Have you ever noticed your daily caffeine fix tastes that little bit sweeter when you know the coffee has been ethically sourced?
The term “direct trade” has cropped up all over the place in specialty coffee in recent years and, on the face of it, would seem to imply just that.
But what does “direct trade” actually mean? And has anyone — let alone coffee farmers — really benefited from it?
In the final episode of series 3, James takes Scott and Jools on a journey into how coffee actually gets traded.
Chad Trewick from the Specialty Coffee Transaction Guide shares his first hand experience of being in the direct trade vanguard. Chris Kornman, author and Director of Education at The Crown, explains the rise of evangelists with the mantra of cutting out the middle men. And Erica Koss, co-author of the Specialty Coffee Association’s sustainability course, reveals some of the limitations of the direct trade ideal.
And, as a parting gift for the summer, James offers tips on how YOU can identify those roasters who are trying to do right by the farmer.
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Learn more about the intricacies of coffee trading with Chris Kornman’s book, Green Coffee: A guide for Roasters and Buyers (https://bit.ly/3Ilx7Jg) and also by visiting the Royal Coffee blog (https://bit.ly/3Au5FY5).
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Scott Bentley: Dear listener, just before we kick off the show, I want to let you know about a survey we've put together. We want to create the best episodes we can, so I would really appreciate it if you could give us five minutes of your time and fill that out. Also, we're looking for a freelance audio producer to work with us on Adventures in Coffee.
So, if you would like to work with Jools, James and myself, check out the link in the show notes. And now, on with the show.
Welcome to Adventures in Coffee, a podcast about the caramelised and sometimes peanutty world of coffee.
This last episode of series three is brought to you by the Ikawa Home Roasting System and Siemens Home Appliances.
James Harper: Now, here on Adventures in Coffee, we serve you surprising coffee stories to open your taste buds and your mind, and try to inspire you to have coffee adventures in your own kitchen.
Jools Walker: Yeah, I'm Jools Walker, also known as Lady Velo on other parts of the internet. I am a bestselling cycling author, a digital content creator and, of course, your very everyday coffee lover.
Scott Bentley: My God, Jools, you must have your own personal milner the amount of hats you wear!
Jools Walker: Juggling baby!
Scott Bentley: My name is Scott Bentley. I'm the founder of Caffeine magazine. I'm also an art director with my agency, Bentley Creative.
James Harper: And I'm James Harper, a professional podcast producer, coffee professional and the founder of the Filter Stories coffee documentaries podcast.
[Musical interlude]
James Harper: Brethren. We are gathered here today to hear a tale of morality, obfuscation and all round head scratchiness.
Jools Walker: Oh, big words today from Mr. Harper. My God.
Scott Bentley: Did you swallow a dictionary this morning, mate?
Jools Walker: He's going out on a bang. This is what we're doing with the last episode. We're going out on a big wordy bang.
James Harper: No. OK, listen, listen. I want you to know that I have absolutely loved making this episode, because at the heart of it is really the question: How should a coffee company source their coffee ethically? And at the end of this episode, I'm going to give you tips on how you can identify the coffee roasters who are trying — trying! — to be more ethical.
Scott Bentley: These are quite lofty claims. I think that you're bringing to the table here. But talk to me — how are we going to actually run this episode?
James Harper: OK, right. So this entire episode revolves around one phrase. And that phrase is: direct trade.
Because, at one point in the world of coffee and even today, everybody was talking about direct trade. Scott, I know you were talking about direct trade. I was talking about it. But anyway, I'm going to set this up like this: A couple of months ago, we were at the London Coffee Festival, where I incidentally also caught COVID…
Scott Bentley: Let it go, James! We've all caught COVID at one point, mate.
Jools Walker: We’ve all been there.
James Harper: I know, but the reason I caught COVID is because I was walking around the show speaking to literally a hundred people, I had a microphone in my hand, I was going up to unsuspecting coffee lovers at the show…
I'm doing some vox pops. I'm from the podcast Adventures in Coffee. And I want to ask you a question, anonymously, of course.
And what I did is I asked this almost, like, series of questions. But this is how it went. My first question…
So what is direct trade?
What is direct trade?
Have you ever heard of the term direct trade?
Jools Walker: OK. What were the answers?
James Harper: Well, interestingly enough, most people didn't have a fig.
Scott Bentley: Didn't have a what?
James Harper: A fig.
Scott Bentley: A fig! Is that a figging clue?
James Harper: Sure, sure.
What is direct trade?
LCF Attendee 1: No clue.
LCF Attendee 2: I have no idea what direct trade is.
LCF Attendee 3: It means buying coffee that is direct from the farmers. That's… am I wrong?
Scott Bentley: Did you find that most people, like two out of three people, said they didn't know?
