What’s the Buzz on Fair Trade Coffee?

By Daniel Fireside

You’ve probably heard about fair trade coffee. Voters in Berkeley, California, recently voted on a referendum that would have required all coffee vendors to sell certified fair trade coffee (it lost). Desperate coffee farmers in Nicaragua have staged massive demonstrations to demand fairer treatment in the global marketplace. The global aid group Oxfam has launched a campaign to reform the coffee market. Locally, many coffee houses, restaurants, and even a major grocery store are proudly telling customers that their coffee is “fair trade certified.”

You might wonder, what is fair trade coffee, and why should I care about it?

Is your coffee fair? If you bought it at Cornell, odds are it’s not.

Coffee may be a small part of your budget, but the price of coffee is a life and death matter for the 25 million people around the globe who grow it for a living, as well as the millions more that benefit from the coffee economy. In fact, coffee is the second most valuable traded commodity in the world (oil is number one). Coffee revenue makes up a significant share of economic activity in dozens of the world’s poorest countries. Because the best coffee needs to be grown in mountainous regions and picked by hand, peasant farmers can be as efficient as large plantations. As a result, coffee is a popular cash crop for small farmers, who currently produce about half of the world’s supply.

Right now the coffee market is in one of its worst crises in history. The world price for green (unroasted) coffee was over $4 a pound in 1997. For the last few years the price has been stuck at about 50 cents a pound, well below the cost of production. The result has been catastrophic for the small peasant farmers and their families, and devastating for the economies of the producer nations.

Desperate Colombian coffee farmers are switching to a different addictive plant stimulant, coca (the raw material for cocaine), putting themselves in the crosshairs of the multibillion dollar US war on drugs. The fragile economies of coffee dependent nations in Africa, including the war-ravaged nations of Rwanda, Burundi, Uganda and Ethiopia, are on the point of collapse.

The countries of Central America have lost over $4 billion in the last two years alone due to the price drop. In Guatemala, where I recently spent four months conducting research, I saw that many rural villages had been completely abandoned by all working age men. Coffee prices had fallen so low that it wasn’t worth it to harvest their crops, and the coastal plantations were no longer hiring seasonal labor. Desperate for cash, the men have moved to overcrowded urban shantytowns, or set out on a perilous, and often deadly, journey across the US border.

The human cost of the coffee crisis is quickly mounting. Coffee dependent regions like Central America, where residents still struggle to cope with the legacies of U.S. sponsored civil wars and waves of natural disasters, are ill equipped to deal with the collapsing coffee market. Malnutrition is on the rise throughout rural Guatemala. In Nicaragua and Honduras the UN has called for international donations to combat outbreaks of famine and starvation. In the coffee growing regions of Guatemala, farmers told me that they had to pull their daughters and sons out of school in order to save on fees and perhaps add a few pennies to the family income.

Some argue that the recent price collapse is due to increased production by Brazil and Vietnam, helped by the generous support of international development banks. Others point to Phillip Morris (Maxwell House), Proctor and Gamble (Folgers), Nestle (Nescafe), and Sara Lee (Douwe Egberts – Cornell’s supplier until recently). These four companies control over 80 percent of all coffee consumed in the United States, and about 60 percent of coffee around the globe. While wholesale prices have plummeted by 80 percent in the past five years, retail prices have fallen less than 20 percent. The price difference has gone straight into the pockets of the giant coffee companies.

According to the International Coffee Organization, coffee revenues to producing nations have dropped from $11 billion in 1990 to $5.5 billion today. At the same time, coffee revenues to consuming nations have jumped from $30 billion to over $70 billion in the same period.

The big coffee companies say that the market will bring back a balance between supply and demand and the price will go back up. They remain unconcerned that poor farmers are paying the billions of dollars the companies are reaping in windfall profits. Decades of economic development are being undone while the coffee crisis plays itself out.

Rather than wait for a market fix, concerned coffee roasters and consumers are pushing their own remedy: fair trade.

What is fair trade coffee? Fair trade coffee got its start in Europe in the 1970s as a way to support progressive cooperatives in Central America and Mexico. With the help of international monitoring organizations and growing consumer demand for ethically traded products, the fair trade movement grown into a market worth over $400 million a year, that includes basic goods like honey, cocoa, tea, bananas, and other products.

