fair trade matters

Fair Trade isn’t perfect by any means. If our world trading system was set up fairly, we wouldn’t even need “fair trade”. But unfortunately, power tends to rule, and the power lies with Northern corporations and governments. There are many admirable alternatives and particularly in coffee you can find many examples of ‘direct trade’. I read about one particular example and although it appears to be successful, the main thing I learned was how important Fair Trade is and why it does offer the best model for so many producers.

A Costa Rican coffee producer, with 12 acres, is struggling. The work is hard, the reward is too little. He thinks this is no way to make a living. Yet he is a “fair trade” producer, receiving fair trade terms and prices. Is there something wrong here? This particular farmer thinks there is. He asks himself: what’s the alternative? is there a better way?

He sets up a company with a new “direct trade” approach. It puts at least 50% of the sale price into the coffee grower’s hands. The farmer has a vested interest in the supply chain right up until the end user. This model is successful. He decides that he can help other farmers and duplicates this model. From a humble beginning there are now 800 producers in this group. They receive better prices for their coffee and thus liveable wage. It sounds pretty good all round, doesn’t it?

What works here? Transparency, shorter supply chain, more of a producer-consumer ‘relationship’, a good price for the farmer. But let’s explore this situation a little more closely…

A “direct trade” model has many advantages, but can lack transparency and often focuses purely on a higher price for the coffee, but nothing for the wider community. This particular model is based on consignment. Who’s buying their coffee? Are there any agreements/contracts in place? What guarantee does he or she have that their coffee will be bought? To me that is a fundamental flaw in this example.

Consignment is only a shop window. Fair trade offers long-term contracts to growers so they have security of a guaranteed sale, and a minimum price. Money is also invested within the community through the ‘social premium’. Via the local co-operative the producer may have access to loans or credit.

A major criticism was that when Fair Trade prices are higher than conventional prices, buyers are more likely to go for the cheaper options, thus depriving the Fair Trade farmer the extra income (which is needed because of his added costs). However, many Fair Trade coffee buyers buy this coffee for exactly these reasons – it helps the farmer. This is not a weakness of the model, it is a strength. And, Fair Trade prices track the market price, with an additional premium paid. The gap only widens when the price of coffee falls below a minimum, which is a critical advantage of Fair Trade because so many farmers end up in dire poverty when they can’t even cover their production costs.

While many examples of “direct trade” are admirable, including this one, overall I believe Fair Trade offers a better long-term model. This particular example, called Thrive, is also somewhat unique. The farmer I mentioned at the beginning? Kenneth Lander. He’s American, bought this farm and moved with his family here a few years ago, taking to coffee as a hobby. It was only when the financial crisis hit his real estate investments that he needed to bring some income for his family. So this ‘Thrive’ model that he established came from this perspective (and his frustration with the Fair Trade model). But I think it would be much more difficult for a Costa Rican farmer to create this kind of model. I also think that Fair Trade offers the average Costa Rican farmer more security, empowerment and community involvement and support. I don’t think Thrive offers these farmers the same advantages, and it suffers from many of the same problems that Kenneth cited about Fair Trade.

Still, it’s important that we as consumers recognise the life situation of the producers of our food and whether it’s Fair Trade, Thrive or another way of fairer production, learn what you can and try to put your money towards some degree of fairer production. I do wish Kenneth and the Thrive farmers success. All producers deserve a fair and dignified livelihood. Fair Trade is not perfect by any means, but it offers that independent guarantee of ‘fairness’ (the Fair Trade ‘label’ i.e. third-party certification). That’s important, and worth supporting.

You can read more about Kenneth and the Thrive model here:

http://www.psmag.com/business-economics/fair-fair-enough-beyond-fair-trade-coffee-farming-agriculture-65987/

http://www.thrivefarmers.com

Advertisements