Direct Trade Sucks

Relationships with many producers is too complicated to give it a title or a badge or a sticker. After all its not about words its about actions. feel free to judge me on them.

So the last blog post here was about my sourcing visit to Bolivia. I planned to continue the blog post whilst doing the same task in Colombia, but a last minute change of plan from one of my hosts threw it all in the air.

The farmer had decided, after months of our joint planning, that he would now be out of the country.

After arranging expensive flights and hotels, having confirmed it was all okay, I was left stuck in Colombia for 3 days with nothing to do. As it turns out another exporter was kind enough to spend some of that time letting me cup with them, and I think we found some stonking coffees that we bought once we got back and will be showcasing later this year. But I was left with lots of time to mull over concerns that have been on my mind for a while.

Before I go to this, I’ll rewind to earlier this year.

Earlier this year we launched our direct trade idea, a model used by other roasters whom I respect, as a way of showing they look after their farmers / producers / co-ops. I agree that farmers / producers / co-ops should be looked after and it’s important to make sure they get paid well, very well. But ever since I launched this I began to feel it was a bad idea for Has Bean (stay with me).

Direct trade is a way the needs of the farmers / producers / co-op can be met, be that monetary, be that pride in improving quality, education, whatever. But it’s also about the farmers / producers / co-ops having an equal voice to that of the roaster, and protection too – but what happens if problems swing the other way?

At the time of our launching the ‘Fairer Than That’ idea, I was in negotiations with a producer in El Salvador about a very important coffee for us. One we bought initially from the number one Cup of Excellence, one that we’d bought every bean of from the farm for four years, and a farm I had visited 3 times and loved. The farmer, due to his hard work, was being approached by many coffee roasters about buying his coffee, but the farm is small (the way we were able to buy everything from the farm for four years shows how small it was). There was not enough coffee to share.

Regardless of how much money we offered (we never even got to the money negotiation), and because the producer’s voice got ever louder, we didn’t get our coffee.

This isn’t about sympathy; there are lots of other great coffees out there, but we invested a lot of time money and travel in building up this farm, and the voices became unbalanced away from us and we could no longer negotiate.

There is good news from this; Santa Petronas, San Raphael Pacas, Loma La Gloria, and Monseratt wouldn’t have made it here this year if this hadn’t happened. I am very pleased with these coffees, and there are many other great coffees to be found.

So from launch I had this concern that the Fairer Than That / direct trade model wasn’t perfect, but I persevered as we had launched and made a big noise about it. I looked enviously at others using this kind of model and thought “I could do that.”

But that’s part of the problem. As a coffee industry we are all saying the same things; we are sending this confusing message, which means something different to everyone. And when we try and tell the world what we mean by it, I think most people don’t get it. We make it more confusing.

I buy amazing meat from my local butcher. I don’t ask him if the farmers got paid. I taste the quality, I listen to what the butcher has to say, and I trust him; this makes sense, right?

So fast forward to my ill fated Colombia trip. Another relationship was falling down, because the producer had a different set of priorities to making our long standing commitment to meet up. I am not just belly aching here; much time, effort, and energy was invested into my second trip for a second year, blown up only when I kept pestering to confirm the trip one week before leaving.

It’s not a relationship when it’s one way. I like the idea of equal-stakes-equal-voice, but in this case it was not equal. If I broke that equilibrium, quite rightly I would be a bad man, but it doesn’t seem to be the same both ways.

I likened it to being trapped in a loveless marriage; one was trying really hard, but the other didn’t feel the same way. It’s a problem when your partner loves you for the wrong reasons, or doesn’t trust your motivations. I guess it’s my job to fix or change that.

The extra time in Bogota on my own – in the evening eating alone, not knowing anyone in the city – gave me lots of time to think, and to run (a great city to run around). Most of my thinking time (and on the flight, and even more since I got back) was about direct trade and Fairer Than That. And you know what, I’m not happy with it at all.

I don’t think it helps the message: I think it clouds it. And it’s important to be happy, or otherwise to change something to make yourself happy. A ginger man once said: life’s too short.

When you make a mistake you can either keep going ahead or stop and about turn, and that’s what I am going to do.

