Java Justice: Fair Trade Coffee and Cutting Out the Coyotes

People care about their coffee, it can make or break your day, but drinkers have acquired a taste for the economics in their cup too. Fair Trade Coffee is a serious growth market and it came at a time when the industry was recovering a coffee crisis. Many new coffee labels have started up with the Fair Trade motto and well known brands, like Starbucks™, Seattle's Best™, Newman's Own™, Millstone™, Diedrich Coffee™, Peet's Coffee Co.™ and Costco's Kirkland SIgnature Brand™ have joined a growing list. Dunkin Donuts™ even hopped on the bandwagon with a Fair Trade Certified Espresso, as did McDonalds™ in selected stores throughout Northeast America.

Just about every grocery store, superstore and coffee shop carries at least one Fair Trade brand. The TransFair USA certification also reaches teas, cocoa, fruit, rice and sugar, all major exports from the Global South, but Coffee certification has seen the widest success by far. Fair Trade Coffee is progressing from the Specialty Coffee category to being a standard in some households and stores.

A past article of mine on AC about Fair Trade generated the same curiosity I see in coffee shops when someone says "Fair Trade." One reader asked how exactly does cutting the middleman out of the supply chain provide coffee farmers more income through fair trade? The trade route of coffee, the 2^nd most exchanged commodity on the planet, has always been a fascinating ride from Bean to Cup. There are all sorts of characters along the way from hard working farmers, coffee cuppers sipping hundreds of blends a day to eccentric roasters and café owners. The Fair Trade labeling phenomenon and the people at TransFair and the Fairtrade Labeling Organization add another dimension in this business of java justice.

TransFair USA is the only certified Fair Trade labeler in the U.S. and over $70 million in additional income has been generated by the sale of over 100 million pounds to U.S. coffee consumers. Starbucks™ entry into the Fair Trade market accounted for 11.5 million pounds of that coffee in 2005, more than double their figures from 2004. "That additional income is over and above what farmers would have received if they had sold in the local markets, to local middlemen", said Paul Rice, President and CEO of TransFair USA.¹This shows how ethical consumers opened their hearts and wallets to coffee farmers and the Fair Trade movement went gangbusters; it's a Free Trade world after all.

It's not as simple as slapping a label on a bag of beans, as TransFair USA has built an international monitoring system that ensures fairness for farmers. Besides the fact that there are profits to be made, it's no surprise that ethical practices can be marketed successfully in a world of Enron, Mad Cow and Sweatshops. That $70 million bonus to coffee farmers was due to the minimum price standards of $1.26 per pound and $1.41 per organic pound, set by TransFair USA for importers. What TransFair and other labels have actually done is bring importers, roasters, distributors, retailers and in the end consumers, closer to the actual farmers.

Huge majorities of the something like 25 million coffee workers around world live in the Global South countries of South America, Africa and South Asia. The Coffee crop simply grows better in these temperate climates and since its earliest days of trade, as far back as the 16^th century, it has been an essential export. While a prosperous supply chain has developed over the centuries, pouring black goodness into the morning routine of billions, there is always someone trying to make a buck more than they deserve. While it may be more complex than can explained here, the coffee farmers living in rural areas just didn't have the resources to access the world markets like they should have. Dependent on a system of middleman in countries where government accountability is another story, farmers got swindled. Its not entirely the middleman's fault as he was just trying to make a buck too, but the local middle who got the farmers deals gained less than desirable reputations. Affectionately called "Coyotes" for their scavenger like nature, the middleman also had to sell through exporters and brokers before the coffee even reached importers. At this point the beans are still green, and for years this was the only green coffee farmers where seeing. Often getting less per bean than what it actually cost to grow, farmers then got offered loans from the middlemen who were scamming them.

This only consists of the 50% of small family farmers who grow the world's coffee, the other 50% is grown on plantations or estates where migrant workers might even have it worse. Though in all fairness conditions have improved and some estates have a long history of farming communities. The focus of Fair Trade coffee though is on the small farmers who then take the additional income and create farming co-ops that in turn build a community of their own.

So in essence to answer the reader's question, Fair Trade Coffee certification ensures that small farmers set up co-ops that sell directly to certified importers. The older system of "Coyotes", multinational exporters and brokers has left a nasty residue from squeezing profits out of farmers. The Fair Trade certification process actually goes back to some of the European countries 20 or 30 years, but the labeling has really reached new market awareness in the past 5 years. Just how TransFair and the Fair Labeling Organization goes into these countries and makes deals and sets up co-ops with farmers is probably a book's worth more of investigating. One has probably already been written (Check out Paul Rice), or maybe someday I'll take a long boat ride and follow that route from bean to cup.

Notes:

1. Paul Rice, President of TransFair USA in Big Picture TV.
   
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