Justice and Java: Coffee In a Fair Trade Market

September 25, 2007

Sip a steaming brew at Starbucks, and you might associate coffee with prosperity. The image of carefree consumers enjoying $3 lattés seems totally unrelated to that of coffee-bean farmers and workers, who live with unrelenting poverty, illiteracy and a long legacy of economic colonialism. However, the two groups are part of an intricately related system that has existed for centuries, leaving coffee harvesters immiserated, and coffee drinkers mostly unaware of the suffering that goes into making their beverage.

But a movement is growing among coffee consumers to demand justice for coffee workers and farmers. In several industrialized countries, including the United States, activists have been putting grassroots pressure on big coffee retailers such as Starbucks to buy directly from cooperative farmers and pay them a price that represents a living wage. Because of the new movement, Starbucks has just begun offering millions of consumers a choice—between coffee produced under sweatshop conditions, and a product based on principles of fair trade.

Fair Trade is the name of the movement, and its time has come. Coffee is the world's second most valuable market commodity after petroleum, and U.S. consumers purchase 25% of the beans traded in the global market. Coffee is a significant source of foreign exchange for many Latin American countries and has played a major role in the political histories of nations such as Mexico, Colombia, Guatemala and Brazil. It was traditionally developed as a colonial cash crop, planted and harvested by serfs or wage laborers on large plantations, then exported to imperial countries.

In its natural, shaded habitat, coffee is a sustainable crop. In the mid-20th century, however, with the advent of the Green Revolution—an agribusiness-oriented scheme that pressed high technology on traditional farmers—varieties of high-yielding coffee were pursued. In the 1970s the United States Agency for International Development (USAID) gave over $80 million to coffee plantations in Latin America to "modernize"—to strip coffee of shade trees and purchase chemical pesticides and fertilizers. This has led to severe environmental problems, such as contamination of air and water through pesticide poisoning. It has also led to deforestation, which has become a major threat to migratory songbirds because of habitat destruction.

Farmers, many of them indigenous peoples, grow most of the world's coffee beans on plots of less than 10 acres. The prices they often receive are less than the costs of production, which pushes them into an endless cycle of poverty and debt. All over Latin America, farmers are forced to sell the future rights to their harvest to exploitative middlemen in exchange for the credit they need to pay for basic necessities.

The world price is set on the New York "C market"—the section of Wall Street that deals in sugar, cocoa and coffee. While severely volatile, the C market price for coffee has hovered around $1 per pound since the collapse of the International Coffee Agreement in 1989. Farmers in over 50 nations are hostage to this speculative market. They generally receive less than half the C market price, or between 30 and 50 cents a pound for coffee that retails for as much as $10. At that rate, a family earns an average of only $600 a year.

Coffee is also grown on large plantations worked by landless day laborers with low rates of unionization and extremely poor working conditions. In 1995, as a result of pressure from the U.S./Guatemala Labor Education Project, Starbucks drafted the first Code of Conduct for coffee suppliers, but they have yet to implement it. Starbucks refuses to disclose the location of the plantations from which it buys, making independent monitoring impossible.

A recent study by the Guatemalan Commission for the Verification of Corporate Codes of Conduct found half the workers on fincas in that country earning less than $3 per day for picking 100 pounds of coffee. Workers also were subject to forced overtime without compensation, and usually did not receive their legally mandated benefits. Coffee workers are denied basic labor rights not just in Guatemala, but worldwide, and efforts to develop an industry-wide Code of Conduct are underway.

Fair Trade offers a mechanism for small farmers to receive higher prices as an alternative to the "tyranny of the C market." To have their coffee certified as Fair Trade, importers must satisfy strict international criteria and submit to independent monitoring by TransFairUSA, the new certification agency based in Oakland, California. The most important requirement is a minimum price of $1.26 per pound, paid directly to organized farmer cooperatives—not to middlemen. Fair Trade importers also must provide farmers with credit at fair terms and commit to long-term trade relationships.

The recipients of Fair Trade benefits are some 500,000 farmers organized into 300 cooperatives in 20 countries in Central and South America, Africa and Asia. One such group, the Promoter of Cooperative Development in the Segovias (PRODECOOP), is based in Estelí, Nicaragua. Founded in 1993 and boasting over 2,420 families, PRODECOOP has undertaken projects such as building schools and healthcare centers as well as training in production techniques and legal matters. From sales to the Fair Trade market, farmers earned $600,000 over the regular market price for their coffee last year. The income is used to pay bank debt and thus avoid loss of land, to purchase the cooperative's own mill, and to increase the quality of the coffee.

Another Fair Trade cooperative, in Oaxaca, Mexico, is the Union of Indigenous Communities of the Isthmus Region (UCIRI). Established in 1982, it has more than 5,000 families who farm roughly 15 acres each. UCIRI has helped create the region's only public bus line, a farm supply center, healthcare services, cooperative corn mills, an agricultural extension and training program, and the region's only secondary school. In contrast to the assumption that upping prices paid for cash crops might induce farmers to increase export dependence, experience has shown that farmers are more likely to use the additional income they gain from the Fair Trade market to invest in projects that increase food security.

Fair Trade clearly makes sense for farmers. As Merling Preza Ramos, PRODECOOP's director, recently put it, coffee producers are asking only "to be paid a fair price... This isn't charity... Behind a cup of coffee there are faces and people—people who are working to produce good coffee."

The idea of marketing fairly priced products from cooperatives is not entirely new, particularly for people who were sympathetic to Central America's revolutionary movements of the 1980s. At that time, solidarity activists and organizations, such as the Boston-based Equal Exchange, were importing and selling small amounts of Nicaraguan coffee to support that country's Sandinista movement, and paying farmers fair prices. Their support made the difference in many cooperatives keeping rather than losing their land when the Sandinistas lost power in 1990. The Fair Trade Federation, the national association of Fair Trade retailers and wholesalers, boasts over 100 business members that import or market crafts to support cooperative producers with fair prices.

The situation was similar in Europe, whose long, explicit history of colonialism has left more of the population aware of how their countries' economic policies have aggravated poverty in the Global South. European fair trade efforts originally focused on operating alternative retail stores that sold folk crafts. Currently, Europe has about 3,500 such stores.

In 1988 fair trade advocates realized that producers of basic agricultural commodities faced tremendous disadvantages in the global market as their "terms of trade" (the value of their products related to other goods) continued to decline—and that developing a Fair Trade market could be a solution. The effort to bring the Fair Trade concept to mainstream commodities and markets originated in Europe through a Dutch organization called Max Havelaar, the first fair trade monitoring organization. The name comes from the title of a book about Dutch colonial exploitation of Indonesian coffee workers at the turn of the century. The book's popularity garnered Dutch support for labor reforms. Fair Trade advocates pressured coffee companies to abide by Fair Trade criteria and carry the Max Havelaar label, which now enjoys wide recognition by consumers in Holland. Max Havelaar later added sugar, cocoa, tea, honey and bananas—historically colonial cash crops—from cooperatives in former colonies. More countries took on the concept and changed the name to TransFair, and in 1997 incorporated into Fair Trade Labeling Organizations International (FLO), which now has branches in Canada, Japan, and 15 importing countries in Europe.

The concept of "mainstreaming" fair trade took off in the United States in 1998, with the formation of TransFairUSA, this country's branch of FLO. Paul Rice, TransFair's Director, spent over 10 years working with coffee cooperatives in Latin America and realized that building a Fair Trade market was a better way for farmers to increase their incomes than other development projects. TransFair reasoned that it could appeal to "specialty" coffee consumers, who pay top dollar for quality Arabica beans. Arabica retails for about $10 a pound and comprises 15 to 25% of the total coffee market. TransFair's research showed that people who pay $10 a pound for coffee would not mind adding a dollar to guarantee a fair trade price to small coffee farmers.

TransFairUSA began its efforts in late 1998 by producing a video about coffee farmers, Santiago's Story, then launching a San Francisco Bay Area campaign to convince coffee roasters of the benefits of Fair Trade. They have branched out nationally and to date over 50 roasters and coffee importers have voluntarily agreed to abide by Fair Trade criteria and submit to monitoring by TransFairUSA.

Global Exchange got involved with TransFair USA as an outgrowth of the 10 years we have spent promoting Fair Trade through our Bay Area craft stores. We believe that as we criticize free trade and corporate globalization for its lack of democracy and exploitation of poor people around the world, we also need to promote our own vision of a global trade system based on economic justice. As this country's first product with an independent monitoring system to ensure against sweatshop-style labor abuses, coffee represents an important alternative model to the free trade practices advocated by the iron triangle of the global sweatshop economy: the World Bank, the International Monetary Fund (IMF), and the World Trade Organization.

Global Exchange initiated a public education-for-action campaign in summer 1999, and currently we are building a network of activists, church groups, students, labor unions and environmentalists to increase consumer demand for Fair Trade coffee in our own communities. In the Bay Area, we have successfully lobbied city councils in San Francisco, Berkeley and Oakland to limit those cities' coffee purchases to brands that are Fair Trade-certified and usually organic. The Santa Cruz city council later followed suit. We helped host a farmer from Estelí, Nicaragua—San Francisco's Sister City—for an event with San Francisco Supervisor and living wage advocate Tom Ammiano. After many hours of volunteer public education efforts and solid media coverage, the Bay Area is now home to over 100 retail outlets for Fair Trade-certified coffee, up from four when we started a year ago.

