How Transparent and Ethical Trade Helps Coffee Farmers

I've been writing this Coffeeness blog for more than 10 years and even since "way back when," my main impetus was the idea that I wanted to raise awareness about high-quality coffee. However, at first I wasn't really able to tackle the question of whether high-quality coffee and fair trade coffee were one and the same.

I’ve been writing this Coffeeness blog for more than 10 years and even since “way back when,” my main impetus was the idea that I wanted to raise awareness about high-quality coffee. However, at first I wasn’t really able to tackle the question of whether high-quality coffee and fair trade coffee were one and the same.

Like many people, I assumed that by paying more for coffee, then surely more money would make its way to the farmers that grew it.

However, even coffee bloggers like myself are learning more and more. The first step was becoming more familiar with the different kinds of certifications. What actually is fair trade coffee, and which criteria does it fulfill? I recently interviewed Jörg Volkmann from Elephantbeans, and we discussed direct trade and its connection to coffee (interview available in German only).

Since then, it’s become clear to me that it’s absolutely worth taking a closer look at what coffee farmers actually get back when we buy their coffee.

“Transparency Colloquium” in Hamburg

I recently attended the “Transparency Colloquium” in Hamburg, which was hosted by Quijote Coffee and organized with Professor Peter Roberts of Emory University’s Goizueta Business School. The participants included an international group of people involved with specialty coffee, roasters, coffee buyers, baristas, PR agents and bloggers.

Kaffee und Tranzparenz
Photo: Andreas van Heyden via Instagram: andivanheyden

The main theme was the meaning of transparency, and how to effectively convey that transparency. Some great roasters invest a lot of time in producing transparency reports, which is an excellent step in the right direction. Transparency also gives a lot of advantages to both farmers and consumers.

Of course, we don’t really know who actually reads these reports — their impact seems to be fairly limited. Therefore, two important questions that came up at the conference were: How can we make the concept of transparency more easily understandable, and how can we make it visible?

This article is meant to be a call to action. Ask your roaster and coffee seller: What do the coffee growers get out of it?

“What Do Coffee Farmers Get Back?”

How much money do the farmers earn for every pound of green coffee beans? In fact, please feel free to post the answers that you receive in the comments section below. Professor Peter Roberts even started up the website Transparent Trade Coffee, where roasters can submit their own information. On that site, you’ll also find some of our old friends from my coffee bean reviews, such as Quijote Coffee, Elephantbeans, Cross Coffee, Hot Roasted Love and the Flying Roasters (the last one still has a review pending — their coffee is simply excellent).

What Do the Numbers on the Website Mean?

Green Price Per Pound (GPP) is the final negotiated price per pound (in $US) paid to a farmer or his/her cooperative and represents the price at the point and time of export.

Return To Origin (RTO) represents the percentage of a coffee’s retail sale that goes back to the coffee supply chain at its origin. RTO is calculated by dividing the green price paid to the grower (GPP) by the green-pound equivalent price charged for each bag of roasted coffee. Green-pound equivalent price is calculated by converting posted (online) prices to one-pound equivalents and then assuming 15 percent shrinkage during the roasting process.

Transparent trade coffee


Direct Trade: A Marketing Blunderbuss?

Fair trade and organic certifications have an advantage: They’re each based on a set of criteria and subject to a verification process. I’ve also talked previously about the other advantages and disadvantages of them. However, what exactly is “direct trade,” and how is it used as a selling point?

The core of the problem surely lies in how the term is used. What does direct trade mean? Does it count as direct trade if a roaster takes a vacation in Mexico, or do they need to regularly be on location? If so, how regularly, and what do they need to do while there? Would that even be verifiable?

This topic has interested me for years now ever since I noticed that every different coffee website seemed to have the same stock photo of a coffee farmer with a caption like: “Our coffee farmer, Juan Carlos.”

In the article “Direct Trade Is Dead, Long Live Its Founding Principles,” the author, Nick Brown, does a nice job of getting into the history of the term, looking at the pioneers of direct trade, as well as the gradual corruption of the term by marketing agents. These marketers were only too happy to put the term “direct trade” to work because it sounded good, but they don’t actually care about the ideals of that term.

I’ve personally been watching closely for more than a decade to see what’s happening online with roasters and coffee traders, and the term “direct trade” is becoming more and more common. That’s even the case with “white label” production, which is when the roasters aren’t actually involved in the marketing or sales. It’s certainly debatable whether overuse has actually counteracted the usefulness of the term “direct trade.”

