What is ‘Direct Trade’?
What does ‘direct trade’ mean in relation to the purchasing of cacao?
My understanding is that direct trade stands for quality, fairness, respect and sustainability.
It speaks to me of trade routes through history, linking and stitching together of origin and country of commerce.
But what does it mean in a practical sense? Top level, it means that the chocolate maker buys beans directly from the grower. A direct channel of trade and a relationship for the mutual benefit of both parties.
Unlike Fair Trade, it is not a certification, simply a description of the relationship.
Why is direct trade a good thing?
Over 60% of the world’s cacao is grown in Ghana and the Ivory Coast (70% or more when you factor in all the other growing countries in Africa). The farm gate price in these countries is fixed by the government and is very low, forcing cacao farmers to live in poverty. It is this poverty which creates and perpetuates issues within the industry of poor and unethical labour practices such as child labour and slavery.
There is a clear problem here. Billions of us are consuming cocoa products every year, cocoa products which are produced by millions of cocoa farmers, the majority of whom are not earning enough to rise above the poverty line. Industrial chocolate wants to keep the cacao costs low, and we just keep on buying those cheap industrial confectionery items. You have to think, if a chocolate product is very cheap, someone down the line is paying the price.
The benefits of direct trade are huge, namely that the farmer gets paid a good price for what they produce. Under the DT model, farmers receive several times more than they otherwise would, ensuring they get enough to earn a sustainable income.
For chocolate makers, direct trade provides opportunities to form relationships with the people who grow their cacao. They can then pass this connection on to consumers to help foster a greater appreciation for the chocolate. Which, in turn, leads to greater understanding of the need to pay higher prices.
As a small maker, I am buying beans from an importer, so a step removed from direct trade. Like many other craft chocolate makers wanting to make an impact, it’s as close as I’m able to get for now. In choosing to work with an importer who works directly with growers, I am assured that those relationships are in place, know that my values are upheld and am still having a positive impact on the supply chain.
There are a couple of clear downsides to the direct trade model. For one, it’s not an indicator of cacao quality, either in the farming practices or flavour. And as there is no set minimum price structure, effectively cacao can be bought direct and not paid a fair price for.
But what about Fairtrade?
When you see the Fairtrade label on products, you most likely assume that the cocoa farmer is being paid a living income for their work. Unfortunately this is not always the case. Cocoa farmers have to pay for the Fairtrade certification, both a one-off fee and annual fees. There are instances where a farmer who has forked out for Fairtrade certification could actually be paid less for his cocoa. This is because there is a set Fairtrade minimum price, which does not fluctuate with the commodity cacao price (it’s there as a safeguard when market prices drop), and so at times it could dip below commodity.
Many small farmers cannot afford the fees to obtain Fairtrade certification. And FT does not guarantee flavour or quality, only offers some reassurance that the cocoa has been farmed without unethical labour practices.
This is a brief overview of some very complex issues. Whichever way you go with cacao sourcing and purchasing, it’s important to do your research. Make sure that your purchasing model aligns with the values you hold, and if working with a broker/importer that they are transparent.
If you are interested to read more, these are some good sources to start with:
