FairTradeCoffee

Fair Trade coffee imports triple in three years But it is still just a fraction of market in the United States.

By John Boudreau
Knight Ridder Newspapers

SAN JOSE, Calif. | How do you like your coffee? Without guilt, say an increasing number of consumers, and an Oakland nonprofit makes sure that's the way they get it.

TransFair USA has become the standard-bearer for the Fair Trade movement, which pushes for coffee growers to be paid a living wage. Any Fair Trade coffee sold in the United States must get certification and a seal of approval from TransFair.

The nonprofit's job is growing. Fair Trade coffee imports have tripled in the past three years, although they still make up just a fraction of the $8.4 billion U.S. gourmet-coffee market. The retail value of Fair Trade coffee in the United States in 2003 came to $208 million.

''It is guilt-free coffee,'' said Paul Rice, founder and chief executive of TransFair USA. ''But I would never call it that. I would call it feel-good coffee.''

The price of coffee in the New York commodity market is about 65 cents a pound. But farmers are typically paid anywhere from 15 to 45 cents a pound.

About 70 percent of coffee growers are small family farms on two to four acres of land. They often have no electricity — and no computers. That means they have little or no access to information about coffee markets. Brokers show up at their gates and tell them what the price is, Rice said.

''They have virtually no negotiating power,'' he said.

Under the Fair Trade model, farmers bypass middleman brokers and get significantly more for their coffee by operating in cooperatives. Importers pay the cooperatives the Fair Trade price of $1.26 a pound, or $1.41 a pound if the coffee is certified organic.

TransFair is part of an 18-member international umbrella group, called Fairtrade Labelling Organizations International, that dispatches inspectors to these farm cooperatives around the globe. The specialists provide annual audits of each cooperative to make sure buyers are paying above-market prices to farmers. Buyers often will pay in advance for coffee so struggling farmers aren't forced to sell their beans early at cut-rate prices if they face financial hardships.

''If there was no Fair Trade price, the farmers would suffer,'' said Tadesse Meskela, general manager of a coffee farmers cooperative in Ethiopia. ''Their children would not go to school. They would not even be able to feed their families.''

The nonprofit (www.transfairusa.org), which operates on an annual budget of about $3 million, is funded by foundations and certification fees of 10 cents per pound of Fair Trade coffee by commercial roasters. The agency now also provides Fair Trade certification for tea, cocoa and fruit.

In 2003, 18.5 million pounds of Fair Trade coffee beans were imported into the country. This year, TransFair expects 29 million pounds of Fair Trade coffee beans — grown on small, family farms from Colombia to Ethiopia — to be imported into the United States.

Sip by sip, Fair Trade coffee is increasingly meeting the desires of java junkies across the country. Starbucks and Peets each offer a Fair Trade coffee. In fall 2003, Dunkin' Donuts introduced Fair Trade espresso drinks that will be sold in more than 4,500 stores nationwide. Procter & Gamble also launched a Fair Trade coffee, Mountain Moonlight.

And by year's end, Rice said, Wal-Mart and Target will start selling Fair Trade coffee.

''We are at the tipping point,'' he said.

Free-market advocates disagree. They don't believe the artificial prices set on Fair Trade coffee will dramatically reshape the industry and buying habits of most coffee drinkers.

''It is a feel-good program,'' said economist Bill Conerly, a senior fellow at the Dallas-based National Center for Policy Analysis.

''I don't expect it to be a broad trend because people don't like to spend more money. I expect the impact will be trivial.''

The problem of poor farmers, he said, is really the market glut of coffee, the normal volatility of agricultural markets, as well as corrupt developing world governments where ''cronyism'' is rewarded and onerous red tape often leads to bribes.

Fair Trade is, in a sense, a way to sidestep world market forces. But supporters of Fair Trade point out that the agricultural markets are anything but free. Vietnam's coffee industry was created with massive help from international organizations and government spending. In the United States, farmers enjoy billions of dollars in farm subsidies.

Also, Fair Trade coffee is more than a way to help impoverished growers, Rice said. It's a model that ensures high-quality coffee is available for the growing gourmet coffee market.

''Better payments leads us to make sure the coffee is a better quality,'' Meskela said. Farmers ''care for the coffee because people care for us. They pay us a fair price.''

It is in the gourmet-coffee industry's best interest to support Fair Trade farmers in order to guarantee a supply of top-notch beans, said Mark Burton, co-owner of Connoisseur Coffee Co. in Redwood City. Indeed, Starbucks has voiced concerns about finding enough high-quality beans to fill its ever-growing cups of espresso and lattes.

''It does make sense,'' Burton said while operating a roaster cooking up 140 pounds of dark beans. About 10 percent of the beans Connoisseur Coffee roasts are Fair Trade.

At the production level, it's the farmers who get squeezed, Burton said.

''And they are the ones who decide if we have coffee or not,'' he said. ''The richest coffee comes from the poorest countries.''

The cost to consumers for Fair Trade coffee isn't that great, he added. Connoisseur's Fair Trade coffee is priced at about 50 cents more a pound.

The Rev. John Sullivan became hooked on Fair Trade coffee after his church, Hope Lutheran Church in Santa Clara, Calif., began serving it.

''The French roast decaf is the best decaf coffee I've ever had,'' he said of the Equal Exchange brand, which only sells Fair Trade coffee. ''Even though I'm paying a few cents more, I think it's worth it. I feel good about it.''

