How Three Corner Coffee Roaster Sources its Green Coffee Beans:

The method through which Three Corner Coffee Roaster chooses to source its green Cambodian coffee beans is based upon the Direct Trade Method. We go ourselves directly to the farmers to obtain the green coffee beans and give them the proper value based on the green bean’s quality. We base the value of the good quality beans according to the current Class 1 Robusta value listed on the New York Stock Exchange.
We choose to not only be socially responsible from an international standpoint, but also to be culturally sensitive from a domestic one. Through the Direct Trade method we hope to encourage the indigenous farming communities to use high quality, environmentally friendly growing and processing techniques so as to establish their coffee plantations in a healthy and sustainable manner. We also hope to encourage growth and industrialization through the current culture of the coffee farming communities so that their success might allow them autonomy in the maintaining and continued development of their own cultural heritage.

(Below is a good article written on Direct Trade vs. Fair Trade)

 

Fair Trade versus Direct Trade: The Sociological Breakdown

Posted by Nicki Lisa Cole on 10/10/2011 to Nicki Lisa Cole

 

While conducting research with consumers of environmentally and socially responsible coffee between 2008 and 2009, I found that though most I spoke with were committed to this product, hardly any understood the distinctions between the different sourcing models available. Given the number of options available in coffeehouses and grocers, this is not much of a surprise. The curious consumer will find Fair Trade, Organic, Rain Forest Alliance, Bird Friendly, UTZ Certified, and of course, variations on Direct Trade up for grabs. Inundated with information, labels and their claims blur together into an indistinguishable impression of goodness. Yet, somehow, Fair Trade seems to rise above the rest. Many consumers I spoke with used the term to refer to the concept of ethical sourcing in general. Many also assumed that “fair trade” was the only promise that they could trust, and that those not so labeled were inherently bad. In this post of the Direct Trade Coffee Club blog, we’ll take a look at what Fair Trade certification really offers, how Direct Trade differs, and consider the room for improvement in each.

 

The Fair Trade Essentials

  • Coffee purchased exclusively from democratic cooperatives of individual small producers
  • Minimum price per pound of $1.69 paid to the cooperative
  • Access to credit provided or facilitated by the roaster
  • Price premium guarantees community development
  • Prohibit child labor, forced labor, and workplace discrimination
  • Require growing practices that promote environmental sustainability
  • Certification provides transparency of relations between buyers and cooperatives

 

From a sociological perspective, what’s greatest about this model is that it is community structured. Because Fair Trade works strictly with cooperatives of producers that range in size from 200 to 8,000 individual producers, its aim and scope are community-wide. Globally, this model included over 5 million producers during 2009. Importantly, democratic governing of cooperatives encourages producers to share knowledge, and to work together to solve problems and improve their communities. The then ten cent social premium that roasters pay per pound of coffee purchased helps them achieve their goals. In 2009, these premiums totaled $11 million devoted to community development projects. Environmentally speaking, the model requires producers to meet certain minimum standards of sustainability, including a prohibition on the use of GMOs and toxic agrochemicals, and conservation of soil, water, and surrounding forests. The global reach of the model means that these standards are being applied in coffee growing regions around the world. On paper, pretty impressive. Now let’s consider how Direct Trade compares.

 

The Direct Trade Essentials 

  • Coffee purchased from a range of farm structures and sizes
  • Typical price paid per pound between $3-5 (never less than $1.80)
  • Work with producers to improve quality and increase value
  • Direct, ongoing, sustained contact between buyer and producers
  • Guarantee economic sustainability of farms
  • Guarantee social sustainability of producers
  • Encourage environmental sustainability & community development
  • Completely transparent

 