James Harper: I would say most people didn't know. And then I give them a bit of context.
It refers to the sourcing practices. So, how a roaster buys their coffee.
Pretty stock standard stuff, right? How a coffee roaster buys their coffee — that's direct trade. Alright, here's my hypothetical trap…
Imagine you buy a bag of coffee from a roaster, OK? And one bag says “direct trade”, right? And the other bag says, “bought from an importer who bought from an exporter”. Which would you rather buy?
Scott Bentley: You’re a naughty man, James!
James Harper: Which would you rather buy?
Scott Bentley: Yeah, I know that this is all…
James Harper: All right, well, you shut up. Jools, what would you rather buy?
Jools Walker: I'm not falling into your trap! I'm not having that — I've been around you too long to know better.
LCF Attendee 1: I would probably buy direct trade.
LCF Attendee 2: I would probably buy the direct trade one.
LCF Attendee 2: Direct trade, because, um, wouldn't it benefit the coffee farmers much more?
Scott Bentley: I think that's obvs…
James Harper: OK, so, here's the kicker. Because, in this episode, I'm going to show you how coffee actually gets traded. Even direct trade coffee — quote, unquote. And when you understand how direct trade coffee actually gets traded. You're going to feel a little bit like these people did when I actually explained it to them at the show
LCF Attendee 1: I feel kind of cheated a little bit. I feel a bit misled. Yes, absolutely.
LCF Attendee 2: Oh, OK! That's confusing.
LCF Attendee 3: Then I would believe that's false advertising.
LCF Attendee 4: That's a bit deceiving.
LCF Attendee 5: A bit deceiving, yeah. Taking advantage of that word.
Scott Bentley: Come on James, take us on the journey, man.
Jools Walker: Do you know what, James? Before you do, I think we might need to hear a quick word from our sponsors.
[Ad music begins]
Jools Walker: And it's time to take a coffee trip with Siemens Home Appliances.
Scott Bentley: Where are we off to today, Jools?
Jools Walker: Scott, we are off to Cauca in Colombia.
Scott Bentley: Now, this coffee is named after the cooperative Comepcafe, and this is roasted by our very good friends Bailies in Belfast in Northern Ireland. So, tell me, why this coffee?
Jools Walker: So, Scott, I've chosen this one because the families who contribute to it are of indigenous and Afro Colombian origins. Now, one of the sad things was food insecurity for this community. I mean, they were earning less than $1 a day and food was actually being trucked in from quite far away only once a week.
Scott Bentley: I mean, I know what it's like only doing our shopping once a week — you run out of stuff very quickly.
Jools Walker: Yeah. Do you know what I'm saying? But the NGO Food For Farmers recently helped them develop home gardens. You know like what we were talking about with the Sri Lanka episode?
Scott Bentley: Right, yes, I see.
Jools Walker: Then they ended up with so much more fresh and nutritious food they were actually able to donate it to nearby communities and continue growing delicious coffee.
Scott Bentley: OK, Jools, tasting time. We're going to taste this coffee on the Siemens EQ700.
Jools Walker: Alexa — ask my coffee machine to make me an espresso, very strong.
Scott Bentley: Jools, why are we drinking this extra strong?
Jools Walker: Because this is actually quite a light roast. So I wanted to pull out as much flavour from this as possible.
Scott Bentley: So, what are you tasting, Jools?
Jools Walker: Well, I was getting notes of, sort of, chocolate from this.
Scott Bentley: I get an orangey citrus.
Jools Walker: Mmm. And there was another thing that was quite floral for me. I don't know if you can put your finger on it.
Scott Bentley: I didn’t! Tell me, tell me.
Jools Walker: Elderflower.
Scott Walker: You've got a far better pallet than me, Jools.
And that was a coffee trip by Siemens Home Appliances.
[Ad music ends]
James Harper: To start us off on this journey into the world of direct trade, we kind of have to understand some basics. How does coffee go from the farm into our cups? And listen, it's simple. Scott, do you care to explain this?
Scott Bentley: OK, look, really simple high level, but as I understand it: Farmer grows the coffee, somebody comes and picks the coffee up, pays the farmer, it gets sent to an exporter, the exporter puts it on a ship, the ship docks in the country that it’s going to be roasted in. And then the roasters buy it off of that company.
Jools Walker: I wish we could put the Countdown music in the background of Scott saying that, as well. Da-da, da-da, da-da-da-da, booo!
James Harper: Now, listen, for hundreds and hundreds of years, that's basically how coffee was traded. Now, the thing is, it all came to a head in the ’90s. This is when things started to go quite wrong for the coffee farmer. For a whole bunch of reasons, coffee prices began crashing and many farmers living in poorer countries who actually grow coffee, you know, went into debt, bankruptcy — it wasn't pretty! So, now I want to introduce you to somebody who I spoke to for this story who has seen the coffee industry change over the last 30 years.
