Fair trade coffee
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. Coffee farmers producing fair trade certified coffee are required to be part of a co-op with other local growers. The coops determine how the premiums from fair trade coffee will be spent. Growers are guaranteed a minimum price for the coffee, and if market prices exceed the minimum, they receive a per pound premium. Fair Trade coffee has become increasingly popular over the last 10 years, and is now offered at most places coffee is sold.
In 2004, 24,222 metric tons (of 7,050,000 produced worldwide) were fair trade; in 2005, 33,991 metric tons out of 6,685,000 were fair trade, an increase from 0.34% to 0.51%.
according to the regulations set forth by the International Coffee Agreement
of 1962. The agreement, which was negotiated at the United Nations headquarters 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.
", after a fictional Dutch character who opposed the exploitation of coffee farmers by Dutch colonialists in the East Indies. 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.
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 1950s, certification and labeling was not enacted until 1982. 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 $2.35 per pound of raw coffee beans as opposed to the world market average of $.80. Farmers who are involved with Fair Trade receive maximum 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 above fair wages. Child labor is 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.
Examples of community development:
Colombia
: Members of the COSUTCA coffee cooperative successfully prevented the cultivation of more than 1600 acres (6.5 km²) 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 CEVOVASA cooperative is assisting indigenous groups in improving coffee quality and transitioning to certified organic production.
Nicaragua
: The CECOCAEN cooperative established a reproductive health program providing tests for the virus that causes cervical cancer.
In 1997, Fairtrade Labelling Organizations International
, 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. The FLO sets the price floor for the coffee. The current pricing is available on the FLO website http://www.fairtrade.net/fileadmin/user_upload/content/090409_EN_FTMP_and_P_Table.pdf .
, 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. This is in part because the company purchases massive quantities of coffee. In 2008, Fair Trade certified coffee composed only 5% of the total coffee purchased by the company.
Though large scale coffee corporations are becoming figureheads for Fair Trade, smaller companies such as Just Coffee Cooperative, Higher Grounds, and Cafe Campesino 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. 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. 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. 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
.
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.
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.
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 per pound 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.
Fair trade
Fair trade is an organized social movement and market-based approach that aims to help producers in developing countries make better trading conditions and promote sustainability. The movement advocates the payment of a higher price to producers as well as higher social and environmental standards...
coffee is one of many fair trade certified
Fair trade certification
A fair trade certification is a product certification within the market-based movement fair trade. The most widely used fair trade certification is FLO International's, the International Fairtrade Certification Mark, used in Europe, Africa, Asia, Australia and New Zealand. Fair Trade Certified Mark...
products available around the world. The purpose of fair trade is to promote healthier working conditions and greater economic incentive for producers. Coffee farmers producing fair trade certified coffee are required to be part of a co-op with other local growers. The coops determine how the premiums from fair trade coffee will be spent. Growers are guaranteed a minimum price for the coffee, and if market prices exceed the minimum, they receive a per pound premium. Fair Trade coffee has become increasingly popular over the last 10 years, and is now offered at most places coffee is sold.
In 2004, 24,222 metric tons (of 7,050,000 produced worldwide) were fair trade; in 2005, 33,991 metric tons out of 6,685,000 were fair trade, an increase from 0.34% to 0.51%.
History of fair trade coffee
Prior to fair trade prices were regulated by the International Coffee OrganizationInternational Coffee Organization
International Coffee Organization was initiated in collaboration with UN to enhance cooperation between nations that consume, distribute and produce coffee....
according to the regulations set forth by the International Coffee Agreement
International Coffee Agreement
The International Coffee Agreement is an international commodity agreement aimed to achieve a reasonable balance between the supply and demand of coffee at a higher price than would otherwise be the case. Export quotas are the principal instruments used...
of 1962. The agreement, which was negotiated at the United Nations headquarters 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
Sustainability
Sustainability is the capacity to endure. For humans, sustainability is the long-term maintenance of well being, which has environmental, economic, and social dimensions, and encompasses the concept of union, an interdependent relationship and mutual responsible position with all living and non...
, principles similar to Fair Trade.
Beginning of fair trade
Fair Trade certification began in the Brazil in 1988 in response to dropping coffee prices in the world market. 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 HavelaarMax Havelaar
Max Havelaar: Or the Coffee Auctions of the Dutch Trading Company is a culturally and socially significant 1860 novel by Multatuli which was to play a key role in shaping and modifying Dutch colonial policy in the Dutch East Indies in the nineteenth and early twentieth century...
", after a fictional Dutch character who opposed the exploitation of coffee farmers by Dutch colonialists in the East Indies. 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
Transfair USA
Fair Trade USA, formerly "TransFair USA" is a 501 non-profit organization.Founded in 1998, Fair Trade USA’s mission is to "enable sustainable development and community empowerment by cultivating a more equitable global trade model that benefits farmers, workers, consumers, industry and the earth"...
, and Rättvisemärkt. In 1997 these four organizations jointly created the Fair Trade Labeling Organization, which sets Fair Trade standards, and inspects and certifies growers.
Certification
The Fair Trade CertificationFair trade certification
A fair trade certification is a product certification within the market-based movement fair trade. The most widely used fair trade certification is FLO International's, the International Fairtrade Certification Mark, used in Europe, Africa, Asia, Australia and New Zealand. Fair Trade Certified Mark...
