Coffee – Fairtrade, Direct Trade…What’s the Difference?

Toby Smith is the Toby in NSW-based Toby’s Estate Arabica Coffee which has recently launched a social, ethical and environmental (SEE) responsibility project.

About Toby

Toby is passionate about coffee. He has trekked in Central and South America, Indonesia, India and East Timor learning about coffee and tea, working on farms as well as enjoying cafes and tea houses.

In Brazil he worked with a coffee trading company where he honed his cupping and grading skills as well as working as a roaster, barista and judging barista competitions.

Toby’s love of espresso has resulted in having three of his own espresso bars, an espresso school and holding tastings over many years to share his passion and knowledge. He has always felt strongly about ensuring that his company’s trading in coffee, tea, cocoa and other products has beneficial effects from the producer through to the customer.

Toby’s Views On Fairtrade And Direct Trade

Toby says Fairtrade is a great initiative but he is currently pursuing direct trade as a great way to do business. How do the two fit together?

FAIRTRADE
The Fairtrade Labelling Organisation (FLO) is a company which registers producers and processors as members.

WHAT DOES THIS MEAN FOR PRODUCERS?
It means they adhere to widely accepted minimum standards re: their agriculture practices and treatment of workers. In return they receive a guaranteed minimum price for the produce they sell with the Fairtrade label though there is no guarantee of volume on that market. Consumer demand dictates volume. Premiums are generally used for improvements to equipment resources, health and education facilities, or simply as extra cash.

WHAT DOES THIS MEAN FOR PROCESSORS?
Processors must pay the premium for Fairtrade labelled goods, plus a quarterly license fee based on a percentage of sales. They are then able to sell the final product with a Fairtrade label attached proving its origins.

ANNUAL AUDIT
Both producers and processors may be audited once a year to check adherence to standards.

DIRECT TRADE
About this emerging alternative Toby says

“Doesn’t it seem unfortunate that a huge organisation with large administration costs is required to provide an avenue for businesses to do the right thing by the producers?

What if business voluntarily did the right thing, and purchased from producers who use sustainable methods on their farms, who treat their workers well, and who charge prices which cover the production costs?

This is what direct trade is all about – processors in developed countries taking a personal interest in the source of their raw materials.

There is more work involved because the buyer must also become the importer and manage the extra processes required, but the benefits are significant.

The producer is rewarded for their sustainable practices by receiving the price they want.

The buyer will be happy to pay a higher than industry standard price because they are competing to buy a reliable supply of premium product. In this way both parties can get a fair deal, and the final consumer can still feel good about their purchase.”

Apparently many companies are now advertising ‘Direct Trade’ as the source of their raw material, the inference being this is an ethical way of buying from a producer. For more info about some of the global network of coffee growers involved you can visit www.tobysestate.com.au/page/sustainability_blend.html

Sparkblog Says

“Direct trade coffee purveyors often have higher-than-market pay minimums, as well as quality that they say exceeds that of their fair trade counterparts. For example, over half of Stumptown Coffee Direct Trade coffees are more than $1/lb above the current Fair Trade price. (Their least expensive Direct Trade coffee is more than 20% above the Fair Trade price.) This, they say, “is what makes the difference between a good cup of coffee and a ridiculously good one.” Sparkblog

All interesting stuff…