Sips: Fair Trade debate

by on July 16, 2011

There are so many great voices in the fair/Fair trade movement, I keep out of it aside from environmental aspects of certification and occasional links. Here are a few of those links to some posts I have found most thought-provoking lately. Fair Trade is having growing pains, and recent high market prices for coffee have added to the turmoil.

The Stanford Social Innovation Review is a publication of the Center on Philanthropy and Civil Society at Stanford University. They recently ran two pieces on Fair Trade. The first, is The Problem with Fair Trade Coffee, by Colleen Haight, an assistant professor at San Jose State University. About a third of the way down is a good illustration of the author’s interpretation of why Fair Trade coffee has a “quality problem.” Lots of history and stats in the piece, and excellent comments, as well.

They followed up with a rebuttal from Fair Trade USA head Paul Rice, Fair Trade: A Model for Sustainable Development.

Meanwhile, Small Farmers. Big Change the blog of Equal Exchange, an alternative trade organization, also put out two pieces. Fair Trade is NOT the End Goal: Part I and Part II. Part I explains the pressures on co-ops during periods of uncertain high market prices, and the choices they face when it is time to deliver on pre-negotiated contracts which will pay less than the market price. One passage struck me,

When the coffee starts coming in, the competition (in the form of multi-national businesses) is knocking at the farm gates offering farmers more money for their beans than the price the co-op has promised them.

I added the emphasis. I suppose anybody could come along and offer higher prices at the farm gate, but look who is specifically singled out* as the entity who is trying to get  farmers to break their contracts with their co-ops: corporate coffee. As the post explains, this far-reaching problems. And those multinationals won’t be at the farm gate when prices drop again.

Part II is a view of the future of Fair Trade by Santiago Paz, co-manager, CEPICAFE, a co-op in Peru.

Food for thought.

*Update: A Wall Street Journal article, “Battle brewing over coffee” published on 17 July confirmed it is the “cash flush” multinationals tempting the farmers. The first sentence reads, “Rising prices have upended the coffee trade, as multinational brokers increasingly woo farmers away from local cooperatives in the world-wide scramble for beans.” It specifically mentioned these are representatives from  Nestlé SA,  ED&F Man Holdings Ltd.,  and Ecom Agroindustrial Corp. Ltd. The latter two are very large organizations that include coffee divisions (ED&F Man’s is Volcafe) that buy coffee for multinational roasters. These companies say that it’s up to the farmers who to sell to.

That’s true, and I can’t really blame the farmers, who need the cash. But these multinationals won’t be providing loans and support when coffee prices drop, and if the cooperatives go under, nobody will.

Maybe these high prices wouldn’t be as tempting if we’d been paying the real cost of coffee all along, providing a price that reflects all the work that goes into growing coffee, and enough for farmers to cover their costs of production and feed their families, send their kids to school, and invest in their farms and communities.

There is no such thing as cheap coffee.

Update #2: Fairtrade International (FLO) has been holding workshops on risk management and contract negotiation for cooperative managers to help them with the problems surrounding defaults on their contracts. FLO reports that Bolivia, Peru and Indonesia were the countries hit hardest by co-op member defaults. Read more here.

Photo by Ian Murchison under a Creative Commons license.

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Revised on March 23, 2014

Posted in Fair and Direct Trade

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