Should Consumers Leave Behind Fairtrade: Is It Time To Embrace a Fairer Solution?

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UK Coffee Week is upon us again. This year it runs from 11 – 17th April, Monday to Sunday. UK Coffee Week begun in 2011, and every year since it has partnered with coffee shops across the country to raise money for Project Waterfall. Project Waterfall is a fundraising initiative created by the Allegra Foundation, with the aim to bring clean and safe drinking water to the some of the poorest coffee growing communities in the world. Since 2011, Project Waterfall has delivered clean drinking water to 14,000 people in Tanzania, Rwanda and Ethiopia. The project has raised £325,000 in total since its inception, and UK Coffee Week continues to go from strength to strength, gaining awareness and support from coffee shops. This year the funds raised will go to the Oromia Region in Ethiopia, where around 27 million people live and work.

Coffee has very quickly become a huge part of British and European culture, just think of the Café culture in places like Italy, Spain and France and the Starbucks on every street in the UK. This culture is starting to bear fruit in the UK after many years of Britain being slow on the uptake. The following facts prove just how seriously coffee is taken and how we have come to rely on it so much for our day to day functioning: in the UK on average we consume 1.7kg of coffee per person every year, this figure is lower than many other European countries. Who new Finns love coffee, the drink 9.6kg on average per year. Coffee is also the tipple of choice for 2/3 of us in the UK, and has even superseded tea, which is almost part of our national identity, and so ingrained in other countries’ perception of the UK. Furthermore, the EU consumes 2.5 million tonnes every year, the same amount of waste that the entire country of New Zealand place in landfills every year!

Knowing the nation’s burgeoning love of coffee, and how we have taken the Fairtrade coffee into our hearts, it’s high time to question whether there aren’t better models to pay producers fairly and also help them to improve their production sustainability, this can be done through supplying quality tools and machinery as well as investing in education programmes. If this was the case there would be much lesser a need for Project Waterfall and other similar initiatives. So, it’s plain and simple, In developed nations we all have a huge responsibility to query how we can help reduce poverty . The public will is there to do so, as attested by research from Bruce Wydick, Professor of Economics and International Studies at the University of San Francisco. Bruce discovered that individuals are willing to pay up to 50 cents more for a Fairtrade cup of coffee.

Why Was Fairtrade Established?

Fairtrade coffee was inspired by the plight of the Mexican coffee farmers, who struggled enormously to support themselves and provide for their families in the aftermath of the collapse of coffee prices in the 1980’s. World coffee prices crashed, caused by the breakup of the International Coffee Agreement (ICA), this came to be after Brazil were unwilling to reduce their quota of Arabica beans, to match the consumer taste shift to the milder Robusta bean. The first Fairtrade label was founded in response to this infighting between members of the International Coffee Organisation and the subsequent break from the ICA. The first label was set up by Dutch ecumenical development agency Solidaridad and was aptly named Max Havelaar, after a fictional character from an 1860 novel, who fought against the exploitation of coffee growers he came across in the Dutch colonies. Max Havelaar was created and run by Dutch economist Nico Roozen and missionary Franz van der Hoff. Soldaridad founded the Max Havelaar label in 1988 with the aim to develop fair and sustainable supply chains for coffee growers, allowing them to flourish economically from growing coffee and introduce more financial transparency in the coffee industry.

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The aims of Fairtrade and its rapid growth

If we are going to question the efficiency of Fairtrade, first we should understand its key objectives. The below gives an idea of the benefits Fairtrade hopes to pass on to the farmer:
• Ensure producers receive prices that at least cover the costs of sustainable production
• Provide Fairtrade Premium which allows farmers to invest in social, economic and environmental projects
• Provide start-up capital to the poorest farmers

The full aims and objectives of the Fairtrade Foundation can be found here.

Fairtrade labelling became increasingly prevalent throughout the late 1980s and early 1990s, and
today the Fairtrade Labelling Organisation comprises 19 national labelling bodies in 24
countries, with Fairtrade coffee products making up 15% of all Fairtrade goods sold worldwide.

But is Fairtrade Coffee Really Giving Farmers A Good Deal?

It is important to firstly state that Fairtrade is very beneficial to a lot of farmers around the world. It gives them a guaranteed fair price for their coffee and lends assistance when farmers are looking to invest in their operation, with the help of Fairtrade Premium. Additionally farmers can be lent financing assistance, which can be a godsend to producers looking to get started.

