What is Fairtrade and what is Direct Trade?Until a few years ago, Fairtrade chocolate was the measure of all things when it came to ethically produced bars. For some time, however, Fairtrade has been criticized time and again, new "fair" seals are springing up like mushrooms and approaches such as direct trade are also being discussed anew. And even if both terms are often mentioned in the same breath, they are essentially very different. However, what they both have in common is their focus on a more ethical and transparent supply chain. Fairtrade in particular has recently come under criticism because the Washington Post, for example, revealed that certified cocoa beans are neither free from child labor nor do they guarantee cocoa farmers fair wages.
The different approachesFairtrade is aimed at larger chocolate producers, while direct trade has so far been practiced by comparatively small manufacturers. Fairtrade is a certification system, while direct trade describes a type of procurement. And while Fairtrade is an international registered organization, the term Direct Trade can be used by anyone and everyone.
Direct trade thus describes a practice of sourcing raw materials. The chocolate manufacturers want to see for themselves how the cocoa farmers work, how they treat their employees and what the quality of the cocoa beans is. Through in-depth knowledge and knowledge from the network, producers choose the farms they work with themselves, build relationships with the farmers and buy the cocoa without intermediaries and, most importantly, without certification fees. This is how the Zotter team procures its cocoa beans, for example.
What confuses many people: When talking about directly traded cocoa beans, in some cases middlemen like Uncommon Cacao are still involved. In contrast to Fairtrade - where a huge international certification apparatus with questionable practices has to be co-financed - these small intermediaries are mostly local and focus on a specific country or region. This relieves the cocoa farmers in particular, as they do not have to work with all manufacturers individually. Traders like Uncommon Cacao also offer direct contacts, annual transparency reports, quality controls and concrete knowledge about working conditions and fair wages on site. In contrast to Fairtrade, there is no minimum percentage or minimum price for direct trade, but the prices do not fluctuate and are not traded on the world market. Instead, the prices paid are published and the quality and origin of the cocoa beans are transparently explained.
Therefore, direct trade - from the point of view of many experts - is the modern and transparent answer to fair trade. While many people would like to make more ethical consumption decisions, they are unsettled by the increasing jungle of dubious seals and certification programs. This approach has been criticized by experts such as Elizabeth Bennent as a 'label fatigue'. The author of the ' Handbook of Research on Fair Trade ' assumes that large corporations take advantage of this. They are betting that consumers will be overwhelmed by all the labels and will eventually give up and simply trust without doing more research. This is exactly where direct trade sets a counterpoint, because an attempt is made to create the greatest possible transparency so that consumers do not have to go into the research jungle themselves. But be careful: the term 'Direct Trade' is also not protected and is therefore sometimes used incorrectly. In contrast to Fairtrade, however, it is easier to see here whether the companies are serious about the approach or just as a communicative tool. In order to save you the research, we take a close look at all our manufacturers and only offer you ethically produced chocolates in our chocolate shop .
Why we at Theyo rely on Direct Trade chocolatesEven if we fundamentally support the idea of fair trade, it is anything but a guarantee for fair trade chocolate. There are understandable reasons for this and anyone familiar with global supply chains can understand this. Nevertheless, the certification is misleading and since it does not work (anymore), it is also not up to date. In order to really change something, the structures of the supply chains have to be adapted and the cocoa farmers have to be treated as equals. And this is where direct trade comes into play. Long-term contracts can only be concluded and the quality of the cocoa beans can be worked on together if the trading partners know each other. Through a direct relationship, working conditions can be better understood and reasonable prices can be negotiated.
Of course, one could also criticize that there is no external verification. After everything you now know about Fairtrade, one can of course also criticize Fairtrade and other certification organizations. Because Fairtrade is also not checked and seems to be more of a cover-up than a desire to create transparency.
Thanks to direct trading, we don't have to rely on dubious certifications. At Theyo, we take a very close look at where our manufacturers’ cocoa beans come from. If we don't find enough information, we'll investigate further. Because we too have heard about the dubious machinations of a well-known Berlin chocolate manufacturer, who simply came up with fantasy names for cocoa plantations that didn't even exist. In order to avoid this marketing scam, we are well connected in the cocoa industry and know the cooperatives and farms that our partners work with. Due to the greatly shortened supply chains, there are fewer or no middlemen. In this way, significantly more sales reach the cocoa farmers. And that is exactly what studies have been proving for decades: fair wages are the best way to combat child labor. This is the only way to ensure that families can be fed from wages and are not dependent on the support of their own children. According to the researcher Kristy Leissle, fair wages are therefore one of the most important means of combating child labour.
Instead of paying a flat premium on a price that is traded on the world market and therefore fluctuates greatly, direct trading is currently the best option. Here fair prices can be negotiated that are attractive for both parties. The focus even goes beyond fairness. Instead, aspects are considered that create real added value and therefore justify a higher price in many ways: high quality, a particularly sustainable cultivation method, a rare cocoa variety, a fine taste. It is not enough for manufacturers of fine chocolate to place a pseudo-label on their packaging. They actually want to change something and source fine, sustainable and ethical cocoa beans and not fair trade Santa Claus.