To the sociologist, the benefits of Direct Trade are quite different than those of Fair Trade. The high price paid per pound is, hands down, the foremost benefit to producers. While the model does not guarantee a minimum price, because buyers evaluate it based on quality, on average they pay well above the Fair Trade minimum. Importantly, Direct Trade buyers pay each individual producer, whereas the Fair Trade price is paid to the cooperative. Because Direct Trade buyers are interested in purchasing the highest quality coffee available, they work with producers to improve their crops, and teach them how coffee is roasted and served in the U.S. so that they understand how the product is used. As quality improves, producers are paid more per pound. The direct communication and interaction between producers and buyers that lends the model its name cultivates long-term relationships based on mutual respect and trust. This, in turn, affords producers economic and family stability. Another benefit of the direct relationship is that buyers and producers negotiate terms and expectations together, as opposed to having them imposed by an outside organization. This means that the trading relationship is tailored to the unique context of each producer and their farm. Because the model is flexible, a variety of farm sizes and structures can be included. While not certified by an independent party, Direct Trade roasters guarantee complete transparency, and are happy to reveal all to anyone who asks.

 

So, which is better? Comparing the two models actually illuminates flaws in each. The most significant downside to Fair Trade is that there is actually no transparency around what individual producers are paid. With this model, buyers pay cooperatives. Cooperatives of course incur some overhead costs, so in the end, producers earn a price that is lower than the Fair Trade minimum. Actual earnings of individual producers are not reported. While the model does channel a ten cent social premium per pound into community development, research conducted by sociologist Daniel Jaffee in Mexico found that the difference between Fair Trade and conventional growing communities is marginal.

 

An absence of emphasis on quality is another drawback of the Fair Trade model. Because it uses a flat price, producers are not incentivized to improve coffee quality. In my research in the coffee industry, I found that this discourages many specialty roasters from purchasing Fair Trade coffee. The structure of the trading relationship also poses a problem to some importers. Because cooperatives are run democratically, leadership changes every year or two. This makes it difficult for buyers to cultivate a long-term, trusting relationship with cooperatives because new players are introduced almost annually. Importantly, research conducted with producers has found that they too have critiques of the model. While the Fair Trade model was initially organized by producers in Mexico as a form of resistance to neoliberal trade models imposed by the north, the inclusion of large coffee companies and the growth in imports and distribution over the last decade has lead to increased bureaucratization and corporate leverage. Many producers feel that their perspectives have been lost. They are constantly fighting to have more representation at the decision-making level so that the model works for them, but they find themselves continually excluded. Because of this, some producers feel that the model is imposed on them by northern business interests, and does not reflect their goals for themselves and their communities.

 

Because the Direct Trade model is based on direct communication and mutual agreement between producers and buyers, producers have much more say in the terms of the trading agreement. But, this model is not without its own flaws. The main drawback, from a sociological perspective, is that the model targets individual producers, not producing communities. While individual producers are paid much higher than average prices for their coffee, they are encouraged to channel their profits into farm infrastructure and sustainability. Of course, from a business perspective, this makes sense. But it bears noting that the model does not require producers to invest in their communities. Overall, it is a very small group of producers around the world who participate in Direct Trade, and so, the impact of the model is quite limited. Similarly, while environmental sustainability is encouraged by buyers, quality and price are the only guarantees. It is also worth noting, from a sociological perspective, that producers are included at the discretion of buyers. Buyers are thus the gate-keepers of this model, which leaves a significant amount of power in their hands, as opposed to those of producers.

 

In a perfect world, a blend of these two models would thrive. Direct Trade empowers producers by helping them improve the quality of their product so that they can earn more money on the global market, while Fair Trade empowers producers by strengthening community bonds and emphasizing collective improvement. To implement Direct Trade on a community-wide scale would fold many more producers into the model, raise the quality of a greater amount of coffee, and empower producers in important ways. What a good, and delicious, world it would be.

 

Nicki Lisa Cole is a freelance writer and consultant who holds a Ph.D. in sociology from the University of California, Santa Barbara. Learn more at www.nickilisacole.com and her Facebook page 21st Century Nomad.