Chicago Tribune | By James P. DeWan | July 3, 2003
Back in the day, milk was milk, vegetables came
in cans, and everybody got their chickens from a
funny-looking guy named Frank we all knew from TV.
Nowadays, we prefer to eat chickens that have
led fulfilled, free-roaming lives. We like our
vegetables grown the old-fashioned way, free of
pesticides and genetic engineering. We want milk from
cows that have not been fed growth hormones.
And we want to see the labels that prove it.
Even coffee, once the beverage of the working
Joe who became its namesake, increasingly finds itself
with a label of certification. Unlike dairy products,
vegetables and poultry, though, the certification of
coffee has less to do with the quality of the product
than it does with the condition of the producer.
Fair Trade Certified coffee, as its label
proclaims, is the product of a 15-year campaign begun
in the Netherlands by an organization called Max
Haavelar. It began certifying products produced by
Third World cooperatives that provided a decent
standard of living for farmers while maintaining the
environmental integrity of the land.
Today, fair-trade certification organizations
exist in 17 countries in Europe, North America and
Asia. The U.S. agency, TransFair USA, was founded in
1998. All certification organizations worldwide are
part of an umbrella group based in Bonn, Germany,
called Fairtrade Labelling Organizations
Although fair-trade coffee constitutes only 1
percent of the coffee market nationwide, its share of
the specialty coffee market, where it is being
directed, is 3 percent and climbing.
"To date, we've signed up over 200 companies,
ranging from Starbucks to Thanksgiving Coffee and
Dunkin' Donuts," said R. Haven Bourque, marketing and
communications director for TransFair USA. "We
estimate that fair-trade coffee is available in over
12,000 retail establishments nationwide."
According to Bourque, fair-trade certification
requires that producers of coffee and purchasing
companies adhere to five criteria:
- Democratic organizations: Individual coffee
farms must be family owned and operated, and the
farmers must belong to democratic cooperatives
controlled by their members.
- Direct trade and long-term relationships:
Purchasing companies must buy coffee directly from
fair-trade-certified producers and agree to establish
long, stable relationships.
- A fair price: Purchasing companies agree to
pay the coffee cooperatives a fair price ($1.26 per
pound or 5 cents above the prevailing market price for
conventionally farmed coffee, and $1.41 per pound or
15 cents above the market price for certified organic
- Access to credit: Because coffee is only
harvested once or twice a year, the purchasing
companies must agree to provide pre-harvest credit or
financing to the producers to allow farmers to survive
until the crop comes in.
- Sustainable farming/environmental protection:
Producers must implement environmental protection
plans, with the ultimate goal of organically farming
all fair-trade coffee.
But why would any self-respecting business
owner pay $1.26 for a pound of coffee when it's only
fetching 60 cents a pound on the commodities exchange?
In this case, producers and retailers are betting that
consumers of specialty coffee will view
environmentally and socially conscious beans as a
And how did coffee growers get in this fix? Ted
Lingle, executive director of the Specialty Coffee
Association of America, believes it all boils down to
the fact that U.S. agribusiness is so subsidized.
"Because coffee is not subsidized [in the
developing world] the way American crops are," Lingle
said, "an inordinate number of Third World farmers
look to it as one of the few arenas in which they have
a chance to compete in the world market."
This popularity of coffee among growers in
developing countries has led to a worldwide glut, with
the result that the market price is now lower than the
cost of production. Thousands of family farms are
The lack of work in the agricultural sector is
a crisis that goes well beyond the per-pound price of
coffee, Lingle said.
"People don't always make the connection," he
said, "but the fact that illegal immigrants are
clogging up our emergency rooms because it's the only
way they can get health care, and the stories we hear
about the workers suffocating in the back of trucks in
Texas, it's all because at the end of the day these
farmers don't make enough money and they have to
abandon their farms."
With the wholesale failure of farms over
widespread areas, another effect of the coffee glut
could be the disappearance of regional varieties of
coffee, known in the industry as "origins."
Kenneth Davids, consultant and editor of the
online publication The Coffee Review, sees this
possible extinction as disastrous. He believes the
culprit is a vast underpricing of coffee in general.
"Kenya is one of the world's finest coffees,"
Davids said, "yet even at the current price of $12 to
$20 dollars per pound, it costs less per ounce brewed
than ordinary cola, and much less than wine or spirits
of similar quality."
Davids believes that by raising the status and,
consequently, the price of coffee, the differentiation
between styles and origins can be rewarded.
"Most people have enough discretionary income
to pay $2 more per pound," he said, "and if that
happens, then everybody will be better off, because
the farmers will be recognized and coffee lovers will
have a much better product."
Product quality in a market-driven economy has
always been of paramount importance, far more than any
social or environmental concern attached to that
"A major benefit of the free market system is
you don't have to know how things are produced, you
just look at the price," says Grace Tsiang, senior
lecturer in economics at the University of Chicago,
"and my feeling is that it's very hard to get people
to pay more for things that are physically identical."
Bourque agreed, and acknowledged that consumer
education is a major focus of TransFair USA. "We're
talking about a new economic model that speaks to
empowering consumers," she said. "Every day you drink
coffee, and with fair trade you're making a difference
not only in the life of a farmer, but in the world
economy in general."