We are not going to label up our buying practices in the “direct trade” model we discussed in Fairer Than That. Not because paying a good price isn’t a good thing; it is a very important thing, but it’s also a complicated thing. I can talk about the $10 a lb Colombian we bought last year when the market was at $1.80 if you like, and I’d sound great, but from all the deals we did last year, none were lower than $3 and most around $4 and above, which is a great price. But what does it tell you?

$3 in Colombia won’t buy you just anything in Nicaragua or El Salvador – it will buy you a great (and I mean great) coffee. It’s all figures and numbers that make no sense. Coffee buying and relationships are complicated, and I want to try and make it easier for everyone.

We’re also not going to cheapen the great coffees we have acquired through importing partners by not giving them a sticker, or make noise about economics when we should be talking about taste. We paid over $7 a lb to a producer for a coffee from an importer last year. This was a huge price, for a huge coffee, but we couldn’t put it under the banner of direct trade because we used an importer. When you have constraints like that, it’s crazy.

Instead we are going to buy the way we always have; some direct, some not, dependent on the partnership and the logistics, but we will always remain transparent and faithful to the following:

1. I promise to pay a good price for the coffee I buy. This is built on trust between grower, roaster, and end customer – trust, and long term results;

2. The price we pay will ALWAYS be above the market price and any Fairtrade floor prices;

3. I promise to visit the producers we buy from directly as often as I am able to, and ask them face to face if they are happy that they sell to us, and with how we roast their coffee and promote their farm name;

4. I will work with our partner producers feeding back things I learn about the coffee market and what I think the market needs, where we can add value to the chain. Collaboration is important;

5. If we use middle men (exporters / importers / brokers) we will make sure they are good people and that the producing end still get rewarded for their work. these people will become facilitators, not leaks where money doesn’t make it back to the ground floor. If we cannot be assured / shown this, we will not work with them;

6. I will promise to work with good people, in general good people produce good coffee;

7. You’re just going to have to trust me.

You’re going to have to trust me even though it doesn’t have the name direct trade / Fairtrade / grown by nuns / kissed by monkeys, or any other certification. I don’t want to make the same noise or the same mistakes as others using direct trade. Relationships with many producers is too complicated to give it a title or a badge or a sticker. After all, it’s not about words, it’s about actions. Feel free to judge me on them.

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What you have been saying

  1. Roland Gifford says:

    Well done for changing.

    I was nervous about the Direct trade model for two reasons that you haven’t mentioned.

    1. Where you have agreed to buy all/most/lots of coffee from a particular farm one year, what do you do if the coffee is awful the next. I recall that there was some problem with Terremater this year but that may be a bad example.

    2. Doing direct trade from some farms potentially upsets importers, especially where the introduction to that farm was through an importer. They want to get payback for their research/relationships too and are less likely to pass on the cream to buyers who may well not be loyal. A similar concept to Direct Trade but with the importer I suppose.

    Again, well done for recognising something that isn’t working and having the courage to change it.

  2. Poul Mark says:

    Hey thanks for this Stephen. I too am thinking more along these lines. We are starting to ask hard questions about the economics of a 100% “direct trade” model, and while we have not experienced the woes you have, we have definitely suffered some quality issues which are frustrating. It would seem that a few producers are starting to have heightened feelings of entitlement when it comes to both price and quality. At the end of the day it does come down to trust, mutually beneficial relationships which in any scenario are difficult to establish.

  3. Simon says:

    Steve, in being true to your convictions, to fairness, and to common sense, you’ve earned my trust. This world is complex and though we mean well when we try to package and label justice, we often end up fighting to uphold the label rather than the justice the label was meant to symbolise.

  4. Lurch (@GunCulture) says:

    I may get burned at the stake for this but I’ll be honest.
    The end product is the be all and end all for me.
    All the feel good touchy feely fluff is well and good but if the coffee is meh then I don’t want it.
    So just keep selling great coffee fella!
    ;)

  5. @clogish says:

    Steve – the biggest reason I buy from you (quality of the coffee aside), is because I trust that your ethics mean that the coffee you supply is sourced in an ethical and sustainable way.

    You don’t need to use labels like “direct trade”, or “fairer trade”, the only label that matters is the biggest label on the bag: “HasBean”.

