The Rise of the Fair Trade Coffee Movement

Introduction:

Although fairly traded goods have been around for over a decade, the movement has only recently gained momentum with consumers—especially with coffee, which is currently 40% of fair trade production. So, what does “fair trade” actually mean? The International Fair Trade Association, “an umbrella group of organizations in more than 70 countries, defines fair trade as reflecting ‘concern for the social, economic and environmental well-being of marginalized small producers.’” (Downie 2007) Looking at this through a consumer perspective, this means that you would have to pay a premium for goods made by local cooperatives in developing nations because you want to support these poor communities and be a better, more ethical citizen. (Mint Life 2010) But why should coffee have such a high fair trade demand compared to other goods?

Coffee ranks as “the 3^rd most valuable internationally traded agricultural commodity and often the single most important source of foreign exchange for tropical countries.” (Smith and Loker 2012) All coffee is produced in the tropics, and primarily by smallholders—Latin America accounts for 60% of global output, followed by Asia and then Africa. (Baffes and Lewin 2005) Because coffee is part of a system of trading relationships dominated by a few buyers, these smallholders in developing countries are usually left at the low value end of the commodity value chain. Delocalization has pressured these developing third world populations into full commercial participation, and has encouraged concentration on one or two main cash crops like coffee. (Pelto 1983) After explaining what delocalization is and how it affects small farmers, we will look at the recent history of the coffee movement in the U.S. and see how it leads to modern fair trade regulations and consumers.

Delocalization and problems for third world countries:

Over the past few centuries, food production and distribution rapidly became “delocalized.” Delocalization, according to Goodman, refers to “processes in which food varieties, production methods, and consumption patterns are disseminated throughout the world in an ever-increasing and intensifying network of socioeconomic and political interdependency.” (Pelto 1983) Goodman argues that delocalization has caused third world populations to lose local control over the distribution system, thus causing these economically marginal populations to be expensed at worldwide food distribution. After the industrialization period in the 20^th century, a transformation of food systems in developing countries allowed more small farmers to become involved in supplying food needs of Euro-American communities. (Pelto 1983) However, delocalization in the past and present has not proved beneficial for these small growers. Smallholder farmers are apparently the one population that is particularly vulnerable to market fluctuations and global economic change. (Eakin, Tucker, and Castellanos 2006)

“More than 25 million farmers in over 50 countries, the majority of whom are smallholders with less than 25 acres of coffee land, depend on coffee for their livelihood.” (Smith and Loker 2012) Delocalization has spurred global market integration, which has produced challenges for smallholders and their livelihood. Livelihood adaptation is defined as “the process by which livelihood choices made by individuals ‘either enhance existing security and wealth or try to reduce vulnerability and poverty.’” (Eakin, Tucker, and Castellanos 2006) Eakin and Tucker used a livelihoods’ framework to understand how farmers respond to global coffee market restructuring as an issue of livelihood adaptation. (Eakin, Tucker, and Castellanos 2006) Just like third world farmers adapted to new trading networks during the industrial period, smallholder coffee farmers are facing a new global shift that requires adapting. They are “not simply facing a downturn in the market, but rather a defined shift in global and domestic production and consumption.” (Eakin, Tucker, and Castellanos 2006) Most smallholders today are struggling to adapt to new production practices that force them to abide by strict organic and fair trade regulations. Fair trade coffee is the newest global consumption trend, and is causing problems for smallholder farmers who want to sport their coffee under the “fair trade” label. But where did this fair trade movement begin, and how has it stirred so many followers?