Chad Trewick: My name is Chad Trewick. I work for a company I started called Reciprocafé. It is a consultancy in the specialty coffee space, focusing on reciprocity and mutual benefits throughout the value stream.
James Harper: OK, so. It's the ’90s, coffee prices crashed. And I think it's fair to say that coffee farmers had an extremely hard time. But if you were a coffee roaster at the time, Jools, and you rang up your importer being like, “Oi! I need some beans, whatya got for me?” Chad suggested that there were very few people who would've asked the hard questions for you to understand what the situation is on the ground for farmers in the ’90s.
Jools Walker: OK.
Chad Trewick: Can you tell me the FOB price? Is there any certification involved? What do you know about whether farm workers get minimum wages? Those questions were just like omitted from the whole conversation.
Jools Walker: So, those are important questions, right? So why were they just left out, omitted, from the conversation?
James Harper: We couldn't have asked those questions, because it would've been impossible to get answers for our questions. Because the reality is, coffee roasters back in the ’90s — with this really dismal situation in the coffee growing world — the coffee that they bought, it was a big fat blend from a lot of different regions.
Scott Bentley: So, they didn't know how much the farmers were getting paid because every farm was probably getting paid a different amount for different coffees at different grades that was all just being lumped together.
James Harper: I mean, absolutely. We didn't know. And I'll prove this point again, right? So, I spoke with Erica Koss, who actually co-authored the Specialty Coffee Association's sustainability course. She was a barista back in the ’90s.
Erika Koss: At that time, we would see bags that were named “Kenya” or bags that were named “Sumatra”. But there was nothing like now where, you know, there would be a specific cooperative or even a specific farmer's name.
Jools Walker: So, if you didn't have that information, I suppose there was no way that you could really ask those questions. So what you were just saying — if that information was not available, and you weren't informed enough, you couldn't ask if the farmer was actually getting well treated, you wouldn't even know who it is that actually grew your specialty coffee, as well. The info's not there.
James Harper: Absolutely. But this is when things started to change. The news stories were flying around about the situation in coffee growing countries. There are many news reports about this. And so consumers were like, “Whoa, what the hell's going on here? We know things are bad, and I'm buying coffee and it's directly linked to the badness that's happening on the farm level”.
And for Chad, this grew and grew and grew, and it kind of exploded. For him, he sees a moment, in 1999, during the Seattle protests against the World Trade Organization meeting.
Chad Trewick: Where, at the World Trade talks in Seattle, demonstrators started to throw rocks through windows at Starbucks and, you know, telling them they were buying sweatshop coffee. And I really think at that moment, it's when the industry sort of had to wake up and go: “Whoa, OK. We're not even imagining that our companies ourselves might be paying these, you know, sweatshop coffee prices”.
James Harper: So, by the early 2000s, this is like a pressure cooker, which has been building and building. And then, this thing called specialty coffee had been created not long ago and, you know, specialty coffee, good tasting coffee, coffee that we all like to drink. And companies who were in specialty coffee were like: “Aha, we can't keep doing business as usual. We need to change how we source our coffee”. And guess who they singled out? Who do they think in the supply chain that was making everyone's lives miserable?
Jools Walker: I'm guessing the person that comes in between them and the coffee?
Scott Bentley: Yeah, the big — air quotes — middleman.
James Harper: Exactly. So I found somebody who has seen this whole transition. Right now he works for Royal Coffee, which is an importer, but back then he worked somewhere different. And his name is Chris Kornman.
Chris Kornman: And I'm the director of education for The Crown. It's Royal Coffee’s lab and tasting room in Oakland, California. And I'm a recently published author of a book called “Green Coffee: A Guide for Roasters and Buyers”.
James Harper: I find it quite funny, actually. So back in the 2000s, Chris worked in specialty coffee cafes and, you know, the middleman — in air quotes — in these stories that were being passed along around, you know, the middleman, where every time someone tries to explain the situation, they amplify it and simplify the problem. And so by the time Chris heard it, in the early 2000s…
Chris Kornman: It was told to me as a young barista, early in my career, that we were being swindled somehow by these people who were taking massive cuts from both the roaster and the farmer. And so all the real value of the coffee was being captured at the centre of the supply chain by these white dudes in suits and ties who were also making big trades on the market or whatever. It was very villainised — you know, these fat cat traders.
Jools Walker: It does sound like a villain from a film or something. The description of them: The bad guys.
James Harper: Exactly. So, traders, the middlemen — they're the problem. And guess what is the solution?
