What is Fair Trade Coffee & How it Differs From Direct Trade?

In the most recent annual forecast for 2020/21, the International Coffee Organization estimates over 10.5 million tons of coffee beans will be produced worldwide. A small proportion of these coffee beans will be grown and harvested adhering to fair trade standards. This coffee is known as fair trade coffee. 

When you go to purchase coffee from your local roaster or grocery store, you may notice some packages include fair trade labeling. It’s worth taking the time to understand what those labels mean and ultimately the story behind the coffee.

So, What is Fair Trade Coffee?

Let’s start off by reviewing what the term “fair trade” means. “Fair trade” is an exchange arrangement. This agreement allows producers in developing countries to sell their goods to buyers or companies in developed countries. The purchase is made at set minimum prices.

As part of this agreement, coffee farmers (producers) follow standards set forth by various fair trade organizations. By following these practices, the coffee farmers are able to get fair trade certification. This can be obtained through an organization such as Fairtrade International.

Fair trade standards center around areas such as workers’ rights, land management, and labor practices. For example, fair trade coffee farmers are not allowed to employ child or forced labor. In relation to the environment, participating farmers cannot utilize genetically modified organisms (GMOs). This is in addition to many other environment-friendly practices.

What Are Requirements for Businesses?

As part of this agreement, Buyer companies pay a minimum price for the coffee beans. This minimum price allows for some stability for farmers growing a commodity with world prices that can be highly volatile. In addition to this minimum price, coffee farmers are paid a premium. They use this premium to invest in their business, environmental sustainability, and their communities. Certifying organizations such as Fairtrade International set minimum prices and premiums.

Businesses who want to use the Fairtrade label on their coffee products must apply for a license from the organization to do so.
Besides coffee, fair trade products include sugar, cocoa, bananas, and cotton, among many other food and non-food products. However, fair trade is most established with coffee. It is a highly traded commodity in producing countries. In addition, the need for fair trade among coffee farmers is great. They tend to be smaller producers who would have less clout in establishing prices.

What is the Size of the Fair Trade Coffee Market?

Fairtrade International has shared data (2019) on its member coffee producers. As previously mentioned, Fairtrade International is one of several organizations establishing fair trade standards and administering certifications.

  • Fairtrade International’s 582 coffee producer organizations represent 760K farmers. These coffee producer organizations make up about one-third of its total number of producer organizations.
  • Latin America and the Caribbean produced the majority (86%) of Fairtrade certified coffee.
  • Half of all Fairtrade certified farmers produce coffee.

Another organization, Fair Trade USA has over 800K fair trade coffee farmers in its system. These farmers produced 176 million pounds of fair trade certified coffee in 2018.

Side note: Fair Trade USA broke off from Fairtrade International in 2012 to develop its own standards. Fairtrade International, an umbrella organization, is the largest fair trade certification company. 

What is the Difference Between Fairtrade and Fair Trade Certified Coffee?

All fair trade coffee is not necessarily the same, specifically as it relates to the producer. For example, one of the main differences between Fairtrade and Fair Trade Certified coffee is the latter may have been produced by large scale plantations. On the other hand, Fairtrade Certified coffee was produced by smaller farmers. However, both organizations work to ensure fair wages for workers/farmers, protect the environment, and invest back into the farming communities. 

It’s best to visit Fairtrade International, Fair Trade USA, and other fair trade organizations’ websites to learn more about their standards and the work they do.

What is Direct Trade Coffee and How is it Different From Fair Trade Coffee?

Many larger roasters bypass the certifications from fair trade organizations. Instead, they decide to establish a direct relationship with coffee farmers. Coffee sourced in this manner is known as direct trade coffee. 

While fair trade organizations establish the minimum price paid to fair trade coffee farmers, direct trade relationships focus on quality. In other words, premium prices are directly linked to better quality coffee beans. This can result in higher prices for coffee farmers instead of being tied to a price established by a fair trade organization.

Other possible benefits of direct trade relationships include direct payment from buyers to coffee farmers, more transparency, and traceability. 

Inversely, possible drawbacks are lack of oversight and continuously a continuously evolving definition of “direct trade”.

For example, in many cases, direct trade coffee requires building relationships with independent brokers and importers. Doing so makes it easier to find and transport coffee from overseas. However, many believe coffee sourced in this way should not be considered as direct trade because there is an intermediary involved. 

Whether through fair trade or direct trade, the idea is to ensure coffee farmers are receiving fair compensation for what they produce. In addition, it is important that these fair prices allow them to sustain and continuously improve their operations, environment, and communities.

Burman Coffee’s Relationship with Coffee Farmers

At Burman Coffee source much of the green coffee beans we offer directly from farmers in different parts of the world. Although we may not be a fair trade certified buyer, we believe in working with farmers to produce the highest quality green coffee beans. Most importantly, we ensure the coffee farmers we work with are paid fair compensation for their premium specialty coffee.

The following are just examples of the specialty direct trade coffees we offer in our online store:

All Hawaiian Coffees
All Haitian Coffees*
Bolivian Apolo *
Brazil Primavera
Colombian Café Social
Costa Rican Lajas* (Finca Los Angeles, Finca San Luis)
Dominican Ramirez Estate*
Guatemalan Finca La Esperanza * (Los Cedros, Las Plantas)
Guatemalan Finca Vista Hermosa and Finca De Dios
Indonesian Bali Blue Moon
Mexican Terruno Nayartia (Natural Gr. 1 Reserve, Org. Washed Gr. 1 Reserve)
Nicaraguan Selva Negra
Papua New Guinea Carpenter Estates

(*Sourced via personal coffee industry connections.)

We are committed to continually strengthening our valued relationships with coffee farmers. If you have any questions regarding our direct trade relationships or our green coffee bean selection, please contact us.

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