Thursday, March 13, 2008

Fair Trade

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Misty Clare opened a fair trade shop called The Middle Way on State St. in West Columbia last September. She was attracted to fair trade, she says, for a number of reasons, not least of which was the movement’s dedication to women’s rights.


By Todd Morehead

Produce markets in the remote villages of Colombia’s Cauca province are probably more high-stress for local fair trade coffee farmers than most, considering, at one market at least, the government has set up a well-armed garrison of soldiers stationed directly across the road. The government claims the mountain hamlets and coffee farms in Cauca need protection from guerrilla groups operating in the area. But, according to Dr. Jerel Rosati, Professor of International Studies and Political Science at the University of South Carolina, who visited Cauca on a fact-finding mission a few months ago, the troops are there both for protection and a very different reason.
“When I spoke to villagers—and it took a lot of guts for them to meet with us, knowing that they were being watched— they said they’re being intimidated,” Rosati says. “The government is trying to prevent them from opting out of the normal ways of selling products on the market. The farmers felt that the government was straining their ability to be entrepreneurial and engage in fair trade. It was very tense. These troops were very well armed and it was very intimidating.”
But as large coffee suppliers in the U.S. like Starbucks (and even Wal-Mart) are trying to break into the “green” market and are buying a percentage of fair trade coffee, some believe that things will ultimately look up for struggling farmers in the Third World. Others, however, see the possibility of corruption on the horizon.

fair trade in brief

Most American shoppers have encountered the little “fair trade certified” logo but aren’t quiet sure what “fair trade” means. In it’s infancy the movement was simply comprised of a few small business owners who often traveled out of their respective countries to deal directly with farmers and craftsmen in the Third World, offering them a fair price for their goods. By some accounts the movement started with handcrafts and later moved to more commodities-based goods like coffee and tea.
A very loose definition of the movement would describe the fair trade system (comprised of wholesalers, retailers, and customers) as seeking greater equity in international trade. Transparency and accountability between importers from places like the U.S. and Europe and suppliers from poorer nations is key. Fair trade is a way, many believe, to help alleviate poverty and foster sustainable development. It also improves producers’ capacity to build their businesses through the influx of capital and the building of direct market relationships in the developed world. Fair trade companies also try to deal exclusively with suppliers that practice gender equality, have safe and healthy work conditions and focus on the well being of the environment through responsible methods of production, as well as prohibit the use of genetically modified organisms (GMOs) and agrochemicals. And the whole system hinges on payment of a fair price and getting money directly in the hands of the farmers.
While technically any company can advertise its product as fair trade (there is no government-mandated system), the international fair trade labeling organization, FLO-CERT operates the largest and most widely recognized labeling system. FLO-CERT monitors, certifies and inspects fair trade outfits in Asia, Africa and Latin America, to the best of its ability. For anything to be labeled “fair trade certified,” a copyrighted phrase, a producer must meet all of the organizations criteria.

On the ground in colombia

According to the Bush administration, the Colombian government supports free trade. But, Jerel Rosati wanted to see for himself. So, he formed a delegation from South Carolina through the Witness for Peace program and set off on a fact-finding mission to Bogota and the Colombian countryside to see how the free market and fair trade operated on the ground.
“The Colombian government is kind of hostile to this fair trade stuff,” he says.
Rosati visited an organic coffee co-op that negotiates to sell their coffee to a fair trade importer. By dealing directly with the importer and bypassing normal international trade channels, the co-op essentially bypasses, in some ways, the Colombian government.
“Potentially these farmers can operate in the open market—I prefer the term ‘open market’ to ‘free market’—on the other hand, given the history of violence and the conflicts that seem to exist within the society, a lot of them feel more comfortable operating if they’re quiet about it.”
And aside from the staying in the good graces of the government, these coffee co-ops (essentially labor unions) have to stay under the radar of the military, paramilitary groups and guerillas.
“It’s tough,” Rosati sighs. “To be honest with you, it’s amazing. I’m not sure how these people get through every day.”
The S.C. delegation met with 12 officials at the U.S. embassy in Colombia at the end of their stay. U.S. officials there acknowledged that the coffee growers are having a tough time, Rosati said, but they only half-acknowledged that some of the problems may be coming from the Colombian government and its relationship with the U.S.
Rosati chuckles as he recalled one part of the conversation. “They’ll [U.S. officials] say something like, ‘Here are the things we are doing for the farmers. If they want to go out on the Internet, they can find this help.’ And we’re there and we’re smiling because most of the people are too poor to own a computer.”
“A few of them basically said that fair trade is not working,” he says. “That was a remarkable acknowledgment.”
One problem, too, is that private fair trade regulators like FLO-CERT and Trans Fair U.S.A. don’t have the resources to monitor every co-op, some of which have been infiltrated by corrupt leaders. “An organization can send someone down to investigate for a week and the head of the co-op can fake some paperwork and show them some smiling farmers and that’s kinda it,” Michael Nixon, an Oregon-based fair trade coffee roaster, told me.
“Brazil is notoriously corrupt,” he says. “The heads of co-ops are driving around in luxury cars. See, the thing is the fair trade price doesn’t guarantee the fair price to the coffee farmer, it guarantees it to the co-op.”

