When you see a coffee bag with a “Fair Trade” label, do you know what it actually means? Or does it mostly just make you feel good about your purchase? Do you know whether Fair Trade ensures that farmers are getting fair prices for their products — and who sets the rules, anyway?
The New York Times raised some of these questions on March 16 with a profile of a U.S.-born coffee grower, Kenneth Lander, who bought a coffee farm in semi-retirement, without needing it for profit. Then, after he lost his financial footing in the 2008 economic crisis, his livelihood suddenly began to depend on the farm:
Very quickly, he realized how difficult that was going to be.
He belonged to a “fair trade” co-op, which guarantees farmers a minimum price, but was making only $1.30 a pound on coffee that retailed in the United States for $12 a pound.
In a decision rooted in his Christian faith, Lander founded Thrive Farmers Coffee to create a better model that benefits farmers at every step of the production process. Instead of just selling their raw beans, Thrive farmers get a cut of the sales of the final product.
In the system that Thrive is trying to develop, farmers are paid only after their coffee has been exported, packaged and sold — at a much higher price — to retailers.
Thrive helps farmers by establishing relationships for the farmers with local coffee processing mills and co-ops. Then, once the beans are shipped to the United States, Thrive takes over, handling packaging, roasting and sales. In some cases, Thrive sells green coffee beans to roasters, in which case the farmer receives 75 percent of the proceeds.
[Read more in the Times story about Thrive Farmers Coffee.]
The group’s website says that in a typical coffee value chain, farmers receive only 2 percent of the final value of coffee — but farmers who use the Thrive model apparently gain about four times the earnings they would get even under Fair Trade.
This is the latest in a long struggle to make sure coffee farmers and laborers are able to live off their earnings. Fair Trade sets minimum guaranteed prices for green coffee beans, but it’s not a panacea. Some Fair Trade farmers pay their laborers below the minimum wage, according to this article by the Financial Times. Plus, most coffee farmers experience “three to eight months of extreme food scarcity” after the coffee harvest is over, according to a study by Green Mountain Coffee Roasters.
And, as Brian Clark Howard writes, all farmers struggle to weather the fluctuations of the global market:
By 2001, the New York trading price for unroasted arabica coffee had sunk below 40 cents per pound. In contrast… [the price] averaged $3.07 in 1977. … As Gastronomica put it in 2003, “In real terms, prices are probably at their lowest point since coffee first became an internationally traded commodity some thousand years ago.”
[Prices have improved since 2003 — arabica prices currently average around $1.53 per pound — but this article is still worth a read. Read more here.]
In addition to Fair Trade and the Thrive Farmers Coffee initiative, a smattering of other organizations and models are trying to make sure that farmers receive more of the final coffee purchase price. The Salvation Army is doing something interesting: It buys coffee directly from farmers in Vietnam, roasts it near the thrift stores, and hands out free cups to customers. The organization’s own article about the program says that it helps increase coffee farmers’ net earnings from about $50 per acre to $820 per acre.
The Thrive Farmers Coffee story in the New York Times seems to show that farmers too often get left out of coffee profits. In the U.S., we love our $4-per-cup coffee, but we do not necessarily think about where it came from. We might know our barista’s name, but coffee farmers seem so distant. Revamping the coffee value chain starts with greater awareness on our end, in addition to giving farmers more opportunities to stay involved with their coffee after the harvest.
Fair Trade is a good starting point, but don’t assume that the Fair Trade logo on your coffee bag means we’ve arrived at a system that’s truly fair for farmers. Thrive Farmers Coffee might be a sustainable solution, and I’ll be interested to follow the company as it continues to grow.
Another New York Times story about controversy over the “Fair Trade” label.
A few college friends of mine made a short documentary in 2011 that followed coffee from crop to cup.
Frequently asked questions about Fair Trade.
Image by Adam Baker, Flickr Creative Commons.