Posts from — October 2007

In 1982 the National Coffee Association, representing the major coffee providers such as Sara Lee and Kraft, launched an awareness campaign offering a solution to type-A go-getters trying to come off of–I’m not kidding–cocaine. It suggested caffeine as a safe, legal pick-me-up for putting in those extra hours, and the campaign had everyone from David Bowie to Kurt Vonnegut asking, “are you a Coffee Achiever”?

YouTube has become a great archive of old TV, and I recently noticed someone dug out an old tape of the commercial and posted it:

(This is part three of a three-part series addressing the debate of Fair Trade vs. direct trade, their political ramifications, and why I prefer direct trade. Read Part 1 here, and Part 2 here.)

In Part 2 I discussed why I don’t think Fair Trade is the best option for getting the best beans at fair prices to everyone involved. But in fact, I didn’t even touch on my single biggest reservation about TransFair: It’s one company.

TransFair has spent years building the Fair Trade brand and getting people to associate their logo with social consciousness–but what happens if TransFair one day dissolves? Another nonprofit will have to start all the way over with a new logo, losing hundreds of thousands of dollars in marketing for years until people mentally latch on to it. Fair Trade has set itself up as the single lynchpin in the marketplace that defines fair practices in the coffee industry, but coffee is a gigantic global industry. A single nonprofit, no matter how big, can’t be everywhere at once and as a result many of the small and poor growers who really need the help end up falling through the cracks.

So there must be a better option, one that’s scalable and supports the two most important roles in the coffee chain: the small grower, and the specialty roaster. Direct trade is that option.

In direct trade, the roastery develops relationships with individual farms, cooperatives, and growing associations. The relationships largely develop in an “old-school” way; word of mouth, personal visits to the farm, and sitting down with the farmers and cupping the coffees themselves. Each roastery and farm must decide the terms of the working relationship, from working conditions, pesticide usage, and revenue distribution. In other words, you’ve got to do your homework, and that could understandably be considered a downside to direct trade.

The upside of course is that the roastery hand-picks the best of the best coffee varietals and can personally vouch for its quality and social consciousness all the way through the chain. In addition, direct trade is more flexible, so if an estate such as Selva Negra hires temporary labor during harvest months but pays them fairly, they’re not automatically excluded. It allows a wider variety of coffees from which to choose when the grower’s size or organizational structure isn’t an issue.

Ultimately direct trade allows social consciousness to work with the free market instead of trying ineffectually to grapple with or control it. Coffee consumers have already proven that they can and will vote with their dollars, which is the one thing Fair Trade has really gotten right. But direct trade allows everyone in the chain to vote with their dollars, and doesn’t require a single and financially-weighty worldwide watchdog agency to administrate it (and absorb money from small farmers while doing so).

Where can you get direct trade coffees? Direct trade is growing rapidly but is still a relatively new movement, so unfortunately you can’t expect to walk into just any shop and expect to find some; also, some regions of the world such as Ethiopia simply can’t offer direct trade coffees because the government controls the trade and auctions all the beans. Maybe the biggest stride was recently taken by Intelligentsia Coffee Roasters, a Chicago-based mid-sized roaster and wholesaler who recently took the step of deciding to offer only direct trade coffees. (I applaud that, but I find their recent trademarking of “Intelligentsia Direct Trade”–with the attendant implication that they somehow invented the direct trade model–unnecessary at best and somewhat sinister at worst.) More and more coffee shops are starting to advertise direct trade, and you can even find them online at places like Stumptown Roasters and RareCoffee.com. They’re often mixed in with Fair Trade coffees, so be sure to ask. Remember, with direct trade the growers get more of the profit than with Fair Trade, so be clear that it’s direct trade coffees you’re after.

Because of the constraints of the blog format, I’ve only really touched briefly on the differences between Fair Trade and direct trade. If you’d like to know more, here are some great resources:

• Reason Magazine: “Absolution in Your Cup” (thanks to Roger for this one)
• The Stranger: “Direct Challenge”
• Intelligentsia explains their direct trade model
• EthicalCoffee.net

(This is part two of a three-part series addressing the debate of Fair Trade vs. direct trade, their political ramifications, and why I prefer direct trade. Read Part 1 here, and Part 3 here.)

