Direct Trade in the Coffee Industry with Andrew Feldman
Andrew Feldman has served as executive director of De la Gente since September 2012. In that role, he oversees a team dedicated to helping Guatemalan coffee farmers achieve economic prosperity through direct trade with buyers and consumers. Labels are confusing, especially when they sound similar. Fair trade and direct trade are two distinct concepts that can easily confuse consumers. Feldman uses his experience with coffee growers in Guatemala to distinguish between fair trade and direct trade and explain what these ideas really mean.
Douglas Gayeton: What is your definition of fair trade?
Andrew Feldman: One thing that I would like to make clear is that there’s a difference between fair trade, the capital trademark fair trade of the Fair Trade Organization, and the concept of trade that is fair. Fair Trade, the certification, is a standard that certifies a base price as well as a price premium for coffee farmers. Meaning that if the coffee price on the open market drops below a certain price, farmers are guaranteed a minimum payment. If it goes above that price then the farmers are guaranteed a premium above the baseline. My idea of fair trade, as trade that is fair and equitable, is that all parties in the chain are getting a fair price and payment for the product they’re producing. A pound of roast coffee in the States might retail for $12 – $14 a pound or more. If the coffee shops sells it by the cup they might be getting $50, $60, $70, $80 a pound for the markup on that coffee. Coffee farmers in Guatemala might be getting $1 or $2 at most for their product, when they sell it to the buyer. Our idea of fair trade is not that the farmer gets the entire value of the product, because certainly each participant in the chain provides a valuable service. It’s that the farmer gets a fair price, a price that allows him to support his family and a price that represents a substantial percentage of the value that’s represented in that product itself.
Douglas: What is your definition of direct trade?
Andrew: Our definition of direct trade is trade that takes place directly between the producing party and the consuming party. This doesn’t necessarily mean that other people don’t handle it. Certainly it might be shipped through a shipping company, it might be imported through an importing company, and it might be bagged by a bagging company. But in this model, the producer deals directly with the customer. This reduces a lot of the unfairness that takes place when other coffee is sourced. Instead of going through an intermediary, the leader of the cooperative might sit down with the owner of a coffee shop in the United States or in Germany or in other consuming countries and say, “This is the product that I have, what are you going to offer me for that?” They sign a contract, they arrange the details and both parties have had the chance to express their desires and come to an agreement that’s mutually beneficial.
Douglas: Is there any formal certification for direct trade coffee or do you see one developing at some point soon?
Andrew: As it currently stands, no. Direct trade is a general concept. In theory, direct trade can be a big coffee company in the US buying from a really big coffee farm in Guatemala. That is direct. It may not be ethical or may not be fair. Currently direct trade is really what is interpreted by those who are using it. So as it stands there is no list of requirements that are officially out there.
Douglas: I could be wrong, but I think the reason that direct trade isn’t going to be certified anytime soon is that it means a lot of things to a lot of different people.
Andrew:Different people hear different things. Locally in a town you might hear direct trade as meaning I go down the street to the farmer who lives on the road and I buy his products directly. Some people hear ethical, so direct trade means I’m dealing with the farmer who toiled out there in the fields, who processed that coffee. He’s the one who’s coffee is being sold to me, so I’m dealing directly with him. But for some, direct trade is more about the quality. It’s saying I’m a big coffee company and I’m buying a million pounds of coffee from someone from a big company. I’m buying directly from them meaning I have control over the quality of the product. I know where it comes from so I can ensure the best quality of coffee for my customers. Because direct trade means so many different things to different people, I don’t see anyone in the near future coming up with a consensus around what that represents.