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free encyclopedia
Fair trade coffee is coffee which is purchased
directly from the growers for a higher price than
standard coffee. Fair Trade coffee is one of many Fair
Trade certified products available around the world. The
purpose of fair trade is to promote healthier working
conditions and greater economic incentive for producers.[1]
Coffee farmers producing Fair Trade certified coffee are
required to be part of a coop with other local growers.
The coops determine how the premiums from Fair Trade
coffee will be spent.[2]
Growers are guaranteed a minimum price for the coffee,
and if market prices exceed the minimum, they receive a
per pound premium.[3]
Fair Trade coffee has become increasingly popular over
the last 10 years, and is now offered at most places
coffee is sold.
History of Fair Trade Coffee
Regulations Prior To Fair Trade
Prior to Fair Trade certification,
coffee prices were regulated by the
International Coffee Organization according to the
regulations set forth by the
International Coffee Agreement of 1962. The
agreement, which was negotiated at the United Nations
headquarter in New York by the Coffee Study Group, set
limits on the amount of coffee imported and exported
from countries so there would not be excess supply, and
consequently a drop in price. The ICA existed five
years, then was renewed in 1968. The agreement was
renegotiated in 1976 due to increasing coffee prices,
largely a result of a severe frost in Brazil. The new
agreement allowed for the suspension of price quotas if
the supply of coffee could not meet the demand, and
enabling them if prices dropped too low. In 1983, the
agreement was again redrawn, this time creating a
database on coffee trade, and implementing stricter
import and export regulations. Quotas remained a part of
the agreement until 1989, when the organization was
unable to negotiate a new agreement in time for the next
year. It was decided that the 1983 agreement would be
extended, but without the quotas because they had not
yet been determined. A new agreement could not be
negotiated until 1992. From 1990 to 1992, without the
quotas in place, coffee prices reached an all time low.
Because coffee price quotas could not be decided, the
new agreement of 1994 focused on public awareness,
providing the public with a forum for comment and access
to documents. The agreements of 2001 and 2007 aimed to
stabilize the coffee economy by promoting coffee
consumption, raising the standard of living of growers
by providing economic counseling, expanding research to
include
niche markets and quality relating to geographic
area, and conducting studies of
sustainability, principles similar to Fair Trade.[4][5]
Beginning of Fair Trade
Fair Trade certification began in
the Netherlands in 1988 in response to dropping coffee
prices in the world market.[6]The
supply of coffee was greater than the demand, and since
no price quotas had been reimplemented by the
International Coffee Act,the market was flooded. Fair
Trade certification aimed to artificially raise coffee
prices in order to ensure growers sufficient wages to
turn a profit. The original name of the organization was
"Max
Havelaar", after a fictional Dutch character who
opposed the exploitation of coffee farmers by Dutch
colonialists in the East Indies.[7]
The organization created a label for products which met
certain wage standards. Within ten years three other
labeling organizations began: the
Fair Trade Foundation,
TransFair USA, and
Rättvisemärkt. In 1997 these four organizations
jointly created the
Fair Trade Labeling Organization, which sets Fair
Trade standards, and inspects and certifies growers.[8]
Certification
The Fair Trade Certification label allows farmers
and farm workers to escape poverty by providing them the
skills and the means to compete in the global market of
agriculture products. Although Fair Trade began in the
late 1940's, certification and labeling was not enacted
until 1988. This label assures consumers that strict
social, environmental, and economic measures are taken
when the production and trade of an agriculture product
occurs. Fair Trade standards require that farmers
receive fair wholesale prices for their crops. This
ensures that farmers will receive approximately $1.26
per pound of raw coffee beans as opposed to the world
market average of $.60.[9]
Farmers who are involved with Fair Trade receive minimum
floor price and an additional premium for certified
organic products. In addition to the price standards of
Fair Trade labeling there are other principles that must
be abided by.
Standards for Fair Trade Coffee
Certification:
Fair labor conditions:
Those who work with Fair Trade farms are able to work
with freedom of association, safe working conditions,
and fair wages. Child labor is strictly prohibited.
Direct trade: With Fair Trade, importers purchase
from Fair Trade producer groups as directly as possible,
eliminating the middle man and letting the farmer
compete in the global market.
Democratic and transparent organizations: Through
proof of a democratic market, Fair Trade farmers and
farm workers decide how to invest Fair Trade revenues.
Community development: Fair Trade farmers and
workers invest Fair Trade premiums in social and
business development projects like scholarship programs,
healthcare services and quality improvement training.[10]
Examples of community
development:
Colombia: Members of the COSURCA coffee
cooperative successfully prevented the cultivation of
more than 1,600 acres of coca and poppy used to produce
illicit drugs.
Guatemala: indigenous Tzutuhil Mayans in the La
Voz cooperative are sending local kids to college for
the first time.
Peru: the CECOVASA cooperative is assisting
indigenous groups in improving coffee quality and
transitioning to certified organic production.
Nicaragua: The CECOCAFEN cooperative established
a reproductive health program providing tests for the
virus that causes cervical cancer.[11]
In 1997,
Fair Trade Labeling Organization, or FLO was created
to support and protect disadvantaged producers within
the Fair Trade market. FLO is a non-profit organization
based in Bonn, Germany, that sets Fair Trade
Certification standards and certifies producers.This
umbrella organization has 20 labeling initiatives
worldwide that work within it to certify the products.[12]The
FLO sets the price floor for the coffee. The current
pricing is available on the FLO website
[1] .
