Advice and answers from the Dispatch team
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Dispatch is a social enterprise. In our company, impact management is an ongoing practice of measurement and improvement, reducing the negative and increasing the positive. We support the priorities of the UN Sustainable Development Goals, and share the view that businesses have a role to play in implementing solutions to our world's most pressing crises. Many of these global crises intersect with the global coffee industry and supply chains.
When answering questions about impact, we believe it is important to define terminology, as "responsibility", “ethics” and “sustainability” can be 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.
We consider impact across many spheres in our supply chain, from coffee purchasing, to our employer policies and company culture, all the way to packaging and distribution.
We are working to make our organizational impacts more transparent and measurable in 2021. For now you can visit our website page that outlines our responsible purchasing practice and ways in which we work to reduce our environmental footprint.
In short, no, and we do not associate this phrase with a high(er) impact way of purchasing coffee than how we currently do. We will try to unpack this further here:
“Direct Trade” is a model that favours the elimination of intermediaries between producers and roasters. It is important to highlight that “eliminating intermediaries” does NOT necessarily means more money goes to the farmers than when coffee is 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 access markets abroad. However, there are many millions of farmers who rely on cooperatives, collection centres, mills and exporters to move to the roasting phase of the distribution chain. This is the prevalent structure in most of the producing countries where our coffees come from..
Decreasing intermediaries does not inherently lead to increasing income for farmers
In some form, all coffee is traded through intermediaries. Not only is there a wide variety of “farm archetypes”, but there are also a myriad 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: from cultivation (in producing country), to processing into green coffee (in producing country), to roasting (generally in consuming country), and, finally, to d) packaging/retailing (generally in consuming country).
We choose to purchase most of our coffee from smallholder farmers (holding less than 10 hectares of land) because research supports that this is where we can have the greatest impact, both economically and socially. Smallholder farmers tend to be the most vulnerable coffee producers, and those with the least market access in the traditional coffee supply chain. They are also plentiful - over 25 million of them produce 80% of our world’s coffee.
In order to access smallholder farmers, informal producers associations, and cooperatives, we need to work with intermediaries. Importers, the intermediaries that we most frequently communicate with, are carefully selected business partners. We require that they share key aspects of our vision toward increasing farmers’ economic agency, and they often have long standing relationships with cooperatives and smallholder farmers. All of our importers have active, on-the-ground presence in the producing countries they represent, allowing them to provide pricing and impact traceability to buyers like us, and to better understand the personalized needs of each farming community.
The positive impacts of "Direct trade” are only as effective as the roaster who is buying the coffee. Traditionally, roasters hold the largest margins of any intermediary in the coffee supply chain. If direct trade is able to transmit more of the roaster’s costs directly to the farmer, thereby increasing the farmer income, this is good, in principle, but direct trade can just as easily enable roasters to simply keep more of the total margin without meaningfully increasing the farmer income, and furthermore without supporting the operations of value-driven importers like those we choose to work with.