Direct Trade Explained

The key drivers to what is rapidly becoming a "mad rush" to source Direct Trade products have been partly due to the following situations:-

  • price volatility having negative impact upon farmers - this creates consequential origin issues whereby whole communities are adversely affected when farmers cannot receive a fair and reasonable price for their crops. The situation has escalated where some regions have effectively withdrawn coffee from sale due to supply and demand factors. Recently, Colombian coffee farmers went on strike to protest the government and local country Coffee Boards not doing enough to protect their livelihood.
  • A desire for industry players (the hundreds of so-called Specialty Coffee Roasters around Australia) to appear as "leaders" by creating exclusive or differentiated products in what has now become a confusing, un-structured and saturated specialty coffee market!
  • Exaggerating the social benefits of Direct Trade by attempting to leverage the conscious of buyers - mimicking programs like FAIRTRADE, etc.

If we look at the evolution of the quality coffee segment, we have seen the trends grow from Premium Single Origin, single estate microlots, traceable and sustainable coffees to a natural transition of Direct Trade linking the roaster to the farmer.

In theory, this sounds fine, however, all is not what it seems and the stated benefits of Direct Trade are not always available.

In our previous articles published during 2012, we explaining the Direct Trade practice by outlining our own personal objectives associated with Direct Trade sourcing.

In late 2011 and for most of 2012, we experienced haphazard supply of coffees from PNG.

Issues with a primary processor (and a major export group) at origin forced us to re-think our options.

For us, engaging in a Direct Trade arrangement was seen as one strategy to resolve supply fluctuations and at the same time ensure that quality and consistency was maintained - well, at least that was our intended goal.

It had nothing to do with cost or conscious - purely an attempt to ensure supply.

Initially, the Direct Trade program operated successfully, however, after a few months we once again experienced sourcing and quality issues.

In reviewing the situation, we came to the conclusion that our arrangement with that Direct Trade supplier was not meeting our objectives and we faced additional risks and issues that would normally be managed by a local Australian broker - so the perceived benefits were not realized.

Recently, there have been an increase in the number of Origin brokers attempting to establish direct contact (and relationships) with Australia roasters.

We see these origin brokers falling into 2 separate categories:-

  • Opportunistic - suppliers at origin attempting to secure higher pricing for their product or offloading excess inventories by effectively bypassing one or two sets of brokers (export and/or import).
  • Quality focused - origin partners with considerable pride in the quality of their products and seeking to avoid their high grade crops from being soaked up by local co-ops only to be blended and diluted with other lower grade coffees to make up a standard.

It is the Quality-Focused origin partners that are stimulating our interest - creating a situation whereby we can access some of the Origin's finest qualities ahead of the large brokers and coffee traders diverting these prime coffees off to other destinations. 

Roaster's Notes

I have to be brutally honest and state upfront that over the last few years our affection for the coffees of Brazil had waned - for no real reason at all.

Yes, it's true that with such a vast array of coffees to sample from more than 20 origins, we were in fact being distracted by Ethiopia, Tanzania, PNG, Colombia, Guatemala and seduced by the many quality Central American microlots from Costa Rica, El Salvador, etc.

Whilst Brazil has always remained our #1 in terms of volume, we found that the emerging trends in specialty coffee were pulling us towards acidic, fruity coffees and hijacking the majority of our mind share.

I've had a "born-again" experience with Brazil coffees recently. This was sparked by the high grade microlots now being made available within Australia by brokers.

Recently, we have roasted Cambara and Cerrado naturals that were amazing. Minas Hill sold us one of their top-shelf coffees - Specialty Matas de Minas "Cachoeira Alta Farm" Lot# 02 Pulped natural that has been the most amazing coffee we have cupped in more than 12 months. The Matas is a rock-star coffee with a price tag to match, but it does underline a very crucial point - Brazil can match it with the best !

This week Marcelo from Minas Hill dropped in a new arrival - Espresso De Minas Volcanic Blend.

The Volcanic blend is from a single farm in Cerrado growing the coffee inside a large volcanic crater, the rich soil provides a unique flavor.

The beans are processed using two different methods which combine together to make the blend, offering complementary characteristics that enhance the finish.

This coffee further extends our firm belief that high quality Brazil coffees provide exceptional flavor and a beautifully balanced cup profile.

After drinking these high quality Brazils over the last month, I am personally finding it quite difficult to enjoy other origins - such is the powerful and memorable cup character.