    Thanks for your tireless efforts.

  6. Chris Woodford says:

    Well done Steve. Since that early blog/website post you wrote some years ago about the trouble with ordinary fair trade, I’ve been impressed that you had the honesty and integrity to stand up and speak it like it is. The trouble with fair trade is that it’s too much of an oversimplification; things just aren’t that easy – and things can’t be set in stone. The real point about ethical coffee trading is that it has to be equally fair all round – for the grower, the roaster, and the consumer. As you’ve always said, patronising fair trade doesn’t work if the consumer gets a poor end product; nor can it work if the supplier gets a poor deal. @clogish makes an excellent point: your own commitment to excellence and fairness is always obvious – and all that really matters in the end.

  7. Matt Briggs says:

    I’ve just started using Has Bean after years of struggling with supermarket coffee. Regardless of lables or a commitment to a single buying method, I’m absolutely confident that the ethics behind what I’m now drinking are immeasurably superior to those of Illy or Lavazza for example. And as for the quality of the product and service…… Brillient.

  8. Meister says:

    This is a wildly important post, and I’m glad you wrote it and hit “publish.” I of course feel very strongly in favor of Direct Trade (I do work for one of the creators of the label), but have long suspected that it might be a difficult and much more complicated example to follow in other circumstances, and by other roasters.

    Several years ago, I started hearing new and young and very small roasters who would puff up describing how they flew to Peru or Guatemala and shook hands with a farmer and isn’t that authentic and isn’t that Direct — and frankly, it made me nervous. Negotiating these kinds of relationships must be (I qualify it because I am in no way a green-bean buyer or a member of the coffee department) immensely complex and often rather delicate, and it certainly can’t be appropriate or doable for everyone. At least not yet.

    We must consider where the failures of Fair Trade — a movement with regulated standards, and global certifying committees behind it! — fall, along with its successes, and remember that Direct Trade doesn’t have that kind of structure to support it. Still, this many years on, everyone is kind of winging this Direct thing, and it makes it a much, much harder system to work under.

    In any event, I apologize for clogging your comments, but I do want to thank you for being so on the level about your frustrations and experiences. Really thoughtful post, this.

  9. Gary Dyke says:

    Steve I apprechiate the honesty and transparancy around your business ethos. The customer service Has Bean offers along promotes trust, and certainly gains mine! To the extent I have just renewed IMM but for 52 weeks instead of the usual 12 ; )

  10. Andy McCurtin says:

    Honesty such as this deserves praise, it would be easy for someone to pay lip service to past labels(direct trade etc) and simply do the opposite now it’s become difficult to maintain. As others have said already the fact that you attempted to be so fair and open in your trades(and inform you customers along the way) is admirable and the products you release show the time and effort you infest in them. The service and care you show your customers mirrors the quality of the products you sell and as long as you feel you can still maintain you quality and stay true to business morals/ethics you set up I(as I’m sure many others) will still support you buy buying your wonderful coffee :-)

  11. Peter G says:

    Stephen-

    I congratulate you for such an honest and forthright blog post. Sharing your experiences will, i hope, be helpful to those who are just exploring the idea of working directly with farmers!

    I can’t help but wonder, though. How does your “new policy” differ from your Direct Trade policy? Not to be glib, but reading through your 7 point policy sounds exactly like a Direct Trade system to me. Do you object to the words?

    Peter G

  12. Thank you everyone for the kind words and support for this. I really just wanted to reply to Peter G’s point

    The policy your right doesn’t change, its just time to stop giving it a badge within our company and just start doing it. I think the problem was I try to copy what you and inteli and many other roasters had done in the past, riding yours and there waves.

    I don’t plan to change the way we buy one little bit, just stop using someone else’s banners to do that.

    My experiences have meant I feel I need more than two words to describe our complicated sourcing styles, and it just didnt feel right for us.

