Fair
Trade Coffee
(From Winter/Spring 1999)
Black, no sugar. That's the way
I like it. Actually, I love it. And apparently so does the
rest of America. It's coffee, it's strong and it's everywhere.
by Dave Brian
Fair Trade Coffee By Dave Brian Black,
no sugar. That's the way I like it. Actually, I love it.
And apparently so does the rest of America. It's coffee,
it's strong and it's everywhere. I can see two cafés
from where I now sit—in a cafés. Coffee carts
line our city streets. We find coffee on airplanes, on trains,
in gas stations. Vending machines in laundromats sell it.
And there's hardly a restaurant or tavern in America that
doesn't serve it.
The more I thought about the rapidly-increasing
presence of coffee all around us, the more curiosity drove
me to find out more about the coffee market. A visit to
the library provided some quick answers.
The Statistical Abstract of the United
States reports that in 1995 (the most recent statistic available),
U.S. consumers drank 5.4 billion gallons of coffee. Adding
the estimated 8.5% average per year for coffee consumption
growth brings the figure up to 6.3 billion gallons for 1997.
The 1998 edition of the CRB Commodity Yearbook reports that,
in 1997, the United States imported an estimated 1.3 million
tons of beans—2.6 billion pounds, while world production
for the 1996-97 season weighed in at over 6,790,000 tons.
Granted, statistics should always be viewed
with some skepticism, but what these clearly indicate is
that coffee trade is an enormous—and growing—industry.
And a closer look reveals this beverage's enormous influence.
What I learned was that coffee has a wide and profound effect
on entire populations and millions of acres of land; that
to increase production, the current trend is toward farming
large, treeless plantations that use chemical inputs and
keep wildlife out; and that small farmers are locked out
of the coffee market. But I also learned of an alternative
to traditional coffee trade that may soon change this trend.
The Current Situation
Nearly all coffee beans are imported from
Third World countries, and of the world's production, beans
from small farmers make up the vast majority. Yet, most
small scale farmers are living in near poverty conditions.
Mexico's premier coffee organization, Coordinadora Nacional
de Organizaciones Cafetaleras, reports that, although coffee
generated $658 million in Mexico last season and is the
nation's number one export crop, a small grower's average
annual income is only $650 in U.S. dollars. How can this
be?
"The gap between the few who are
in power and the poor is large," says Rosario Castellon,
manager of PRODECOOP farmers' cooperative in Nicaragua.
According to Neil Harvey's "Rebellion in Chiapas"
(Transformation of Rural Mexico, No. 5), over 90% of coffee
growers in Chiapas, Mexico, farm an average of 11 acres
each, while wealthy plantation owners, which make up .15%
of all coffee growers, control an average of 220 acres each.
These small farmers are unable to compete with the production
efficiency of large plantations, thus they are locked out
of the market and forced to sell their beans at very low
prices. "Farmers often need quick money, so they accept
below-market offerings—instant cash—from middlemen,"
says Bill Harris, co-founder of Cafés Campesino,
a "fair trade" import company in Americus, GA.
On a basic level, "fair trade"
(not to be confused with free trade) focuses not on resale
profit, but on the means of production, particularly the
effects on the producer. Organizations like Cafés
Campesino conduct regulated trade that ensures that producers
benefit from their efforts and make a fair living. It's
a growing sector of trade that can help turn positive the
profound effects of one of the largest imported commodities
in America.
The traditional system of coffee trade
goes something like this: small farmer / middleman / processor
/ exporter / U.S. broker / trader / coffee company / distributor
/ store / consumer. Each of the many steps along the way
costs money—with the largest amount taken by the middlemen—and
is reflected in the price we pay at the retailer. Middlemen
(known as "coyotes") purchase beans directly from
the farmers and, depending on the current market price,
are able to limit the amount they pay. Naturally, the coyotes
aim to pay the lowest price possible to maximize their own
profits. This price may not even cover the cost of production.
Then why continue to farm? It seems logical
to think that a producer who does not realize a profit would
drop his or her efforts and search for another means of
survival. In America that's common, but in some Third World
countries a vast range of opportunities doesn't exist. "For
many workers, the choice to work for more or less money
or in better or worse conditions isn't available—the
choice is between working for little money in any conditions,
or starving," says Mimi Stephens, former Executive
Director of the Fair Trade Federation, a nonprofit group
that brings fair trade producers together with consumers.
"Small farmers are willing to work season to season
with only the hope to make a living."
Harris toured Mexico and Central America
for three months with business partner, Aileen Pistone,
researching the need for fair trade coffee before starting
Cafés Campesino. "Some farmers are relatively
well-off," she says. "Others are dirt poor, but
typically the small coffee farm is very poor—and the
harvest, a family's only source of cash."
The Fair Trade Alternative
One can buy fair trade clothing, crafts,
musical instruments—you name it. Generally, and depending
on the item being produced, this is accomplished by guaranteeing
small producers a purchase price that earns a profit, and/or
ensuring healthy working conditions for employees of large
producers. In the case of the coffee trade, the main concern
is guaranteeing a profit, although there are other criteria,
as established by European fair trade laws.
Consider Equal Exchange for example—a
coffee importer in Canton, Massachusetts. Equal Exchange
is the fair trade coffee importer of the United States,
importing 100% of its coffee according to European standards.
These standards establish the following trade criteria:
producers must be organized into democratically-run farmers'
cooperatives; importers must pay a guaranteed minimum price
that covers production costs and ensures a profit (including
a premium that is to be used in consultation with the producers
for their social and economic benefit); importers must arrange
for advanced payment; importers must commit to a long-term
trading agreement with the co-op.
