What exactly is Direct Trade and why is it important? Project Origin founder, Saša Šestić responds to several questions about Direct Trade relationships and how they are affecting the specialty coffee industry, on all sides.
- What is the concept of ‘Direct Trade’ and why is it important?
I think that the term ‘Direct Trade’ has been used a lot over the years and we’ve seen many different roasters use this term to describe their relationships with producers.
Simply put, Direct Trade is a direct relationship established between coffee producers and buyers/consumers, removing a ‘middle man’ or trade negotiant. In Direct Trade relationships, often buyers will arrange pre-payment for a particular crop or lot prior to harvest, based upon quality from previous years or various commitments made in the relationship. In my mind, the ethos behind Direct Trade dictates that if it so happens that the coffee quality has dropped or isn’t quite up to expectations, the coffee will still be purchased and the producer and buyer will work together to prevent cup scores from dropping again.
However, in recent years we’ve seen the term become a bit diluted and we are seeing businesses that have no involvement in origin, including travelling, cupping and buying claim to be ‘Direct Trade’. We are also seeing roasters claim to be ‘Direct Trade’ but then only buy the best lots from a particular producer, which could only be 5% of the total production of that producer. Although they may be paying fantastic prices for these coffees, overall the money doesn’t go a long way as the purchase is only 5% of the crop, and what happens to the other 95% is often not considered.
‘Direct Trade’ is a very romantic term for what is a complicated relationship. There need to be sacrifices made on both sides to truly make these relationships function. These relationships are important as they bring us closer to achieving excellence and to improving quality. At the same time, these relationships deliver a coffee or flavour experience that the consumers want and helps to open opportunities that may not have existed otherwise.
Direct Trade is important for the sustainability of both sides; producers know that they need to be growing and producing the best coffees possible in order to keep selling coffees and satisfying consumer needs, while the consumer is receiving the benefit of information, a relative guarantee of quality, influence in production and in some cases, exclusivity of certain coffees. My hope is that anyone who works under the banner of a title such as Direct Trade is doing it in the right way and for the right reasons.
2. How did your first Direct Trade relationship come about?
My first true Direct Trade relationship was with Thalanar Estate in India, back in 2010-11. The reason I wanted to establish a Direct Trade relationship with this community is that I didn’t want to simply travel there, pick the lots I wanted from the harvest and to leave. I wanted to create a system in which I could work with the producers to get exactly the profile that we wanted in our coffees, to have more input on processing, picking, fermentation and more. At the same time, we wanted to offer security and sustainability to the producers by not only paying ah higher premium, but from committing to the purchase of these coffees the following year even if there were a drop in quality. This system enables us to work closer together, rather than just operating on different ends of the coffee chain and only coming together for purchase and trade.
This relationship inspired the beginning of the coffee-sourcing company, Project Origin. By viewing relationships with producers not just as opportunities for transactions, but rather as ongoing projects, we begin to look at them in a different way and thinking about the long term goals of each end. Project Origin has been in operation since the Direct Trade relationship with Thalanar Estate began and now sources coffee from more than 10 countries across the world, dealing with hundreds of producers and their communities.
3. How has this relationship developed over the years? Have you seen a significant change in the coffee being produced?
This Direct Trade relationship in India was founded on friendship and a genuine desire from both ends to create better quality – but now, it has become so much more than that. We’ve done a lot of work on sustainability at the farm, organising medical facilities, building sanitation blocks and a childcare facility for the farming community, as well as helping to purchase equipment to improve coffee production and quality on the farm. We’ve also held some events back home, such as latte art events and fundraisers, in order to raise money for these projects and more – so in this way, it’s not only us interacting with the producers, but customers themselves who are active agents in the Direct Trade relationship. I believe that across the years, our relationship has created a positive difference on both the farm level and on the consumer level, in roasteries and cafes.
Our relationship with Thalanar Estate has developed greatly over the years, to the extent now that they are really just an extension of our wider family. I am accepted and embraced there as part of the community and at home in Australia, members of the Thalanar community are considered as part of ours. Last year, I took my son Aleks to Thalanar and saw the true extent of our relationship with the local community, as he was immediately treated like part of their family.
