We are Coffee Farmers.
We are not importers, traders, brokers, exporters or "coyotes". We are a vertically integrated organization made up of many small-scale coffee farmers that could never have direct access to roasters willing to pay fair prices for their microlots independently.
We have banded together and enlisted the help of some non-farmers to challenge the traditional supply chain, reorganizing the coffee trade in a way that encourages progress for the community and quality coffee for the world.
Being a collective means we share resources so that all of us small farmers can operate independently and enjoy the same efficiency as the large estate growers and international traders. We are not an association or a coop, in fact, we partner with those types of local organizations that provide day-to-day support for the farmers that make up our group. Our function lies in the logistics and commerce between the farm gate and the roaster in another part of the world.
Basically each producer that is a member of the collective sends samples of each harvest or microlot they produce to the DOT cupping lab. We cup everything that arrives, give detailed feedback, and if cup quality reaches the agree-upon level, the collective prefinances the producer, effectively purchasing their parchment coffee at the price that we feel roasters would pay for it, minus costs. It is then the collective’s responsibility to mill, export, import, warehouse, market, and sell it to a roaster, as the farmer has already been paid.
Producers do not have any formal committment to the collective. It is available as a resource to farmers that feel their product has the potential to be sold as a microlot at specialty prices.
The collective assumes all financial risk on behalf of the members, who typically are not financially equipped to weather loss or spoilage. All risk, financing, and the cost of shared services are covered by the collective centrally and built into a margin the organization earns on export and direct-to-roaster sales.
For all the talk of direct, fair, ethical trade, it remains impossible for small farmers to sell to roasters. Our coffees were largely purched based on physical quality and blended with everything else produced in the area, and that was the end of the story. The best cup quality was mixed with the worst and everything in between, and the resulting mediocre blend was sold as¿t a factor of the New York C-price, probably a few cents/lb over.
Smallholders are largely unable to access quality and transparency premiums enjoyed by larger plantations due to scale. Basically you need an export entity with someone to manage the miriad of documents and administrative requirements, marketing person that knows at least English to contact roasters, enough production to fill up containers, and most importantly the financial muscle to hold coffee until it reaches the consumption country and wait for it to be sold, maybe 6 or 9 months between harvesting and bringing foreign currency back to the farm. It would make no sense for a farm producing 30 bags a year to have all of this, and no small farmer in the areas we work has access to the credit necessary to make it work. However, between 60 farms each producing 30 bags a year, it’s viable.
While “direct trade” in it’s purest form (farmer selling directly to roaster without anyone else involved) is utterly impossible for the small farmers that make up our organization, we feel that the collective model is the next best thing, and the most beneficial solution for our group.
So, we started a collective to pool our individually small scale and operate with nearly the same level of efficiency as the large players. We involved standout farmers producing delicious coffees, started a Colombian export company and a US import company, and enlisted the support of an international team handling farm-level assistance, quality control, international logistics, marketing, sales, and distribution. We started small, and lost money on every pound we sold, but slowly gained a reputation as a trustworthy organization handling high-quality products, and now move coffee by the container-load, providing fixed, high prices for farmers, and competitive prices to roasters.
Prices based on cup quality, reflective of prices paid by roasters
Almost all coffee produced by small farmers in the areas where we work is purchased by consolidators at commodity price based on physical quality, regardless of cup quality. Operating at immense scale with thousands of small farmers and selling to commodity-grade buyers, there is simply no time to fuss about taste and no one to purchase the high-quality microlots. Even in the specialty-trade, cup quality is often discovered after purchasing from the farmer, in which case no premium is returned. Furthermore, with no traceability, it is impossible to see how the coffee was produced, and therefore environmental resonsibility is not a factor.
Working collectively at an individually small scale, channeling single-farm microlots to roasters that deeply appreciate their unique sensory attributes and with full traceability back to the farm and the environemtnal responsibility of cultivation and processing practices, prices paid by roasters, and that are returned to producers, are directly related to the market’s appreciation of the particular mircolot. This pricing system rewards the most conscientious farmers for their hard work, and incentivizes investment in cup quality and environmental responsibility.
Confidence in fixed pricing
Since we work vertically, and specialty roasters that work with us purchase at mostly fixed prices, not as a factor of the NY C-Price we are able to offer fixed prices to member farmers. In large-scale commodity-oriented coffee trading, prices must float so that all coffee offered is sold every day. Exporters and importers must then purchase futures and other financial hedging instruments to protect themselves, and therefore must buy and sell coffee based on daily prices. For farmers, that means that they must invest in cultivation and production of coffee at essentially fixed prices, then when it comes time to sell, they have no idea what price might be paid to them. This situation makes it difficult to justify investments in infrastructure to improve cup quality and can cause great financial and social hardship for farming families, even causing them to lose their farms in some cases.
Assistance in continually improving quality
DOT provides its members with technical assistance and cupping feedback so that they may continually strive to improve cup quality, and therefore prices. Most farmers that send samples are not immediately admitted into the collective, but rather are given recommendations that should allow them to improve cup quality up to the 86-point mark where we feel microlot logistics are viable. These recommendations are initially derived from cupping analysis, such as “pick only ripe cherries”, “ferment longer”, “dry more consistently”, etc. and sometimes site visits are necessary to fine-tune certain processes or implement more advanced measures such as fermentation acidity analysis or infreastructure improvements.
