November 15

Direct Trade

Movements are like honey.  They start out sweet but eventually draw lots of flies.  We have certainly seen that in fair trade and organics, with poseurs putting the meaningless “More than Organic” on their packaging.  So it has already become with Direct Trade.

Personally, I think Direct Trade was started by a few companies that either didn’t want to pay farmers the Fair Trade price, didn’t want to deal with cooperatives (although they all do,) or just had a more libertarian bent of not wanting to be told what to do.  Some of the companies were honorable, although most made the hopefully unconscious move of representing that all of their coffees were Direct Trade when only a few were.  Some were downright bogus.

There is no such thing as Direct Trade, actually.  It is a self-declared and self-created “certification” made to look like some sort of official approval.  Again, some of the companies are well-intended, but already in the short life of the supposed Direct Trade model there are many phonies and poseurs.

Theoretically, Direct Trade means that the company has a real and direct relationship with the farmer, whether a small farm, large farm or a cooperative.  They buy direct, not using brokers and intermediaries (who have such a bad name out there, whether deserved or not.) Almost all of them claim to pay “well in excess of Fair Trade pricing” but since the Fair Trade price is either a minimum in the bad times or a floating price daily, that’s a hard claim to verify.  In my experience, however, many of these guys don’t buy direct at all. It is nearly impossible to buy less than a full container directly, as shipping costs on a few bags would add several dollars per pound to the price alone. Rather, they buy through brokers in business as usual, but since they may have visited a farmer or coop for a day or two, they claim to have a direct relationship.  I think some of these guys really believe they are doing something special, and while it makes great marketing, it makes no significant difference in the farmers’ lives.

A few weeks ago I was having a long back and forth email thread with a farmer we work with in Indonesia, Ghair.  We were talking about our fathers, and how they are aging and slipping into early-stage Alzheimer’s.  We shared the heartbreak for our families and talked about strategies for retaining dignity but putting safety in place for our beloved dads. As I actually know and have spent time with his father, it was a profound correspondence.  Soon thereafter I got a call from a reporter who wanted me to comment on a company that said it was Direct Trade, and how superior their program was to Fair Trade.  He told me that the owner was proud to know the farmer, and knew his name and even his wife’s name.  “Big deal,” I thought, “but let’s see where this is going.”  I asked the reporter if he would call back the company and tell the owner he was really interested in his story and needed background.  What was the farmer’s name and what was his wife’s name?  A few hours later he called me back laughing.  When asked the farmer’s name, the owner hesitated and then said “Manuel.”  When asked the wife’s name there was a silence and finally the owner said “I’ll get back to you on that.”  An hour later a woman from the company called the reporter to tell him that the farmer’s wife’s name was “Maria.”  This would have been a joke, except that after my correspondence with Ghair it seemed like a rude marketing ploy.

Direct Trade is not new. Lots of companies like us, Equal Exchange and Cooperative Coffees have been engaged in this kind of trade for decades.  It is what our business models are based on.  To us, Direct Trade means really knowing farmers we work with on an intimate level.  We understand their economic, social, and ecological struggles and aspirations. We work with them on a very long-term basis to address those – not just by giving more money for one year and finding some other farmer to be “direct” with the next year.  We are not importers. We use the great services of Royal Coffee for that. We identify and visit the coops, make the connections and relationships, and Royal does the paperwork and physical importing.  Our relationships with farming communities are real, long-term and have meaningful and measurable impact in the field.

I applaud anybody who tries to break the old system of abuse in world trade, whether through formal Fair Trade, sincere Direct Trade or personal relationships with integrity and real impact.  But a self-serving declaration that a company is “Direct” doesn’t meet that standard.  Don’t take their word for it (especially as there are no regulations or standards whatsoever beyond self-declared ones.)  Ask the hard questions, like …what’s the farmer’s name?

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