Coffee News: from Seed to Cup

How Coffee Roasters Can Use Direct Relationships With Producers

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There are many forms of direct relationships within the coffee industry, including importers who label themselves as direct trade. But when a roaster has immediate contact with a producer, there can be a number of benefits.

Read on to learn more about my experience of using direct relationships and how such an arrangement might be beneficial to you.

Lee este artículo en español Tostadores: Cómo Manejar Las Relaciones Directas Con Caficultores

Finca El Paraiso in La Libertad, Huehuetenango, Guatemala. Credit: Urisar Ferneldy de León for De León Coffees

How to Form Direct Relationships With Producers

Every roaster has to decide how to source green coffee beans. There are different models of buying beans, including using an importer and by direct relationships with producers.

In 2015, I started a micro-roasting business in the rural midwest of the United States. Out first large-volume green coffee partner was a direct relationship with a producer in Nicaragua, which continues to this day. As the business has grown, we’ve added an additional direct relationship with a producer in Papua New Guinea. In 2018, 53% of our coffee was sourced through direct relationships and the rest through an import company.

Because direct relationships can take different forms and the term “direct trade” can mean many things, I’ll define how our arrangements work. These coffee producers grow, harvest, process, and export their own coffees or those of partner farmers, import those coffees to a high-consumption country like the US, store their coffees with a contract warehousing firm, and then sell them directly to roasters like us.

Learn more in What Does “Direct Trade” Really Mean?

Coffee roasters visit a coffee farm in Guatemala. Credit: Ricardo Montalvo

It was surprisingly easy for me to find sourcing partners. While I was still a hobby roaster in my garage, I searched #specialtycoffee on Instagram. Since I didn’t have experience in the industry and I live in a rural area without specialty coffee companies, I used social media to make connections. I followed established specialty coffee roasting companies, third wave cafés, barista champions, roasting competition winners, industry insiders, and influencers.

There are also a lot of coffee producers on Instagram. I stumbled across a few producers who sell direct to roasters and made contact with our first partner in Nicaragua.

If you’re looking to make your own direct relationships, I highly recommend using social media to find connections. You can then contact producers directly and ask for green coffee bean samples. Of course, there are also real-world opportunities to make connections, such as local cuppings, auctions, or events specifically created to connect roasters and producers.

Learn more in How Can Coffee Auctions Enable Direct Trade Relationships?

A cupping table at Producer & Roaster Forum 2019, featuring details of each producer. Credit: Fernando Pocasangre

Balancing Direct Relationships With Your Wider Sourcing Strategy

Many roasters want to offer a range of coffees from various origins. If you work with just one producer, this is impossible. So you may want to make direct relationships a part of your sourcing strategy, rather than use it to fulfil all of your needs. 

In my first two years of business, I sourced 10% of my green coffee through one direct relationship, and used an importer for the rest of my coffee. My goal is to always maximize freight costs, since shipping one sack of green coffee usually costs as much as shipping 10 through a freight company.

Roasters need a variety of coffees to stay competitive, but you also want to support your producers with decent size orders. Many producers have different coffees at different qualities for sale, so consider buying a few different qualities for different uses. 

For example, from my direct trade partner in Nicaragua, I usually buy a large amount of coffee that scored in the low 80s for blending, a smaller amount of mid-to-upper 80s for single origin offerings, and one or two sacks of expensive high 80s/low 90s for high-end/limited availability and to enter into roasting competitions. This combination allows me to fill a pallet or two with coffees for different uses and keeps my shipping cost per unit down.

You may also like A Roaster’s Guide to Green Bean Samples

Coffee producers from Veracruz and Chiapas at a public cupping in Guadalajara, Mexico. Credit: Ana Valencia

If you’re looking to add direct relationships to your sourcing, I advise starting small and getting to know the details before scaling up.

Because my first direct relationship was only 10% of my coffee sourcing in the first two years, I was able to learn the ropes of green coffee sourcing without much risk. It allowed me to understand cash flow with respect to sourcing and production. When I had gained confidence, I developed a plan to bring on another direct relationship, which I did early last year.

Now over 50% of my green coffee comes through direct relationships, so more of my money is going to producers and making a difference to their communities.

Roasters cup coffee in Brazil. Credit: Julio Guevara 

The Benefits of Direct Relationships

The producers that I have established direct relationships with are social enterprises, that is, for-profit business that try to do good through their business. These types of organizations are common in specialty coffee, but not all direct relationship producers fall into this category. 

By doing business with social enterprises, I know that I am helping to improve life for producers, their families, and their communities. If this is something that you value in your business model, make sure to research who you’re buying from and how much their goals and ethics align with your own.

Coffee roasters visit Finca La Labor in Guatemala. Credit: Ana Valencia

Direct relationships can also have benefits for you, the roaster. By taking out the intermediaries, you’re more informed on the origins of your coffee and can easily trace it through the supply chain. This is something that consumers are increasingly asking for and expecting from their food and drink manufacturers, regardless of company size.

If you’re able to visit your direct relationship partners at origin, you’ll also have a valuable marketing opportunity. You can show your customers that you’re serious enough about your sourcing relationships to dedicate resources to seeing first-hand where your coffee comes from. You may even want to bring current or potential clients with you.

Direct relationships also mean that you can communicate with producers about what you’re looking for in coffee. You may be able to work together to produce green beans that are grown and processed to fit your needs.

Ripe coffee cherries from Finca El Paraiso in La Libertad, Huehuetenango, Guatemala. Credit: Urisar Ferneldy de León for De León Coffees

Every small business is different and it’s up to you to decide whether direct relationships are a good fit for yours. But I am very happy that I began my roasting business with direct relationships built in from the start. Aside from finding amazing coffees, the relationships I’ve formed at all points in the supply chain are rich and rewarding.

What better way to honor a commitment to quality, traceable coffee than by fostering more direct connections with producers? It’s an experience that can have great benefits for both you and those you work with.

Enjoyed this? You may also like 5 Questions Roasters Should Ask Their Green Coffee Importer

Written by Brian Gumm of Ross Street Roasting Co.

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