Julius Rathgens from the Institute of Ethics and Transdisciplinary Sustainability Research at the Leuphana University Lüneburg (yeah, the name is a bit of a mouthful) is in the process of making everything more systematic. He gave a presentation at the Transparency Colloquium, and in it he described how he had researched who exactly had worked with — or, more to the point, advertised with — some form of the term “direct trade.”

His first count tallied 97 direct import coffee roasters or traders in Germany alone. To be more precise, 97 roasters that call themselves direct traders.

Based on his survey, of those 97 roasters, 20 percent had never even visited a coffee farm. That number even excludes social desirability factors (if I understood that part correctly), which means that the percentage may be even higher. So if you laughed a bit when I mentioned the “vacation in Mexico” above, then these numbers might not seem too funny anymore!

Transparency as a Way Forward

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As a blogger, I always try to bundle and condense information so that it’s more understandable for my readers — and for me, as well. I think that direct trade and the foundation it’s built on are great things. However, those who use the term as a marketing blunderbuss make the term lose its meaning

What’s more, “direct trade” isn’t the only path that leads to good and fair coffee.

What can you do as a buyer to understand which companies actually walk the walk? That’s not so simple. I believe that transparency is a first and very important step toward getting a clearer understanding of where things currently stand. One thing was very clear from the scientists’ presentations: There’s very little research currently being done on this topic, and the numbers that we do have aren’t very reliable. It’s also clear that the data from a country like Kenya must be interpreted in a completely different way from a country like Guatemala.

Transparency leads to a clearer overview of everything, from the farm to the end user, and also gives us a good starting point to attempt to solve problems. Transparency in and of itself won’t actually solve those problems, but it does let all interested parties have more knowledge of what’s happening.

Fear of Transparency

If you look on Transparent Trade Coffee to see the values that companies have entered under “Green Price Per Pound” or “Return To Origin” percents, some things become clearer. Many industrial coffee roasters apparently didn’t want to add their own data. That doesn’t necessarily mean that they use unfair practices, but it’s very striking to compare them to the suppliers that actually did add their data to the list.

What kind of company would willingly add their name to the list? Well, it’s likely the ones that buy extremely high-quality coffee for very affluent consumers. However, I definitely wouldn’t recommend going only by black-and-white numbers. Basically, anyone who has added themselves to a list like this can be considered one of the “good guys.” However, there are lots of factors and calculations hidden behind those simple-looking prices and percentages. The roasters would likely be happy to tell you more information if you ask.

Some coffee beans that may look good on paper should also give us pause, especially since many of these key parameters are simplified. For example, if you see that only 20 percent of profits actually make it back to the source country, then that does admittedly look bad. I can understand how even a person who buys cheapo coffee at the supermarket might be annoyed by that figure. Of course, if you buy that cheapo supermarket coffee, then even less than 20 percent will go back to the coffee growers. Unfortunately, that’s not something they write on the packaging. Sometimes you can’t even tell which continent a particular kind of coffee comes from.

A Shiny Distraction

If you’ve watched the growth of specialty coffee cafes (another empty catchphrase that deserves its own article), then you might actually think that we’ve made some progress. However, what would the coffee growers themselves say? I fear that my earlier assumption of “if I pay more, then the growers get more” is likely outdated and incorrect.

Impressive, shiny equipment and even-more-impressive hipster mustaches are just one side of the coin. Cheap coffee, transparency freeloaders, and the K-cup coffee craze are the other side. Additionally, when you read that Starbucks has now sold its distribution license to Nestlé, well, it’s hard to stay optimistic.

However, there are still the “good guys.”

Photo: Andreas van Heyden via Instagram: andivanheyden

Many of the good guys were at the Transparency Colloquium in Hamburg. There was an upbeat, constructive atmosphere, and I’m excited to see what happens next. The mood was optimistic, there was a lot of desire for change and realignment. There was even some outstanding beer from the craft brewer, Olli.

So go to it! Ask your roaster or seller: “What do the coffee farmers get back?” Then post their answers in the comments section below. Of course, it would also be interesting to find out which ones come up with flimsy excuses or don’t answer at all.

  • Featured Article Photo from Andreas van Heyden via Instagram: andivanheyden
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