Monthly Archives: June 2009

Debunking Fair Trade – again.

Interesting chats with a newly-found coffee academic the other day made me realise – I’ve never yet written about Fair Trade coffee on here. Sure I’ve mentioned it quite a bit in passing, but I think the reason why I’ve not tackled the subject properly is because I am not entirely sure what I think about it.

Get past all the emotive gumpf, and Fair Trade is actually a pretty simple concept. It is a price guarantee: workers on Fair Trade cooperative farms can never receive any less than the Fair Trade rate of $1.26 per pound of coffee they produce. It is the bear minimum that can be paid. On top of this, the label also commands a $0.10 per pound ‘social premium’ which goes to various development projects in the communities affected. Inside a coooperative, all members get to vote on how this money is spent. Apparently.

Given that in the past two decades, the global price of coffee has fallen below the cost of production, guaranteeing the minimum price is a great help – and since this price is set before the coffee is harvested, it is a reassurance, a return on the investment. It is also theoretically egalitarian; if everyone in the coop gets paid the same, there shouldn’t be any power struggles within the cooperative, and better still, the whole group gets to decide how to spend the social premium on projects that in turn, benefit the whole community. I have no problem with any of this.
There is obviously some flaws, however. Firstly, the Fair Trade Foundation do not certify individual farms, only cooperatives. There are many advantages of joining a cooperative anyway, but for those few independent farmers, this means that their own prices are never guaranteed, and there is no incentive to go it alone, to make your own profit or to encourage any competition. Look at me, good little capitalist…. That again, may not always be a bad thing. Certainly left-leaning Nicaragua has a long history of cooperative working and communal living, which suits this trade model. However, coffee growing is not restricted to Latin America.In parts of Africa, coffee growing operates on a tribal basis, on land shared amongst vast extended families. These too, do not get Fair Trade status, apparently because they lack the democratic element required for the social premium system. Which begs the question: Who are the Fair Trade Foundation to dictate how third world farmers should organise themselves?

Fair Trade is a price guarantee; however, it does not, and has never claimed to be a living wage. In real terms, the minimum the farmers can expect is $126 for a 100lb sack of coffee. This sounds a lot, until you realise that some farmers (like Bernabe in La Corona, Nicaragua where I stayed) are only producing 15-20 sacks a year. At the Fair Trade price, this means he could only get $1890 a year to support his family of twelve. This is not sustainable. Sure the cooperative uses its Fair Trade money to invest in community schools, electricity supply, clean water and so on, but realistically, these families still have to eat!

My biggest concern about Fair Trade however, is the aspect of coffee quality, this slippery concept which seems to affect every possible area of coffee production and retail. In the past few years, the global price of coffee has increased again, and the average is now $1.40 per pound. This alone makes the Fair Trade price irrelevant. First World buyers from big, international importing companies can and will pay considerably more for what they judge to be excellent quality coffee. I visited farms, even tiny, impoverished farms, who were selling coffee at $1.80, $2 a pound, entirely because it was really good stuff. But these people weren’t always rich, because they were only producing such small amounts of this coffee. This excellent quality coffee, when sold in the UK would not have the Fair Trade label on it however, because it was not sold at the Fair Trade price. I was always very cynical for example, about Caffe Nero’s claim that they don;t have the Fair Trade logo because they pay “better than fair trade prices” for their coffee. Now I am starting to realise what that actually means.

I have always been a horribly good little Guardian-reading ‘ethically-aware’ consumer, and always bought Fair Trade coffee unquestioningly. And to be fair, most of it was pretty good in my uneducated, non-gourmet opinion. I am not a coffee cupper. However, the Fair Trade label, and for that matter, the organic, Rainforest Alliance or Bird Friendly labels tell you absolutely nothing about what is inside that bag of coffee – only how it is grown, not what it tastes like. What is actually happening, somewhere along my tangled commodity fishnets, is that good quality coffee is sold at good prices, and marketed minus Fair Trade label. Then, the farmers in Fair Trade certified cooperatives are selling all the lower quality coffee that can’t be sold for high prices, off to Fair Trade buyers, meaning that the coffee with the Fair Trade logo is potentially of far lower quality than the non-labelled stuff.

By buying Fair Trade unquestioningly, we are therefore sending a message back to the international coffee buyers that there is a higher demand for this stuff. They of course, are keen to pay the lowest price they can for their coffee, and so are demanding more, lower quality but Fair Trade priced coffee from the farmers. Even though this price is guaranteed, it still potentially screws the farmers, because they could get a lot more money for higher quality coffee – if people would actually buy it at the other end of the chain. But we don’t, because we believe that anything that’s not Fair Trade must therefore be Un-Fair Trade. We are inadvertantly driving down the price the farmers receive, and also, driving down the quality of the coffee we consume.

(Obvious example of this: McDonald’s new McCafe’s -uuuuuuuuurgh- are promoting the hell out of serving you Fair Trade, 100% Arabica Latin American coffee. To me, this immedietely screams: “we’re gonna pay the bear minimum we can, steal as much of Starbucks’ market as we can, and still claim ‘ethics'”)

On the other end of the scale, the really, really bad coffee is still ‘wasted’ in a sense. Even though Fair Trade guarantees a minimum price, it does not guarantee a buyer. If the coffee is truly awful, the farmer may be stuck with no buyer at all, if the buyers are not willing to pay the Fair Trade minimum. Those locked into a Fair Trade certification contract cannot legally sell coffee for less than the $1.26, and if they can’t find a buyer willing to pay this price, their year’s crop ends up as chicken feed.

The problem seems to lie in the consumer awareness in this, and other consuming countries, which can in turn be blamed on the marketing and labelling we see in the supermarkets or coffee shops. There is little to no price differentiation any more in regards to the coffee’s quality. Fair Trade still usually costs a little more than non-fair trade, (this extra is NOT passed on to the farmer) but from the consumers point of view, we can’t see which coffee was bought for $1.80 a pound, and which was bought for less than the Fair Trade price. We either play it safe and buy Fair Trade, or we are forced to trust the ethics of the brand, and believe that when they say it’s ‘ethically sourced’ and excellent quality, it actually is.

I don’t have the answers to this. I can’t advocate buying solely Fair Trade coffee, because it may not be beneficial any more. I think the best solution is to remember that coffee is a very difficult, unpredictable, resource- and labour-intensive commodity to produce, that it is only produced in developing countries, and that it has to travel half way round the world before it gets to you. Therefore, it is always going to be expensive. Accept that, and then pay a good price for the sort of coffee you actually like drinking – ignore the guilt-trip labelling and just enjoy! 


Posted by on June 4, 2009 in Uncategorized


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