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How Efficient is the Direct Trade Model

Posted by Meera Nair on

For the average coffee drinker, thoughts about how the coffee has been bought or what channels it has gone through before being placed on a store shelf are not high up on the priority list.

And that’s understandable.

You are ultimately concerned about the end product since that is what you’ll be consuming.

But if you are interested in knowing more, one term that you should be familiar with is direct trade coffee.

What is Direct Trade Coffee?

Trade models typically refer to how the coffee product has changed hands in the process of production and selling.

In a direct trade model, the roaster or coffee distributor directly buys coffee from the farmers without going through any organizations or importers supplying coffee.

Here, the aim is to ensure that farmers get well compensated for the efforts they put in, and customers have access to higher quality products. 

The alternative to this is fair trade coffee. In the fair trade model, there are middlemen involved between the farmer and the coffee distributor.

harvesting coffee beans

The purpose of the fair trade model is to create quality standards in the coffee market, to level the playing field, in a manner of speaking.

But the farmers inevitably end up with only a fraction of the price that the customers pay.

Is it an Efficient Model?

This is a highly debatable topic. A lot of people consider direct trade coffee to be the better alternative. And there are multiple reasons for this.

For starters, this model eliminates the involvement of multiple parties in the process. This can be either a boon or a bane. 

On the one hand, it is efficient because it is mutually beneficial. Farmers get a bigger cut as compared to the fair trade model, which in turn fuels their role in growing and harvesting coffee.

Roasters have better control over the quality of coffee since they are directly interacting with the farmers. This enables them to decide on crucial information that affects the flavour profile of the coffee. And, therefore are able to deliver more premium quality coffees to their consumers.

There’s also a lot more transparency and communication in the direct trade model.

As long as all of this is present, it can guarantee higher levels of efficiency.

coffee roasts

However, it’s not without shortfalls either.

There is no one universal set of standards that all distributors and producers are required to follow. This means that distributors are not held accountable as per the quality benchmarks that fair trade coffee fulfils.

And so consumers must base their trust on the roasters and believe in their ethics if they are to rely on direct trade coffee.

Both the models - direct trade and fair trade - have a fair share of pros and cons. It’ll probably require more shifts in the coffee market for the two models to be perfected further.

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