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 1950s, certification and labeling was not enacted until 1982. 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 $2.35 per pound of raw coffee beans as opposed to the world market average of $.80. Farmers who are involved with Fair Trade receive maximum 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 above fair wages. Child labor is 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.
Examples of community development:
Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
: Members of the COSUTCA coffee cooperative successfully prevented the cultivation of more than 1600 acres (6.5 km²) of coca and poppy used to produce illicit drugs.
Guatemala
Guatemala
Guatemala is a country in Central America bordered by Mexico to the north and west, the Pacific Ocean to the southwest, Belize to the northeast, the Caribbean to the east, and Honduras and El Salvador to the southeast...
: indigenous Tzutuhil Mayans in the La Voz cooperative are sending local kids to college for the first time.
Peru
Peru
Peru , officially the Republic of Peru , is a country in western South America. It is bordered on the north by Ecuador and Colombia, on the east by Brazil, on the southeast by Bolivia, on the south by Chile, and on the west by the Pacific Ocean....
: the CEVOVASA cooperative is assisting indigenous groups in improving coffee quality and transitioning to certified organic production.
Nicaragua
Nicaragua
Nicaragua is the largest country in the Central American American isthmus, bordered by Honduras to the north and Costa Rica to the south. The country is situated between 11 and 14 degrees north of the Equator in the Northern Hemisphere, which places it entirely within the tropics. The Pacific Ocean...
: The CECOCAEN cooperative established a reproductive health program providing tests for the virus that causes cervical cancer.
In 1997, Fairtrade Labelling Organizations International
Fairtrade Labelling Organizations International
Fairtrade International was established in 1997, and is an association of 3 producer networks, 19 national labelling initiatives and 3 marketing organizations that promote and market the Fairtrade Certification Mark in their countries Fairtrade labelling organizations exist in 18 European...
, 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. The FLO sets the price floor for the coffee. The current pricing is available on the FLO website http://www.fairtrade.net/fileadmin/user_upload/content/090409_EN_FTMP_and_P_Table.pdf .
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 ClubSam's Club
Sam's Club is a chain of membership-only retail warehouse clubs owned and operated by Wal-Mart Stores, Inc., founded in 1983 and named after Wal-Mart founder Sam Walton. , the Sam's Club chain serves more than 47 million U.S. members...
, Wal Mart, Dunkin' Donuts
Dunkin' Donuts
Dunkin' Donuts is an international doughnut and coffee retailer founded in 1950 by William Rosenberg in Quincy, Massachusetts; it is now headquartered in Canton...
, McDonald's
McDonald's
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 64 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by the eponymous Richard and Maurice McDonald; in 1948...
, and Starbucks
Starbucks
Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 17,009 stores in 55 countries, including over 11,000 in the United States, over 1,000 in Canada, over 700 in the United Kingdom, and...
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. This is in part because the company purchases massive quantities of coffee. In 2008, Fair Trade certified coffee composed only 5% of the total coffee purchased by the company.
Though large scale coffee corporations are becoming figureheads for Fair Trade, smaller companies such as Just Coffee Cooperative, Higher Grounds, and Cafe Campesino 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
Guatemala
Guatemala is a country in Central America bordered by Mexico to the north and west, the Pacific Ocean to the southwest, Belize to the northeast, the Caribbean to the east, and Honduras and El Salvador to the southeast...
and Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
, 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. 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. 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
Catholic
The word catholic comes from the Greek phrase , meaning "on the whole," "according to the whole" or "in general", and is a combination of the Greek words meaning "about" and meaning "whole"...
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. Many church groups feel that this organization emulates Christianity
Christianity
Christianity is a monotheistic religion based on the life and teachings of Jesus as presented in canonical gospels and other New Testament writings...
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
Christian
A Christian is a person who adheres to Christianity, an Abrahamic, monotheistic religion based on the life and teachings of Jesus of Nazareth as recorded in the Canonical gospels and the letters of the New Testament...
.
Ethics
Critics believe the Fair Trade certification is abused by marking up retail prices significantly, while only providing the growers with marginally higher prices.When large corporations like Wal-Mart
Wal-Mart
Wal-Mart Stores, Inc. , branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. The company is the world's 18th largest public corporation, according to the Forbes Global 2000...
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
Transfair USA
Fair Trade USA, formerly "TransFair USA" is a 501 non-profit organization.Founded in 1998, Fair Trade USA’s mission is to "enable sustainable development and community empowerment by cultivating a more equitable global trade model that benefits farmers, workers, consumers, industry and the earth"...
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.
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.
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 per pound 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.
See also
- Anti-globalizationAnti-globalizationCriticism of globalization is skepticism of the claimed benefits of the globalization of capitalism. Many of these views are held by the anti-globalization movement however other groups also are critical of the policies of globalization....
- Organic agriculture
- World Trade OrganizationWorld Trade OrganizationThe World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
- Rainforest AllianceRainforest AllianceThe Rainforest Alliance is a non-governmental organization with the published aims of working to conserve biodiversity and ensure sustainable livelihoods by transforming land-use practices, business practices and consumer behavior. It is based in New York City, and has offices throughout the...