Copyright © 2004, The Morning Call
Source: http://www.mcall.com/business/local/all-fairtrade-jun14,0,595812.story?coll=all-businesslocal-hed
Accessed on June 22, 2004

Small coffee brewers try to redefine fair trade

Byline:  Tim Rogers Contributor to The Christian Science Monitor
Date: 04/13/2004

(GRANADA, NICARAGUA)Fueled by a popular taste for lattes and cappuccinos and a growing consumer-awareness campaign, the fair-trade coffee movement has tens of thousands of Americans asking for a scoop of social justice with their morning coffee.

Fair-trade coffee - beans purchased from small farmers outside the US
at well above the slumping market price - is hot in the java world: The
amount of fair-trade coffee sold in the US nearly doubled last year.

But as the movement has expanded in recent years to include such brands
as Starbucks, Green Mountain, Procter & Gamble, and Dunkin' Donuts,
dissension is percolating among some smaller roasters. They claim that
the large firms, which buy only a small percentage of fair-trade beans,
are turning it into a marketing ploy rather than an effort to help
farmers.

Now a move is underfoot to create a new model where smaller brewers
purchasing 100 percent fair-trade coffee hope to distinguish themselves
as the real deal among fair traders. The rift demonstrates how some
small companies feel cheated by larger corporations for infringing on
their market niche, even when all parties involved insist they are
working toward the same goal.

Others say the mainstreaming of the movement has helped the cause.

"If a corporate giant roasts a million pounds of fair-trade coffee in
one year, they are still doing far more than some of the smaller
100-percent roasters will in their entire history," stresses Paul Rice,
CEO of TransFair USA, the group that audits the US fair-trade industry.

The fair-trade model seeks to ensure livable wages as well as
environmental and cultural sustainability for small farmers in Latin
America, Africa, and Asia by establishing a base purchase price of
$1.26 per pound - about $.75 more than the current market price. Since
TransFair formed in 1998, fair-trade coffee sales in the US have grown
exponentially, totaling 19 million pounds last year, according to Mr.
Rice.

Several smaller 100-percent fair-trade coffee roasters in the US have
broken from the establishment in recent months, claiming they can do
more to raise consumer awareness by going it alone.

On Friday, Larry's Beans of North Carolina split from TransFair, the
company that holds the US trademark for the term, "Fair Trade
Certified." At least three other smaller roasters - Just Coffee, Dean's
Beans, and Cafe Campesino - have followed suit. All the details of
their new association have yet to be worked out.

"Without people outside the increasingly corporate-friendly TransFair
system pushing for the original vision of a better model, [the
movement] will be watered down into nothingness," says Matt Earley,
cofounder of Just Coffee in Madison, Wis.

Under the current system, chains like Starbucks can call themselves
fair-trade friendly by purchasing just 1 to 2 percent of their coffee
from certified growers.

Starbucks, which brews fair-trade coffee once a month as its "coffee of
the day" in the company's 7,834 worldwide shops, and has bags of it for
sale on its shelves, acknowledges that fair-trade beans are only a
small percentage of its total purchase, but explains that there are
other ways to ensure farmers are treated justly.

Sue Mecklenburg, vice president of business practices for Starbucks,
says the company purchases all its beans - fair-trade certified or not
- at an average price of $1.20 per pound. She says that last year the
company bought 2.1 million pounds of fair-trade certified coffee,
double the amount from the previous year, and sold 28 million cups of
fair-trade coffee as its cup of the day in 2003.

"Starbucks doesn't purchase 100 percent of its coffee as fair-trade
certified, but 100 percent of the coffee we buy is under conditions
that are fair to farmers," she says, noting that fair-trade certified
coffee is still a relatively small market, representing 670,000
smallholder family farmers, out of an estimated 25 million coffee
farmers around the world.

Another sticking point inside the movement are the requirements for
being certified. Germany's Fair Labeling Organization (FLO), which
certifies all fair-trade coffee in the world, charges farmers $2,431 to
certify plus an annual base of $607 for recertification and $.02 per
2.2 pounds of coffee sold under the fair-trade label.

Stuck in the middle of the controversy is the rural Nicaraguan coffee
cooperative of El Porvenir, located on a 2,000-acre swath of land in
the volcanic highlands. This village of 255 people produces a modest
45,000 pounds of organic coffee beans in a good year and has been
trying for three years to get certified as fair trade by FLO.

Mike Woodard of the Nicaraguan ecumenical organization Jubilee House
Community, says he helped the village fill out a certification
questionnaire in 2001, but never received a response. FLO did not
answer questions about why they have not visited the community, but
spokesman Simen Sandberg says that seldom do they certify producers who
harvest less than 44,000 pounds per year - almost the exact amount El
Porvenir harvested last year.

Rice downplays criticisms that the movement sold out by inviting the
multinational's on board. He says his mission is to get as many
roasters and retailers involved as possible.

But some are still wary of the bigger brewers. Robert Everts,
co-executive director of Massachusetts' Equal Exchange, the largest
100-percent retailer of fair-trade coffee in the US, applauds efforts
to bring in larger firms, but says he stands with the defectors. He
says that "the verdict is still out" whether the fair-trade
establishment can support both the big and small roasters under the
same tent.

(c) Copyright 2004 The Christian Science Monitor.  All rights reserved.

Original Article: http://www.csmonitor.com/2004/0413/p01s02-woam.html