Many of us can’t imagine our day without a cup of coffee. I hardly can. Coffee is one of the most consumed beverages in the world and its consumption is still rising – around 1.6 billion cups of coffee are consumed every day. While most of it is processed and consumed in the US and Europe or Brazil, the majority of coffee is grown by small holders in lower-income countries of the Global South. Coffee is one of the “cash crops” (crops produced rather for profit than for use by the producer) planted widely during colonialism since the 18th century. In many cases this lead to the symptom of dual economy. Dependency on a narrow base of cash crops for export constitutes a thread for food security. Small holders move away from subsistence farming, facing low purchase prices of commodities and their volatility along with rising incidence of pests and extreme weather conditions due to climate change impacts. Fairtrade is an alternative economic initiative whose main objective is to “provide farmers with improved terms of trade … that enable them to improve their lives and plan their future … Fairtrade offers consumers a way to reduce poverty through their everyday shopping.” You can find Fairtrade coffee (and other products) in supermarkets and most of cafes – even the University of Sheffield is Fairtrade certified.
As Fairtrade becomes mainstreamed, the question of credibility comes along. Critics say that Fairtrade might be a nice idea, but in reality it has no significant results in improving lives of the poorest, it enriches the wealthy, disadvantages certain regions, and sometimes can have even counterproductive impacts.
So is Fairtrade just a “pay more – feel better” model to calm your conscience or does it actually benefit the growers?
I decided to see for myself and visited coffee growing cooperatives KCU and KDCU in Tanzania, which gather together over 100 000 small holders. Below are some of the challenges in the existing Fairtrade system that I identified.
Fairtrade minimum price. Faitrade guarantees a minimum price that has to be higher than the purchase price at the conventional market. However, since Fairtrade started in 1992, the conventional prices rose and in the present the difference is not so significant. The Fairtrade price was perceived by most of the farmers like “slightly higher, but not covering the production costs“. Furthermore, what is little know – small holders do not receive the price stated in Faitrade regulations – the cooperative as a whole does, when selling the final production to buyers. This means farmers get some percentage of it, depending on that year’s budget and sales. The growers from KCU and KDCU received around 1/2£ to 1£ per kilogram of coffee during last season.
Faitrade premium. Faitrade farmers also receive a premium for every kg of coffee sold. This money should be invested in social projects in the community (e.g. education, health, sanitation). As well as the purchase price, it doesn’t go directly to the farmers. Benefits of this premium vary a lot, as it depends on the amount of coffee sold to Fairtrade buyers. This bring us to the third point.
Faitrade certification and market. First, respondents perceived the fees paid for certification as too high. The cooperative also needs to pay an annual fee for inspection. These fees might be a burden, especially for small or emerging cooperatives without access to a big market. Second, often neglected but very crucial issue for succesful fulfilment of Fairtrade benefits is the availability of Faitrade buyers. KDCU, one of the cooperatives I visited, is represented on the website of Fairtrade as very succesful. In reality it manages to sell only marginal portion of its production as Faitrade every year. The rest has to be sold on the conventional market, thus reducing the benefits of Fairtrade.
The value chain. Faitrade claims to shorten the production chain and bring more money to producers. Conventional producers receive around 3 % of the final price of your coffee cup, but research shows, that even on Fairtrade terms, country of origin doesn’t get more than 7 % of the final price. Fairtrade does nothing to question the status quo of international commodity market. It sustains the model of importing green beans and doing all the processing at the home markets of multinational companies, based on low tariffs for imported raw commodities in contrast to high tariffs for final products from countries of the Global South. This strips the developing economies of all value added and restrains them from developing (or profiting from) their own processing industry.
“Producers are asking why Fairtraders in Europe, why can’t they come here and we make the factory here. That is when the coffee would pay off and the prices would be satisfactory … why don’t they do some processing here? Why do they like to import the green coffee?” Vedastus Ngaiza, general manager of KCU
According to my research, although Fairtrade coffee production does not have any significant impact on the overall economic situation for coffee farmers, it brings them certain advantages over conventional producers.
“Farmers became more knowledgeable on the social and economic aspect of coffee production … They can build a better house and drink clear water, children can go to school. They better know the issue of environment now. And that was done through Fairtrade schooling.” Josephat, export manager of KCU
However, as opinions varied, we need to realize that the farmers are not a homogeneous group. They differ in their needs, abilities, preferences and aspirations.
Fair trade as a concept of more ethical market is definitely important, but possibly there should be a bigger effort for fairer international market rules in general, along with a diversification of livelihoods. This could bring more justice, sustainability and reduce the vulnerability of primary producers. To sum up, my intention is not to discourage you from buying your daily cup of Fairtrade coffee, but to encourage a critical way of thinking about this concept (any many more) within the development and food security/justice debate.
All photography by the author of the article