Boosting coffee transparency with ‘100% direct trade’: Online platform works to improve farmer profits and roaster value
Global venture Typica entered the market with the aim of boosting transparency in the coffee supply chain.
Prior to its launch, green coffee trading was only available in extremely large quantities via shipping container.
“The minimum container weight is 18 tonnes,” explained Typica co-founder Ayane Yamada. “The rest has to be shipped by air, so the freight rate cannot be matched by one company.” This means that ultimately, the shipping costs become higher than the cost of the beans.
Online platform Typica is on a mission to disrupt green coffee distribution by enabling a significantly smaller minimum trading quantity, of just one single 60kg jute bag, via direct trade.
“We are able to reduce the sales [minimum] because we accept pre-orders online,” Yamada told this publication.
Increasing transparency for producers
Globally, around two billion cups of coffee are consumed every day. This makes coffee the second most traded international goods after oil.
However, the coffee industry faces a number of challenges. Aside from deforestation and climate change, price swings place coffee farmers’ livelihoods at risk. Further, a lack of transparency allows for unethical practices to fly under the radar.
Typica’s system enables small-scale coffee producers, especially family-run operations, to participate in direct trade. As a result, these producers can set their own prices without being affected by the volatile fluctuations on the international market.
To increase transparency, Typica provides supply chain and price breakdowns for all distributed lots. It also supports producers and roasters to create a ‘face-to-face relationship’, with the idea of fostering ‘mutual understanding’ and to ‘improve communication’.
Ways of communication between producer and roaster vary, we were told. A bulletin board on the online platform allows for some communication, while others communicate directly via social network services.
“In a world where more than 3.5 billion people are connected on the internet, there is an increasing opportunity for coffee producers to distribute as direct trade,” explained co-founder Masashi Goto. “Providing the infrastructure to more than 20 million coffee producers (around 100 million including their families), can change their lifestyle and their lives.
“I believe that by increasing directly traded green coffee, we can simultaneously improve the quality of life for producers, roasters and consumers, as well as increase the sustainability of our world.”
To date, producers have sold their coffee via Typica at a price three to 30 times more than that of the international market.
Direct trading for coffee roasters
The ability to trade directly is also a boon for coffee roasters. Conventional direct trade, which as Yamada explained uses an 18-tonne unit of trading, makes it ‘extremely difficult’ for even large-scale roasters to trade directly.
According to Typica, direct trading was also a challenge for small- and medium-size roasters because of trading quantity and high financial costs. “In many cases, there were no alternative options but to depend on trading companies for all aspects of trading – from inventory checks to purchases,” noted the business.
By trading directly, coffee can bypass these trading companies. However, Yamada stressed the Typica concept is ‘not about cutting out the middlemen’.
“It is to ensure transparency so that we can help resolve the exploitation of producers and ambiguous purchasing processes by roasters.”
Within its first year since launch, Typica has expanded its network to more than 2,000 producers and roasters from 12 countries.
In Japan, where it launched in April this year, more than 800 roasters have registered on the platform. “One of the top 5 biggest Japanese trading companies is also buying from Typica,” said Goto.
By this October, Typica will have been used to distribute to 38 countries, including the Netherlands, the UK, France, Germany, Italy, Spain, Denmark, Norway, South Korea and Taiwan. The platform is also now available to roasters in the UK.
By 2025, the platform aims to have onboarded more than 5,000 producers across 70 countries worldwide.
“Our objective is to empower the individuals in the coffee industry, to increase the sustainability of high-quality coffee production, and to drastically improve the experience of coffee lovers by rejuvenating the worldwide coffee community of producers and roasters,” noted the firm.