Fair trade and direct trade are terms used to describe different ways of buying coffee. They’re set up to benefit both producers and consumers but mean different things. Here’s what you need to know about fair trade vs direct trade coffee.
The first thing to note here is that there is also a difference between fair trade as two words and Fairtrade as one word with a capital F.
Let’s get to that first.
What Is Fairtrade?
Fairtrade as one word refers to a system formulated by the Fairtrade Foundation and other similar governing bodies.
Its goal is to produce:
a strategy for poverty alleviation and sustainable development, whose purpose is to create opportunities for producers and workers who have been economically disadvantaged or marginalised by the conventional trading system.– Fairtrade Foundation
When you see the Fairtrade logo on products, you know they’ve been produced to the Fairtrade Foundation’s standards.
Therefore, the difference between Fairtrade and fair trade is that the former refers to an organisation. The latter refers to the more general system being used by such organisations around the world.
What is Fair Trade Coffee?
There are several different elements that must combine for coffee to be considered fair trade.
- Producers have to pay a fee to a relevant organisation to become certified. This then grants the coffee producer access to larger consumer bases around the world. Of course, to be certified, the producer’s coffee must meet certain standards.
- Importers must also pay a fee to register with a relevant organisation and become certified. This grants them access to coffee exporters. Importers must pay a minimum price to exporters to make sure producers are being paid a fair share for their product.
- Exporters are often secondary cooperatives who work on behalf of the producers to sell their product.
A potential issue with fair trade, however, is that exporters incur costs of marketing, quality conformation, certification, inspection fees and so on.
This can mean less profit for exporters and, as such, less money for the producers.
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What is Direct Trade Coffee?
Direct trade is an alternative system that aims to avoid some of the issues fair trade coffee is known for.
- Producers meet with distributors. An agreement on product standards is made in advance with the benefit of more profit for the producer.
- Distributors buy coffee directly from producers.
This process ultimately cuts out the middlemen found in the fair trade system.
Without the need for certification, importers, or exporters, many of the costs are eliminated.
This allows distributors to pay more money to producers in exchange for a high-quality product. Both parties benefit.
A potential issue with direct trade is that there is no governing body stamping their approval on produce standards. Therefore, the system relies on honest on behalf of the distributors for everyone to benefit.
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Fair Trade vs Direct Trade Coffee
Both fair trade and direct systems have positive aims of improving the lives of coffee producers around the world. In turn, this also allows for a higher quality product for consumers.
They both have potential issues.
The fair trade system may result in less profit for producers due to the wide range of fees incurred along the chain.
The direct trade system may result in dishonesty with no governing body to intervene.
Nevertheless, both fair trade and direct trade are great in theory. It all comes down to the execution but it’s better to try than not.
Next time you’re shopping for coffee, be on the lookout for that Fairtrade stamp of approval.