in transparency of socially responsible business practices. In the research paper, Do Consumers Care About Ethics? Willingness To Pay For Fair-Trade Coffee, published in the International Journal of Consumer Studies, the researchers concluded that, “A substantial number of surveys showed that consumers value the ethical aspect in a product”. With coffee consumers’ increasing awareness and apparent interest in ethical buying, they must now determine how to best support sustainability in the coffee industry.
Direct trade coffee purchasing currently seems like the best way for consumers to support sustainability in the coffee industry. Although fair trade has done much to provide stability in prices for cooperatives as well as raise awareness for coffee farmers amongst consumers, it is ultimately not as effective as direct trade. This is because direct trade pays higher prices and is a more inclusive system in which the only requirement is providing a high quality product. In an industry that has a history of massive price fluctuations, the fair trade movement provided a push for more ethical practices that led to the development of direct trade, which, ultimately, is the best model for sustainability. It is now up to the consumer to determine whether or not, and to what extent they will support a sustainable model to ensure the future, of this beloved commodity.
Neither model is proven perfect and I doubt we’ll ever reach that point but there is great satisfaction in the growth and achievements of Fair trade that allowed Direct trade to come along and even more satisfying than that; and I believe the only thing that gives this product hope, is the consumers constant demand for better sustainable practices by the purchasing chain.