  13. Coffeehunter says:

    What can I say here that won’t be construed as biased? But I will try. The specialty coffee business has been (sorry, Steve, no pun), and still is, essentially about a lot of things except the coffee itself. People would laugh at the idea of Fair Trade Beer, but coffee is perhaps the first product that comes to mind when Fair Trade is mentioned. Rainforest Alliance Water, anyone? Pass me the Evian. How about a model I am proud to say that we have been working for more than a decade now. Make a deal with growers to pay substantially more than their production cost and more than they can get elsewhere in the market, and for that promise, we want pick of the crop, the good stuff. What we reject, sell to my competitors. That means we manage a relationship AND quality model and sometimes the two do not always match, but we serve as the control / the qualty gatekeeper. If the coffee arrives under par, not up to scratch, Mercanta wears it. I am 100% certain there are Direct Trade roasters offering the world’s best coffee, for the simple fact they bought it, paid for it, and, well, now there it is in the roastery. A previous reply mentioned a good point I have no problem reinforcing. Loyalty. We do a good job for our growers and customers. If we have a rare, 90+, limited availability coffee, who are we going to think of when it comes to selling that lot? And we too have been burned too many times by helping bring a coffee to market and put the coffee all over the world 3 bags at a time only for Direct Trade and our competitors to come along once all the hard work was done, and money spent on the finding / the discovery. I regret that there are many in our sector, importers, brokers, and sundry middle men who do not add value and who have generally damaged the reputation of those good importers (I prefer merchants) who are out there. Has Bean is the ”brand” that matters, Has Bean does roast, and will continue to offer great coffees, of that I am sure. There are numerous ways to secure excellent supplies, and as with many businesses, it is not always as easy as it seems when you get into it. Keep up the good work, Steve.

  14. Marcos Croce says:

    Steve

    This is what I love about Specialty Coffee and Specialty Coffee People: the search for the extra “more” : quality, relationship, social & environmental awareness, passion…

    It is all about connection. In today’s world where we are connected to all sorts of electronic devices, we become closer to the farthest distances and far from people close to us. Coffee bring us together.

    In the search to “who we are” and “how we can do things better” it is imperative that we know what we are consuming, who are our relationships, what are we eating. I really want to know where my meat comes from:

    is it Organic or Grass fed? Or it is from a conventional factory farm treated with hormones and fed with transgenic corn?

    Direct Trade, in my opinion, is a great label to simplify to the consumer the relationship between producer and roaster.

    The Direct Connection is fundamental to the establishment of a long
    term relationship, to development of trust, of coffee and life quality
    improvement.

    I do want to know where my coffee comes from. I do want Tracability for allmy foods if possible. I am physically what I consume. Direct Trade should facilitate tracebility.

    The logistics are very difficult and vary greatly from situation to
    situation but what we are aiming for is traceability, accountability,
    and that people along the way are being fairly compensated wherever
    they are on the chain as long as they add value. Small roasters cannot
    buy direct a full container; most buyers cannot buy a full container
    with micro-lots; most farmers need someone to mill their coffees; most
    farmers will need an exporter/trader/consolidator. Specialty coffee is
    not just a coincidence and not just discovered with a cupping spoon.
    You also need trained, informed, technical people who guide the farmer
    towards quality.

    DIRECT TRADE should be understood as DIRECT CONNECTION between roasters and farmers where both can work together to develop a long relationship, the best coffees, and life improvement, at the same time that the end consumer will be able to enjoy the best coffees, knowing where it comes from, connecting the cup to the farmer, closing the cycle.

    Specialty Coffee is affordable, warms the soul, brings people together, have no boarders, improve Sustainability awareness, connects us all for a better world.

    I really appreciate the DIRECT TRADE buying/roaster partners we have developed along the years that have been of extreme importance to the overall quality of the coffees and of the lives of all our producer partners
    at FAF.

    Marcos Croce

  15. Ray Bowen says:

    Steve, lets face it we all know you ain’t gonna rip the farmers off that’s why we love you and Mrs L…xx

  16. Andi T. Mersch says:

    This topic is of particular importance and interest to me. I really appreciate the candor of Stephen’s first post (and the replies to it following). Sadly, I have felt a similar sentiment over the course of recent months. I am heavily involved in this business model (fortunate to work with a number of great roasters and producers), so very much hope that we can find a way as an industry to make the model work rather than abandoning it or even just abandoning partners within it that we are having problems with.

