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Specialty Coffee vs Fair Trade Coffee

Fair Trade, Direct Trade, Specialty Coffee etc. Confused? What is the difference between these different types of coffee? Let us explain.

What is Fair Trade?

Fairtrade was started in response to the collapse of world coffee prices in the late 1980s. Coffee farmers were struggling to survive. With Fairtrade, certified coffee producer organisations are guaranteed to receive at least the Fairtrade Minimum Price for their coffee, which aims to cover their costs of production and act as a safety net when market prices fall below a sustainable level.

-     http://www.fairtrade.org.uk/Farmers-and-Workers/Coffee

This means:

  1. There is a guarantee that they will at least cover their costs.
  2. If market prices are above this level, they will be paid according to the market price.
  3. Fair trade regulations also ensure that your coffee is ethically sourced. They prohibit both child and forced labour.

Problems:

First, in order to get the Fairtrade label, coffee producers must apply for certification (which requires a fee) and get a license. Majority of coffee producers do not have the resources to get themselves certified to begin with.

Due to a combination of fees, extra cost, and low demand, export cooperatives often incur losses rather than profits from dealing in fair trade certified coffee. These losses eventually affect the profit of farmers.

Secondly, the Fairtrade only guarantees farmers to cover their costs. Businesses do not exist to cover their costs; they exist to profit. Without profit, they cannot grow nor create a better life for themselves.

As with any large corporations, The Fairtrade organization has also seen increasing concerns regarding transparency and a lack of regulations in quality control.


 
What about specialty coffee and direct trade?

Direct trade is a methodology of sourcing coffee used by roasters who buy directly from the farmers. The transactions are based on higher premiums in exchange for higher quality coffee. These premiums can be 4 to 5 times higher than what is possible in the commodity market.

These individuals and companies put an emphasis on negotiation, discussion, interpersonal relationships, and information sharing.

This means:

1. In exchange for better prices for their goods, the producers strive to provide quality products to their buyers. Overall, this increases sustainability on both sides of the equation.

2. Direct trade effectively cuts out the middle men. This eliminates up-charges and fees that come with the Fairtrade territory. The result is higher profits reaching the farmers.

 Problems:

  1. Direct trade is an option available only to bigger companies. This is due to the scale of shipping logistics and risks involved that only larger organisations are able to support.
  2. Even though there is significantly higher quality control due to its correlation with the price, there is still relatively little regulations over transparency and processes.
  3. There are no ways to officially verify claims of direct trade and recorded impact towards the farmers. This allows many smaller companies to pass off as proponents of direct trade without actually being involved in the said process.

 

What about us?

Compound Coffee Co. sources our coffees through two methods.

  1. Direct trade through official auctions

Many of the coffees we purchase come from auctions with full transparency. Customers are able to see the full prices paid for these coffees, taste their amazing quality and understand how they are impacting the producers with their contribution.

Prices for these coffees can reach 10x to 100x more than what they would be paid on the commodity market. This empowers them to lead higher quality of lives not normally possible for their families. 

  1. Importers and Exporters with transparent practices and excellent track records.

Registering for auctions is a tedious process and not always easy for many producers, even if they produce high quality coffee. We rely on exporters and importers who have extensive networks in order to help deserving farmers achieve high premiums for their coffees.

These exporters and importers also help farmers to reach out to a significantly larger customer base. This allows them to sell very high volumes, which alleviates much of the risk and logistical issues involved in shipping.

 

It’s your turn.

Would you like to do your part to support and empower these amazing individuals who work hard to produce your cup of joe? Find out more about the farmers we work with or check out their coffees available for sale here.

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