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Java Junkies

Fair Trade java: Profits drip down

To some it may just seem like a politically correct label, but buying Fair Trade coffee amounts to more than a hill of beans to many farmers throughout the world.

If you're a java junkie, you've probably seen "Fair Trade" signs, but maybe you're not quite sure what it means. It seems to imply fairness, so that's probably a good thing, you think. But the issue is more complex than just reading a "Fair Trade" label and choosing a brand on that basis alone.

Fair Trade is a concept that has existed in the United States coffee business for the past six years. In its simplest terms, the practice involves ensuring a fair price to coffee farmers who participate in cooperatives that are audited by TransFair USA, a certification group operating under its parent group, the Fair Trade Labeling Organization.

Farmers working in these cooperatives receive a minimum of $1.26 per pound of regular coffee, or $1.41 for organic beans, even if the market price falls below those levels. In addition, when the market price rises above those prices, Fair Trade buyers agree to add a 5-cent premium to the current market rate.

This allows the farmers, who are often living in impoverished areas, to earn a living wage, and provide health care for their families. Some of the revenues from Fair Trade cooperatives are used for community projects such as schools, health care centers, or training farmers in organic farming techniques.

The reason behind Fair Trade's creation lies in hot-and-cold nature of the coffee market over the past decade. In the late 1990s, there was a coffee boom, which drew speculation investors into the game. This drove the price of coffee even higher and farmers, eager to capitalize on this growth started growing more coffee. Once these investors made a quick profit, however, many sold their shares. At the same time, the United States pulled out of the International Coffee Organization, causing a hiccup in the market. This exodus coupled with a flood of cheap coffee from Vietnam, which was trying to stabilize economically, caused a crash in the coffee market. Farmers were then forced to sell their product for less than it cost to produce.

While this all sounds like a simple market correction where some people got burned, some coffee roasters say that it was totally unnecessary. The profit margin for coffee is so high, they say, that everyone should be able to benefit from the expanding gourmet coffee market.

"The coffee market is two-tiered. There is room for both the Maxwell House crowd and those who enjoy specialty coffees," said Dean Cycon of Dean's Beans in Orange. "And the profit margin is huge, so Fair Trade just ensures that farmers get a fair piece of the pie, instead of it all going to the middlemen."

But just because a coffee isn't labeled Fair Trade doesn't mean you shouldn't buy it. Because Fair Trade currently can only come from cooperatives and small farms, many farmers can't participate in the system if they want to.

Lourdes M. Tallet, co-owner of Indigo Coffee Roasters in Northampton, also noted that some great coffees which customers demand are not Fair Trade. Indigo, which was formed in 1989, joined up with Fair Trade in 2001. About 50 percent of the company's products are certified Fair Trade.

"Just because a coffee isn't Fair Trade doesn't make it bad," she said. "With some coffees, like ones from Hawaii, it's hard to talk about Fair Trade because they have minimum wage laws and it doesn't apply. It's a complex issue and the average customer just wants good coffee."

Indigo Coffee Roasters got involved with Fair Trade for similar reasons as Cycon: A commitment to sustaining the farms that grow the beans and allowing them to make a fair wage, Tallet said. All of Indigo's organic coffees are now certified Fair Trade.

"It's just a great thing in terms of the economic impact for these farms," she said. "It also impacts the quality of specialty coffees, because if prices get too low and farmers have to struggle to just make ends meet, the last thing they are going to be thinking about is quality."

Most Fair Trade coffee is also shade-grown, meaning it doesn't lead to deforestation or robbing birds of their natural habitat. In addition, over 80 percent of Fair Trade farms do not use pesticides, although only 15 percent currently are certified as organic farms.

"Fair Trade makes an amazing difference in people's lives," Cycon said. "It's a matter of educating people about it so they can make an informed choice."

Tallet agreed.

"Most people see the Fair Trade label and probably think it's a good thing, but they aren't sure what it means," she said. "But once people learn about it, it typically catches on. Fair Trade doesn't address everything, but it's a great start."

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