Branching out nationally, in fall 1999 we laid the groundwork to help community activists and college students coordinate Fair Trade coffee campaigns. We now have a network of over 50 groups, mostly on campuses such as the University of Chicago and Columbia, where students are working to pass purchasing restrictions at those institutions for fair trade coffee. Efforts have already been successful at the University of California Davis, College of the Atlantic, and University of Delaware. Meanwhile, the Student Alliance to Reform Corporations, United Students Against Sweatshops, and the Student Environmental Action Coalition have participated in Fair Trade-certified coffee activities across the country.

Perhaps our most dramatic campaign has been focused on Starbucks. We chose Starbucks because it is the largest specialty coffee retailer, with a fifth of all cafes in the country. In the fall of 1999, Global Exchange approached then-CEO Howard Schultz and requested that Starbucks offer Fair Trade-certified coffee in all its stores. The company was initially very hesitant, alleging that the beans were of low quality. Shortly thereafter, we organized several peaceful demonstrations in front of Starbucks stores in Seattle.

In February 2000, an investigative report by San Francisco's ABC TV affiliate exposed child labor and scandalously low wages on Guatemalan coffee plantations, some of which sell coffee to Starbucks. Immediately after the program aired, we organized a local protest. We then petitioned Starbucks stockholders at their annual meeting in Seattle to offer Fair Trade Certified coffee. That same week, the company announced a one-time shipment of 75,000 pounds of Fair Trade coffee. We responded that for a firm as big as Starbucks, this represented a "Drop in the Cup"—an average of only about 30 pounds per store—and the coffee was not certified! We then circulated an Open Letter, signed by 84 student, environmental, church, and social justice organizations, again asking Starbucks to pay farmers a living wage and offer their customers Fair Trade Certified coffee. We helped plan 30 demonstrations that were scheduled for April 13 across the country at Starbucks shops. Meanwhile, hundreds of people faxed letters to Starbucks from our website or sent postcards asking the giant retailer to pay farmers fair prices.

Three days before our scheduled demonstrations, Starbucks announced an agreement with TransFairUSA to offer Fair Trade Certified coffee at all its stores nationwide, beginning this October. They will also be developing educational materials and training for coffee bar workers, so that millions of consumers can learn about Fair Trade. This is a huge victory for farmers, whose incomes will triple when they can sell their coffee at Fair Trade prices. It is also an important win for the corporate accountability movement. Starbucks' quick capitulation in the face of nationwide protest illustrates that grass roots organizing and education can indeed bring major results.

But so far, Starbucks has agreed to offer Fair Trade-certified coffee in whole bean form only: It will be available in take-home bags, but not brewed in the cafes. As soon as the beans are on Starbucks' shelves, we will be pressuring the company to offer Fair Trade-certified coffee in brewed, in-store drinks. We will also continue encouraging Starbucks to sell Fair Trade coffee on campuses and to increase their purchases generally.

U.S. consumers seem ready for this new way of doing business. In a recent BusinessWeek/Harris poll, 51% of those interviewed said they support fair trade rather than protectionism or "free trade." Even the Specialty Coffee Association of America (SCAA) recently officially endorsed Fair Trade Certification, and has formed a task force to determine ways to promote it. The anti-sweatshop movement has struggled for years to answer the consumer question, "I'd be happy to stop buying from Nike or GAP, but what should I buy instead?" As coffee demonstrates, the key to success is to educate consumers that another product exists, and to mobilize citizens to demand it. When it comes to our daily brew, an independently monitored alternative finally exists—one that sets a standard for fair trade in the global economy.

For more information on how to locate stores and cafes that sell Fair Trade-certified coffee; how to request that retailers stock the product; how to start a local Fair Trade campaign; or to learn about Global Exchange's upcoming (January 2001) Reality Tour to Costa Rica and Nicaragua, "Fair Trade and Free Trade: An Integrated Look at Coffee, Bananas, and the Effects of Globalization," contact Global Exchange at www.globalexchange.org/economy/coffee or deborah@globalexchange.org (415) 255-7296, Ext. 245,

Or TransFairUSA at
www.transfairusa.org or paul.rice@transfairusa.org, or (510) 663-5260

Deborah James is the Fair Trade director of Global Exchange, where she coordinates a national public education campaign to promote Fair-Trade certified coffee. She is also Chair of the Fair Trade Federation.

Tags: coffee, globalization, fair trade, cooperatives, Starbucks

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