The Real Impact of Fair Trade

A throwback post to 2001, during the first coffee pricing crisis. Most of what is happening right now with coffee pricing, and the tragedy facing farmers right now, is exactly the same 18 years ago. So, we're recycling THIS post (we do love recycling!) to show what we were doing then, and what we're doing now ... but then we have to ask, why hasn't anything else changed?

(Original post April 11, 2001)

When you wake up and smell the coffee, you'll have to admit that the world coffee market stinks. Prices paid to coffee farmers are based on a host of irrelevant factors, from predictions of frost on large Brazilian plantations, to NY commodity speculators who've never been to a coffee village, to a market-glutting flood of cheap Vietnamese coffee promoted by the World Bank. It's a nightmare. As a result, coffee prices are the lowest in recorded history, and growers are receiving far less than it costs to produce their crop.

Economists sipping their three dollar mochaccinos hold to the theory that the market works efficiently, that all those surplus coffee farmers should just pack their bags and get into something else. Like what? Overcrowded third world cities? Vans sneaking across the Texas border? Sweatshops in maquiladora zones? Fair Trade provides a floor price when the market price paid to farmers, along with their quality premiums, sinks below $1.26 for conventional coffee and $1.41 for organics (that's us!). When the price is above those levels, Fair Traders agree to pay an extra nickel per pound above the contract price to keep all the players committed to the system.

Equally as important. Fair Trade also requires the importer to provide pre-financing to the farmers. The up-front money allows the farmers to pay for harvesting and processing of their crop without overreliance on local moneylenders or unpredictable banks. In order to participate, farmers must be organized into transparent, democratically-run cooperatives. It costs us a heck of a lot more to be a leader in the Fair Trade movement, but recent trips to Ethiopia and Nicaragua demonstrate the real impact of Fair Trade on the lives of farmers and their families, and reminded me where my values lay.

In January 2001, we shut down the beanery and the whole Dean's Beans crew (all six of us) headed south to Nicaragua. I wanted everyone to be able to connect their work directly with the farmers of the PRODECOOP in Esteli and CECOCAFEN in the Matagalpa growing regions. We also wanted to visit with the small farmers of Matagalpa who had been thrown off their lands for inability to pay rent or bank loans in this market, and who had created a shanty town on the municipal ballfields. By the time we arrived, the ballfields were empty, as farmers who once tended their own lands were trucked throughout Nicaragua to work as day laborers on the large farms of others. We visited the beneficio (processing plant) that CECOCAFEN had purchased with their Fair Trade premiums and some development aid over the past two years. Pedro Haslam, the coop manager proudly showed us the new drying beds and cupping laboratory that had been added since my last visit (and gently teased me about my rum-induced dance on the table top in Matagalpa so long ago - now the story had grown to three women on the table with me! Must have been the biggest table in Nicaragua.).

By taking over this value-added step of production, the farmers realize significantly more money for their coffee. The same land, the same crop. The difference between the landless farmers and their CECOCAFEN neighbors was cooperative membership and Fair Trade. I started working with CECOCAFEN about six years ago, when they were just organizing as a coop. The difference between then and now is profound, judging by the number of farm children in school, the amount and variety of food on the table, the building materials used in housing, and the sense of dignity and control in the lives of the farmers. In Esteli, the effects of Fair Trade are just as noticeable. PRODECOOP is one of the most successful Fair Trade coops in the world, has been involved in Fair Trade for years, and sells about half its total harvest to Fair Traders. Two years ago, the farmers voted to pool their Fair Trade premiums to buy and rebuild a beneficio that had closed due to low market prices. I remember visiting the site - it was a wreck. Today, the beneficio is processing all of PRODECOOP's production, so the farmers keep a greater share of the market price. And their new cupping lab allows very sophisticated quality control. It's hard for northern eyes to see, but the quality of life for PRODECOOP's Fair Trade farmers is significantly higher than that of their farm neighbors in Esteli. Better housing, more pick-up trucks, schoolbooks and shoes, vegetables and variety on the table.

By our standards it's still the poverty of the farm, but it's light years from where it had been and where it would be without Fair Trade. In February, I went to Ethiopia, the fourth poorest country in the world and the birthplace of coffee. Last harvest, we pulled the first ever Fair Trade coffee out of Ethiopia and we wanted to meet the farmers, celebrate our relationship and plan for the current harvest. The eight-hour land rover ride from the capital to the coffee regions was a dusty, diesel filled voyage through third world poverty, mud-walled thatch roof towns, cattle, hippos and baboons. Many of the OROMIA Cooperative farmers had walked hours out of the mountains to meet us at the coop's cement and mud offices in Yrgacheffe, Sidamo and Jimma. We were taken through the coop's books with a transparency and thoroughness that would make Enron shudder.

We walked for hours through heavy forest canopied coffee, alive with monkeys, hornbills and snakes. But it's this wildness that gives Ethiopian coffee its distinct flavor, and, at another time, its higher price. In the ritualized speechmaking so unique to African village life, the coop elders welcomed us, the first Fair Trade buyers to visit their lands. They spoke with pride of their communities, their love of the land. They also spoke of the harshness of life, the lack of water, health care or schooling. They told us how there would be little coffee available from the early harvest, because the banks were months behind in disbursing loans, so there was no money to pay for processing. The early harvest had been sold to coyotes or jackals, the cash carrying exporter's men who came to the villages to pay pennies a pound for the crop when times were hard. But it would be different now, as the Fair Trade pre-financing gave them the up-front cash to process the harvest. And the actual money received by the farmers would be three hundred percent higher than what they'd get without Fair Trade! In each coop we visited, the farmers told us that this was the difference between hunger and survival. We left each coop with the traditional farewell "Omishagari!" ("Good Harvest!"). Fair trade is not the solution to poverty in the coffee world. Nor should it be a marketing gimmick or a feel-good effort by companies that have one or two Fair Trade coffees while they reap record profits on all their low cost coffees.

The commitments we make to the farmer through fair prices and access to credit are an essential to keeping the farm communities on the land, feeding their families, and providing us with great coffee.

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