Some roasters or sellers regard Fair Trade as a “handout” or subsidy. Tom, of Contra Café, notes that “Fair Trade is getting better at finding high quality coffee but a portion of what they buy is low quality bought at a (higher) price. The farmer gets the higher price not because he/she has outstanding quality but rather because they happen to be members of a coop with strong links to Fair Trade.” The current minimum Fair Trade price paid to farmers for conventionally-produced coffee is $1.26 per pound; for organic coffee, it’s $1.41 per pound. Contra Café, on the other hand, pays their farmers $1.50 per pound for what they deem the best-quality beans. Another roaster, Groundwork Coffee Company*, also prides themselves on establishing direct relationships with the farmers and cooperatives who grow the coffee they sell. A written declaration on their website notes that, until recently, they chose not to have their coffees Fair Trade-certified, and their reasoning follows:
*Editor’s Note: The company spells its name completely in small letters, but because this looks like a proofreading error in the context of our story, we have chosen to capitalize it.
“Most of the coffees we buy, and every one of the relationship coffees in our inventory are purchased at prices well above the fair trade prices set by TransFair. Therefore we refer to these coffees as fair trade, or more accurately, fairly traded coffees. In fact, the majority of these coffees are certified as fair trade at origin. However, until now, Groundwork has resisted paying TransFair USA for certification for a number of reasons. Our primary reason for not working through TransFair is that through their program, only coffee produced by cooperatives qualifies to be certified by TransFair as fair trade. This leaves many wonderful and committed family farmers unable to obtain TransFair certification. Several of the coffees we buy come from independently owned and operated farms. These farms are models of responsible land stewardship and sustainable agricultures and business practices. Although we pay them well above the fair trade price for their products, we cannot have them certified through TransFair because of their status as independent farms.
Additionally our decision not to seek TransFair Certification is based on differing philosophies about how to promote coffee quality. We believe the TransFair model makes no provisions for compelling coffee growers to improve the quality of the coffees they produce. Rather, the model of paying blanket fair trade prices for all levels of coffee quality can only foster a climate of mediocrity. At Groundwork, we believe that failing to assign value to coffee quality is a disservice to the farmer and smallholder alike. Instead we prefer to participate in a program that rewards and encourages excellence in products and growing practices. We believe the most sustainable business model addresses value rather than prices and subsequently rewards the best qualities with the best prices.”
I have checked with the President of Groundwork, Ric Rhinehart. Although he will not permit me to quote the exact price he pays for a pound of beans, because he doesn’t like to see “raw green pricing without a look at the costs associated with converting coffee into a roasted pound,” the minimum price groundwork is currently paying, which happens to be for an organic coffee, is some 19% above Fair Trade’s “floor” (or minimum) price for organic coffee beans.
License Fees
If you sell coffee, for each country with a Fair Trade program in which you wish to sell, you must pay to become a Fair Trade licensee, even though the certification requirements are the same across the board for all member nations. Ms. Chettero explains this policy by saying that it better allows each member country to track the coffee supply chain. If all of the Fair Trade activity was centralized, say, in Bonn, Germany (the headquarters of FLO), it would be far more difficult to follow any “chain of custody.” As she notes, “A lot can happen between the farm gate and a U.S. port.” Then, too, Ms. Chettero cites cultural and linguistic disparities between member nations, remarking that they’d be a great hindrance to raising consumer awareness of Fair Trade. And the primary relationships Fair Trade seeks to cultivate with businesses in each country would likely be unviable. While it’s true that US consumers differ greatly from those in Japan or Europe, I don’t know enough about consumer differences between nations, or Fair Trade’s relationships with coffee businesses, to be able to comment on her statements. Still, for smaller-scale roasters and coffee businesses, it often makes selling their coffee in other countries an impossibility; they simply can’t afford the fees. (Fees for Fair Trade certification for coffee are paid by the roaster and based on the number of pounds roasted per year. For all other commodities, the certification fees are paid by importers.)
Environmental Issues
According to the TransFair USA website, most coffee that is Fair Trade certified is both shade grown and organic, but neither is mandatory. FLO was concerned, I was told, about “setting the bar too high.” The “organic” label requires another degree of certification, and it was feared that poor coffee farmers would turn away from the idea of Fair Trade if too many certifications were required. Ms. Cheterro assured me that Fair Trade was the beginning point for many farmers to transition into organic agriculture, but I’ve been able to find no independent research confirming that. I was also told that Fair Trade coffee requires integrated pest management (IPM), a system which, while not organic, is less dependent on agrochemicals. Since shade grown coffee supposedly cuts down on pests, the logic is that most Fair Trade coffee is shade grown by default.
As is the case with organics, there are accusations of cheating. A letter in the London Financial Times dated September 8th of this year states that Peru, the world’s top exporter of Fair Trade coffee, is paying workers less than the legal minimum wage. Allegedly, Canadian satellite data given to the paper indicates that roughly one-fifth of coffee from one association certified as Fair Trade is being illegally planted in what should be protected national forest. It’s also been reported that non-certified coffee is being stickered and sold as Fair Trade. The Fairtrade Foundation (the U.K. equivalent of TransFair USA) has denied these charges, issuing a strongly-worded reply, and has sent inspectors to Peru to investigate the situation. The Financial Times maintains that four out of the five certified farms the paper visited were paying casual laborers less than the minimum wage; the Managing Director of FLO insists that such an occurrence is not systemic in coffee. However, the head of the Peruvian Coffee Chamber, a private exporters’ group, has declared that no one in the industry is paying workers minimum wage, as producers just can’t afford to do so. Nicole Chettero has told me that, at least as of mid-September, no evidence for any of these charges had been given to FLO, though it had been requested.
It is no less than just to try to provide decent living and working conditions for the people who ensure that millions of Americans can have their daily caffeine fix, and Fair Trade is a beginning toward that. The TransFair USA employees I’ve encountered are invariably enthusiastic, and I believe they’re interested in doing real good. Chris Neumann of Sweetwater Organic says that Fair Trade “is a starting point that makes a difference in peoples’ lives, but it isn’t the only model.” And Fair Trade is still a very young movement. There’s been tremendous hype surrounding the idea of Fair Trade, and the coffee industry is almost unimaginably enormous and complex. What the future will hold for Fair Trade is anyone’s guess.