Scott Bentley: It’s direct trade, of course, isn't it. Let's just pay the farmers a good amount of money and we’ll cut out the middlemen.
James Harper: Cut out the middlemen! How dare they stroke their cats on Wall Street, making all this money off the poor hardworking farmer? And when it comes to direct trade, there were many companies talking about doing it, essentially cutting out the middlemen. But a couple of companies in America, in particular, became huge, purist, puritanical evangelists for it.
Chris Kornman: Stumptown, Intelligentsia and Counter Culture were probably the big three.
James Harper: And now Chris began working at Intelligentsia, one of those big three puritanical evangelists for direct trade — cutting out the middleman.
Chris Kornman: They needed some way to describe that what they were doing was also, like, ethically and businesswise, better than Starbucks. And recognisable labels carried by Starbucks and the like at the time included something called FairTrade. So, direct trade, which, you know, the language obviously sounds very similar, was meant to capture people's attention and sort of level up, and be like, this is better. This is better than fair trade, right?
James Harper: Direct trade — it captures the attention, right? It sounds like FairTrade, but it's more direct than that.
Scott Bentley: It's a great piece of marketing.
James Harper: So, yeah, direct trade now starts kind of percolating through coffee roasters. Now, I found that piece really funny. So, in the mid-2000s, right, so Chris, he's at Intelligentsia, they go really gung-ho on cutting out the middlemen as far as they possibly can. And so they not only… we're gonna figure out who exactly grew their coffee and negotiate as close as they can to those people who grew their coffee. They were also going to handle the shipping of the coffee themselves.
Chris Kornman: Intelligentsia actually went out and got their own import licence while I was working for them. And so they were doing direct facilitation of logistics involving, you know, freights and cargo and ocean liners and all this stuff.
Jools Walker: OK, Jools wants to question this. Why get involved in the shipping side of things as well?
James Harper: Because there was such this, like, vilification of middlemen, that, you know, “They're the fat cats — everything they're doing is making the coffee farmer poorer. So if we cut them out, we and the farmer can share the spoils between us, without them”.
Scott Bentley: I mean, that's quite amazing, isn't it! They're going to buy their own ships. Are they going to hire the captains for these ships? They're going to hire the crew…
James Harper: I think it’s important to clarify. They're not starting shipping companies, they're just doing the shipping logistics, right? These are other companies they're working with. But anyway, the point is this: They became, essentially, coffee importers, working with shipping companies directly.
Scott Bentley: So, they're not cutting out the middlemen at all? Because they're using a shipping company.
James Harper: Yeah, well, quite, quite.
Scott Bentley: That's not direct though, is it! You're basically using somebody else. I thought the point of direct trade was like, “I, the coffee roaster, buy beans from you, then I stick them in my rucksack and I jump…
Jools Walker: … take them over to the dock, yeah! Then I load up my ship…
Scott Bentley: Yeah, and then I swim all the way back home”.
James Harper: We'll come back to that later, but for many reasons that is an impossible model. And I'll explain why a little bit later. But one thing I do want to mention is that there were many reasons that companies would want to do a direct trade kind of thing, OK? There are many business benefits to this. For one, Chris told me that, you know, Intelligentsia would get first dibs on the best coffees on the best farms.
Chris Kornman: You also get access to coffees before importers might.
Jools Walker: OK. That makes sense.
James Harper: And coffee roasters really loved the fact that they could claim they were doing direct trade because the PR was amazing, right? So Chad Trewick, from earlier, he worked at a company — he was actually sourcing coffee for this company — and they managed to source coffee from one specific farm, right? — again, a version of direct trade. And they shouted from the rooftops about it. They were like, “Hey, look at us!”
Chad Trewick: We were cultivating relationships with people, with humans, at that farm and be able to tell our own stories about interacting with those people, seeing what the land looked like.
James Harper: “We are not buying coffee from those slimy middlemen. We are sourcing our coffee ethically”.
Scott Bentley: You dropped the ethical bomb.
James Harper: I did. So this is it. By the late 2000s, many coffee roasters from around the world are using this term direct trade — they're jumping on the bandwagon, they're shouting about it. But now, listen, there are a lot of problems with direct trade — a lot of problems. I mean, if I were to write, on a scroll, the list of problems for direct trade…
Scott Bentley: Would you be using a quill, as well?
James Harper: With my Quill and my plumed hat…
Jools Walker: …With your big words, as well!...
James Harper: … That scroll would go out of my window, into the middle of the street. It's that long.
Scott Bentley: Right.
James Harper: But, to keep things simple, I'm going to give you my top three. The first big one: Let's say you're a coffee roaster. Let's say you're doing the Intelligentsia thing. You are handling the transportation yourself. Now, if you're handling the transportation yourself, you’ve got to fill a container at the country which grew the coffee. How much coffee can you put in a container?
