The Real Impact of Fair Trade

Report from Nicaragua and Ethiopia

(Courtesy of DeansBeans.com)

Let’s face it. The world coffee market stinks. Prices paid to coffee farmers are based on a host of irrelevant factors, from predictions of frost on large Brazilian, to NY commodity speculators who’ve never been to a coffee village, to a market glutting flood of cheap Vietnamese coffee promoted by the World Bank. It’s a nightmare. As a result, coffee prices are the lowest in recorded history, and growers are receiving far less than it costs to produce their crop. Economists sipping their three dollar mochaccinos hold to the theory that the market works efficiently, that all those surplus coffee farmers should just pack their bags and get into something else. Like what? Overcrowded third world cities? Vans sneaking across the Texas border? Sweatshops in maquiladora zones?

Fair Trade provides a floor price when the market price paid to farmers, along with their quality premiums, sinks below $1.26 for conventional coffee and $1.41 for organics (that’s us!). When the price is above those levels, Fair Traders agree to pay an extra nickel per pound above the contract price to keep all the players committed to the system. Equally as important, Fair Trade also requires the importer to provide pre-financing to the farmers. The up-front money allows the farmers to pay for harvesting and processing of their crop without overreliance on local moneylenders or unpredictable banks. In order to participate, farmers must be organized into transparent, democratically-run cooperatives.

It costs us a heck of a lot more to be part a leader in the Fair Trade movement, but recent trips to Ethiopia and Nicaragua demonstrate the real impact of fair trade on the lives of farmers and their families, and reminded me where my values lay.

Fair trade is not the solution to poverty in the coffee world. Nor should it be a marketing gimmick or a feel-good effort by companies that have one or two Fair Trade coffees while they reap record profits on all their low cost coffees.

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