We trust you’ve been drinking responsibly over the weekend and you’re all geared up, well-armed with freshly roasted coffees (courtesy of Hook Coffee hopefully), for the week ahead!
We’ve gotten a few requests to share more about Direct Trade and why we’re so obsessed about trying to be 100% DT. So we’ve finally gotten down to writing a three-part series – in Part 1 we’ll provide a low-down on what it means and how it compares to Fair Trade, in the next we’ll explain how we advocate and practice it Direct Trade, and finally in the third installment we’ll give you a glimpse into one of our sourcing trips in Indonesia.
Thanks to those who requested for this and keep the ideas coming in!
Coffee farmers work everyday, through rain and shine, all to painstakingly grow the coffee beans that make their way into our daily cups of joe. In view of the expertise and hard work involved in coffee farming, we firmly believe here at Hook that our farmers should be justly rewarded – after all, coffee growing is as much as an art as coffee appreciation.
Direct Trade allows us to do just that. Before you ask what’s the difference between the popularised Fair Trade practice and Direct Trade, here’s an infograph explaining the discrepancies aptly and succinctly.
What is Direct Trade?
To put it simply, Direct Trade is the process of buying beans directly from the farms and cooperatives that grow them, removing the need for brokers and organizations that control certifications (e.g. Fair Trade, Rainforest Alliance etc).
This entails a closer relationship between the buyers and growers themselves, assurance that the beans are in fact specialty-grade, sustainably-grown, and ethically produced. This fosters a collaborative and mutually beneficial roaster-grower relationship with greater quality control and transparency, thus benefitting roasters, growers, and final consumers.
Most importantly, a higher premium (10-25% of the final retail value) is paid for the quality beans. This encourages them to reinvest in the quality of their coffees, a safe and ethical working climate, and environmentally sustainable coffee production. They can enjoy better living standards, send their children to school and afford better health services.
What is Fair Trade in the Coffee Industry?
In contrast to the Direct Trade model, Fair Trade is the practice of buying coffee through an international cooperative. Fair Trade is one of many certification organizations worldwide that inspects and evaluates coffee estates and plantations according to a set criteria, before Fair Trade certification is granted.
Historically, Fair Trade was established to ensure a minimum price and wage to sustain small farmers and enable them to improve their living standards. However, while the Fair Trade movement started off with great purpose, it has been corporatised and misappropriated in recent years. At best, Fair Trade ensures farmers get paid a very subjective “fair” price determined at higher levels of the supply chain (usually the certification company or international cooperative), and the money is almost never enough to be reinvested into improvement in key poverty reduction areas of education, health, infrastructure, and entrepreneurship.
As a comparison, the Fair Trade model only pays farmers 0.5% and at the very most 5% of the final retail value of “Fair Trade” coffee. Additionally, the farmers have to pay thousands of dollars a year as a “membership” fee while agreeing to standards for pesticide and fertiliser use, which unfairly increases their cost of compliance due to lower productivity and diminished economies of scale. Not to be too academic about this, but a joint UC San Diego and UC Berkeley study estimates that Fair Trade certification costs about $0.03 per pound, which is a lot for impoverished farmers, with little to no long-term benefit (there are many academic papers and articles out there confirming this).
So Fair Trade isn’t as great as it’s been purported but we shouldn’t be too quick to trample all over it and at least appreciate the international movement towards fairer supply chains across different agricultural trades. One can only imagine how much more devastating the impact is on growers that are neither involved in Direct Trade nor Fair Trade. Not to mention the unsustainable farming practices used in such instances to increase the yield and turnover rate.
Direct Trade is, in fact, fairer than Fair Trade, and Direct Trade has far more advantages both to growers and buyers like us, and even to you because the quality of the beans are as good as they can get.
We hope this blog post has been useful and enlightening, and the reason Hook Coffee chooses to do Direct Trade over Fair Trade is pretty obvious.
So how do we practice Direct Trade and how are the benefits distributed throughout the value chain? You’re gonna have to stay tuned for the next installment of this three-part series to find out. 🙂
In the meantime, check out our coffees and click on “more info” to read about the origins, farms and growers who have made our extraordinary coffees possible.