Scott Bentley: I think it’s probably something in the region, of, what is it, about 20 tons of coffee will go in a container?
James Harper: Yes, 20 tons of coffee can fit into a container.
Scott Bentley: So look, if you've got a container and it holds 20 tons of coffee and you have to pay a certain amount of money to transport that coffee, but the problem is that you're only going to put 10 tons of coffee in there, essentially every ton of coffee is going to cost twice as much to transport as it would if the “bad middlemen” filled the rest of that space up with other coffee for other people.
James Harper: Exactly.
Scott Bentley: And so, actually, the landed coffee comes to your roastery at a much higher price.
James Harper: Correct. And to take it to its extreme example — so, Chris Kornman told me about a time that he was in Brazil, he was buying coffee for Intelligentsia, and he found some tiny quantities of just some of the most outstanding Brazilian coffees he'd ever tasted.
Chris Kornman: And we tasted them all and loved them and could not figure out for the life of us how to get them out of the country. Like, how do we even buy these coffees? It just wasn't possible that year.
Jools Walker: Yeah, the logistical nightmares begin.
James Harper: They couldn't fill a container, and if they can't fill a container…
Scott Bentley: …got to go in an aircraft. And if it goes in an aircraft, your carbon footprint goes through the roof.
James Harper: Well, quite, quite. But also, it's really expensive.
Jools Walker: Yes.
James Harper: OK, now, here's the second big problem doing direct trade in this very puritanical model. Remember how Intelligentsia said that they could be the importer themselves, right? And in doing so cut out the middlemen — because the middlemen were making all the money — so, “if we get rid of the middlemen, we can make the money”. But that's absolutely not true.
Chris Kornman: It’s a massive headache. It was a super sloppy mess. And we learned a lot on our feet for a couple of years there. And I don't think that we actually ended up saving any real money. You know, of course, I've come to realise, in fact, the importers’ margins on coffee are pretty slim. So it's a game of volume for the most part for traders.
Scott Bentley: I mean, it's that whole thing where somebody will say, “Well, why should I spend £1,000 on an iPhone? They only cost £200 to make”. And it's like, yeah, the materials and the labour probably does only cost £200, but you go and find a factory, and then you go and find the workers, and then you go and find the shipping, and then you go and find the distribution and the packaging, and then you try and make it for less than £1,000. You won't.
James Harper: Absolutely. Alright, so that was problem number two, here's problem number three. So, Jools, let's say you create Lady Velo Coffee Roasters. And you think, you know what? I really want to offer my customers some Kenyans, and I'm a direct trade purist, OK? I'm going to buy coffee directly from a Kenyan farmer, OK? Walk me through how you would get that coffee. What would you do to get that coffee?
Jools Walker: Well, I’d connect directly with the farmers that I want to work with. And then I guess I have to work out the plan of getting hold of that coffee and then flying it out from Kenya. Which I know you're going to tell me… no!
Scott Bentley: Well, absolutely. The thing is though, firstly, how do you find the farmers? Because maybe they’ve already got contracts with other people.
James Harper: Peeps, peeps, peeps. Even if you find the farmer…
Jools Walker: Yeah…
James Harper: Let's say you book a flight to Nairobi, right? You land in Nairobi, you hop in a Jeep, you go to a coffee growing region, you meet a coffee farmer. Yeah, granted, there are many problems with that, because they grow very small lots of coffee, etc. etc. But, let's say you meet one farmer and you're like, “I want to buy this person's coffee”. They literally give you a bag of coffee cherries, right? And you give them money in exchange, right? Does it get more direct than that?
Scott Bentley: Um…
Jools Walker: I’m guessing…
Scott Bentley: I'm guessing, no — I think that’s about as direct as you can get, isn’t it?
Jools Walker: Yeah…
James Harper: OK, OK. So that's direct trade, right? In its pure form.
Jools Walker: Pure form, yeah.
James Harper: Here's the rub.
Erika Koss: Depending on when you air this podcast, it's actually not legally possible for someone to do that in Kenya. So, if anyone were to literally do that scenario that you just narrated, they would be violating Kenyan law.
Jools Walker: Of course something like that was going to be the answer. Of course it was!
James Harper: But of course.
Jools Walker: What is the barrier? Why are you legally not allowed to go and do that?
James Harper: So, I actually did ask Erika that question.
Erika Koss: This hearkens back to colonialism. So, the British government was specific about the fact that indigenous Kenyan peoples could not farm their own coffee. And then, once things started to build toward independence — in the case of Kenya, this was 1963 — some of those started to change. So, for example, in the 1950s, Kenyan law did start to change where indigenous Kenyan peoples could then farm and harvest and have some benefit from their own coffee. But the structures, such as the Nairobi auction, such as the ways that the marketing scheme is created and is still with us in Kenya, these are still there. But this is actually a conversation with the Kenyan parliament right now about, you know, will this change and what will that look like? So, Jools, you asked a question, there's your answer?