The coffee itself has greatly changed too – when we began the relationship, I sought to have input into processing to achieve a particular profile, but what came out of it was so much more. I had previously worked with Mauricio Salaverria in El Salvador on a project called Supersonic, in which we used special natural processing to create an incredible experience with his coffee. I wanted to achieve something similar in India and by connecting the community of Thalanar Estate with Mauricio, we created the ‘Deep Purple Project’ which has seen some incredible tasting coffees come out of this farm and overall, the cup scores from the farm have greatly increased.
This relationship has become so much more than what I thought it ever could be; it’s a lifestyle, a friendship and a partnership in which we are working to give each other the best possible outcomes. We are giving more value to every person and every stage of the process, from growing all the way to drinking – at the end of the day, this is the goal.
4. What are the ways in which Direct Trade is changing the quality of coffee? i.e. is greater interaction between producer and consumer increasing cup score?
I think in our case, we’ve definitely seen cup scores increasing and the quality of coffee increasing overall. However, it isn’t all about the scores and if one year one farm or one lot underperforms or doesn’t meet our expectations, rather than walking away from it we take the opportunity to understand why this has happened and what we can do to prevent it in the future.
Direct Trade is changing not only the quality of coffee, but the ways in which we think about and approach it. For this reason, Project Origin has invested in several farms in countries including Honduras, Nicaragua and Panama. We use these farms as a place to experiment and learn, so that this knowledge can be passed on to other producers and aid them in increasing the quality of their coffee. We also use methods and tools from other industries in order to push the boundaries of what we can do with coffee; this in turns inspires change in how coffee is served.
5. How do you see Direct Trade relationships influencing or changing the coffee industry in the coming years?
In my opinion, the model of a Direct Trade relationships isn’t groundbreaking any more; it may have been the case 10 to 15 years ago, but these days we are seeing more people and companies attempting to engage in direct partnerships. People such as Mark Dundon from Seven Seeds and Jeff Watts from Intelligensia inspired me to start my own direct trade relationships and I believe that they are true pioneers of true Direct Trade and specialty coffee.
As I mentioned, some people operate in what they may call Direct Trade by travelling to farms and buying the 5% of the harvest that has the highest quality or score, paying 3 to 4 times the average price or even more. These people will return home and feel as though what they have done is good – and make no mistake, it is – but in my opinion, as buyers we need to ask ourselves “What happens to the other 95%?” We also need to consider the issue of consistent sale from the producers’ side – do we engage in Direct Trade and commit to a certain amount of coffee per year, or do we purchase a coffee we like and only repurchase it the following harvest if it lives up to or exceeds the previous year?
6. How do you see Direct Trade relationships helping in the face of issues faced by producers, such as disease?
There are many ways we can help producers when it comes to facing natural obstacles such as disease, climate change and unseasonable rainfall. While not always an available option to everyone, offering payment or partial payment prior to harvest can give producers the funds needed to establish preventative measures, combat disease and fertilise their crops so that they grow better. At the same time, committing to purchasing coffee from producers prior to harvest and providing some some of guarantee to them can be invaluable, as it allows them to approach banks for loans.
7. In your opinion, what is the most successful Direct Trade relationship you have established through Project Origin?
I think that we have created many successful relationships over the years and overall, we have seen increases in cup scores across many farms and with many producers. We’ve watched as producers we have worked with have won events such as the Cup of Excellence auctions and others who have managed to establish other Direct Trade relationships. In Central America, the Project Origin ‘Best of’ auctions in El Salvador and Honduras have helped to connect small producers with buyers, at origin and to establish Direct Trade partnerships. In Ethiopia, we’ve helped to create some incredible coffees, which we can’t wait to share with the world. In places such as Panama, we’ve worked with notable producers such as Jamison Savage of Finca Deborah/Morgan Estate to undergo experiments, which have yielded incredible coffees that have been exhibited on the world stage in Barista and Brewer’s Cup competitions. And of course, in Colombia I have worked with incredible people such as Camilo Merizalde of Finca Las Nubes, whose coffee helped me win the World Barista Championship 2015, and Jairo Ruiz of Banexport who is continually helping producers in Colombia share their coffee around the world.