And why is direct trade chocolate so expensive?
We are also regularly asked this question in our chocolate tastings . And admittedly we were pretty shocked at the beginning. Because we quickly realized: if that is the "true" price for chocolate, under what precarious conditions must supermarket chocolate be produced? Of course, this does not only have to do with the conditions in the supply chains, but also with economies of scale. But today's conventional chocolate production is so thoroughly optimized that people, nature and the variety of flavors are left behind. Starting with the conventional cocoa plantations, for which rainforests are cleared. As a result, according to Oxford University, the carbon footprint of chocolate is almost as bad as that of beef . Child labor is still common practice, sometimes even child slavery . Finally, the cocoa beans are collected by a few exporters and imported into western countries already processed. The beans are over-roasted to such an extent that it is guaranteed that you will no longer be able to taste the aromas. Supplemented with cheap fats, flavorings and sugar, the chocolates are then sold in supermarkets at low prices.
The production of fine chocolate from directly traded beans stands in stark contrast to this. Direct relationships are maintained with the farmers who grow their fine flavor cocoa trees in permaculture or even harvest them wild. The cocoa trees are often old varieties that have been given new life. This contributes to their preservation and often saves habitats of special animal species. Some of the fine varieties come from unusual countries or places of origin, which in turn is associated with higher procurement prices. In addition, fine chocolate often has a higher cocoa content, as this allows the rare flavors to come into their own. The higher the cocoa content, the higher the purchase price. Because sugar and milk powder are significantly cheaper than fine flavor cocoa beans. This also explains why there is often so much sugar in ordinary supermarket chocolate.
Friend or Foe: the Fairtrade Santa ClausEven if the intention when buying a Fairtrade Nikolaus is a good one, it primarily gives the consumer a good feeling. However, the purchase often does not do much more than that. Why it is like that?
Fairtrade certification alone is not enough
Various studies, research projects and, last but not least, investigative media have found in the recent past that fair trade is often not enough. Despite certification, the cocoa farmers live in extreme poverty. Depending on the world market price, political conditions and other factors, Fairtrade increases farmers' annual income by a maximum of 10-16% . According to the World Bank, this means that income - despite "fair trade" - is still below the poverty line . And even if consumers often pay significantly higher prices, not enough gets to the farmers. Fairtrade has recently been heavily criticized because of Lack of on-site controls Far too often it has been proven that Fairtrade, despite certification, does not succeed in preventing child labor on plantations.
Fairtrade often no more than greenwashing
You've probably already wondered how Fairtrade chocolate can sometimes cost less than one euro in the supermarket. The trick: the manufacturers work with a quantity balance. In short, this means that not all cocoa beans in purchased chocolate have to be fair. Below you will find out exactly what volume balancing is all about! But even if a bar consists entirely of certified ingredients, most of the money still goes to large corporations or the Fairtrade organization itself. Depending on the political situation, it often happens that farmers in Ghana receive higher wages and more support from conventional trading partners than if they participate in Fairtrade. In addition, the conditions imposed by Fairtrade sometimes do not make much sense for the local farmers and accordingly do not improve their lives, but rather make them more complicated.
Are you fed up with Fairtrade Santa Claus, but fancy fair Santa Claus chocolate or chocolate for Christmas? Then have a look at our St. Nicholas tasting or let our delicious chocolate boxes convince you!
Do you frequent "analogue" chocolate shops? Then take a look at our tips on how to recognize really good chocolate .
FAQ Volume BalancingWhat does 'quantity balancing' mean?
Volume balancing means that fair trade and certified raw materials are mixed with non-certified ones. The quantities and supply chains must be recorded precisely, FLO-CERT controls this. Because, of course, only as many goods can be labeled as 'fair' that have been procured in accordance with Fairtrade regulations. However, this can then mean that a chocolate that is advertised as 'fair' was not produced from a single fair cocoa bean. Conversely, chocolate without a seal could have been made from Fairtade cocoa beans.
In which cases is the 'quantity equalization' used?
Quantity equalization is only permitted for selected foods: cocoa beans, tea, sugar and fruit juices. The thought behind it is good, because it is about avoiding food waste. If (smaller) Fairtrade farmers do not get rid of their raw materials, then quantity equalization can be used. So that the food does not spoil, the manufacturers can then also process it on conventional machines or store it in conventional warehouses. Normally, Fairtrade cocoa beans must be strictly separated from conventional ones. This is not possible with all other Fairtrade products, they are strictly separated and it must be completely traceable from which producers the Fairtrade products come.
Are the affected products labeled?
Fairtrade requires all affected products to be labelled. You have never seen the note "with quantity balance" on a product? This is probably due to the fact that it is not specified how the label must be designed or where it should be placed. That is why it is usually "hidden" in very small letters and without any further explanation on the back of the packaging.