A few things about fair trade coffee

image I am reading Starbucked by Taylor Clark, and the book is quite enjoyable, both as a look inside the coffee industry, and as a business case study of Starbucks. Clark dedicates an entire chapter to fair trade coffee practices, that I wasn’t too familiar with, but as anybody else, assumed it was a Good Thing. Fair trade coffee practices, controlled by a non-profit TransFair USA, pay farmers participating in the program $1.26 a pound for regular coffee, and $1.31 for certified organic. Under the fair trade label it’s resold to you at $12-15 a pound, making the retailer quite a winner in this transaction (originally fair trade was supposed to eliminate the middleman, and thereby lower the final cost of coffee).

When the price of coffee beans can occasionally go under 40c, this seems like a good deal, if you’re a coffee farmer, so what’s the catch?

  1. Fair trade contracts are binding, and requiring the coffee bean farmers to commit to $1.26-$1.31 even if market surges (as it does when there’s a cold summer in Brazil). Ok, this is a bit hypothetical, but coffee markets have been known to swing wildly nevertheless. In 2006 Starbucks (the largest seller of fair trade coffee in the US) has actually paid its non-fair-trade growers an average of $1.42 per pound. Oops.
  2. TransFair requires that each coffee farm participating in the program be coop-owned and employ no outside seasonal labor. This rules out private farms, family-owned farms, and corporation-owned farms. A family of coffee bean growers starts out a farm, hires seasonal labor to pick the beans, and wants to sell it as fair trade coffee? TransFair doesn’t let those capitalist pigs get anywhere near the application form.
  3. Roasters admit that fair trade coffee is of inferior quality. While the rest of the coffee farms have to compete in lower-priced open market, they frequently do it by quality of their product. When a fair trade farm is guaranteed $1.26-$1.31 a pound, the economic rationales start to take over, and growers always try to cut their costs to enjoy higher profit margins.
  4. TransFair requires every participant in the fair trade program – retailer or coffee grower – to sign a release form promising never to criticize the program in public.
Posted Wednesday, July 16th, 2008 under General, Health, Money.
  • J03P

    Doesn’t quite seem like much of a fair trade, for anyone involved.

  • David

    Well, after reading this article which only discusses some of the supposed negatives of the Fair Trade label, I was almost certain that many of the claims were false (in addition to the assumptions and faulty logic). However, I was reluctant to post anything as I would be very embarrassed to claim to know about something without being relatively certain.
    Apparently, this is a rule the author does not care to follow. Within one minute of reading the TransFair USA website, I confirmed my suspicion that the information provided in this article was entirely false. As taken from the “Frequently Asked Questions-Advanced” section:
    “For washed Arabica, the highest quality coffee, the Fair Trade minimum price is set at $1.25 per pound, plus an organic differential of $.20 if the coffee is certified organic. Should the world market price rise above these prices, the Fair Trade minimum price rises accordingly and becomes the world market price. In addition, importers pay farmer groups a Fair Trade premium, which is $0.10 per pound, over and above the Fair Trade minimum price.”

    That’s just a start. Perhaps the author did not think the advanced section was for him, or didn’t know what “minimum” meant.

    Cheers fellows, and don’t let mis-informed trash talkers keep you from buying socially and environmentally responsible goods.

  • Adron

    David,

    Alex is quoting the book “Starbucked” here. If there is incorrect information presented I don’t think it is on the part of the author of this page.

    Fair Trade Coffee hurts small farmers and coffee growers. Fair Trade Coffee prices do not change fast enough to accomodate a single season; coffee prices are set once a year and do not take into account climate and seasonal variances that can affect a coffee crop.

    Fair Trade coffee is one of those do nothing programs that makes people feel good about themselves as they order their triple skim soy latte and climb into their gas guzzling SUV’s (that they left running in the car park) and feel that they helped “save the world” today.

  • Thos Weatherby

    Any type of fair trade hurts the farmers long term. It has never worked and never will. It feels good to those of us who buy the coffee but in the end you are only rewarding the retailer. To pay more for a product doesn’t help any cause.

  • Meryl

    I disagree with that statement. You need to do more research on TransFairUSA.com. Any type of fair trade does not hurt farmers especially with this economy. Also try watching the movie called Black Gold and see what many of the retailers do with their product to make the price higher, not the Fair Trade.

  • Patrick

    That’s what I’ve been telling people for years!!!! People always ask me if my coffees were fair trade and I tell them fair trade doesn’t exist.

    And that’s the truth.

  • Patrick

    and the farmers that may benefit from this farce are going for quantity over quality, as this article clearly states.

  • http://www.bgcoffee.net David

    Of course the Transfair website is going to make its claims seem valid. What is little written about and makes a lot more sense is that there are suppliers in the US such as Atlas Coffee Importers who seek to build relationships with local farmers in the producing countries and pay them directly so that the middle man (including Fair Trade) are eliminated. The result of this is really good quality coffee at a ‘fair price’. I agree, my experience of fair trade coffee is that it has been invariably inferior in taste and costs more.