Quality, price, and sustainability

by JulieCraves on July 10, 2007

I made this comment on my post about Counter Culture’s “Source” initiative:

Fair Trade is such a darling of the green set, but it’s certification is restricted to cooperatives, and does little to address quality.

It’s come to my attention that there is a more profound disconnect between price, quality and sustainability by the public than I first suspected. Although I’ve tried to address these issues here at C&C, perhaps I should be more explicit.

First, the connection between price and quality should be self-evident: you get what you pay for. Cheap (= grocery store, mass-marketed) coffee is never going to be great coffee. Coffee is a living crop; it responds to many environmental variables, not the least of which are altitude (generally, the higher it’s grown, the harder and better the bean) and shade (older varieties will only grow well under shade, and shade coffee matures more slowly, which is believed to intensify flavors in the cup). Coffee is also not a direct plant-to-table crop, and the best coffees are hand-picked and initially processed in a labor-intensive manner. Hence, there is no way to efficiently mass-produce coffee in a mountainous terrain with lots of various shade trees “in the way” by using machinery.

Second, high quality coffee promotes environmental sustainability. No farmer receiving premium prices for his coffee — nor any roaster — wants to see the land depleted and crop quality decline. Coffee grown under sun requires high inputs of fertilizers, herbicides, and pesticides, and land is subject to erosion and soil loss. Coffee grown in the shade gets nutrients from fallen canopy leaves, has fewer weeds, attracts birds and other wildlife that reduce pests, and maintains soil integrity. Obviously, it also maintains biodiversity. Coffee farmers who care about their land invariably grow coffee in ways that echo natural ecosystems.

Coffee farmers who receive a higher price for their quality coffee are also less likely to exploit their land for other purposes — whether it is turning to less environmentally-friendly but higher paying crops (including drugs), logging, or pasture.

Finally, there is little incentive to producers to grow high quality coffee except price. Let’s see how our buying practices influence prices, and therefore quality, and ultimately sustainability.

  • If you are buying coffee at a grocery store at around US$6/lb., it was purchased as green beans from producers at between US$0.80 to $1.12/lb [1] on the commodity market. These prices are often lower than the cost of production, a sure path to poverty for farmers. Also, it tastes like crap.
  • If you buy Fair Trade coffee, the producers (which are cooperatives, NOT single farmers or estates, which do not qualify for Fair Trade certification) receive US$1.26/lb. The cooperative decides how the money is distributed to member farmers (or if; it may be reinvested in the capital of the co-op, or community projects). Quality and taste will vary. This price is not a hell of a lot higher than the current commodity price [2], and no matter how brilliant the quality, there is no mechanism built into the Fair Trade model that rewards a farmer for it. Great quality Fair Trade coffee is great not because of Fair Trade, but in spite of it.
  • If you are buying a Cup of Excellence or another award winning coffee, farmers are typically getting over US$5.00/lb. Examples of average prices for the top ten coffees received per pound by farmers or cooperatives from recent CoE auctions are $7.40 for the top El Salvadors, and $9.64 for the top Guatemalans. You’ll pay about $15.00/lb for these carefully-grown, artisan-roasted beans — that’s still less than $0.70 per 6 ounce cup! You can often find beans from the same winning farms that were not part of the CoE auction lot which are usually just as good and cost far less.

The connections between price, quality, and sustainability are much more deep and complex than this (or at 200+ posts I wouldn’t still be at the “scratch the surface” level of this blog). But if you are buying Fair Trade coffee because you believe it is the best mechanism to insure that farmers are paid a fair price or even a living wage, you may want to consider a broader picture, do some research, and try buying the best quality coffee you can afford.

Read more:

[1] Cost pass-through in the U.S. coffee industry/ERR 38. Economic Research Service, USDA. (PDF).

[2] The day I wrote this in early July 2007, the composite indicator price on the New York Board of Exchange for green commodity coffee was US$1.06.

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Revised on November 29, 2016

Posted in Coffee awards and competitions

Joe Lencioni August 5, 2007 at 8:50 pm

Thanks for all the tips and the warnings about Fair Trade. I never really knew some of these things. It's good to have someone to remind us to consider the bigger picture. I'll definitely look into this some more now.

Joe Lencioni August 5, 2007 at 8:52 pm

Thanks for all the tips and the warnings about Fair Trade. I never really knew some of these things. It's good to have someone to remind us to consider the bigger picture. I'll definitely look into this some more now.

BirdBarista August 5, 2007 at 9:16 pm

If only it were simple and straightforward…

Damien Droney October 2, 2007 at 2:23 pm

I'm going to have to disagree with your assessment. It is true that high quality coffees receive a higher price (as they well should), but there is no guarantee that the workers that live and work on these estates make a living wage, regardless of the price per pound paid to the estate owner. Also, Fair Trade absolutely does encourage quality improvement! For small farmers trapped in the cycle of poverty, there's often no way for them to invest back into their farms to improve quality. The spending of the Fair Trade premium which is paid to cooperatives are democratically decided upon by all cooperative members, and they very, very frequently choose to invest in quality improvement on a cooperative-wide basis. (This also brings me to the point that Fair Trade cooperatives are democratic, and therefore if "the cooperative" spends a certain amount of money on overhead, it is not without the farmers' approval.)

The vast majority of cooperatives that sell on the Fair Trade market sell only a small percent of their coffee as Fair Trade. They, of course, want to do whatever is possible to improve their quality and receive more money for their non-Fair Trade Certified coffee. Fair Trade allows them to do so. If you would like, I can get you a very long list of investments in quality improvement paid for by Fair Trade premiums.

I love your blog. Keep doing what you do!

BirdBarista October 3, 2007 at 8:53 pm

[Note to readers: Damien Droney is/was an employee of TransFairUSA].

I know and appreciate that Fair Trade has done many worthwhile and wonderful things for coffee growing cooperative communities, including invaluable projects such as schools and clinics. I also understand improvements in mills, equipment, and the like help quality.

But while I am not against Fair Trade and admire much of what it has accomplished, I maintain it is not the only, and probably not the best, mechanism to alleviate the poverty of coffee farmers. I read a thought-provoking question on a forum: What if all coffee were purchased at the FT minimum? Would it solve the poverty of coffee farmers? Your comment also made me wonder, could the members of a cooperative vote to have 100% of the FT premium go straight to themselves? I've just posted on a couple FT articles, and note there that the market price is now equal to or above the FT price, and I wonder how this will impact FT.

I don't know that I'm qualified (or inclined) to wade into some of the more complicated issues, but I appreciate the input of folks like you who are experienced in FT. I'd be especially interested in hearing specifics on how FT premiums have funded or aided habitat restoration or enhancement projects. Thanks for reading!

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