Fair Trade: Something Good is Brewing

“If fair trade can't work with coffee, it won't work with any product. It's the perfect product to try to get the word out on international trade issues,” says Bill Harris, founder of Augusta, Ga.-based Café Campesino and head of the Cooperative Coffees, an association of 12 regional coffee roasters in the U.S. “Consumers are very passionate about their coffee and want to know where it's from. Coffee shops are ideal locations to leave educational materials around. They're a place for conversation, for new ideas,” he says. And, since the cost of the raw beans is miniscule as compared to the cost of a cup of coffee brewed from those beans, “the roaster or shop owner [finds] it's not difficult to increase the percentage of the cost of the final cup of coffee that goes back to the grower.”

Advocates say fair trade provides a consistent, guaranteed price for coffee beans that allows growers to improve the lives they lead in countries such as Brazil, Colombia, Vietnam, Indonesia and Mexico, the largest coffee exporters. By being certified under the label of TransFair USA, an Oakland nonprofit firm, coffee companies commit to paying growers the equivalent of $1.26 per pound, rather than the 50 cents a pound commonly paid.

Of American coffee drinkers, 14 percent, or 29 million, drink gourmet coffees. It is that group that fair trade coffee roasters consider to be potential customers, since retail prices on fair trade coffee start at about $7 per pound, putting it in the same price category as high-end gourmet brands.

Despite the upscale prices found in the high-end of the industry, economic conditions have deteriorated for many growers in the past few years as coffee prices dropped dramatically due to Brazil's soaring production and Vietnam's coming of age as a major coffee producer. According to Deborah James, fair trade director of Global Exchange, a San Francisco-based human rights organization, plummeting coffee prices are to blame for the snowballing failure of once profitable farms, particularly in Nicaragua. “The crisis caused by the falling prices makes fair trade more important now than ever,” says James.

Why Fair Trade?

According to TransFair USA, there are four principles involved in fair trade coffee:

Fair wages. By bypassing middlemen and working directly with producers, buyers can cut costs and return a greater percentage of the retail price to the producers.

Cooperative workplaces. Buyers work primarily with small businesses, many of which are worker-owned and democratically run cooperatives that bring significant benefits to workers and communities.

Consumer education. Fair trade sellers educate consumers about the importance of buying fairly traded products that support living wages and healthy work conditions.

Financial and technical support. Small-scale farmers in the developing world lack access to affordable financing. Fair trade members that buy coffee often provide financial assistance either through direct loans or prepayment or by linking producers with financial sources.

TransFair USA reports swelling growth numbers since the firm started certifying coffee in 1999. “We certified 2 million pounds in 1999, 4.3 million pounds in 2000, and we expect to certify between 9 and 10 million pounds this year,” says Paul Rice, director of the nonprofit. “We're growing very fast.”

TransFair USA's rapid strides can be credited in part to the trailblazing efforts of companies like Equal Exchange, a Cambridge, Mass., company that has been importing, roasting and selling fair trade coffee since 1986. According to the company's self-described “answer man,” Rodney North, Equal Exchange has grown by 37 percent per year since its 1986 founding. Sales in 2000 were $7.2 million and the company estimates 2001 sales to top $8 million. “Most fair trade companies buy from brokers who first buy the coffee from the co-ops,” says North. “But we have been at this long enough that we've developed relationships with the co-ops themselves, buying the beans exclusively and directly.” Equal Exchange will import l.6 million pounds of coffee from 10 countries this year. It sells its products “from Atlanta to Vancouver,” according to North, to consumer co-ops, cafés, restaurants and retail chains, including Albertson's and Shaw's.

“Equal Exchange is undoubtedly the pioneer in fair trade coffee,” says TransFair USA's Rice. “And they did very well selling fair trade coffee long before there was any official certification. Yet, the certification process has allowed for huge growth. When we started, Equal Exchange was selling its coffee at 200 locations. Now, two years later,” he says, “we have fair trade coffee in 7,000 U.S. locations.”

Rice believes that certification has been the mechanism for mainstreaming the fair trade concept. “Consumers won't believe a product is fair trade, particularly if it's from a large corporation like Starbucks or Sara Lee, unless there is third-party certification,” he says.

Smaller Companies Step Up

Inspired by the success of Equal Exchange, many small, regional companies have jumped on the fair trade bandwagon. “Our situation is similar to many companies in the LOHAS marketplace,” says Equal Exchange's North. “We have demonstrated that selling a socially responsible product can both work and be profitable. So our success invites competition. But it being our mission is to help coffee growers, this is a problem we are happy to have,” he says.