All of the relationships I have with producers across the world are special in their own way and have their own measures of success.
However, if I had to pick one to use as an example of successful Direct Trade, it would be with the Lanza family in Honduras. This relationship continues to grow year by year and what I especially love about what we have developed together is that it is shared with everyone. Throughout the years of our relationship, we have experimented, made discoveries and found new ways to produce and experience coffee – all of this information is shared with local farmers and producers, with the intention of increasing cup scores and quality across every farm.
I was in Honduras in 2012, looking to taste and buy coffees. I was put on a table by the IHCAFE staff and while cupping, tasted some coffee from the Lanza’s farm, La Huerta. I had already purchased coffee on that trip and didn’t have any intention of sourcing more. However, I kept thinking over and over about this coffee that I had tasted. I was due to travel to Panama the next day, so I sent a quick email to Jorge Lanza saying that I would love to buy his coffee and offered a higher premium than what he was asking. He agreed and I continued on my travels in Central America. We didn’t talk for a little while after that so after a few months I wrote to him again, saying that I was still interested in purchasing some of his coffee. He had kept his word and hadn’t made any commitment to selling his coffee to anyone else. After another couple of months, I got a call from the Lanzas, telling me that they had placed #1 in the Cup of Excellence program! I was so happy for them.
A few months later I went to visit La Huerta and the Lanzas. While I was there, they agreed to lease part of the farm to me so that we could conduct some experiments there together. We changed the soil quality by introducing different fertilizers, with the intention of achieving different flavour profiles in the coffee. We also experimented with selective picking, matrix picking and methods of growing. Our relationship had extended past a simple transactional relationship and had allowed us to be open to each other’s idea, to push boundaries and realise each other’s true potential; to engage in Direct Trade. When I visited the Lanza family, I feel in love with the mountain, the community and everything about La Huerta and its surrounds. I wanted to become closer to these people and be a real part of the community, which resulted in me purchasing my first coffee farm, Finca Beti. Now the relationship has taken on a whole new dimension, we are neighbours.
Had I just bought coffee from them the one time, I would barely know the Lanza family. However, because we pushed the relationship to new heights and began a Direct Trade relationship, it became so much more. When I was competing in the World Barista Championships (WBC) in 2015, the entire family flew from Honduras to Seattle to watch me compete; and very time I go to Honduras, even if I arrive at the airport late at night the entire family is always there waiting for me to arrive.
After the 2015 WBC, I looked for ways in which I could give back to coffee producing communities and use my success to help others. Together, the Lanza’s and I created the first Project Origin auction event, with the support of the Honduran Institute of Coffee (IHCAFE). These events now take place in several countries and have helped to connect many small producers with buyers and consumers from across the globe.
The strong relationship we have established with the Lanza family is just one story among many across the world that Direct Trade has enabled. They are an example of how trust, cooperation and respect can be the most valuable tools in creating long, lasting relationships and how these relationships increase the value of each part of the coffee chain, from crop to cup.
8. What can the industry do to foster more Direct Trade relationships, going into the future?
I think it is quite accessible to enter into Direct Trade relationships, now more than ever. Events such as the Cup of Excellence and the Project Origin ‘Best of’ auctions enable buyers and consumers to go to auction, meet producers and start buying directly from them. There are also many other opportunities to visit producers and their farms, either alone or with other companies and groups such as the SCAA, Cafe Imports and more.
I’d like to ask that question back to roasters and consumers – what can we do to foster these relationships and to make them better? Many people love the story of direct trade but in my opinion, some of the intention is lost as it is translated to consumers. What is it that we seek to achieve as an industry and what do we think we can do in the future?
I think that a significant step we should consider is buying and helping to produce better coffees, and not just purchasing the cheapest. This then encourages producers who produce commodity coffee to aim for higher cup scores and quality. The next step is then to help them and be part of this journey to higher quality and more value. Eventually, through Direct Trade and its principles, roasters will be serving a better product that customers can enjoy.