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What Is Direct Trade?

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What Is Direct Trade?

Why Is It So Important?

The sticker Direct Trade on the coffee pack means that the roaster bought the coffee directly from the farmer. Direct Trade is a trading model that excludes importers and exporters. The farmer sells coffee directly to roasters and other coffee companies.

Positives

Direct Trade is not an official certification, but coffee with such a label will be of high quality in most cases. Purchasing coffee, the roaster requires the farmer to meet specific standards. In return, the farmer gets a price that often exceeds Fair Trade.

  • Farmers make more profit;
  • The buyer doesn't pay intermediaries;
  • It's easier for consumers to trace the origin of coffee.

This trading method allows you to know exactly the place of origin and the conditions where the lot was grown. It helps to build a transparent and trusting relationship between the roaster and the farmer. Direct Trade also allows the farmer to improve his production and improve farmworkers’ working conditions.

Risks

However, in practice, these are risks for both the farmer and the buyer.

Each country of coffee origin has its legislation and different market structure. These regulations are often not easy to understand. For example, it is so tricky in Brazil that it is easier for farmers to sell coffee through traders. And Kenyan producers have only recently been given the right to trade directly, but it is challenging to do so so far.

The process must be easy and transparent to develop direct trade: the buyer knows what he wants, the farmer knows what he sells.

Conclusion

Producers and roasters themselves choose how to sell and buy coffee. Some select Trade Direct to work with the farmer directly, to know how and under what conditions coffee is produced. And for others, it is more convenient to use special services of exporters and importers.

In any trading model, participants seek to increase the transparency of the process. If the trade is transparent, each participant in the chain will win, the producer, the seller, the roaster, and the consumer.