James Harper: But let me drive the conversation back to these direct trade purists who were doing — quote, unquote — direct trade. The coffee industry, these direct trade purists, they villainise the middle man. And the thing is, they were right to, because sometimes there are — for the record, there are — bad middlemen out there, you know? The old school exploitative Wall Street traders who corner the coffee market or the coyotes. A coyote is someone who goes up to your farm and they buy your coffee for the cheapest they can get away with. And you just wanna get the coffee off your farm. You get pretty poor payment for it. And then they make good money when they sell it onwards to, let's say, an exporter.
Scott Bentley: The other stories I've heard are, people will come to your farm and they won't even give them money there and then. They'll say, “We'll go and analyse your coffee and we'll give you how much it's worth”. And then they take it away, they look at the coffee, they realise it's quite good coffee, they give it a grade and a score, and then they come back to the farm and go, “It wasn't very good. It was pretty bad, so we'll give you this, but that's all we're going to give you”.
Jools Walker: Ahh. Dodgy.
James Harper: I've heard that story a few times.
Scott Bentley: So, what do you do? Do you say, “Oh no, I want my cherries back”?
Jools Walker: Yeah.
James Harper: That's the complication. There are middlemen who do things that are not good for farmers. That is a fact. But, to villainise all middlemen and exporters and importers, etc., is kind of not fair. And so, I like Erika Koss’s take on this, on the role of the middleman,
Erika Koss: Direct trade implies that all these people in the middle aren't valuable. And they are valuable because farmers don't want to deal with tax and customs documents. And cafe owners and baristas are busy doing the work of the cafes and the baristas. So they don't want to think about it from that side either, right? So, I'm trying to honour the fact that there are a lot of exporters and importers, and all of these people who are involved in transport and storage — their work is vital. And if it wasn't for them, we wouldn't have the pleasure of having a menu of coffee when we walk into these cafes.
Scott Bentley: I think the other thing that a lot of people don't realise, the very valuable work that importers do, is they give you essentially a whole library of coffee that roasters can pick and choose from. And those roasters don't need to kind of buy a specific coffee all the time; they buy from the importer and the importer takes on all the risk. The other thing is that they've bought all the coffee up front, and if a roaster only wants to buy one bag today, and then maybe in a couple of weeks wants to buy another bag, and then maybe in a month or two wants to buy another three bags, they're not having to fork out all of the money up front. So, the importers are essentially becoming a bank for small roasters.
Jools Walker: Yeah, there is a lot of dunking that happens on middlemen, middle people, but they do serve a useful purpose, so long as it’s all being done correctly..
James Harper: Absolutely. So, if I may offer you my final criticism. I mean, as I said, my scroll with all these problems is now on the street being run over by buses and cars.
Scott Bentley: Dogs are weeing on it.
James Harper: Dogs are weeing on it. But let me give you my final point of criticism for direct trade. So, you know, as the 2000s wear on and we enter now the early 2010s, the thing is everybody starts using direct trade. Even a roaster I used to work for, they basically did what you just described, Scott. They bought coffee off an importer’s shelf. They rang up the importer, they were like, What you got for me today?” And they said, “We’ve got these coffees for you”. And they went, “Great”. That roaster, I went on the way-back machine, back in 2012, when they started up, they said they were direct trade, but that's how they got their coffee.
Jools Walker: I'm going to ask the question now: What does direct trade even mean here, in this context, then? Because it just feels like it's getting murky again, James.
James Harper: That's the point, that’s the point! Nobody knew anymore.
Chris Kornman: Direct trade was invented by a whole bunch of different roasters, who all had different definitions for it. And so, the central premise is that trade is occurring directly between roaster and supplier — let's say farmer, to simplify it. But, that's not necessarily the case, and literally everyone that's doing it is doing it a little bit differently.
Scott Bentley: This again comes back down to the fact that somebody makes up a term, which sounds like it's doing really great things, but doesn't define the term, and we get to this whole greenwashing thing, don't we.
James Harper: Yep. Now, here's an interesting thing too, right? So, if we were to just take a step back and reflect, the way that coffee changes hands through the supply chain, nothing's really changed that much. And I asked Chris Kornman point blank.
So, Chris, if I were to look at how coffee was traded, let's say 30-odd years ago, right? And if I'm a coffee roaster based in America, I call up my importer and I’m, “Oi! What you got? I need coffee”. And they're like, “Well, I've got this coffee here, got this coffee there. It's sitting on the shelf, it's already been cleared through customs, all the rest of it — we'll ship it to you”. Right? That's how it was done if you were a roaster. Today, is it any different?