Enter starbucks

South Carolina native Michael Nixon and his wife Heather own Wandering Goat Coffee, a fair trade organic coffee roasting business in Eugene, Ore. He says, at least with coffee, one’s perspective on the current fair trade movement depends on where you are in the industry. If you look at the big picture, considering coffee is a multi billion dollar industry, he says, fair trade is a really good thing.
According to third-party certifier, Trans Fair USA, close to one million farmers have been positively affected by it. Also, according to Nixon, large coffee companies like Folger’s and Maxwell House are playing around with buying fair trade in small amounts and Wal-Mart is buying fair trade coffee through one of the big four coffee companies.
“In that regard it’s awesome because you have these companies that are used to paying next to nothing, now having to pay higher amounts to farmers,” Michael told me via phone.
But the flip side to it all is that when you look at it from a quality perspective, fair trade hits a wall, due to the limitations set upon it. The current system relies on—and in many cases strictly requires—co-ops of smaller farms. So a farmer who grows a high-grade coffee has no choice but to have it blended in with other lesser coffee beans at the co-op. Michael worries that the co-op requirement is not only diluting the quality of coffee for discerning retailers and connoisseurs but may ultimately stymie the farmers’ ability to grow their businesses in the long run.
“The small and specialty planters and roasters are beginning to learn enough about agronomy and coffee processing that we can teach farmers how to make the quality of their coffee so high that instead of getting $1.41 per pound, the minimum price for fair trade, they can get five or six dollars a pound.”
The current sticking point with that plan, he says, is that it requires roasters willing to pay that much more for the quality and a customer base willing to pay that much more for a primo cup. But as that market begins to grow and as coffee roasters and companies begin to pitch themselves the way wine companies and high-end beer brewers do, it’s generating a new market that Nixon believes may retroactively affect the system as a whole.
“One problem with fair trade is that there aren’t any quality requirements for the farmers. They can just crank out the same mediocre shit and still get the higher price for it as long as they’re part of a co-op,” he says. “And there’s no way for coffee growers to break out of the fair trade system if the quality of their coffee is so high that people want to pay more. There’s just no mechanism in place.”
In the beginning, the system was comprised of small roasters that wanted to be assured of the socio-economic quality of their coffee. But small roasters now account for less than five percent of the overall fair trade coffee purchased, because Wal-Mart and Starbucks are slowly cornering the market. Since all companies, large and small, pay a fee back into the bureaucracy for every pound of coffee roasted, the large corporations account for 90 percent of Trans Fair USA’s cash flow. As a result, Michael believes, they no longer have loyalty to sustainability-focused, smaller companies who focus on high-end coffee.
“Quality to me is the number one key of sustainability,” Nixon says. “There are plenty of really righteous mission based coffee companies out there but they don’t know what they’re doing. They don’t research coffee, they don’t learn about it, they haven’t studied it, so their coffee is shit. So if somebody is drinking coffee in a shop and it tastes like shit because it hasn’t been brewed right or roasted right or whatever, what is that doing? That’s not representing the work that the farmers have done. If the quality chain is broken you’re never going to get long-term sustainability.
“Originally, if you had a fair trade sticker on your coffee it said something about your company and your company’s commitment to sustainability and equity. Now if you look at Starbucks, they’re the largest purchaser right now. But that only accounts for two percent of their overall coffee. It doesn’t say anything about the company, it’s just a way for them to green wash themselves.”
For now the Nixons plan to stay in the fair trade system, though Michael says it won’t be forever. “It gets to where people are going to have to judge the coffee for the way it tastes. I don’t want to sell coffee to liberals just so they can feel good about it. I want to also sell coffee to people who don’t care about that stuff and just want good coffee and as a result are then participating in the sustainable fair trade system.”

Beyond agriculture:

Small retailers enter the mix

Misty Clare opened a fair trade shop called The Middle Way on State St. in West Columbia last September. She was attracted to fair trade, she says, for a number of reasons, not least of which was the movement’s dedication to women’s rights. And unlike coffee growers, Clare focuses more on importing handcrafts and clothing.
“We’re definitely aware of the integrity of our suppliers, that’s really important to us,” Clare said, the store mascot, a cat named Presto, lounging on her desk. “We support local artists. And we focus on women’s cooperatives.”
Clare was first introduced to the fair trade concept by her twin sister who owned a store in New Orleans before Katrina hit. She says her sister would travel to places like San Juan de Oriente in Nicaragua and buy directly from merchants to stock her store. To Misty and her sister, taking a product directly from the hand of its maker, ushering it into the U.S. market and hand selling it seemed like a better, more fulfilling way to do business, for all parties involved, from producer down the line to the customer.
Recently Clare has been working alongside a Maryland-based importer who started bringing in silk handcrafts from his former village in Cambodia and now imports from close to 12 villages. The company, Wild Boar Creek, claims to import products hand-woven by subsistence farmers, landmine victims, widowed mothers and women heads-of-household.
“There are times when I can just touch something and know that it has badness in it,” Clare says. “There’s nothing like that in here.”
She, unlike most retailers, can accurately say that about her products; after all, in most cases, she knows the person who made them.
The concept is catching on with retailers across North America and in Europe the fair trade retail market steadily grows by over 40 percent each year, with total sales estimates reaching close to $1 billion (U.S.) in Britain in 2007.
Michael Nixon’s quality argument seems to easily translate to retail, as well. Many people who come into these small retail shops do so because of the high quality of the imports. They are then supporting fair trade, whether they know it or not, by proxy. And, as evinced by the numbers above, they’re doing so in increasing numbers.
For now, small fair trade retailers don’t have to compete with large big box and department stores trying to corner the fair trade market. When that happens it remains to be seen if fair trade retail, like coffee, will be able to retain its quality and certification controls in the wake of growing demand.

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