Popularity
Many coffee vendors are now
advertising Fair Trade certified coffee. This is most
likely a result of increasing public awareness of Fair
Trade, and increased pressure from consumers.
Sam's Club,
Wal Mart,
Dunkin' Donuts,
McDonald's, and
Starbucks all offer Fair Trade certified coffee, as
do most independent coffee shops. All espresso served at
Dunkin' Donuts is Fair Trade certified, as is all coffee
sold at McDonald's in England. Starbucks coffee is one
of the largest purchasers of Fair Trade certified coffee
in the world, planning to purchase 40 million pounds of
green, unroasted coffee in 2009.[13]
This is in part because the company purchases massive
quantities of coffee. In 2008, Fair Trade certified
coffee comprised only 5% of the total coffee purchased
by the company.[14]
Though large scale coffee
corporations are becoming figureheads for Fair Trade,
smaller companies such as Just Coffee, Higher Grounds,
and Pura Vida are now working to successfully advocate
Fair Trade coffee. Aside from word of mouth marketing,
these small businesses are forming tour groups to
various coffee producing countries, such as
Guatemala and
Mexico, to show consumers first hand what coffee
farming with Fair Trade entails. These tours allow
people to become ambassadors of Fair Trade and gain
support for the movement.
[15] This type of marketing provokes a growth
for popularity and demand. In 2006, nearly 65 million
pounds of fair-trade coffee were imported to the U.S.,
45% more than the year before, and twice as much as in
2004, according to TransFair USA, in Oakland, Calif.,
the only third-party certifier of fair-trade goods in
the U.S. Trans Fair nearly doubles every year in
applicants that want to certify their coffee products.[16]
This is because over the past ten years, the demand for
Fair Trade coffee has increased significantly and will
continue to grow.
Other advocates for Fair Trade
coffee include various religious groups and churches
across the U.S. From
Catholic to
Methodist, the concept of Fair Trade has been
referenced in sermons and further enforced with
fellowship hours consisting of Fair trade coffee as part
of the refreshment.
[17]Many church groups feel that this
organization emulates
Christianity by carrying out good works for others
and the environment. For many of the faith-based
organizations, fair trade is a way to connect younger
members with an applicable message of how to be a good
Christian.[18]
Criticism
Economics
Fair Trade creates a
price floor for coffee, which some economists
believe has adverse affects on both growers and
consumers. By setting prices artificially high, Fair
Trade encourages more people to grow coffee, leading to
a surplus. According to the rules of
Supply and demand, demand is decreased because
prices are higher. Critics claim farmers will be unable
to sell their coffee.[19]
Transnational corporations such as
Proctor and Gamble’s
Folger’s,
McDonald’s, and
Starbuck’s now sell Fair Trade coffee, using their
large consumer base and strong advertising campaigns to
bring in Fair Trade consumers. Fair Trade activists are
now concerned that the morally driven small
Fair-Trade-oriented businesses are going to be pushed
out of their original customer market.
When large corporations sell Fair
Trade coffee, consumers are easily brought to the
larger, well known companies for their Fair Trade
coffee. This takes out the small coffee shops’ edge of
selling consumer-oriented, special coffee’s like Fair
Trade coffee and continues the success of big businesses
in the coffee industry.
Generally, Fair Trade goods don't
cost more than other goods because the large percentage
taken by middlemen is removed from the equation.
[20] However, as a result of Fair Trade’s
elimination of the middle man, numerous jobs are removed
from the market without the guarantee of finding
another.
Ethics
Critics believe the Fair Trade
certification is abused by marking up retail prices
significantly, while only providing the growers with
marginally higher prices.[21][22]
When large corporations like
Wal-Mart can afford to sell Fair Trade coffee, and
choose to do so as an economic decision for profit, many
consumers see the gap between large corporations
supporting Fair Trade coffee growers in other countries
but in the meantime the same corporations do not pay
their workers wages similar to their profits and often
put smaller, local business owners out of work. Some
smaller sellers of Fair Trade coffee, who sell Fair
Trade coffee as more than an economic decision are
losing their Fair Trade market to these larger companies
and many have suggested that
TransFair USA come up with a tiered labeling system
so as to show that these small business owners are truly
committed to Fair Trade and aren’t making the same
larger profits off of the Fair Trade label that the
large corporations can.[23]
Another criticism is that the
per-pound price for Fair Trade coffee is that of the
1990 International Coffee Organization price, which is
only moderately above the cost of production. Fair Trade
farmers make $0.20-$0.30 per pound of coffee they grow
and sell and as a result do not make much profit off of
Fair Trade like the final sellers do.[24]
While some argue that Fair Trade pushes under-empowered
growers into forming cooperatives, creating islands of
democracy in often autocratic regimes, others challenge
the assumption that encouraging farmers to form
cooperatives is a good idea. This is because co-ops can
be just as corrupt as any other organization. In a
system meant to eliminate middlemen that pitches itself
as a direct connection to growers, co-ops add a level of
bureaucracy between consumer and producer. The farmer
doesn’t directly receive the $1.26 but instead receives
whatever portion the co-op decides. Therefore, a
corruptly managed co-op can mask the real price of
coffees from individual farmers and turn a profit
greater than that of the farmers themselves.[25]
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