Chris Kornman: Materially, no. It's exactly the same. The average roaster, our Royal Coffees average customer calls us up any day of the week, and they're like, “We're out of X amount of bags of X amount of coffee origins — what have you got?” We tell them what's in our warehouse and then we ship it.
James Harper: The point is, the way coffee has been traded historically, and today, hasn't really changed, right? Coffee roasters these days ring up their importers and say, “What you got?”
Scott Bentley: The only way it's changed is that rather than all the coffee at the source gets put into bags, which no one really knows what's in that coffee, and then gets put on a container. They now put it into smaller bags and label those bags with exactly where the coffees come from and who grew it. But they still put it in the same container, and they still stick on the same ships, and it still comes into the same countries, and it still sits in the same warehouses.
James Harper: And over time, what you would've noticed, Scott, when you got into specialty coffee as did I, what, 10-odd years ago, in the early 2010s, direct trade as a term had begun to die out.
Chris Kornman: The term has been so abused, I think, and just used ubiquitously without strict definitions. You know, at one point, Counterculture, they got a third party to certify their coffees as direct trade. They were so concerned about the integrity of that phrase. And after a while, it just wasn't even worth it to do that anymore. The term is like the word “natural food” or whatever. It's like, it's not necessarily a bad term, it just doesn't mean anything.
Jools Walker: OK, so, James, this is where I think we are at with this. You did say when you took us on this journey at the very top of the episode that the coffee farmers ended up getting quite a raw deal historically, and of course that's pants. Everything's anonymous, you know, there's no way to ask questions and make sure that the farmers are actually being treated correctly. So there's a backlash against the old school way of trading coffee. So then everyone hops on direct trade, right? They start using the term, but then that in itself starts to cause problems. That ends up dying out itself. But things have changed a little bit. So, today we know who grew our coffee, for example, we know the elevation of it, etc. etc.
James Harper: Mm-hmm.
Jools Walker: But, James, are the coffee farmers better off now than what they were back in the ’90s? Because I still want clarification here if direct trade has actually helped them out at all.
James Harper: OK, for some farmers, often those who had quite a bit of money to begin with, this direct trade phenomenon actually helped them have financially sustainable coffee farms and it was great for them. But for those who had a lot less money to start off with, even though we probably still know who they are, they are not that much better off, if at all, than in the previous system.
Jools Walker: So James, what's it going to take to actually fix this problem?
James Harper: The solution to this is pretty simple. Pay farmers sustainable prices so they can have a sustainable business.
Jools Walker: How do I know who are those roasters who are actually paying sustainable prices to the coffee farmers?
James Harper: I actually do have an answer for you, but before I divulge, perhaps we should have a word from our sponsor.
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Jools Walker: So Scott, you know a few weeks ago you took me on your roasting journey?
Scott Bentley: Mmm.
Jools Walker: Now I actually have my own little journey to share with you.
Scott Bentley: Go on, babes, go on.
Jools Walker: So, you know, up until now, I've been roasting up different coffee on the Ikawa Home and giving it to baristas to taste. Now Scott, whenever I went with the recommended recipes, it was always a slam dunk. But sometimes I would go a bit off-piste and experiment a bit. You know, tweaking the development or the roast degree in the Ikawa Home app and then send out those coffees. And for the most part of it, the baristas loved it. But I actually had a very different reaction recently.
Scott Bentley: Oh, God, what happened?
Jools Walker: So, I roasted up some coffee from the mill in Ayarza in Guatemala, and I chose a medium-light roast and a medium development. And then I sent it to a cafe on the other side of London.
Michaela Kyriacou: So, my name is Michaela. I run Bean and Brew coffee bar in north London.
Jools Walker: Now, get this, Michaela got her entire barista team around to taste this coffee, and they got geeky with it.
Michaela Kyriacou: And our first one used the 1:16 ratio on an inverted aeropress.
Scott Bentley: And… What did they think?
Michaela Kyriacou: If I'm honest, we didn't get much out of it. So, we all found it quite grassy, a bit earthy.
Scott Bentley: Oh, Jools — you messed it up, babes!
Jools Walker: This is OK, because, you know, I'd learned in the two roasting episodes that we'd recently produced on this series, that when a coffee is tasting grassy without much body or any strong flavours going on, it’s probably a sign that it hadn't been roasted for long enough. So, instead of pressing the medium-light button, like the last time, I chose the medium-dark button. And then I got back on the phone with her.
Michaela Kyriacou: There was definitely a marked difference.
Jools Walker: Oh!