    I think Peter’s point is spot-on in that it’s not really about the name Direct Trade or Direct Source or whatever you call it*. It sounds to me like you’re going to continue with the purchasing model (and my belief is that it is a long-term growth model for specialty), so whatever anyone labels the business transaction, they’ll still need to navigate ways to manage the challenges.

    Honestly, I really feel Direct Business is like marriage– sometimes it sucks in the short-term, which can be confused as a long-term problem with the whole arrangement. It takes work and commitment (and some head-on metaphorical blows sometimes) to come to a meeting ground that works for everyone to keep the longer-term commitment (and all of the benefits that come with it) in place.

    Anyhow, regarding solutions, let’s hash them out. What are ways that we can all find better protection operating within the model? I still think there are a lot of problems with people jumping in to the model without enough information and understanding of the risks. How do we get everyone on the same page as an industry about this business and what it means to engage in it regardless of how you label it on your packaging and in your marketing materials?

    Andi

  17. Andi T. Mersch says:

    *I proposed some terminology in a recent Roast magazine article on the subject as an aside.

  18. Thompson Owen says:

    Direct Trade is something to tell your customers when they ask if you do Fair Trade coffee : “No, we do direct trade..” followed by an explanation of how it means your are a really good coffee company. It is primarily a consumer-facing idea, and a defensive one in that regard. What you are discussing is that things got a bit tough for you – you thought direct trade meant a reliable partner on the other end and you found, as a maturing company, it wasn’t working. It wasnt working because all the other companies, probably younger, lack creativity and all flock to the same sources as you. This is not an issue with direct trade ideas, which is, in it’s actual practice, about finding reliable people to work with and making stable, long-term mutually-beneficial agreements. It’s about competition of many small buyers throwing money and a few highly publicized and easy-to-contact/easy-to-export sources. Of course, this competition and the lack of diversity among the buyers (and lack of impetus to really go find their own relationships) is bad for coffee farms/mills (doesnt share the benefits of high prices among many), bad for roasters (you, as you make the point in this post), and bad for consumers (who pay too much for a few ridiculous coffees).

    Personally, I don’t care about the language, it’s about the practice. You seem to agree, but then run this sorta false flag up the pole with “direct trade sucks”. It might not suck for someone else, they may be doing very well with their own program. If it sucks for you, based on how you defined it, maybe you should title this something different, about how your own program left you up sh** creek… and really, all it means is that you tweak it a little and move foreward, not really have a bunch of drama and write a manifesto.

  19. Coffeehunter says:

    I wonder if there is really any other product where people spend so much time discussing how it is purchased instead of how it tastes. Craft micro brewed beers are increasingly popular, hundreds of new local breweries producing innovative, tasty, interesing, fresh brews. All about being local, enthusiastic, professional, discerning, visionary. and even rebellious.The specialty coffee business could learn from this innovation and focus on taste and quality. Debate about various methods that quality oriented coffee roasters can secure their green bean supplies is healthy and beneficial. Fair Trade tried to stifle debate and critique about ethics in purchasing, suggesting that their brand was the only one that could be trusted. Every roaster will find what works best for them, and it will not be the same method for every one.

  20. Roland Gifford says:

    Wine springs to mind as a product where exclusivity (and implied direct trade) can be presented as being important. I would expect that a number of other gourmet type foods and drinks have similar debates. I’m only interested in coffee so don’t come across the others.

    Fair Trade present themselves as being best, spend a lot of money doing that, and do it very well. It is difficult, but important, to show customers that a product being sold which isn’t fair trade is also looking after the producer. Grasping the fact that just paying a guaranteed minimum price isn’t the best way of looking after the producer is beyond many people. There are costs to the producer, and the product, of being involved in Fair Trade which aren’t always in the best interest of the product, the consumer or the producer. Shortening the chain from producer to customer is often not in anyone’s best interest either even though it appear to be at first sight.

  21. Samuli says:

    Just a small remark to coffeehunter. The ingredients for beer is bought from western countries and that creates completely different circumstances for the whole trade, the power and vulnerebility is equal for producer and buyer, that doesn’t apply for the coffeetrade. Therefore it gets the attention, as it should i would say but for sure, taste, innovation and quality is what makes the heart beat for most of us.

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