Fair and Direct Trade

Fair and Direct Trade

Fair Trade news

This blog focuses on sustainable coffee specifically as it pertains to the environment. I’ve written some about Fair Trade, because there is a connection between poverty and environmental degradation. But Fair Trade is complex, and the issues surrounding Fair Trade coffee alone are numerous. There are many blogs that focus exclusively on Fair Trade, and C&C will continue to deal more with science and leave the economics to the others. But October is Fair Trade month, and there have been several interesting articles on Fair Trade in the media lately. I’d like to just point out a couple.

  • Fair Trade in bloom — New York Times. Discusses the increase in consumer demand for FT products, and how many big companies are jumping on the bandwagon. Specifically highlighted are Sam’s Club and its Brazilian supplier, Cafe Bom Dia. I’ve already written about Cafe Bom Dia. It is an enormous operation. It’s hard for me to believe Bom Dia cannot pay their farmers more than FT prices. I think the Times article is worthwhile to read along with last year’s piece by the Organic Consumers Organization, Wal-Mart’s attempt to sell the “cheapest Fair Trade coffee in America” generates skepticism.
  • Fair Trade coffee price unchanged after 10 years — National Post (Canada). After a recent increase of US$0.05/lb in the social premium (which goes to communities for schools, clinics, etc.), the minimum price for FT coffee paid to the cooperatives is $1.31/lb. When FT pricing was established, coffee was trading around $0.60/lb. Today, when I checked the market price (“C” coffee futures on the NYBOT), it was trading at $1.36/lb, and yesterday’s composite indicator price (how calculated) for arabicas was around $1.40/lb.The FT price is indexed to the market price; it rises to $0.05/lb above the market price if it reaches the FT minimum. I’m not sure which “market price” FT is based upon (I’m pretty sure it’s the C market), or when or how the new FT price is triggered. However, when coffee prices are rising, due to any number of factors including poor weather, the gap closes between the FT and market prices. Then there is less incentive for co-ops to become FT certified (which costs money), diluting FT’s power until prices fall again. Rising prices aside, the FT is not indexed to inflation or (falling) value of the US dollar. This is a challenging time for FT and farmers, and it will be interesting to see how this all unfolds.

Coffee news and miscellany / Fair and Direct Trade / Retail and specialty roasters

Counter Culture announces "Source"

One of the major criteria a roaster must meet to get favored nation status on the left sidebar as a source of sustainable coffee is transparency. C&C is all about educating consumers on how to recognize and appreciate sustainable coffee. All the knowledge in the world won’t help a coffee buyer if the roaster doesn’t provide enough information on where they get their beans. If a roaster provides country, region, and co-op or farm it goes a long way in helping consumers understand whether the coffee was grown in a sustainable manner. When a roaster has a close relationship with a farmer, they can provide even more data on exactly how the coffee was grown.

Counter Culture Coffee has always been excellent about giving customers lots of information on each of their selections on their web site. They recently announced an expansion and refinement of this commitment, which they are calling “Source.” Each bag of Source coffee includes the farm or co-op’s real name; authentic production details and tasting notes; a precise roast date; a regional map; and vibrant, original artwork inspired by the community that produced it. Indeed, the whole point, noted in their press release, is to

“…achieve a deeper level of consumer education through real, transparent information about each coffee’s distinct seasonality, tasting notes, geographic and cultural origins, and artisan cultivation methods.”

This program goes well beyond marketing and consumer education. Like Intelligentsia’s Direct Trade, and similar “unbranded” programs by other roasters, Source is about working closely with farmers to improve coffee quality and the quality of life for farmers. Fair Trade is such a darling of the green set, but it’s certification is restricted to cooperatives, and does little to address quality. Programs like Source or Direct Trade can do even more than Fair Trade, including paying higher than Fair Trade prices straight to farmers for their crops. For example, Counter Culture paid a 153% premium to the Guarapamba farmers for their La Golondrina Microlot, one of the Source coffees.

Not all roasters can follow this model. Economies of scale make it difficult for very large roasters; they are profit-driven and treat coffee as a commodity rather than a specialty food crop. You simply will not find specialty-grade coffee and close relationships with farmers from corporate coffee roasters. Very small roasters often don’t have the resources to develop working partnerships with individual farms or co-ops (which is not to say many are not sources for sustainable coffees).

Hats off to all roasters who strive to follow this philosophy. Working to transform coffee from an anonymous caffeinated beverage to an identifiable crop, nurtured by real farmers on land that sustains people and biodiversity, is a model we’d be wise to adopt for all of our food. Only then can we choose to purchase sustainable products, increasing demand, and in turn take steps to help to transform the world.

Fair and Direct Trade / Organic coffee

Some recommended reading

Book: Organic Coffee: Sustainable Development by Mayan Farmers by Maria Elena Martinez-Torres. This book is based on a PhD dissertation, but has been skillfully adapted and is very readable while still preserving the excellent information including tables, charts, and references. The book explains the history of coffee farming in Chiapas, Mexico, including growing techniques and political and social considerations.  The author ties it all together with chapters on the economic and ecological benefits of organic coffee farming. A really worthwhile book that is very helpful in understanding organic coffee.

Article: Ethical Certification — Sustainability with a Rich Aroma by Ethical Corporation magazine. Contrasts, compares, and discusses three certification schemes: Rainforest Alliance, Fair Trade, and Utz Kapeh (which has just changed its name to Utz Certified), from a European perspective. Frames the discussion around McDonald’s decision to serve Rainforest Alliance certified coffee in all its UK stores and the controversy around that move. It branches out into the various other certification programs and their costs and requirements, and wades into organic certification and even Starbucks and the trademark issue. Wide-ranging (obviously) to the point of wandering, not too deep, but offers some interesting facts.