Stable market: personal brand & visibility
The intention of our international marketing arm is not simply for roasters to purchase coffees from DOT, rather to position individual small farms in the international market, creating reputations, brands, and demand for their unique coffee from their farm. Our aim is to partner each farming family with one or more roasters that will consistently purchase their coffee at fair, fixed prices. We don’t want producers to depend on DOT to sell their coffee. We want them to have the ability to access the specialty market, through DOT or by other means as they wish.
Buy directly from small farmers, at competitive prices and efficient logistics
Purchasing from a collective of producers, you have direct access to unique, single-farm microlots produced by small-scale coffee-farming families. You also have the support of the experienced international logistics and professional quality-control team. If you have ever connected with a small farmer and tried to get their coffee to your roastery in your country, you probably know that it is extremely difficult, time-consuming, and risky to do-so without outside help and puts a financial strain on both parties. Working this way gets you the same level of access, but with the efficiency of dealing with a big commodity importer.
Full traceability and transparency
If you source through the DOT collective, we won’t just send you a photo of the region and a list of buzz-words. We are the farmers, and our logistics and marketing team have personal relationships with each member. We perform audits, spend time together, and produce as much content as we can to show the end consumer from where and whom their coffee comes. While most importers that are willing to provide price transparency are only able to get to the FOB price they paid the exporter, we are able to provide figures down to the farm level and even the farmer’s cost of production in some cases.
Just as we aim to assist farmers who don’t have the scale to export and import on their own, we also understand that roasters who use 5 or 10 bags a year from a farm probably can’t justify a trip down for a face-to-face with a small farmer. Therefore we try to bring the two extremes of the supply chain as close together as possible.
Marketing material to promote farms and sell your roasted coffee
Because great coffee isn’t all that uncommon, we aim to provide roasters more than just an excellent cup and peace of mind. Our marketing team travels to each farm periodically to check up on operations, listen to farmers, and produce marketing content that will help their roaster partners better promote their coffees and keep coming back for more. This content includes high-resolution photos, info booklets, interviews, videos, blog post stories, and access to us to ask questions, gain insights, and better understand the everyday reality of the people producing your coffee. We are also at roasters’ disposal to organize the production of custom content.
Ability to communicate directly and form relationships with farming families
All the photos and audit reports in the world are no substitute for a direct relationship. A relationship is also not a selfie and 5-minutes of translated pleasantries. We are available to facilitate whatever depth of relationship the roaster would like with the producer. This could be in the form of a phone call (keep in mind language barrier), subtitled cell phone video back-and-forth, cupping feedback from the roaster, sending a bag back to the producer, or even a farm visit with us. Transparency is usually thought of as farm-roaster or farm-coffee shop, but the truth is, farmers are just as intereseted in where their coffee is going and who is enjoying it as you are in who is producing it. It is important for farmers to realize that someone is appreciating their hard work, and to complete the feedback loop.
We believe that everyone should have the ability to control their own situation and future, by investing their time and energy in endeavors that will lead to their sustainability and prosperity if they choose to do so, not by providing these things for them. It’s easy to abuse this logic by overlooking systemic failures of political global capitalism to provide a level playing field. This is why we strive to break down barriers in the coffee supply chain to allow small-scale rural community members to have the same access to markets and premium pricing as large plantations and educated elites. If a farmer accepts our recommendations and develops a superior quality, sustainably-produced coffee, they will be compensated as such.
No handouts, but fair compensation
There is a lot of chatter out there about paying farmers more. Simply paying more for the same product, sold more cheaply elsewhere, is utterly unsustainable. There are also efforts in existance that pay more for no reason other than to clear the conscious of developed-world donors, and unknowingly distorts the market. If we were to pay much more than fair market value to farmers, and they got used to that level of income and adjusted their spending as such, then we dissappeared for some reason, they would be in a worse situation than had they never met us.
That said, many farmers are paid commodity price and their coffee is then sold as specialty, giving them a lower share of the value than to other farmers producing inferior quality. This is possible due to the lack of transparency in the supply chain, is unfair, and should be corrected. The logical way to calculate payment to farmers is based directly on the value of their green coffee to the end user, the roaster.
Transparency leads to empathy and mutual understanding. Verifyable transparency in our supply chain, business, and farming practices as a collective is the only way to guarantee responsible and sustainable sourcing.
Decisions and strategies based on research and experience
We believe in democracy and taking into account the opinions and wishes of the collective members. Nevertheless, our first priority is the holistic sustianaiblity of the farms and communities we work with and the collective itself. We possess experience and a wealth of research in rural development, agricultural economics, and the management of international trading organizations and use this knowledge to make decisions that are in the best interest of the families that we exist to support. We have worked with dozens of coops and associations over the years and have seen them get bogged down and even fail due to the lack of ability to make decisions as a group. We invest in professional farm assistance, sustainability projects, and provide farmers with tools they would not have purchased in otherwise. We price coffee based on it’s fair market value, not based on how much the farmer would like to earn. This style of organization may be criticized by some in the collaborative sector, but we feel it is the most responsible way to maintain and grow a prosperous organization and maximizes it’s potential to positively impact the quality of life of it’s members.
