Direct Trade is when a coffee buyer pays coffee farmers a premium price above the fair trade price for high quality specialty coffee.
It differs from Fair Traded coffee on two aspects: 1) Direct Trade does not require coffee farmers to enlist themselves in a cooperative or establish one before it can engage in trade; and 2) Fair Trade assures farmers will receive a minimum price, whereas Direct Trade pay farmers above Fair Trade price.
Implementing an authentic Direct Trade program requires an enormous commitment on the part of the coffee buyer. It entails building trust and personal relationship with farmers over a long period of time, and can be a very cost-intensive endeavor.
There is no global regulation of Direct Trade, so unscrupulous coffee traders and retailers sometimes freely (ab)use the term in their products when in reality, they and their intermediaries provide farmers with poor information on quality requirements and give a lower price than what farmers truly deserve.
Direct Trade seeks to eliminate the power imbalances that exist in traditional supply chains and remedy the legacy of the colonial mercantilist system and the kind of crony capitalism where large businesses obtain special privileges from local governments, preventing small businesses from competing and flourishing. Direct Trade is an approach to alleviate poverty and encourage economic development in coffee growing regions.
In Direct Trade, stakeholders and farmers work together in the long-term to produce quality-focused coffee, and the farmers receive incentives and a premium price for their crop.
Overall, Direct Trade results to better wages for the farmer and better coffee for consumers.