Fair Trade Coffee
Fair Trade was introduced back in 1988 due to the coffee crisis. The price quotas were not maintained at that time, which caused the coffee supply to surpass the actual demand.
The Netherlands first took a decision to handle the situation by using Fair Trade. The Fair Trade caused the prices of coffee to rise so that producer can get better wages artificially.
Different organisations came into the coffee market intending to maintain coffee prices. These organisations merged together, and they formed Fair Trade International to cope with coffee prices and demand.
Requirements & Goals
The biggest goal of Fair Trade was to justify the differences between small farmers from developing countries and farmers from already developed countries. The Fair Trade focused on equality for all farmers and their international growth.
The Fair Trade helps farmers to support themselves, and farmers aim to provide better quality products to the coffee consumers.
The Fair Trade has certain rules and regulations, and they make sure that their coffee is ethically sourced without any forced or child labour.
Who is involved in the process?
Everyone, including farmers, importers and exporters, is involved in this process, and they all are essential to make this system work. Let’s have a look at their duties.
The Fair Trade chain is handled by FairTrade International, which is a major organisation that imposes all policies and regularities. There are many other organisations under Fair Trade International, and FLO-CERT is one of them which deals with the standards and certifications.
The farmers have to decide and apply for Fair Trade certification before they become part of this chain. They have to get a licence before anything. After the completion of this process, farmers or producers are now introduced to big consumers.
The farmers are also supported financially by Fair Trade international to help them achieve their sustainable growth.
If any importer wants to import through Fair Trade, then they must register themselves in Fair Trade International. The organisation also asks for some fee while joining the Fair Trade chain. Importers are also asked to pay a minimum amount to their exporting companies. The prices are adequately maintained to make sure that farmers are getting the best prices on their trades.
The Fair Trade is not very friendly with exporters. There are a lot of extra costs, fees and demand issues. The exporters might face losses instead of any profit while dealing for Fair Trade coffee.
The farmers are mostly affected by these losses, but when organisations earn extra profits, then they spend some money on improvement projects.
Issues with Fair Trade
The Fair Trade is working for the betterment of farmers, but there are many concerns about the transparency of Fair Trade.
- The licence fee in Fair Trade is the most prominent issue face by farmers because many of them are unable to afford the fees.
- The Fair Trade is full of middlemen which lower the profitability of farmers, and it can ultimately harm the farmers.
Direct Trade Coffee
Direct trade is a fine and direct approach to farmers. In Direct Trade method, we directly trade coffee from the farmers (producers). There are no middlemen included in the process.
The Direct Trade is mainly focused on the quality of the coffee, and producers are responsible for it. There is no licence fee included in the Direct Trade. The Direct Trade just includes the roasters and the farmers. There is no certification process required to trade the coffee and farmers are independent to deal with the roasters.
Requirements & Goals
The Fair Trade is complex, and it includes a lot of costs as well. The farmers were looking for a more profitable and beneficial offer for both parties. The Direct Trade left behind all the complexities of fair trade. It is an open type of trade where farmers are independent to deal with the roasters.
There is much transparency in Direct Trade, and that’s why most producers prefer it over Fair Trade. The individuals and companies are more focused on relationships with consumers, negotiations, and discussions which make Direct Trade transparent.
Who is involved in the process?
The Direct Trade is a simple and efficient way for all coffee traders because it is free of all complexities. The producers and distributors discuss and negotiate with each other to finalise the deals.
The distributors are directly connected with the producers. The producers aim to provide high quality to their distributors, and the distributors also contribute to pay good prices on Direct Trade coffee.
The distributors directly buy from the farmers or producers. There are no middlemen like importers, exporters or cooperative. The Direct Trade benefits the distributors by providing good quality goods while distributors benefit their producers by paying handsome prices in return.
Issues with Direct Trade
The Direct Trade is mostly dependent upon the honesty of your distributors. The roasting companies might take advantage, which can affect the transparency of the system. Otherwise, Direct Trade coffee is perfect for those who are focused on quality.
Which one is better?
The main focus of Fair Trade is the well-being of their farmers. There is not much transparency in the Fair Trade system, as many middlemen are included in the process. Both types of trades are effective, but if someone wants to focus on the quality of their coffee, then Direct Trade is preferred because only the producer and distributor are involved in the process which makes everything transparent.
We personally use the best quality of Direct Trade coffee by dealing with the most trustworthy producers. If you want to taste the original high-quality coffee, then we are here for you.