Direct trade has become synonymous with specialty coffee, emerging as an alternative to the traditional, multinational-dominated coffee industry. Its foundation lies in the idea that when roasters, traders, and producers collaborate more closely, the entire supply chain benefits.
Initially, direct trade was seen as a social responsibility initiative. Roasters paid higher prices for better-quality coffee, helping producers reinvest in their operations. This fostered trust and built long-term, mutually beneficial relationships.
Over time, however, some roasters adopted direct trade as a marketing tool, offering consumers vague promises of ethical sourcing without clear accountability.
More recently, rising arabica futures have prompted roasters to embrace direct trade as a risk management strategy. With more control over their supply chains, roasters can better manage costs and reduce market volatility.
Despite this shift, the social and ethical aspects of direct trade remain central to its role in specialty coffee.
The coffee supply chain is long, with many intermediaries involved, which lowers the prices farmers receive. According to the International Trade Centre, producers often earn just 10% of the retail price of coffee. For the 12.5 million smallholder farming families worldwide, these prices don’t cover production costs, forcing many to abandon coffee farming.
Third-wave and specialty coffee aimed to change this dynamic by reducing intermediaries, allowing producers to capture more value. Direct trade eliminates the middlemen, enabling producers to negotiate prices directly with buyers and establish trust-based, long-term relationships that ensure consistent quality.
"Direct trade means building personal relationships between producers and roasters, understanding each other’s circumstances, paying fair prices, and creating lasting partnerships," says Wilmer Carcamo CEO of Caribe Coffee Co.. "It’s about respect and collaboration over the long term."
Consumers are increasingly demanding transparency in the coffee supply chain, and roasters using direct trade can show their commitment to ethical sourcing. This helps build consumer trust and fosters a deeper understanding of coffee’s journey from farm to cup, which can lead to greater appreciation and a willingness to pay higher prices for quality coffee.
However, direct trade is not without challenges. The term itself lacks formal certification, meaning that anyone can use it in marketing, blurring the lines between genuine ethical sourcing and superficial claims. Direct trade is not clearly defined, so its use in marketing varies but over the past two decades, the industry has learned to distinguish between those truly committed to ethical sourcing and those just jumping on the bandwagon.
In light of record coffee prices, direct trade is now seen as both an ethical practice and a strategic approach. By bypassing traditional intermediaries and allowing producers to set their own prices, roasters gain more control over their supply chains and can better manage relationships with producers.
"Direct trade isn’t just about a good business model; it’s about long-term, trustful relationships," says Wilmer. "It requires hard work, but it reduces environmental and economic risks when done right."
Looking ahead, direct trade’s role is evolving. It’s no longer just a social responsibility initiative but a strategic business model that fosters accountability and shared value. By investing in communities and ensuring that farmers receive a fair wage, direct trade contributes to a more resilient and sustainable coffee industry.
"Without direct trade relationships, roasters cannot fully understand the challenges faced by farmers," Wilmer explains. "To make a positive impact, you need to be present and build trust, which ultimately leads to better quality and more secure volumes."
As direct trade continues to grow, it represents a commitment to supporting coffee-growing communities and creating a more equitable, sustainable supply chain that benefits everyone from farmers to consumers.