Fair Trade vs. Direct Trade Coffee: What It Actually Means

Whether fair trade coffee is what it claims to be is still debated by the coffee industry and consumers alike. With so many different labels on products claiming to be fair trade, it’s no wonder that we’ve also grown skeptical about fair trade coffee. 2007 to 2009 saw a massive push from McDonalds and Starbucks for consumers to buy their fair trade certified coffee. 10 years later, and many in the coffee industry have either turned their back on fair trade certification or have stopped using it as their main marketing strategy. What we are left with is confusion and misinformation about which is actually more ethical: fair trade or direct trade coffee?

The idea behind fair trade certified coffee is simple: it is a product that meets certain standards in its production and labor conditions so that it can be certified as fair trade. In theory, fair trade labeling promises the consumer a product free from the exploitation of workers at every level of the supply chain. It also comes with a more expensive price tag than uncertified coffee.

For the producers, the fair trade certification process has upfront costs as well as ongoing fees, and quite often this continual investment is not as rewarding as it was promised. Many small-scale farms cannot afford the upfront costs, which squeezes them out of the fair trade market. It is sometimes unclear who is profiting the most from a fair trade certified product, as there can be several middle-men in the exportation chain.

When Did Fair Trade Coffee Start?

The concept of ‘fair trade’ products has existed since the 1960s and 1970s but the labeling, or certification of coffee didn’t begin until the late-1980s. The world coffee market had become saturated, and there was not enough regulation to ensure that the producers could make a profit. The idea was to raise the prices of ‘fair trade’ product to a healthy minimum per pound. It was also introduced for ethical reasons to stop farms using child or forced labor.

The Max Havelaar Foundation in the Netherlands was the first organization to begin labeling products as fair trade in 1988. Fairtrade International (FOL) was established in 1997 and continues to be the largest fair trade organization in the world. The Max Havelaar Foundation still exists today and is now part of Fairtrade International.

Is Fair Trade Really Fair?

The fair trade debate is still continuing today. The consensus is that there’s not enough evidence-based research from the organizations to show whether fair trade certification is consistently benefiting the producers. One of the main reasons they may not be benefiting is an oversupply of certified product. When farmers have produced too much fair trade product for the current demand, they have to sell the excess at a loss. This means that many of us are drinking fair trade coffee without realizing because not all that is produced is carrying the label. Fairtrade International has also been criticized for not closely monitoring how much money is actually returned to its producers.

Is Fair Trade Better Quality?

There is no direct correlation between fair trade certified coffee and the quality of the beans. If a producer who has a low-quality harvest is fair trade certified, they can still sell this product at the higher price tag that fair trade attracts. However, there are many high-quality producers who are certified, so it is possible to find fair trade coffee that also tastes great.

Many specialty coffee roasters do not see the benefit of buying fair trade certified beans, as the price is based on the label, not on the quality of a particular harvest. They’d rather pay top dollar for the highest grade of beans available, and often establish their own direct trade relationships.

Is Starbucks Coffee Fair Trade?

Starbucks does offer some fair trade certified coffee to its consumers, but it is unclear how much. Starbucks stores in the UK still offer a range of Starbucks® Fairtrade Certified blends. In recent years, Starbucks has steered away from the term ‘fair trade’ and prefers the term ‘ethically sourced’. The company says it currently has 99% ethically sourced coffee and is “committed to buying 100 percent ethically sourced coffee in partnership with Conservation International.” It is involved with many other initiatives including its own Global Farmer Fund program and the Sustainable Coffee Challenge.

Is Fair Trade Growing or Declining?

In 2015, Fairtrade International reported its first decline in 20 years. This was attributed to the organization’s lack of evidence and transparency around how producers are really benefiting. Consumers increasingly want to buy ethically-sourced products, however, they are more confused and skeptical about fair trade labeling. This consumer skepticism has led brands like Starbucks to develop their own initiatives outside of Fairtrade International. By developing its own programs, Starbucks aims to show how they are directly contributing to a more ethical coffee industry.

What Is The Difference Between Fair Trade Labels?

There are numerous fair trade labels that are used around the world, and it is difficult to know what they all mean without researching them individually. Fair trade organizations have their own certification bodies which regulate which products qualify for their label. The largest and most recognized in the coffee industry is Fairtrade International (FLO). There are three other widely recognized fair trade organizations: Fair Trade U.S.A., Fair for Life, and Rainforest Alliance.

World Fair Trade Organization and Fair Trade Federation have their own labels but are not certifiers, only memberships groups. This means that any organizations presenting these labels have paid membership to a group and are advocates for fair trade, but it does not guarantee that their product has been fair trade certified.

What Is Direct Trade Coffee?

Direct trade coffee refers to coffee which has been directly sourced from the producers by coffee roasteries. Direct trade is perceived as a mutually-beneficial relationship where the trade is transparent from farm to cup, without a middle-man, and prices are negotiated directly based on quality. Many specialty coffee roasters will visit the farms of their growers each season to test this quality themselves. Many advocates of direct trade believe it is a better alternative to fair trade, as the farmers are paid higher premiums and don’t have to pay the fees associated with fair trade certification.

The argument against direct trade is that the demand is solely driven by quality. This leaves producers more vulnerable to the effects of a bad season, or diseases like coffee rust that can devastate small farms. This point-of-view goes back to the core idea of fair trade offering a more consistent price for producers, so that a bad season can be tolerated. However, a lot of direct trade partners would argue that roasters offer prices much higher than fair trade for a high-quality harvest. The close relationships formed in direct trade mean that roasters offer support to their producers in times of need, as they’re directly invested in their product.

What Is Direct Trade Chocolate?

Much the same as direct trade coffee, many chocolate producers develop direct trade relationships with their cocoa bean growers. It is up to the buyers to ensure that the farms they are purchasing from have ethical labor practices, so many buyers will visit the farms themselves to source product. Much like coffee beans, there is no correlation between fair trade certified cocoa beans and their quality.

Can I Buy Ethically Produced Coffee Without The Fair Trade Label?

The simple answer is yes, but you need to do your research on specialty coffee roasteries which have strong direct-trade relationships. Just like farm-to-table cuisine, a barista at a good specialty coffee roastery will be able to tell you exactly where their beans are sourced from. The more they know, the more you can be assured that a direct relationship exists between them and the producer.

What Is Single Origin Coffee?

An easy way to narrow down where beans are sourced is to ask about single-origin beans, which are just that – sourced from one farm. A lot of the coffee that we drink is typically a blend of at least 2 beans from different origins. For example, a typical espresso blend might be made up of 50% Colombian, 30% Brazilian and 20% Nicaraguan. Blends can also be identified by the different beans used, however, blends are not typically narrowed down as far as which farm they came from, only from which region.

A well-packaged bag of single-origin beans can tell you the region and the farm that they were grown on, and some roasteries can even provide you with a personal story about the producers. Single origin beans also come with a higher price tag because they are often produced in much smaller crops, and the grade of bean will be the highest on their farm. The most resources and care are given to processing the highest grade beans on the farm, whereas the lower-grade beans (often robusta) are given less attention and are sold off cheaply to brokers.