Hi Folks,
A Happy New Year to you all!
It is a happy coincidence that the new year arrives on a Friday this time around, so my article is reaching you all as you enjoy your very first cuppa of the new year. Perhaps some of you have a new years resolution to drink more coffee than last year, and for those of you planning on drinking a LOT more coffee, you may find a vast panacea of health benefits (according to the Wall Street Journal here).
So, in support of curing all things that may now or in the future ail you, I will be roasting this weekend on Sunday (January 3), then delivering and shipping on Monday. Please send your orders by 10:00 Saturday night to be included in this round, though we'll have some extras on hand if you don't get this until after that. Coffees for this week are detailed on the website.
Hey, if you haven't seen Starbucks' holiday greeting, have a look. Its very inspirational, and I thank them for it.
Today, I'll continue my series on social issues in coffee production, here taking on the complicated task of trying to demystify fair trade coffee.
A few months ago, I wrote about the global coffee market, and how the fortunes of any coffee farmer are tied to the macro scale forces of supply and demand for an agricultural product (including weather, crop cycles, and the actions of major producer countries) and how this in turn drives pricing structures set on one of two large international commodity exchanges. The end result is that farmers and cooperatives that have relatively fixed costs of production can see the revenue side of their business swing wildly, at times at or below their costs. First and foremost, this jeopardizes the livelihood of farmers, their families and their communities; but it also makes those who grow coffee question the value of continuing to grow coffee. It may make more economic sense to move in the direction of alternate crops that offer more diversity or lower risk.
Enter the fair trade system.
What is Fair Trade?
Fair trade is the common name for a set of global trade standards administered by Fairtrade Labeling Organizations International (FLO), which is both an umbrella organization of 24 regional certification groups and the operator of a large producer certification operation. In the US, certification is done through TransFair USA, a non-profit organization headquartered in Oakland, California. It is the logo of TransFair ("Fair Trade Certified") you see on coffee, tea, chocolate and other fair trade certified products available at your grocery store.
The goal of these standards is to ensure producers of certain agricultural products (in addition to coffee, tea and herbs, cocoa and chocolate, fresh fruit, sugar, rice, flowers, honey and vanilla) a fair price and a guarantee of a "social premium" that provides benefits to the community. Specific benefits to coffee farmers include:
> Farmer cooperatives receive a guaranteed minimum price of $1.35/pound, a rate that rises as the benchmark "c price" commodity benchmark increases beyond this level. An additional premium of $.20/pound is paid for coffee also certified as organic.
> Cooperatives also can receive pre-harvest credit, an important method of meeting costs growing, processing and transportation prior to being paid for the final product.
> Workers on Fair Trade farms enjoy freedom of association, safe working conditions, and living wages. Forced child labor is strictly prohibited. Since most good coffee is dependent on seasonal workers who hand pick the coffee cherries, this is an important set of guarantees that impacts a far wider range of people than just those categorized as "farmers"
> Importers try to make direct purchase arrangements with grower cooperatives; thus avoiding the markups of middlemen and helping to ensure more transparency in the flow of money.
> Because the mechanism for fair trade business agreements is the cooperative, these groups (or growers) make the decisions on how to channel fair trade premiums back into their communities. Projects with these funds can include, schools, hospitals, water quality or quality improvements in their coffee operations
> The fair trade certification system strictly prohibits the use of genetically modified organisms (GMOs), promotes integrated farm management systems that improve soil fertility, and limits the use of harmful agrochemicals in favor of environmentally sustainable farming methods that protect farmers' health and preserve valuable ecosystems for future generations. (Note that this does not confer organic certification, though some of these are requirements of that system.)
Issues:
The fair trade system is one of several common certification programs at play in the US coffee market, along with organic, shade grown, bird friendly and Rainforest Alliance certifications. Each of these measures growers compliance with a set of standards, then provides some measure of assurance to consumers that they have been met.
The subjects of these standards - fair treatment for growers and workers, natural production methods and forest and habitat protection - are extremely important in the world of coffee, as they sustain the people who grow it, the drive to improve coffee quality and the places in which it is grown. But, I think it is important to view all of these with a measure of balance and understand all sides of a certification like fair trade.
> A System: To receive a certification, a grower cooperative must pay fees to be certified (an additional business expense), and its members must comply with the requirements of the certification. At the end of the day, the price advantage of fair trade (or fair trade organic - "FTO") certifications must make these costs and requirements worthwhile.
> Formulas: There are established prices formulas set for the world under the fair trade system, and in the same way having a single commodity market price for coffee is more or less of an issue for individual regions of the world, the fair trade price structures can be out of balance with the local costs of production. Some have recently suggested that the fair trade rates are far too low, and that a minimum of $2.00/pound is what is needed to provide a truly sustainable income for coffee growers.
> What about non-certified coffees? The fair trade system allows consumers the confidence that certified products have met the standards of this program, but I fear in promoting this system, the impression has been created that everything that is NOT certified is therefore not fair. Though there are certainly plenty of unfair situations out there that would be made better under this system, there are also farmers receiving a more than fair price for their coffee, farmers who are not members of cooperatives (who therefore don't have a mechanism for participating in the fair trade system) and market forces (such as prevailing wages far above the legal minimums) that makes that part of the structure unnecessary.
> Is fair trade (or organic or bird friendly) coffee better coffee? In many cases, the presence of a certification improves conditions on a farm, improving the attention to quality production methods and motivating farmers to produce a better tasting product. But unfortunately, certification systems can also provide a way for low grade coffee that meets a set of business or production standards to come to market bearing a designation that implies quality. Visit WalMart or Trader Joes and you'll see "Fair Trade/Organic" coffee that sells in large packages at prices close to $4.00/pound - I assure you, this is NOT good tasting coffee.
But in the final analysis, I think the fair trade system has been good for coffee, and it has also been the starting point for a number of programs initiated by US roasters that are designed to be more specific to local markets and to have more of an impact on the quality of the coffee itself. These include the Starbucks CAFE Practices program (used n conjunction with dramatic increases in fair trade coffee purchases), the Counter Culture Direct Trade program, Intelligentsia's Direct Trade program and the Green Mountain Farm Identified program. All of these programs use the fair trade system as a starting point, and then layer on additional quality standards and the benefits of direct trading arrangements.
I hope this helps, and please feel free to write back if I can answer any questions. If I can't answer your question directly, I can certainly point you in the right direction.
I wish each of you and your families a happy, healthy and prosperous year ahead.
Kent
