Direct trade is a term used by coffee roasters who buy straight from the growers, cutting out both the traditional middleman buyers and sellers and also the organizations that control certifications such as Fair Trade and Bird Friendly. The Direct Trade model is the best because it allows to build mutually beneficial and respectful relationships with individual producers or cooperatives in the coffee-producing countries and allows to have more control over aspects ranging from the quality of the coffee, to social issues, or environmental concerns.
The problem with middleman in the traditional coffee market is that they often take advantage of the farmer’s lack of knowledge about the market, lack of access to multiple buyers, and lack of capital resources. Middlemen often use these disadvantages facing the farmer in order to extract a greater share of the coffee retail price for themselves.
Direct trade roasters remedy this situation by first negotiating a fair price with the farmers, and then negotiating additional costs to be paid to whichever “middlemen” have a legitimate function to play in bringing the product to market. All are party to a common contract that stipulates how much will be paid at each stage in the process - including farmers and all other intermediaries deemed necessary, such as a collector, miller, exporter, and importer.
In the fair trade or direct trade system, farmer coops are sometimes able to get financing to buy a truck for transporting the cherries to a mill themselves, eliminating the need for the collector. Some farmers may also buy their own milling equipment, thereby acquiring another link in the production of coffee and retaining the corresponding portion of the retail price. Whether particular farming coops are able to profit from taking over these intermediate steps depends upon how efficiently they operate. But when roasters negotiate directly with farmers on price and assure transparency in contractual relationships with all intermediaries, this eliminates much of the abuse suffered by farmers in the traditional market.
What are the environmental standards?
Tico Coffee Roasters examines the farms on an ongoing basis (at least once a year) to ensure that "healthy environmental practices" are followed. Inspections address such issues as use of herbicides and pesticides, disposal of wastewater, and maintenance of forest cover.
What are the labor standards?
Tico Coffee Roasters pays growers generally 25 percent above the Fair Trade price. Beyond that, it takes a flexible approach to labor issues, as it does with environmental issues. The guideline is economic sustainability. Are all parties benefiting from the coffee trade?
How does the coffee get the direct trade certification?
Tico Coffee Roasters sends its coffee buyers to visit each grower or cooperative at least once each year for an inspection and the program requires "personal and direct communication" with the farmers on a more frequent basis.