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The Benefits of Cutting Out the Coffee intermediaries:
Why Buying Directly from Farmers is the Way to Go
Buying coffee directly from farmers in coffee-producing regions, such as Colombia, has a whole host of benefits. Generally speaking, cutting out the middleman in any industry will help keep costs down, but with coffee, it also ensures a superior product and the fair treatment of workers. That is why when Colombian Coffee.US was born, we asked ourselves “Why can’t small farmers sell their coffee directly to customers without having to hand their hard earned beans over to roaster and packers who ultimately end up benefiting more than they do? Below, we delve into all the benefits of buying coffee directly from farmers, otherwise known as direct trade or farm-direct sourcing.
What is Farm-Direct Sourcing?
First thing’s first, what is direct trade coffee? As the same suggests, this approach involves a retailer sourcing coffee beans directly from a producer or farmer in the region in which the coffee is grown. For us, that region is Colombia because we wholeheartedly believe that this South American nation produces the highest quality coffee beans in the entire world. Beyond that, our company has a deep understanding of the importance of coffee to the national pride of Colombia. As such, we opted to go the direct trade route for our coffee, ensuring that the history and traditions of Colombia are respected, and so too are the farmers that make this tradition a reality.
How does Colombian Coffee.US work? First, we buy directly from co-ops and farmers in Colombia. Then, we consolidate and ship your fresh coffee directly to our warehouse in the US, where legal US workers unpack and ship the bags of coffee directly to the consumer. This process eliminates the middleman and balances out the equation.
Now, to truly understand farm-direct sourcing, you need to understand what the opposite of direct trade is, and that is importer sourcing. This is one of the most common ways that coffee retailers acquire their coffee beans. Importer sourcing is a process whereby retailers get their coffee from importers, roasters, or larger sellers, who act as middlemen. This approach is not only more expensive but often results in lower quality control and ethics violations.
Why is Farm-Direct Sourcing So Important?
To showcase the importance of sourcing coffee directly from farmers, the founder of Colombian Coffee.US, Raul Valencia, shares his personal experience working as an intern at the Colombian Government Trade Office. He started working as an intern there back in 2000. He worked in the ProExport division, where their mission was to promote Colombian exports outside of coffee and oil. As an intern, Raul learned a lot about the major logistical and language barrier challenges Colombian entrepreneurs faced. After that, he ended up in the fashion business and made a living trading between several countries and the US. All of this to say, Raul deeply understands the difficulties of exporting a commodity from Colombia to the US. That is why when it comes to coffee, he knows how challenging it would be for a small farmer to deliver an already roasted package of coffee beans directly to a customer in the developed world. Let’s look at the inequalities in the coffee industry for a second. On average, a farmer gets about $270 USD for 125 kgs of raw coffee. Meanwhile, Amazon, Starbucks, McDonalds, Folgers, Tim Hortons, and other major roasters receive about $2,151 USD for the same amount of coffee. The farmer effectively gets 10% of the retail price and from there, they must deduct any additional costs, leaving the farmer with very little income.
That is what drove Raul to create Colombian Coffee.US. He sought to right this wrong in the industry and put more money in the pockets of farmers. When founding the company, he constantly asked himself, “How can we put some equilibrium in this equation?” A lot of small coffee growers work with cooperatives, or co-ops, who invest the profits they earn from coffee into their community. That is the case of the co-ops we work with. But also by buying directly from the farmer, we ensure that they benefit from the coffee they produce.
Overall, our mission at Colombian Coffee.US is simple: to empower Colombian coffee farmers and pay them the price they deserve for their superior coffee. We promise that each and every farmer we work with will receive 50 percent of the selling price of the coffee, generating a higher income for them and creating a sense of pride that their work is valued and is being delivered directly to the world market.
What are the benefits of Farm-Direct Sourcing?
Now that you know a little bit more about the importance of sourcing coffee directly from farmers and the principles that Colombian Coffee.US was founded, let’s delve into the benefits. In essence, farm-direct sourcing cuts out all the hassle and nonsense associated with going through an importer, instead allowing retailers to do business directly with farmers. It’s a business model as old as time, and it works! A few of the key advantages of direct trade coffee include:
- Lower Prices: Since direct trade cuts out all middlemen or intermediaries from the supply chain, the price of the end product is typically less expensive than that sourced through an importer. Not only are costs kept to a minimum, but you’re also getting more value for your money as the quality of direct trade is usually significantly higher (more on that below).
- Higher Degree of Transparency: Direct trading is a more transparent process from start to finish. Typically, the specific farm from which the coffee was sourced will be listed on the packaging, rather than simply the country it’s from or a generic fair trade symbol. Further, if you’re concerned with ethics and upholding the rights of workers, then direct trade is the way to go. Direct trade has all the advantages of fair trade, without the certification process being a necessity. While this certification process provides standardization, it also comes with an expensive licensing fee that the growers are required to pay. Thus, when retailers opt for direct trade rather than fair trade, the farmers are exempt from paying this fee, resulting in more money in their pockets. Plus, most often, direct trade retailers pay their farmers more than the fair trade price.
- Relationships with Farmers: In business, there is no substitute for having a close personal relationship with your colleagues. This is exactly the kind of connections that direct trade sourcing facilitates. Many retailers including us have long standing relationships with the farmers that we work with. We treat them fairly and with respect, and pay them a premium for the service they provide us (a reminder that Colombian Coffee.US guarantees that all farmers will earn 50% of the selling price of the coffee). Since we know that our direct trade approach yields a higher quality coffee bean, we are invested in the success of our farmers. That is why many direct trade retailers are involved with the operations of the farms, providing necessary infrastructure or training to help them provide the best product they can.
- Better Quality: In a direct trade approach to coffee, retailers partner directly with farmers. How do they decide which farm to partner with? It all comes down to quality. Farmers are paid based on the quality of their beans, which means they aim to exclusively harvest the best of the best. That is why direct trade coffee tastes so much better than any other kind. Even fair trade coffee, despite its many certifications, does not have a standard for quality. In addition to better tasting coffee, direct trade coffee is often more consistent in terms of quality. What you get from week to week is always going to be superior, compared to importer sourced coffee which comes from a much less stable source and starts at a lower quality to begin with.
There you have it - the difference between coffee sourced directly from farmers and that sourced through importers. We hope this article has clarified the differences between the two methods, and shown you how beneficial it is to partner directly with the hard working farmers on the ground. Colombian Coffee.US prides itself on its relationship with farmers in Colombia. They are an integral part of our business, and we treat them as such.