History of the fair trade movement:

The delocalization of the American food system started with the industrial age following World War II. New technology “allowed American farms to specialize, mechanize, and grow larger in scale.” (Ikerd 2008) This meant that Americans no longer had to buy food locally at the closest farmers market—it was now being preserved better and successfully shipped in on trucks from major agricultural centers, like California and Florida, via the improved highway systems. (Ikerd 2008) During the 20^th century, the effects of industrialization and delocalization improved the diversity of available foods and quantity of food imports for a wide spectrum of people in America. (Pelto 1983) This meant that the upper class was no longer the main consumer of coffee and other exotic goods. Larger and more important commercial enterprises, like Procter and Gamble and General Foods, started more complex food marketing that helped boost sales. (Pelto 1983)

In the 1960’s, most coffee-producing countries and almost all developed coffee-consuming countries formed the International Coffee Organization, which created the International Coffee Agreements. (Baffes and Lewin 2005) These agreements attempted to control coffee prices through mandatory expert quotas. (Baffes and Lewin 2005) This quota system apparently did not work effectively, as it collapsed in 1989. The volatility of coffee prices, which the ICO addressed before the collapse, returned and has caused serious problems for producers across the world to this day. (Smith and Loker 2012) According to Smith and Loker, “the collapse of the ICA together with increasing concentration among importers and roasters of coffee caused a shift in power relationships in the coffee trading system to favor multinational commodity traders.” (Smith and Loker 2012) This unfair trading system is what gave birth to “alternative trading organizations” (ATO’s). Fair trade started out as an ATO, and over time emerged as a successful network of trading relationships. A major reason why the fair trade coffee movement became successful was due to an additional change in the global coffee economy in the 80’s: the rise of specialty coffee. (Baffes and Lewin 2005)

Stepping back 9 years before the ICA collapse, we see the emergence of specialty coffee varieties being marketed based on quality and flavor. In the 1980’s, “World Coffee and Tea issued a report on ‘the browning of America,’ pointing to an exponential growth in the segment of the coffee trade devoted to specialty lines, with annual growth rates approaching 30 to 50 percent.” (Roseberry 1996) Coffee became a part of the gourmet boom—it belongs to the same class of foods as wine and beer,

“in which a range of quality attributes and different tastes can be distinguished and used for marketing purposes.” (Baffes and Lewin 2005)

The move towards these gourmet coffees was initiated by small regional roasters who developed new sources of supply and new modes of distribution that allowed consumers to buy coffee from peasant cooperatives in Latin American countries. (Roseberry 1996) This is where we come full circle with the fair trade coffee movement.

With growing concern for an alternative trading method between farmers and developed nations, and an increase in American demand for higher gourmet beans, “coffee became an information-laden product with consumers learning more about the quality attributes and origins of their coffee as well as related issues concerning socioeconomic and environmental conditions of production.” (Baffes and Lewin 2005) Fair trade coffee came to age with the rise of conscious coffee drinkers trying to align their consumption with social justice values. (Baffes and Lewin 2005)

The modern coffee producer and consumer:

Fairtrade Labeling Organizations International has stated that consumers spent around $2.2 billion on certified products in 2006, which was a 42 percent increase from the year before. (Downie 2007) A major boost in consumer sales of fair trade products may be due to the increase of big chains starting to market fair trade products like coffee. Starbucks is marketing their “responsibly grown” coffee as ethically sourced through “responsible purchasing practices, farmer loans and forest conversation programs.” (Starbucks 2012) Since Starbucks began purchasing fair trade coffee in 2000, they have paid over $16 million in Fairtrade premiums, “which are used by producer organizations for social and economic investments at the community and organizational level.” (Starbucks 2012) But how much of these premiums are actually reaching the community?

Fair Trade USA, leading the movement in the United States, has recently stated that it will be making some changes—one of which includes “giving the fair trade designation to coffee from large plantations, which were previously barred in favor of small farms.” (Neuman 2012) They are also planning to place their seal on products with only 10 percent fair trade ingredients, compared to the minimum of 20 percent required in other countries. (Neuman 2012) Rink Dickinson, president of Equal Exchange, has labeled this move as “a betrayal.” Many critics and sellers of fair trade products claim that Fair Trade USA is motivated by the bigger fees to be earned by certifying a higher quantity of products. (Neuman 2012) Many small coffee farmers could also lose market share to the big plantations and become even poorer. So, when big companies like Starbucks say that they will be increasing investments at the community level through fair trade practices, they are correct in one sense. But, at the same time, these large plantations and their products, which will consist of only 10% fairly traded ingredients, are damaging many other small producers.