Many academics including Bruce Wydick, think Fairtrade is a less than ideal solution. Bruce says while Fairtrade is ‘well-intentioned’, the reality often is that there is very little evidence that Fairtrade positively impacts poverty in poorer developing nations. Studies at Harvard and the University of Wisconsin from 2014 state that Fairtrade is one of the most inefficient methods for poverty alleviation and that Fairtrade coffee has only a minute effect for coffee growers, even the poorest. Why is this and are there other fairer programmes for the grower? Well, yes, direct trade is a system that cuts out all the middle men. In direct trade coffee roasters work directly in conjunction with coffee farmers, direct sourcing their product to sell in developed countries. One such company is Pact Coffee, a UK based speciality coffee company that buys it coffee directly from the source. Pact have often and loudly advocated for the direct trade approach, see the following article in the Telegraph. Pact’s Head of Coffee Will Corby says, “The supply chain for coffee is complex and in places flawed because the farmers who grow and produce this wonderful crop are not well paid for what they do. You definitely know the system is broken when sometimes the cost of producing coffee for farmers is actually more than they get paid!”. This appears to be the conundrum with Fairtrade coffee, the supply chain is many layered and therefore convoluted, meaning money often slips between the cracks as it flows down the supply funnel. Bruce Wydick also points out that the positives of Fairtrade are overshadowed by the negatives; it is in places a flawed system. This flaw is perfectly exemplified by the fact that 13 years of data collected from Guatamalan farmers demonstrates that that the benefits of selling Fairtrade are outweighed by the costs involved in

Obtaining Fairtrade certification. There is also the issue of adverse selection, this occurs when farmers select lower quality beans for Fairtrade products, aware that lower quality beans get a lower price, so the practice of farmers adding low quality beans to their Fairtrade consignment is very common, in order to retain the quality and price they can expect for their non-Fairtrade crop. Also consumer goodwill is not being passed on to farmers, that is, although consumers are willing to pay significantly higher prices for the Fairtrade sticker, these profit margins do not get passed down through the supply chain, and farmers only get a tiny proportion of profit. When a Fairtrade coffee has a 50p mark-up over a non-Fairtrade cup of coffee and the farmer gets less than 1p of the profit, is this fair or reasonable? This definitely is not what the consumer envisages when they imagine the branding and feel good marketing of Fairtrade! On the other hand direct trade coffee fosters a much more respectful and mutually beneficial relationship between coffee buyers and growers.

So Why Direct Trade?

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Direct Trade products are largely higher quality and concurrently provide sellers with a living wage, a much better solution than Fairtrade, where we often see those that grow the raw product one of our favourite beverages forced to live in poverty. Direct trade removes the stress for farmers of living on the breadline and secures growers livelihoods in the long term. It could be said that Fairtrade rather than improving the future of farmers in the developing world merely at best allows them to stay afloat. Another key factor is despite Fairtrade bringing big benefits to farming cooperatives the results don’t always reach the individual farmers, their workers or employees.

Direct Trade Is Better For Coffee Companies and Coffee Farmers

When coffee companies work closely together with their producers they increase production efficiency. Pact’s Will Corby, “Direct Trade means we can help the farmers we work with to make the quality of their coffee even better, aiding farmers to increase production quality and importantly scale the production of their highest quality production”. The bottom line is this, direct trade creates a higher grade product and allows farmers to maximise their earnings by driving more value and efficiency from their crops and land. Typically direct trade pays a much higher percentage to the producer and can do so because earnings are not divided up to pay a cooperative, Will says: ‘Pact Coffee guarantee that at least 25% more than the Fairtrade rate’, moreover, Pact and many other direct trade companies pay much more than that. This leads to a very clear picture. When consumers feel a level of pride for buying Fairtrade, their pride and trust is often misplaced, to truly make a difference to poverty in the third world, buying more direct trade products, not just coffee, is the best solution.

Future of Fairtrade coffee?

So what does the future look like for Fairtrade? Well, there have been some particularly shocking stories in recent months regarding the production of coffee, with Nestle and Dowe Egberts – two of the biggest coffee firms in the world – coming under scrutiny for human rights abuses. Both firms have admitted the possibility that the beans from their Brazilian plantations may have been produced as a result of slave labour, this is because the companies are actually unaware of the exact names of the farms and producers that they buy from. Again this is due to the convoluted nature of supply chains in the coffee industry, which is something that is mostly bypassed with direct trade.

Will attests we should be mindful that ‘Fairtrade and other certification bodies’ will continue to be vitally important in the coffee industry because they are committed to ‘regulating the standards for low-quality, commodity grade coffee (which currently makes up the majority of the global industry)’. Commodity grade, which in most instances is made into ground coffee, is protected by quality standards, but for true coffee lovers, coffee which you won’t find in a plastic jar, maybe it’s time we turned our focus on to proliferating direct trade coffee.

Direct trade often makes a tastier brew, is more authentic to its source (most speciality coffee companies sell the whole bean), is better for the planet, is sustainable and quite simply it gives a fairer deal to coffee producers, sound good?

Hey stop teasing me, where can I Find Speciality Coffee In Bristol?

Don’t worry my friends, I wouldn’t leave you hanging, after all those mentions of coffee I’ll bet your scrabbling to get your coat and head on down to the coffee shop to slake your thirst. So, to save you the trouble we’ve done leg work for you,here are some great speciality coffee houses in town:

Black Sheep Coffee:
Grab a bite tom eat from their seasonal, fresh menu to complement a direct trade speciality coffee. There’s no doubt it’ll taste better when you remember it made by empowered farmers.

Wogan Coffee:
Buy great tasting speciality coffee from Wogan Coffee, based in Bristol

Michelle Grady

Michelle Grady

Michelle is an ex-Fed Up & Drunker who has now been released into the wild.

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