Advice and answers from the Dispatch team
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When we answer questions about impact, we believe it is important for us to define terminology, as “ethics” and “sustainability” can be defined and interpreted in many ways. This enables us to build consensus as a team, and those sharing data with us across our supply chain, as well as with you, our customers! When we make a coffee purchase or operating decision, we consider the impacts of these three spheres: Economic, Social and Environmental. This is the recommended lense for discussing impact and sustainability by the UN sustainable development goals, and Impact Management Program, a forum for building global consensus on how to measure, manage and report impacts.
Impact management in our company is an ongoing practice of measuring and improving our impacts, so that we can reduce the negative and increase the positive. We do this activity internally, tracking and considering impact across many spheres in our supply chain lifecycle From Coffee Purchasing and other suppliers partners to Employee Policies and Culture to packaging, supply and retail distribution.
We are working to make our impact measurements and improvement objectives public facing by 2021. In the meantime, we are applying for B Corp certification.
In short, no, and we do not subscribe to the term, nor do we associate it with a high(er) impact way of purchasing coffee than the way we currently do. We will try to unpack this further here: Direct Trade is a Trade model that works in certain supply chains, and it is important to highlight that “Eliminating Intermediaries” does NOT necessarily means more money goes to the farmers than coffees traded through intermediaries like Importers:
Direct Trade has been commonly defined in our industry as an approach to purchasing coffee from the farmer to the roaster. This may be possible in certain producing countries, and with certain farm archetypes where farmers have the foundational structures in place to export their own coffee and acces market. However, there are many millions of farmers who need to sell their coffee, and rely on Co-Ops, Collection centers, Mills and Exporters to move to the roasting phase of the distribution chain. This is a typical structure in producing countries like Ethiopia, Laos, Myanmar, Tanzania, Democratic Republic of Congo, Rwanda and Burundi, to name a few.
We choose to purchase most of our coffee from smallholder farmers (holding less than 5 hectares of land) because we have researched that this is where we can have the greatest impact, economically and socially. Smallholder farmers in coffee are the archetype of farmer that is the most vulnerable and lacks the most access to market in the traditional coffee supply chain. They are also plentiful and over 25 million of them produce 80% of our world’s coffee.
In order to access smallholder farmers, informal producers associations, and co-ops, we need to work with intermediaries. These intermediaries, called importers, are carefully selected in our business. They share our vision and value of increasing farmer’s economic agency, and they have longstanding relationship with co-ops and smallholder farmers, whom they have been representing and trading for, sometimes over a decade long. Our importers are very active, on the ground in the producing countries they buy and trade from, in order to provide pricing and impact traceability to buyers like us, and to better understand the personalized needs of each farming community.Finally, it is important to consider, that Direct Trade and more money going to farmers, in principle, works, but it is only as good as the Roaster who is trading the coffee. Roasters hold the largest margins, traditionally, of any intermediary in the coffee supply chain. It could be argued, that Direct Trade enables Roasters to Keep More margins, versus inadvertently funding the operations of value-driven boutique importers like those we choose to work with, listed here: https://www.croptocup.com/
http://www.redfoxcoffeemerchants.com/ Firstly, it is rare that coffee can be traded without intermediaries. Not only are there a myriade of permutations of “farm archetypes”, but there are also a myriade of intermediary structures between farmers and roasters. All coffee must move through four primary steps before final consumption and in each of these stages there can be multiple local actors or agents required to move coffee from one step to the next:a) cultivation (in producing country)
b) processing green coffee (in producing country)c) roasting (generally in consuming country)d) packaging/retailing (generally in consuming country)
For true Direct Trade, a farmer must also be processing their coffee, and exporting their coffee. Here is a diagram from this research paper on the standard coffee value chain and intermediaries.