The Sweet Smell of Life-Sustaining Coffee: An Initial Excursion into the Fair Trade Universe

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Today my journey has taken me into the realm of the Fair Trade Association, into realms of chocolate, coffee and cotton. My brain is spinning, and I feel that to fully understand the issues I would at least need the knowledge of an economist and a farmer. As I have neither of these things, I struggle to put the pieces together. It might take awhile. But here’s some food for thought:

Fair Trade certification began in the realm of coffee. Its purpose was to give a leg up to poor farmers in the developing world, where pretty much all coffee comes from, not only with set crop price minimums but also business ethics involving open, respectful and accountable relationships, safe working environments and the protection of children. The growing of coffee is extremely labor-intensive, time-sensitive, life-consuming and carried out with the most basic of tools (not machinery). I’ve walked the fields with one bent, wrinkled and smiling grandma in Brazil who’d spent her whole life since girl-hood growing coffee and she let me try my hand turning over and sifting the beans—Oof! She may not be able to read, but I admire that woman’s strength. Despite the work involved, coffee prices remain low—the Fair Trade price stayed the same for 20 years (though it was increased by 8-10% just a few years ago). When the world market price of coffee slumps below the farmer’s own cost (as in a coffee surplus), it can force coffee growers into the slums.

Fair Trade and other socially concerned cooperatives running on similar principles balance the world market system and keep coffee growers in business by guaranteeing a minimum per pound price high enough to keep farmers going, no matter how low the world market drops. When the coffee market hit an all-time low in the “coffee crisis” of 2000-2004, the market price was 42 cents per pound while the Fair Trade price was $1.26 per pound. If world market prices rise above the minimum Fair Trade price, Fair Trade importers are required to pay market price plus 5 cents extra per pound, a premium which is put towards different social development projects at the ground level. Many Fair Trade companies pay even more. For example the Fair Trade USA page on coffee posts that “The average price per pound paid to farmers for Fair Trade Certified coffee in 2009 was $1.69, well above the average market price of $1.25.” That’s also above the current Fair Trade minimum.

The Fair Trade label isn’t the only one with socially concerned standards in the business. Because of the administrative, application and auditing costs its not financially feasible for many smaller gigs. So don’t confine yourself to the label; look for companies operating on similar principles. Your cup of coffee is one place you can start making a difference in the world every day. That’s what I call a pretty sweet aroma to wake up to in the morning.

Resources for further reading:

Fair Trade Principles

Equal Exchange Coffee Prices Discussion

“Economics of Coffee” on Wikipedia

The Fair Trade Coffee Company Coffee Price Explanation

Fair Trade USA Coffee Listing

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