A small farmer in the conventional market sells hundred pound bags of unprocessed coffee cherries for whatever a local buyer (known as “coyotes”) will pay. The coffee will change hands as many as twenty times before it reaches consumers as roasted beans. For what ends up being a $10 bag of coffee, the small farmer will get as little as 10 cents. Turned into 40 cups of coffee at $1.00 per cup, this means that the farmer is getting about .0025 percent of the value of the coffee.

Under fair trade rules, a coffee roaster has to guarantee a minimum price of $1.26/lb for green coffee, and pay an extra $0.15/lb premium if the coffee is certified organic. (Nearly all fair trade coffee is organic. However, only a small percentage of organic coffee is fairly traded). This price represents a living wage to farmers, reflecting not just the costs of production, but also the expenses of shelter, food, and education. Fair trade roasters pay 5 cents above the global price if it rises above the fair trade minimum. Roasters must also sign long term contracts to discourage speculation and provide credit to farmers to get them through the growing season.

To sell to the fair trade market, farmers must belong to a cooperative that abides by democratic principals and promotes sustainable farming techniques. All of the fair trade coops I visited this summer received training on organic farming techniques and learned how to grow coffee in a way that promotes economic and biological diversity.

Fair trade is definitely living up to its promise in the coffee growing regions I visited. Farmers in San Juan La Laguna, a small indigenous village on the shores of Guatemala’s beautiful Lake Atitlan, have been selling all of their coffee to a fair trade roaster in California for the past ten years. Benjamin Chojotillo, the president of the local coop proudly showed me the concrete houses that the farmers built, the coffee mill that allowed members to keep more of their profits, and the composting units that turned coffee waste into rich organic fertilizer instead of ground water pollutants. “We take great pride in our coffee plants,” Benjamin told me under the verdant coffee canopy near his home. “Selling to the fair trade market means we get a just price that sustains our way of life.”

Unfortunately, most fair trade farmers don’t do as well. “The problem is that the fair trade market is just too small,” explained Gerardo de Leon, the manager of FEDECOCAGUA, a cooperative umbrella group that represents over 30,000 farmers in Guatemala. “We’d gladly sell all our coffee to the fair trade market, but because of low demand we can only sell about 20 percent there. The rest we sell on the conventional market at the best price we can get. We spread the fair trade benefit to all the farmers.”

I asked Gerardo what the most important thing that US consumers could do to help coffee farmers. Without hesitation he replied: “Expand the market for fair trade coffee.”

Although consumer awareness about coffee is steadily growing, certified fair trade coffee is barely a blip on the global radar screen. In Europe, where fair trade coffee is easily found on supermarket shelves and coffee shops, about two percent of coffee is fair trade. In the US, the number is far from reaching even one percent.

This is a great opportunity to make a difference right here in Ithaca. According to university officials, Cornell dining establishments serve up over one million cups of coffee each year. If this coffee was traded fairly, the direct impact on farmers’ lives would be enormous. In response to requests from student activists, the university agreed to serve fair trade coffee as an option in several Cornell Dining-run cafés. Flavored and decaf coffee is still unfair, as is all the coffee in dining halls and department-run cafés, like the Green Dragon and Temple of Zeus.

A collective of student activists called Fair Trade Cornell is currently lobbying Cornell Dining to guarantee that all of its coffee will be certified fair trade by Earth Day, 2003. It’s an ambitious goal. Although student activists are working on this issue across the country, no other university has gone 100 percent fair trade (Brown is getting close).

Cost and quality are not an issue. Although fair trade coffee may be slightly more expensive by the pound, it costs at most a penny or two more per cup. Fair trade coffee is the same high quality gourmet coffee that companies like Seattle’s Best already sell. The only difference is that the farmers are guaranteed to get a fair price.

Pressure from student activists got Cornell to agree to guarantee that university apparel would not be sewn in sweatshops. Now it’s time to make sure that the farmers who grow our coffee are getting a fair price. It’s up to concerned Cornell coffee drinkers to make it happen.

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Daniel Fireside is a MRP candidate in the department of City and Regional Planning. He can be reached at def2@cornell.edu.

Contacts:

Fair Trade Cornell: Andres Blanco: mab59@cornell.edu.

Cornell Dining: William McNamara: wm37@cornell.edu.