Michaela Kyriacou: Yeah. It was kind of juicy. I want to say juicy. I love a juicy filter, and I could definitely, definitely enjoy another cup of that again.
Scott Bentley: I think what this shows, Jools, is that, you know, it doesn't have to be perfect first time.
Jools Walker: And that was the joy of the journey, Scott. And it felt really great to give Michaela a cup of coffee that she would love.
Scott Bentley: So, dear listener, maybe it's time for you to begin your roasting journey with the Ikawa Home.
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Jools Walker: So, James, we need to find the roasters who have paid the farmers a sustainable price, but how are we supposed to figure out who those roasters are?
James Harper: OK, so there are a million ways to answer this question. But personally, for me, one thing that I look for when I buy coffee is, I look for roasters who have participated in the Specialty Coffee Transaction Guide.
Jools Walker: I don’t know what that is. So, I’d like educating on that myself, please.
James Harper: Yeah. So, the Specialty Coffee Transaction Guide is where roasters and importers from across specialty coffee have come together and they have anonymously provided the prices that they pay for coffees across the world. It's an initiative to, essentially, share more information with each other. So one roaster can't be like, “Hey, I feel really great, because I'm paying, you know, 50% more than the commodity price for coffee”. And it's like, the roaster next to them is like, “Well, I'm paying two and a half times more than the commodity price”, “I'm paying 10 times more than the commodity price”. Everyone can make their claims. And so it brings this information together, so roasters can be like, “Oh, it's much higher than I thought it was. OK, this is what I’ve got to be paying next time”.
And it helps farmers because farmers can be like, “Oi! Roaster, pay this! It's in the guide, see? That's what everyone else is paying. Why aren't you paying that?” So you, as a coffee drinker, this is what Chad recommends.
Chad Trewick: If you look at the list of roasters, importers and exporters that are participating in the Specialty Coffee Transaction Guide project, it is a good place to start, because it will be a list of brands that is willingly and openly sharing information about the prices being paid for coffee.
James Harper: Alright, now, listen. I feel like I have to do my journalistic duty here and say, this is still not a perfect solution, right? Like, a coffee roaster who participates in the Specialty Coffee Transaction Guide may not necessarily be paying enough for a farmer to have a long term sustainable business. But it's a move in the right direction. Because, as you've heard, these are extremely complicated problems. And, you know, there are people across academia, industry, who butt heads every year, they're trying to figure this stuff out. So it's like an evolving solution here.
So, today, I would say best practice is, roasters who have participated in the Specialty Coffee Transaction Guide, and you finding those roasters and purchasing coffee from them — link in the show notes. And, you know what? In five, 10 years, there'll be something else, something new, better! And I can't wait to tell you about that when the time comes.
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Jools Walker: OK, gents. Well, I think it is time for us to roll those credits.
James Harper: The last time for series three!
Scott Bentley: Dear listener, we're taking a little break for summer, but don't worry. We're not just going to be sunning ourselves on deckchairs and sipping cocktails. No, we're developing new episodes for series four and we want to hear from you. So, we're going to create a survey. What would you like to listen to?
James Harper: Do you want to know what is the best water for coffee?
Jools Walker: Should Jools get an espresso machine? And should she learn how to use it?
Scott Bentley: Should you buy your coffee equipment second hand? I mean, is that the sustainable way?
Jools Walker: Or is it just cheap? Has oat milk won the alternative milk debate?
James Harper: How about we do myth busting, round two? And, er…
James and Scott: …We actually bust some myths this time!
Scott Bentley: But please do tell us in the survey. And the link is down in the show notes.
James Harper: Now, one way you can actually support the show is to buy us a coffee on Patreon. Patreon is a platform where you can give a monthly amount to support the creators you love. And, by the way, we're giving away a nice little kettle, aren't we, and a brewing device, to some lucky Patrons. So, hop on — link in the show notes — and help the show out. Thank you.
Scott Bentley: But if you're not able to support us there, you can help us, for free, by telling your friends and family about the show. The more people who listen, the easier it is for us to keep the show going.
James Harper: Now, a quick aside here. If you, dear listener, live in the UK and work in a coffee shop, or maybe you want to open one, you may or may not know that the Coffee Shop Innovation Expo is taking place in October. Like the name says, it's a place to discover the latest innovations in the cafe world. You can watch seminars on how to build your next cafe and connect with other cafe entrepreneurs — link to it in the show notes.
This podcast was produced by myself. I wrote and played the piano music, and our editor is Amedeo Berta.
Jools Walker: OK, so this is the bit where we sign off for the series but, like we said, we will be back, but in the meantime, enjoy your summer holidays, and we will see you again in late August. Bye bye!
Scott Bentley: Bye bye!
James Harper: Ciao ciao!