Source: FORTUNE SMALL BUSINESS

PROGRESSIVE ENTREPRENEUR
Brewing Social Change
Peace Coffee aims to stop the exploitation of poor farmers by purchasing their coffee at a fair price -- and marketing it to consumers who care.

 

Tuesday, December 10, 2002

By June Avignone

Web exclusive

There is a haunting image in Scott Patterson's mind from his last stay in Central America, where he worked as an English teacher. Lines of Costa Rican farmers and land laborers walked along dirt roads toward the cities, leaving their coffee fields behind to look for jobs in sweatshops, known as maquiladoras, because they were unable to support their families. Often, these long journeys were in vain.

Coffee is one of the world's most heavily traded commodities, with close to 25 million people relying on it for income. Yet many farmers and hired laborers live in abject poverty. As president of Peace Coffee (www.peacecoffee.com), an organic coffee roaster and distributor located in Minneapolis, Minn., Patterson hopes to change the marketplace so that farmers in developing countries won't have to struggle against such dire conditions. By awakening consumers to the stories behind the lattes they drink every day and giving coffee beans a human face, he hopes to persuade shoppers to choose blends grown under conditions in which farmers have a chance to make a decent living. "Recognizing that coffee doesn't just end up in our cup in the morning, that it is a lifestyle to someone else, is key to Peace Coffee's purpose and success," says Patterson, 32.

To that end, Peace Coffee has devoted itself to making it possible for socially conscious coffee lovers to buy beans for which they can be 100 percent sure the farmers received a decent price. The company buys organic coffee for about $1.40 a pound directly from farmers' coops in Mexico, Guatemala, and Ethiopia. Then Peace Coffee turns around and sells it to American consumers at high-end markets and natural food stores in resealable bags that feature the company's logo -- a mandala-like turtle shell based on the mythological symbol for the union between the earth and spirit worlds. The prices the company pays farmers are set according to international Fair Trade standards, which guarantee the farmers a minimum rate of at least $1.26 per pound (www.fairtradeffederation). That's nearly three times as much money as they would ordinarily get from exploitative middlemen known as coyotes, whom many were previously forced to rely upon to get their crops to the big companies that ultimately market coffee to American consumers. The farmers who benefit from this arrangement, in turn, adhere to strict standards of organic farming. The coffee they grow is cultivated in the shade of other trees to preserve critical bird habitats and soil nutrients.

Fair Trade, which got its start in the 1960s in Europe, is commerce with a commitment to developing equitable partnerships between marketers in highly industrialized nations and low-income producers in developing regions of the world. Of $3.6 trillion of all goods exchanged globally each year, Fair Trade products -- which range from coffee to bananas to soccer balls -- account for only .01%. Still certified Fair Trade coffee imports are catching on slowly. They increased in the U.S. from 4.3 million pounds in 2000 to 6.7 million pounds in 2001.
Peace Coffee is one of the few companies that specializes exclusively in selling coffee that meets Fair Trade criteria. Its growing number of blends all adhere to Fair Trade rules, as reviewed by TransFair USA (www.transfair.org), an international certification agency. To label itself as a Fair Trade roaster, a business must deal with farming cooperatives directly, foster long-term trading relations based on mutual respect, provide advanced credit during the harvest to keep farmers out of debt to coyotes, and purchase only from farms that practice chemical-free, sustainable agriculture. Roasters using the TransFair USA label pay TransFair a 10-cent-per-pound licensing fee for promotion and administration costs; farmers pay nothing to be part of the Fair Trade system.

Patterson began working for the nonprofit that later evolved into Peace Coffee in 1996, after his stint working in Costa Rica as an English teacher. While he was there, he had the opportunity to visit farming coops, which cultivated everything from coffee to dairy products. "I became interested in how populations could develop models to benefit themselves, instead of a poor-rich status quo," says Patterson.

Upon his return, he heard about a fair trade startup project subsidized by The Institute for Agriculture and Trade Policy (www.iatp.org), a Minneapolis-based international agricultural and environmental think tank. IATP invested $45,000 to buy one container of coffee (about 40,000 pounds) from a co-op of organic farmers in Oaxaca, Mexico that sells to the Fair Trade market. "I couldn't have scripted my life any better," said Patterson of his timely union with the group of young activist, who imported and roasted beans under several non-profit labels in IATP's basement offices. In 1998, the roasters consolidated into a single, for-profit enterprise and Peace Coffee was born, with Patterson as president. Under his leadership, the company has grossed more than $525,000 this year, and Peace Coffee has paid back IATP for seed costs. "As policy makers, we wanted to see how a fair trade model would fare in the real world," says Dale Wiehoff, vice president for communications at IATP and a former farmer. "The lesson here is how fair trade products can offer unusual entrepreneurial start-up partnerships between non-profit organizations, labor unions, church and community groups -- a model for making a profit while connecting to the big picture on the planet."

The company has managed to get its product onto the shelves of Minneapolis's abundant food coops, independent cafes, and natural food markets, building a following by brewing it and distributing it for free at select stores, then educating consumers about the story behind it. "It is easy to talk after a good cup of coffee most of the time," Patterson joked. After these tastings, Patterson engages in relentless follow-up to stay on the radar screen of management in case there is an opening for a new vendor. New accounts include Whole Foods in Minneapolis and Kawalski's, a gourmet supermarket chain. Through continual customer referrals, sales from Peace Coffee's website are growing as well, says Patterson.

With its local operations humming, Peace Coffee has been trying to spread its message outside of Minneapolis. In 1999 the company joined seven other small roasters from around the country and Canada to form Cooperative Coffees (www.cooperativecoffees.com), a green-coffee-importing cooperative which pools money to buy containers of fair trade coffees. Members may purchase a variety of organic beans in the volume they need. "This is a concept that has never been done before, and it is working because a small roaster can tie up a lot of cash in one container and then not even need the one blend all at once," said Patterson." Currently, 11 small roasters belong to the cooperative.

In keeping with Fair Trade environmental goals, Peace Coffee has recently moved its offices and roasting operation to the Green Institute (www.greeninstitute) in Minneapolis, located in a state-of the art business center built of recycled materials. Its new offices use recycled rainwater for internal plumbing needs. Its headquarters have a roof garden and changing rooms for employees who bike to work. The rooms come in handy. Nearly all of Peace Coffee's five full-time staff members make local deliveries by bicycle. "We don't need to go to the gym," said Patterson of those, including himself, who haul up to 200 pounds of coffee at a time in trailers behind their bikes.

Patterson believes consumer support for 100% Fair Trade certified products in the U.S. could ultimately change life for small coffee farmers around the world. But even with their small but growing support today, Fair Trade policies have brought about advancements in healthcare, housing, and education, he notes. In the meantime, Peace Coffee is working on its mission at its own, organic pace. "We are driven, greed is not our bottom line, and business is growing," Patterson says. "It is our hope to change things for people who don't have the option of just picking up and going someplace else to change the circumstances of their lives, to let them know there is hope where they are." That's a far cry from a world where the coyotes rule.
June Avignone is based in Paterson, N.J.
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