On the regional level, companies like Peace Coffee in Minneapolis are making strong inroads into the Midwest coffee scene. “We consider ourselves to be the regional leader,” says co-director T. J. Semanchin. “One hundred percent of our offerings are fair trade coffee. We supply customers with good coffee, and we are totally dedicated to pushing the fair trade movement further,” he says.

The company was founded in 1996 with financing from the nonprofit Institute of Agriculture and Trade Policy in Minneapolis. The company's initial goal was to help refugees return to their land following the Guatemalan Peace Accords that marked the end of that country's 36-year civil war—hence the name Peace Coffee. Semanchin says that the company has taken a “pretty typical” business path. “Last year was the first year we were profitable. And this year, for the third time in our history, we've doubled our sales, so we will be profitable again,” he says. This year, Peace Coffee expects to sell 150,000 pounds of fair trade coffee. Its customers include area businesses, food co-ops, coffee shops and restaurants.

One of Peace Coffee's missions is to educate the community on traditional fair trade issues, something that Semanchin and his associates do by speaking at schools, churches and business gatherings. And in keeping with its environmental mission, the company delivers coffee to its downtown customers via bicycle. “We have a bike and a trailer system that can hold up to 250 pounds of coffee,” says Semanchin. “We have our logo on it, and our customers love it when we arrive on bicycle with their delivery.” In fact, Peace Coffee places a sticker on its coffee noting that it was “bike delivered by Peace Coffee.” Those touches have helped the company get the attention of the local press, whose ample coverage also has helped further Peace Coffee's efforts to get the word out on fair trade issues.

Widespread media exposure has come as well to Green Mountain Coffee, based in Waterbury, Vt., since it started selling fair trade
coffee. In September 2000, the company converted its six organic coffees to fair trade as well, leading to a 50 percent increase in sales in one year. In addition, it converted its best-selling flavored coffee, Rain Forest Nut, into a fair trade product. Sales surged and fair trade coffee now accounts for 7 percent of the company's total sales, figures the company plans to plump up further through promotions featuring the Buzz Mobile, a vehicle that dispenses free product samples at universities and sporting events.

“Fair Trade has been the biggest story in our company's 20-year history,” says company spokesperson Rick Peyser. “We've been featured on NPR, PBS and in numerous newspaper articles.” Peyser says that fair trade has become the core of the company's culture. “It will be a big part of our future,” says Peyser. “It's why we get out of bed in the morning and work so hard.”

Buoyed by the success of regional firms and threatened by potential mass protests, large coffee companies have taken notice and, bit by bit, are incorporating fair trade coffee into their vast lines. In October 2000, Starbucks began offering fair trade certified beans at its 2,300 stores, but only after Global Exchange picketed the company's annual stockholders' meeting, demanding the company sell fair trade coffee.

Big Players Smell the Coffee

“Starbucks committed to keep it on the shelves in every store as a permanent addition, which is a rare occurrence for Starbucks,” says TransFair USA's Rice. “They sold it brewed at one point, and we're hoping they bring that back permanently as well,” he says.

Rice is equally pleased to have signed up Sara Lee, which is now selling a fair trade coffee called Previca in its high-end line. Beyond sales to universities and government offices, Sara Lee is marketing fair trade coffee to 350 Border's Bookstores, where it is sold both brewed and in bean form at the chain's in-house coffee shops.

Rice knows that fair trade coffee will not work for the coffee farmers if it doesn't work for industry. “We're not a charity. This has to be a win-win for everyone involved,” he says. With a resume that includes 18 years of anti-poverty work in developing countries, Rice recognizes fair trade's power as a tool for economic and social change. “I lived in Nicaragua for 11 years working with farmers,” he says. “I have never seen anything as powerful as fair trade in terms of helping poor people develop their own capacity to solve problems. The impact on their lives has been impressive.”

The future of fair trade involves expanding the movement to even more coffee producers, particularly mainstream companies, as well as expanding the concept to other products. “My dream is that someday a shopper can go into a Safeway and find a dozen fairly traded products,” says Rice. On the short list, he says, are bananas and cocoa. But for now, coffee continues to be the dominant product geared for fair trade. “With the low international prices and the potential for so much despair, we're needed now more than ever,” he says.

Mary Scott is the co-author of Companies with a Conscience, which will be published in an updated edition by Career Press in 2002