The Organic Consumers Association is rallying for support against the labeling of Fair Trade products. “Fair trade is a movement not a brand and its promise and reach is much bigger than that of TransFair or any single certifier or other fair trade organization.” (Food First 2011) Fair Trade USA is TransFair’s new name—the OCA claims that they changed it as a

“strategy aimed at monopolizing the field of certification of fair trade products in the US.” (Food First 2011)

To prevent this monopolization of the term “Fair Trade,” the OCA has filed a complaint with the Federal Trade Commission that discusses the issues and problems with TransFair. With the help of groups like the OCA, consumers are becoming more aware of the fair trade movements reality, and the problems that arise with products that are labeled as merely “fairly traded.”

A new type of conscious coffee shop is on the rise; some may even be in your backyard. More and more coffee shops today are getting their coffee either directly from the farmers themselves, or from trusted coffee brokers. Cutting out the middleman cooperatives and uncouth labeling methods enables the coffee shop to know the source directly and how the coffee is produced. Tucson, Arizona has one of these particular coffee shops right near the University. Exo Roast’s mission is to advance socially responsible and environmentally sustainable coffee in the community. Exo strives to obtain the world’s finest quality coffee, and at the same time, makes sure to thoroughly research where their product is coming from. If coffee shops have a safe, trusted trading relationship with a supplier, than more customers will trust the shop owner and actually pay the increased price for a proper fairly traded product.

References:

Roseberry, W.
1996 The Rise of Yuppie Coffees and the Reimagination of Class in the United States. American Anthropologist 98 (4): 762—775.

Loker, W., Smith, E.
2012 “We Know Our Worth”: Lessons from a Fair Trade Coffee Cooperative in Honduras. Human Organization 71 (1): 87—98.

Pelto, G., Pelto, P.
1983 Diet and Delocalization: Dietary Changes Since 1750. Journal of Interdisciplinary History XIV (2): 507—528.

Eakin, H., Tucker, C., Castellanos, E.
2006 Responding to the coffee crisis: a pilot study of farmers’ adaptations in Mexico, Guatemala and Honduras. The Geographic Journal 172 (2): 156—171.

Baffes, J., Bryan, L., Varangis, P.
2005 Coffee: Market Setting and Policies. Global Agricultural Trade and Developing Countries. http://siteresources.worldbank.org/INTPROSPECTS/Resources/GATChapter16.pdf, accessed November 29^th, 2012.

Organic Consumers Association.
2011 Fair trade is a movement—not a label. Food first: Institute for Food & Development Policy. http://www.foodfirst.org/en/node/3251, accessed November 29^th, 2012.

Downie, A.
2007 Fair Trade in Bloom. The New York Times. http://www.nytimes.com/2007/10/02/business/worldbusiness/02trade.html?pagewanted=all, accessed November 29^th, 2012.

Starbucks Coffee.
2012 Responsibly Grown Coffee. http://www.starbucks.com/responsibility/sourcing/coffee, accessed November 29^th, 2012.

Ikerd, J.
2008 The Relocalization of Food: Values-Added Agriculture. http://web.missouri.edu/ikerdj/papers/WI%20Eau%20Claire%20–%20Local%20Values-Added.htm, accessed November 29^th, 2012.

Neuman, W.
2011 A Question of Fairness. The New York Times. http://www.nytimes.com/2011/11/24/business/as-fair-trade-movement-grows-a-dispute-over-its-direction.html?pagewanted=all&_r=0, accessed November 29^th, 2012.

Ask Men
2010 Fair Trade: 5 Things You Should Know. Mint Life. http://www.mint.com/blog/trends/fair-trade-07162010/, accessed November 29^th, 2012. 

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