Specialty coffee & the Omar difference (Part 3)

Is Direct Trade best for farmers?

‘Direct Trade’ relates to roasters buying directly from the farmers, and ‘cutting out the middleman’. Despite what one might assume, this doesn’t necessarily mean it’s better for the average small- scale coffee farmer. These sellers tend to require a level of business administration, and the average farmer doesn’t have a computer, let alone the know-how on how to value what their coffee is worth, write up invoices, get an exporter’s license, and communicate in English.

We work with importers in Australia who have close ties and relationships with exporters, buying agents and farmers in coffee producing countries. They better understand the needs of the farmers and can support them throughout the year in a more meaningful way. Coffee is a crop that brings income at one or two times per year, depending on location. This makes it hard for farmers to operate without cashflow projections, which they often don’t know how to do. If a particular farmer needs some financial assistance to be able to apply fertiliser at the right time of year, the local support is there for them, alternatively, if a farmer needs advice on processing, there is a local expert to help them through it. We believe that trading this way is a better long-term investment in the coffee farming communities. Ultimately, it empowers small-scale farmers in co-ops, and encourages larger estates, to produce high quality coffee beans with greater confidence and consistency. In this way, the system for buying and selling coffee is more stable, creating a better result for all contributors. 

Big estates and smaller co-ops can both produce high quality coffee. Co-ops are a great way to help small farmers market their coffee. After all, sometimes farmers have just a few trees in their backyards. Co-ops will represent their interests, manage administration and find the right buyers.

Some roasters might make a big deal about going ‘direct to source’ to buy. At Omar we trust a great number of people, at many levels, to put in the hard work to get good quality coffee to us. Each of these levels requires a strength of relationship with the adjoining link in the chain: retailer to importer, importer to exporter, and so on. This assures that everyone’s interests are being represented, each with their own unique needs. For instance, a farmer may in fact prefer to deal with a larger importer who can market and distribute their entire crop, rather than having to deal with a range of smaller buyers and the additional administration that would entail.

Direct Trade doesn’t mean a farmer has been treated fairly and ethically, either. There are stories of roasters travelling to farms and suggesting the farmer try experimental variety planting, or non-traditional processing techniques because that’s what the buyer is interested in marketing. However, if the experimental product is not considered a success, the purchase is not completed and the farmer is left with a yield that isn’t saleable.

What about Fair Trade?

Just because a coffee doesn’t have a ‘Fair Trade’ logo doesn’t mean that it is unethically traded. And a ‘Fair Trade’ certification does not guarantee the coffee is of good quality.

Fair Trade is generally a great program that can help farmers who earn very little for their coffee. The market price for coffee is around US$1 per pound of green coffee. Fair Trade, on the other hand,  pays a minimum of US$1.40 per pound. The issue is that the Fair-Trade program doesn’t help farmers improve the quality and value of their coffee over a sustained period. It simply gives them a better price for their coffee, regardless of its quality.

Because of this system, ‘Fair Trade’ and ‘Quality’ are really mutually exclusive. No truly high-quality coffee is sold through the Fair-Trade system, simply because the farmers could earn more money for that coffee being sold to a buyer who appreciates that quality. We often say that our coffee is ‘fairly traded’. We put a great deal of effort into ensuring that we’re supporting ethical and sustainable systems of growing and purchasing, that allow producers of high-quality coffee to make a good income from their work, instead of having to rely on producing larger quantities of lower quality coffee.

The Fair Trade price is well below what we pay for high quality coffee. High quality coffee involves more expensive machinery, more expertise and generally more work at every link of the coffee chain. Premiums are paid for this extra level of care and attention, which ensure that those involved are paid fairly. Of course, the farmer only earns the high price for their “good stuff”. All farmers have a mix of qualities of coffee to sell. Larger trading companies can support a farmer by buying their whole crop due to their diverse client list. This enables them to buy these differing qualities of coffee from a farmer and distribute them to the clients that want them. There is a market for every quality of coffee. The Fair-Trade system, whilst admirable, cannot facilitate this level of complexity and demand in the market.

Would you like to find out more? Please come in and talk to us. We are a space for everyone to learn about, and be excited by, all things coffee.