Sustainability is a word that can be interpreted in many ways and is often used to describe environmental efforts, ignoring the social and economic elements or overlooking the bigger picture. We define sustainability as a state in which something “will be available at or beyond the quantity demanded in perpetuity.” (Alden Dowds 2016) We feel that in all endeavors and especially when working with vulnerable communities, that it is important to evaluate the primary and secondary macro-effects of every micro-level activity and decision, and that strategies must be developed and implemented to preserve the long-term environmental, social, and economic sustainability of the entities and activities with which we interact.
You can’t change supply and demand. They will always exist and they will always dictate price. Period. It’s easy to stand on a soap box and complain about the unfairness of global capitalizm or “the system” without understanding how you fit into it and the forces that dictate it’s behavior. We realize and accept that we work in a global commodities market and try to reorganize certain aspects that we feel illogical or inefficient in a way that strives to derive value for farmers from value created for the consumer, all within the parameters of the global market.
Our goal is to make small-scale, artesanal coffee production sustainable. Here are our sub-goals:
- Fair, stable compensation for farmers
- Create empathy and mutual understanding in the supply chain
- Make coffee production a stimulating vocation for rural youth
- Incentivize environmental responsibility and castigate irresponsibility
Our founder, Karl Wienhold, was born in the US and worked for several years as an international trade consultant in different parts of the world, helping companies do business internationally. Later, he gravitated more toward the agricultural sector in Latin America, pivoting toward rural development economics, a shift solidified by a project in northern Cauca department of Colombia in 2012 and another creating fruit producer associations throughout Colombia. He noticed in almost all cases a lack of vision in supply chains and diminished returns for producers due to high levels of intermediation. Working in Brazil in 2013 he first envisioned a “direct trade network” of producers connecting directly with end consumers.
He met Frank Villada in 2013 who had been active in the specialty coffee sector in the Eje Cafetero region of Colombia for many years. Frank had a deep network of producers whom he had assisted in improving cup quality, but lacked access to markets willing to pay what their product was worth, not having an alternative to the commodity buyers that only evaluated physical quality.
Karl felt that coffee was the lowest hanging fruit as there was already an interest in an ethical supply chain, so the two decided to try to connect some farmers with some roasters and let so-called “direct trade” ensue. Both had other jobs and had no financial interest in the network, as for Frank it was something to help out his friends, and for Karl, it would be proof of his hypothesis as a researcher.
Very quickly it became clear that there was a lot more to “direct trade” than they wanted to hear. Someone needed a registered company with a license to exort coffee. There was an incredible amount of paperwork and reporting to various government and quasi-governmental agencies. Someone had to sign an affidavit with the Colombian narcotics police taking responsibility for anything that might be contained within the merchandise. Quality control needed to be performed at each step in the chain by a professional cupper. Someone needed to import into the consumption country, coordinate shipping to the roaster, invoice, and ensure payment was recieved. Air freight was extremely expensive since none of the farmers were sending more than 5-10 bags. Most of all, no farmer was willing to let parchment coffee leave their farm without payment, much less wait 5-10 weeks to complete the process and bring in and convert currency. Paying someone to perform these activities was prohibitive, so they began putting up their personal savings to float the operations and dedicating more and more time to the project.
It was easy to see that the project was not going to be able to work on an independent 1:1 farmer-roaster basis, that a collective administrative and financial infrastructure needed to be established to allow the 1:1 relationships to reach the efficiency of the competition. Thus the DOT Collective organization was born. Karl and Frank decided that this was going to become their job, formed a Colombian export company, a US import company, and began recruiting US roasters and Colombian farmers to join the movement. At first, they lost money for every pound sold, since if paying for air frieght, it was impossible to pay the farmer what they deserved while charging roasters competitive prices. Little by little, they grew from shipments of 3-5 bags to full containers.
Today, the collective has grown to involve approximately 60 farms producing mircolots and 80 in the process of improving quality in Colombia. A Honduras chapter was incorporated in 2016, and they are now seeking to expand distribution beyond USA, currently entering Australia with their sights on other growing specialty coffee markets to be able to involve all of the producers interested in joining the Direct Origin Trading collective organization.
What does Direct Origin Trading actually DO?
Coffee producers that pertain to the DOT collective receive our support in implementing measures to improve cup quality, consistency, and the environmental sustainability of their farms. This includes cupping feedback, custom recommendations and guidance in experimenting to improve quality, and hands-on support at the farm level.
Farm-Roaster Logistics & Financing
Direct Origin handles for the farmer the entire logistical process from parchment coffee at the farm gate, dry milling, quality control, exporting, importing, and delivery to the roaster's door, as well as the risk, financial burden, and administration of this operation.
Direct Origin Trading acts as each small farming family's international marketing depertment, sharing their unique flavors and stories with roasters worldwide with the goal of building their brand and establishing lasting allinaces between farmers and roasters.