Quality, price, and sustainability

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.

[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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