Coffee is complex. This is especially true when considering transparency. When it comes to coffee production, there is an enormous amount of variability in the models and activities employed by producers across coffee growing regions and farms. Below, we attempt to give a basic view of how green coffee buying works— and how we think about the process.  

We are the first to admit that we’re still learning— and striving to be raise standards for ourselves and the industry as a whole At the most fundamental level, we aim to embed three principles into every buying decision we make:

RELATIONSHIPS
THE PEOPLE

TRACEABILITY
THE PROCESS

QUALITY
THE PRODUCT


FAQs

We’ve asked our Green Buyer and Co-Director of Coffee, Emma Howarth-Withers, to answer some of the most common questions we receive here at Detour.

What is direct trade?

Direct Trade, unlike Fair Trade, is not a specific buying model. It is an industry term generally used to refer to purchases which are made as close as possible to the producer level.

Essentially, it means working with an individual producer rather than a large importer, exporter, or co-operative. Working with independent producers means that we are able to pay more for quality differentiation, as well as to make long-term commitments for the types of coffees that we love.

How is Direct Trade different from Fair Trade?

While we support the mission of Fair Trade, we do not believe that it provides enough traceability or lot differentiation. Fair Trade is a very specific, audited trading model which is concerned with ensuring that coffees are purchased above a set price. This price is generally higher than the commodities price, though not always by a huge margin.

Due to the specific requirements of Fair Trade, it makes it extremely difficult to purchase from individual producers, which in turn makes it challenging to pay the quality premiums that those lots are worth. We choose instead to work with independent importers and exporters – a practice that, we believe, provides a higher quality product, compensates producers more fairly, and cultivates sustainable business practices for all parties. These small-scale organizations have direct contracts with individual farms or small-scale co-ops in different regions; they know the coffee producers, and their product, intimately and ultimately serve as middle-man between us (the roaster) and the farms that grow our coffees.

We see this as a mutually beneficial arrangement for several reasons. First, it allows us to know exactly where our beans are coming from – in fact, if you check our website, you'll often see a blurb about the producer(s) that grew the beans you're going to drink! Second, it assures a fair price for the coffee farmers we work with. We are quality focused and know that premium coffees come at a premium price. By seeking out quality bean sources, through the assistance of our trusted importers, we are paying farmers more for their bean than they might get by going through a large exporter.

Why isn’t your coffee certified organic?

Although we occasionally purchase certified Organic coffees, we do not prioritize that certification over other traditionally produced coffee. Organic certifications can be expensive, which makes it more challenging for small scale producers to maintain. Also, we try to work with producers who practice renewable, safe agricultural practices, because those will often increase coffee quality. Being able to buy both organic and non organic coffees allows us the flexibility to bring in new and interesting lots in from smaller, less established producers.

Are you buying directly from the coffee producers / farmers?

No! While we do visit most farms and have direct relationships with producers, to acquire the coffee we typically work with trusted exporters who are on the ground and who can purchase larger quantities than we would be able to commit to.

These exporters are key relationships for Detour, and we try to visit, learn from, and provide feedback to those exporters who in turn are able to have boots on the ground regularly to invest in a coffee region. Detour works only with exporters who are able to add value to the buying relationship by using their expertise and equipment to improve the profits of the producers they work alongside.

How much does the producer actually make?

Although Farm Gate* price tells us the price paid by weight to a producer, it does not speak to the cost of production at a farm. Just as in any business, the costs associated with producing each lot will vary greatly depending on the circumstances of the farm.

We are always considering the cost of the living and the cost of production on a coffee farm in a given region: Loans repayments, cost of fertilizer, seedlings, experimentation, replanting, changing varietals, labour, food/education for employees and families who reside at the farm, loss of product from weather or pest damage, cost of transport from fields to farm, processing or patios, weed and pest control, post harvest and drying costs, administration, and exchange rate are all considered when working with a producer.  

Here is a great breakdown from Caravela, one of the exporters we work with, on how to calculate cost of production in Latin America.  

So the answer is, we don’t know the profit of every producing partner. What we can try to do is ensure that the Farm Gate price is not ever lower than the cost of production, and work with exporters who we trust are invested in creating lasting, sustainable relationships with producers.

GLOSSARY

Below is a short glossary of terms often referenced when discussing transparency:  

C MARKET (Commodity coffee)

The C market refers to the current rate on the commodities exchange for coffee. It is an extremely volatile crop — traded like any other volatile crop — and unfortunately this can have real, negative implications for producers because the value does not reflect the cost of production or the relatively slow turnover of coffee harvests.

Because coffee production can go up and down seasonally, it is an attractive commodity for market speculators. This makes the C price increasingly volatile, since speculation swings the prices up or down in response to political or environmental events. This means that the price paid for coffee is not set by producers, but rather is a response to market forces, and will therefore not necessarily cover the cost of production. In fact, it can be significantly less than COP, which is devastating to producers.

Coffee is complex! The seasonality of coffee and the many countries that produce the coffee we purchase means that each purchase happens within a unique eco and economic system!!!!

Cost of production

This represents the cost that it takes to produce a pound of coffee. It includes any inputs, labour, investment, loan repayment, transit costs, etc that are incurred when growing and processing the coffee cherry. Cost of production is challenging to track on an individual level, and is even more challenging to track on average overall. Producers may take on different amounts of the processing labour in coffee, and different levels of input, investment, and labour costs will result in a very different picture from farm to farm or country to country.

farm gate price

This is the price by weight that the producer received for their coffee. This could refer either to pure coffee cherry or to wet milled parchment coffee, which represents a vastly different burden of labour and equipment. In both cases, the “pound” paid for at Farm Gate may not represent a pound of exportable green coffee to an exporter, as the cherry, parchment, and any defective beans will be milled off before export. Some models will reward producers for exceptional quality with a second payment when that coffee lot is able to be sold for a higher price.

fob price

This is the price paid to an exporter for milled green exportable coffee. It stands for “free on board”, which means that the costs associated with moving the coffee, as in importing, shipping, customs, or transport, is assumed by the buyer.

spot price

This is the price paid to a green coffee importer, and it would represent coffee which has already been imported, shipped, milled, and paid for, and is sitting in a warehouse somewhere (hopefully) near to the coffee roaster. This price does not include the cost of shipping to the buyer from the warehouse.