Direct Trade

Direct trade is a term applied to the process of purchasing and sourcing coffee. It is used in many different ways and means many different things in different contexts. 

In the broadest sense, direct trade indicates that that the original producer and the coffee roasting company can identify each other. All trade—of coffee, tea, cocoa, grains, fruit, clothes, electronics—involves a supply chain in which products are moved across borders and between warehouses as they are processed and turned from raw materials into foodstuffs or useable goods. 

Coffee is unique in that, compared to other products, it involves minimal process and remains a discrete entity from the tree until it reaches the consumer. In this way, it is easier to trace coffee as it moves through its supply chain than it is to trace the chocolate and sugar in a candy bar or the cotton in our jeans.
In order to move physical products between their countries of origin and all the places in which they will be consumed, things are aggregated and distributed multiple times. As Direct Trade coffee moves along its supply chain (or through its supply web), the theory is that it retains its specific identity and does not become homogenized at any of its points of aggregation or distribution. 

To illustrate, here are three examples of direct trade coffee that involve different parties playing various roles. 

1. Several employees from a cafe-roaster in the US travel to Panama. They have the contact information for several coffee producers given to them by friends who used to live in Panama's mountainous agricultural region. They meet the farmers, tour their lands, taste some of the current harvest, and negotiate the price of the specific lots they want, about 50 bags in total. Back in the US, they hire an importing company to add those 50 bags to a container shipping out of Panama at the end of the harvest. The importing company pays the producers at the price the roasting company negotiated, essentially financing the transaction. When the coffee arrives in the US, the importer releases the coffee from the warehouse and the roaster pays the importer. In this case, the roaster initiated the transaction and the importer facilitated it. 

2. An importer has a longstanding history of buying from an exporter, who processes coffee from many small producers at their dry mill in Guatemala. The exporter is separating lots from different farmers by processing them individually, rather than as a large group. An importer organizes a sourcing trip for roasters to visit individual producers and tour the exporter's mill. Roasters select different lots and the importer buys a few extra in order to fill a container. When the coffee lands in the US, the importer distributes the specific lots to the roasters who selected them and sells the additional lots as spot coffee to other roasters.

Those spot coffees are also considered direct trade because there is transparent information that traces the coffee from the specific producer to the final roaster. 

Here, the importer and the exporter initiated the transaction by acting as liaisons between producers and roasters who otherwise might not have known each other. 

3. A producer who owns a midsize farm in Quindio, Colombia with its own processing mill travels to a coffee event in the US. He brings samples of his coffee and information about his family's farm and operation. He meets with roasters who try his coffee and order their favorite lots based on processing method and cup score. Back at origin, the producer exports his own container and has a US broker to help bring the container in. He distributes the lots to the different roasters who ordered them. Several months later, a few of the roasters travel to the farms to better understand the source of the coffee they purchased. 

In this case, the producer was able to initiate the transaction by actively seeking buyers and complete the transaction by dedicating time and resources to handle the logistics himself. 

These three scenarios all qualify as direct trade because, even though there are many parties involved to get the coffee from the farm to the roaster, those parties all ensure that the coffee remains as an isolated lot identified by its specific qualities and provenance.  There are many other paths that are also direct trade. Traceable, transparent coffee is as variable in its movement from farm to cafe as bulk coffee. The difference is that the original source of the coffee is never obscured and that coffee from different farms is not blended, such that the person drinking the final cup of coffee can put a real name and face to the people who first produced it.



-Rachel Northrop is a contributor for the Specialty Coffee Magazine and the writer of When Coffee Speaks.

Relationship Coffee
Photo Credit: Landon Yost
RACHEL NORTHROP is a contributor for Specialty Coffee Magazine. Her articles focus on agriculture, environmental and economic sustainability at origin, emerging US roasters and retailers, and the personal narratives of people involved at all points along the supply chain. She began researching coffee production in 2012 for the book When Coffee Speaks: Stories from and of Latin American Coffeepeople. She works as the Northeast US & Canada rep for Ally Coffee’s specialty division. Read more at whencoffeespeaks.com.
 

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