THE BLOG
10/16/2015 01:38 pm ET Updated Dec 06, 2017

Straight Talk on Fairtrade vs. Direct Trade According to Brazilian Coffee Farmers

The rolling hills of the coffee farms in Brazil looked something like I had imagined: expansive, lush with green trees and bright berries, winding dirt roads. It was beautiful scene. But I can't say that before I went to visit the plantations a few hours outside of São Paulo I had any real in-depth knowledge of the coffee business, or spent too much time thinking about the how it lands in our cups every morning. I only knew that I needed it to survive and hoped to find that I could feel good about my daily brew choices. I try hard to be a conscientious consumer and have long wondered what Fairtrade and Direct Trade really mean, as well as how they compare - and for that these visits were hugely educational.

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Coffee beans drying on a farm in the APAS community. Photo: Stephanie Keller

Through extensive conversations with the farmers who live coffee every day and trips to some regional plantations, the nuances and differentiators came to life. Starting with Fairtrade, I learned that it's a large organization with a mission to support a sustainable and financially stable standard of living for the farmers. It involves a cast of characters including farmers (producers), importers, exporters, and roasters (distributors). To be eligible for certification, producers must meet certain requirements, apply for the program and pay a fee to be licensed as a Fairtrade company. In return, they receive exposure to a large market of consumers who seek out the label and receive discretionary funds designed to help advance their business.

Direct trade, on the other hand, is not run through an overarching organization and there are only two parties involved: farmers and roasters. The process is largely based on interpersonal relationships, venerable farming practices and a desire to produce artisanal-grade coffee. Unlike Fairtrade, there are no formal requirements from a sustainability perspective, but many of the farms are compliant at those levels regardless. The guiding principles are high quality, social responsibility, and pride in their work. The batches are also generally much smaller than Fairtrade.

Ok great, you say. So how does that affect everything down the line?

"Fairtrade, through the premium it offers, helps us carry out activities and projects that allow the association to provide more and better services to its members," explains Alessandro Hervaz, a founding member of the APAS coffee co-op in São Gonçalo do Sapucaí. His organization is made up of about 40+ farm families, who take their award-winning coffee very seriously and appear to like each other a whole lot. He also makes honey on the side.

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Farmers of APAS. Alessandro Hervaz is the one in the cowboy hat. Photo: Joel Shuler

"Before we became Fairtrade certified, APAS was already developing activities to educate growers about sustainable production. The Fairtrade premium...has helped us to expand and improve these activities, in addition to allowing us to make the association more professional by hiring new people and implementing training courses." The premiums have been a big part of what's enabled them to make their product great, win coffee competitions, and grab the attention of smaller buyers willing to pay even more than the Fairtrade minimum for craft beans.

The Fairtrade model, however, does have some significant drawbacks. For starters, the premium funds work well to benefit APAS because it is a tight knit and well run place, but when co-ops aren't as stable it can lend itself to poor use or distribution. Fairtrade products can also be sold on the shelf to consumers at a much higher price than what importers pay for them and the farmers don't see a proportional profit. Finally, and perhaps the most significantly to us coffee snobs, Fairtrade buyers are generally more concerned with quantity versus quality, according to Hervaz. While Fairtrade guarantees farmers a minimum price for their coffee, they are not compensated for particularly great beans or motivated to constantly improve them. In this model, producers often make the same amount whether the product is at the passable level or of the highest quality.

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Yellow and green coffee cherries. Photo: Lisiane Saúde Shuler

Direct trade is where specialty quality and true value for the farmers come into play as the tight connection between the producers and roasters affects almost every aspect of the business. Coffee purchased in smaller amounts means producers can work to create particular flavor profiles and roasters can seek out the best beans. To decide on a price, farmers and roasters come to an agreement about what the crop is worth based on an intricate tasting process determined by Specialty Coffee Association of America (SCAA) scoring. The farmers are then compensated based on the true value of the product, which ultimately makes them more likely to extend quality measures to those lots. The roasters are then also transparent about the price the coffee is sold at to consumers.

"We are great friends and business partners," said Joel Shuler, founder of a roasting company called Casa Brasil that deals exclusively in direct trade, who was visiting APAS too as part of his purchase process. He has been working with the farmers at APAS for years now and demonstrated a cupping slurp so loud during the tasting process (a sign of aptitude in the coffee culture, apparently) it scared the crap out of me.

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How coffee is scored: Joel Shuler of Casa Brasil smelling the brew as part of the cupping process, right before he slurps it like a pro. Photo: Stephanie Keller

"Our goal is to work together with the growers to identify the best coffees on the farm, ensure they are processed, dried, stored, and transported in a manner that maintains the quality, and then roast them to perfection here in the US...Coffee is traditionally based on commodity pricing, which has little to do with a grower's cost of production or our price of sale here in the US," he further explained. "Rather than be subject to commodity market oscillations, we pay set prices based on quality that are far above commodity and Fairtrade prices. This is a win-win for both growers and coffee lovers."

These relationships, transparency and human-to-human elements also make for a more gratifying overall exchange. "Direct trade is the best type of trade for producers because it guarantees the best price and gives us the personal satisfaction of knowing where our coffees are going and who is drinking the coffees," adds Hervaz. "It is a good feeling and "fair" to earn money producing something that, besides quality, brings health and pleasure to people."

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Coffee berries of different grades getting washed and separated at Fazenda Recanto. Photo: Stephanie Keller

This type of business model is most desirable for both small co-ops and for much larger businesses, who have no trouble producing on a grand scale. Alfranio Paiva and his family, for example, run a 432 acre farm called Fazenda Recanto that supplies to well respected coffee giants like Illy and Nespresso. About a third of their land is a natural reserve and although they incorporate a gamut of sustainability practices, they are not part of the Fairtrade program (they are Rainforest certified). During the peak season, harvesting the crop takes the help of about 60 workers and a piece of specialty equipment that looks like a coffee tree Zamboni machine.

"Since coffee has a high production cost, direct trade rewards us by paying a fair price, which allows us to maintain our production," Paiva said. "It's the closest form of fair negotiation; actually, it is really what is considered a true fair trade. "

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Coffee Tornado (Zamboni) collects fruit from the trees and shoots it into a truck bed moving alongside it on the next row. Photo: Stephanie Keller

It was illuminating to see what these terms really mean on the other end of the supply chain and intriguing to think about how the differences play out in other commodity markets. The concepts and all their dependent parts were nothing if not complex, but ultimately my clear takeaway emerged: Fairtrade does a lot of good work for sustainable practices, but the care and quality integral to the direct trade philosophy are where it's at for me. That, and coffee farming is some seriously hard work. I left Brazil not only with a 360° java education but also feeling completely fine about spending $15 on that dark roasted specialty blend.