Many socially-conscious coffee lovers peek into the windows of their local shops looking for the tell-tale sticker with the Fair Trade logo, wanting to balance their beverage with the peace of mind knowing that farmers overseas are getting their fair share. Unfortunately, Fair Trade certification doesn’t automatically guarantee that customers are getting the best coffee for their dollar, or that the growers are getting the maximum profit for their beans.

Before I lay into TransFair USA for what I think keeps Fair Trade certification from being truly effective, I want to make it clear: I’m not arguing for the abolition of FT, or saying that it should never be used. What it’s done for the public consciousness about the status of coffee growers is itself astounding. But I do think that it’s important to know where they’re misstepping and why, and that if you truly want to practice coffee social consciousness by voting with your dollar there are other options that are better for everyone involved.

There are two basic things that keep many of the world’s finest coffees out of Fair-Trade-certified bags: money and size.

1) Certification costs money; for many growers and retailers, too much money. To be certified by TransFair USA costs money from both sides: the growers must pay to have their beans certified, and roasters/retailers must pay yearly licensing fees just to be allowed to carry Fair Trade beans.

For the grower, it costs between $2,000 and $4,000 USD to assess a farm, plus annual recertification fees and a small percentage of the price of each pound of coffee sold. A small estate farm–the kind of farm that produces the highest-quality coffees–might sell an entire year’s crop for under $20,000. That’s a significant barrier to entry. Selva Negra Farms, located in Matagalpa, Nicaragua, produces one of the best coffees in the world, winning the Cup of Excellence in 2003; but their coffee business is only part of the farm, which also produces livestock, flowers, and is a vacation resort. The plantation is widely renowned for sustainability and positive working conditions, but coffee is only part of their overall income–for them, paying $4k out of that coffee revenue isn’t feasible.

For the roaster, putting an FT sticker in the window adds about ten cents a pound to the cost of a coffee in licensing fees. This amounts to about a 10% overall increase in buying costs, on top of paying the higher minimum floor price for the coffee in the first place, all for “participation” in a program in which the roasters have no vote about how that money is being spent.

2) The size and organizational structure required by Fair Trade simply isn’t possible for many growers. Costa Rica’s Hacienda La Minita produces what is generally accepted to be one of the top three or four coffees in the world: Cafe La Minita. The plantation is wealthy, yet the owner William McAlpin is consistently held up as a model of humanism in independent and international business. McAlpin literally coined the term “estate coffees”. Whenever a journalist writes about shocking working conditions on coffee farms overseas, Hacienda La Minita is frequently referred to as the utopian alternative.

But Fair Trade certification requires any participating growers to be part of a farmer co-operative. Any other organizational structure is automatically disqualified from consideration by TransFair. That means family plantations such as La Minita, individual independent farmers, and for that matter any farm that hires outside labor, are all ineligible for certification no matter what the worker conditions are or how good the coffees are. Growing regions where the coffee trade is managed by the government as a matter of economic survival, such as Ethiopia, are also ineligible, meaning entire countries in the coffee-growing world are excluded outright.

The poorest independent farms and estate farms who produce rare varietals who stand the most to gain by increased profit share are by definition excluded from participating in the program that so loudly claims is there to help them.

Fair Trade is a well-intentioned brand that nonetheless leaves behind the best growers in the world, trumpeting “rigid quality control” that ultimately doesn’t actually reflect true working conditions, trade practices, or especially coffee quality. They hemorrhage money: even after six years of net deficits spent in building the brand, their most recent financial report on their site shows them spending $3.2 million in order to collect only $2.9 million in licensing fees.

Fair Trade isn’t bad, it’s just misleading and mismanaged. With some core structural changes it could probably become the agent of change it bills itself as. Nonetheless, there must be a better method of trade practice that doesn’t require a single, worldwide arbiter and doesn’t exclude the very people it’s supposed to empower.

Direct trade is that method, and in Part 3 I’ll explain why.