Comprehensive and Detailed Explanation From Exact Extract of Documents:
The practice described is known as Direct Trade. Unlike Fair Trade, which follows certification
standards set by external bodies, Direct Trade involves companies directly sourcing from producers,
often providing higher prices and more investment in local communities. The L5M5 study guide
(p.309) explains that Direct Trade is particularly common in coffee and cocoa supply chains, where
companies wish to build stronger, transparent, and ethical relationships with producers. It differs
from Fair Trade in that it avoids third-party certification costs and focuses on building trust through
long-term partnerships. Procurement professionals must understand both models when sourcing
ethically in international markets.
📖Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.309