Equal Exchange trades with co-ops from
El Salvador, Nicaragua, Guatemala, Peru, Tanzania, Costa
Rica, Columbia and Mexico. By forming into co-ops, small
farmers pool resources, which enables them to compete in
the market. "It's power in numbers. A family that owns
a couple hectares of land doesn't have the resources to
market their product themselves," says Eliza Brown
of Equal Exchange. "Being a part of a coffee co-op
gives them the power to compete." Each farmer participates
in the governing process of the co-op.
Equal Exchange pays a minimum price of
U.S. $1.26 per pound of unprocessed beans. Subject to fluctuation,
the average market price has gone to as low as $0.50 per
pound (some types of coffee to less than $0.40/lb). Furthermore,
Equal Exchange offers a bonus of $0.15/lb. if the producer
is selling certified organic beans. "We work with them
to get organic certification, supplying the information
they need; bringing them together with certifiers,"
says Brown. Switching to organic cultivation preserves soil
quality, improves product quality and prevents water contamination.
Two-thirds of Equal Exchange's coffee import is organically
and shade grown. (See sidebar.)
Through fair trade, the chain of intermediaries
is broken and the payment is more direct: small farmer /
farmers' cooperative / coffee company / store / consumer.
The guaranteed payment ($1.26/lb) is established to not
only cover the cost of production, but to create a profit.
Included in the purchase price is a premium that the co-op
must use to directly benefit the community. For example,
UCIRI, a co-op in Mexico, built the first public bus line,
constructed the only secondary school in the area and built
a community health clinic with the help of the premium over
the years.
Equal Exchange provides advanced credit
to and establishes long term trading relationships with
farmers. Besides helping farmers to sustain a livelihood
between shipments, these provisions create income security.
The fear of living from season to season is extinguished,
allowing farmers to live more comfortably and plan for the
future.
In addition to providing a tool through
which small farmers can compete in the market, co-ops empower
and educate the farmers. "The co-ops consist of people
who have organized themselves," says Harris. "It's
very empowering to become an active member of an organized
group." Co-ops provide training for crop diversification
(planting other crops along with coffee plants to supplement
income), as well as technical assistance on how to compost
and increase production. This is information that most small
farmers wouldn't have access to without the co-op.
"The history of the coyote paying
below market prices shows that this system keeps them down,"
says Harris. "The farmers are trying to break out of
this system, and fair trade, with the establishment of co-ops,
really gives them the opportunity."
The Future of Coffee Trade
So I buy a cup of coffee—black,
no sugar. Did I support fair trade? Most likely not. Not
many places sell fair trade coffee—yet.
Fairtrade Labeling Organizations International
(FLO) is a worldwide umbrella of fair trade monitoring groups
that issue labels to products meeting fair trade criteria.
Before the creation of FLO, one of these groups, Transfair
International, awarded the license to use the name Transfair
to a group in the United States, creating Transfair U.S.
This past May, Transfair U.S. received a grant from the
Ford Foundation to help implement a consumer education plan.
"We hope to have a coordinated national launch in the
market by November 1998," says Transfair U.S. Executive
Director Paul Rice.
The concept behind Transfair U.S. is to
make it easy for consumers to identify fair trade products
by marking the product with the Transfair logo. "In
the following months we will need to have coffee roasters
across the nation sign up with Transfair U.S., and consumers
and consumer groups who support fair trade to show this
support." The tentative plan is to include a national
letter-writing campaign and public visits from small farmers
from various countries.
According to Rice, who developed the marketing
plan for Transfair U.S., "A significantly large portion
of those surveyed were concerned about the plight of coffee
producers, and if given the option, would buy small farmer
coffee over other brands." Cost was rated last in importance
behind taste, convenience, and means of production. It's
important to note that fair trade coffee does not cost more
than current, gourmet-quality coffee. The importers are
able to pay more money to the farmers by reducing the number
of steps between the farmer and the consumer, not by charging
the consumer more. If things work out as planned, large
scale coffee trade will be changing in the near future,
and consumers will be given the opportunity to choose between
fair trade-grown coffee and traditionally grown coffee.
How to Support Fair Trade Coffee
First and foremost, fair trade coffee
needs to be placed on a level playing field with traditional
coffee. It needs to be convenient and accessible. We need
to be able to walk into a cafés and order a fair
trade cup; to be able to grab a bag of fairly traded coffee
beans off the supermarket shelf. The only way to have a
choice is by making the product available to consumers,
and the only way to do this is to make it clear to producers
and retailers that we want the option to buy fair trade
coffee. "When you buy coffee," says Harris, "you
are voting on which systems you support."
As consumers, we can support fair trade
coffee by purchasing Equal Exchange beans and looking for
the Transfair U.S. label on products in the future. We can
inform our supermarkets and favorite caféss that
we want to drink fairly traded coffee. Although Equal Exchange
is the only large-scale, consumer-oriented fair trade coffee
importer in the U.S., other companies assume a more behind-the-scenes
role. Cafés Campesino sells fair trade coffee beans
not to consumers but to roasters. Contact them to find retailers
that sell their beans.
For more information about Equal Exchange,
visit their website at or write Equal Exchange, 250 Revere
Street, Canton, MA 02021. Cafés Campesino can be
reached at 132 E. College St., Americus, GA, 31709 (912)
924-2468, or at www.cafecampesino.com. For more information
about fair trade in America, write The Fair Trade Federation,
P.O. Box 126, Barre, MA, 01005, or visit their website at
www.fairtradefederation.com. To receive their publication
Consumer's Guide to Fairly Traded Products, call 1-800-688-5186.
Dave Brian is a California-based writer.
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