Fair Trade vs. Direct Trade: What’s the Difference?

With the third wave coffee movement and rise of specialty coffee, people have come to care a lot about coffee origin. Not only does this have a profound impact on taste, but knowing who grew the coffee promotes transparency. This helps ensure safe working conditions, fair pricing and more, all of which promotes an ethical, sustainable coffee economy 

In an effort to let consumers and coffee makers know a particular coffee was grown under proper conditions and bought for a fair price, various terms are used (single origin, ethically sourced). Two of the most prominent terms used to promote fairness and stability across the industry are fair trade and direct trade.  

Though they may sound interchangeable, there are important distinctions between the two. But before we dive into what those differences are, it’s important to understand why such terms are important to the coffee industry in the first place. 

Regulating Coffee Price 

In 1962, the International Coffee Agreement (ICA) was createdAmong other things, the ICA helped regulate price on coffee. Every five years, the conditions would be ratified by the International Coffee Organization, the governing body of the ICA. A new ICA would then be passed and continue for the next five years. Though it wasn’t perfect, it helped keep the market balanced while ensuring coffee producers weren’t taken advantage of. 

However, after the 1983 ICA, negotiations between members of the International Coffee Organization began to break down, ultimately leading to the Coffee Crisis of 1989. With uncertainty on the horizon, fair trade certification was launched starting with the Netherlands in 1988.  

Fair Trade 

Fair trade is a certification given to coffee that has been produced under an approved set of standards in an effort to improve transparency, respect and ongoing dialogue. Today, fair trade is overseen by Fairtrade International or FLO. In addition to coffee, FLO offers certification for bananas, flowers, tea, sugar and more. 

Fair Trade vs. Direct Trade

Fair trade helps protect developing countries and their farmers from larger industries while combatting child labor and unethical labor conditions. In order to be considered fair trade, a coffee producer must go through a certification process. If they pass, they’ll earn a fair trade license, and they are introduced to a larger market base. In some cases, FLO even provides some financial assistance to fair trade producers. 

Importers, on the other hand, must pay a fee to join the fair trade market. They are then required to pay a set minimum price when buying coffee within the network. 

Despite good intentions and support provisions for coffee producers, fair trade has faced ongoing criticism. The main point of criticism is that “fair trade” exists more as a marketing term rather than an actual differentiator. Consumers can feel good about buying something with the fair trade label without knowing what, if anything, is different about it. 

Some also see it as an over-commoditization of coffee. Essentially, if you check all of the necessary boxes, it doesn’t really matter about the quality or taste of the product itself. It largely overlooks the taste and artistry of coffee production.  

Fair trade is a step in the right direction. The question is, can we do better? Those who favor the direct trade model believe we can. 

Direct Trade 

Unlike fair trade and similar initiatives, “direct trade” isn’t a true certification or brand. It’s more of a shared set of values and best practices. This can make it a little tricky to truly quantify what direct trade means. The term comes from buying directly from the producers of the company rather than working through a middleman, importer or even an overseeing organization such as FLO.  

This puts the responsibility on roasters and coffee providers to deal only with coffee producers who have safe working conditions and pay their employees a fair wage. When it comes to direct trade, transparency and relationships are the biggest priorities rather than convoluted rules and licensingIt also tends to place a larger focus on the quality of the coffee itself. 

Because there is no system of approval or standardization, direct trade relies on the coffee roasters to be honest and ethical. This has resulted in direct trade roasters being open about the people who produce their coffee and conditions in which they work. Direct trade promotes the grander story behind a cup of coffee. 

However, the only way consumers will know this is if they pay attention to the origin of their coffee. 

What Does This Mean for Coffee Lovers? 

Navigating today’s coffee market can get a little tricky with all of the terms the industry likes to throw around. If you buy fair trade coffee, you can at least know it follows some degree of policies and requirements, even if there is little guarantee of quality.  

Meanwhile, direct trade brands will likely come with a greater emphasis on where their beans were grown and who farmed them. Though there isn’t a larger organization examining the situation, there is a lot of information you should be able to find out for yourself.  

The first step to all of this is to simply pay attention to who made your coffee and where it was grown. 

At 7 Corners Coffee, we only work with ethical roasters who are transparent with their coffee’s origins. These roasters have close relationships with the people who grow their coffee, ensuring they have safe working conditions and are paid a livable wage. 

Currently, we have ONYX Coffee as our featured roaster. To learn more about where their delicious coffee comes from, stop by our downtown Minneapolis coffee shop today! 

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