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the alliance of fair forest free direct rain trade and stuff

When the lads and I were thinking of recording a frivolous podcast we put feelers out asking for topics to discuss. 

There was suggestions like “If a man speaks in the forest and there are no women around to hear is he still wrong?”  and “you are in a zombie outbreak, you get bitten and find yourself in a costume shop … what costume do you put on before you die to be dressed as when you become a zombie?”  but there was also one serious one which was asked by Luke. 

He asked “What are the limitations of fair trade?” 

So that is loosely what this post is based on. ( fair trade, not women and zombies)

I’ve been mulling over this topic in my head for quite some time, not so much the limitations of fair trade but the rise in direct trade and what impact it may and can have. 

Before you turn off and think an under-qualified bum is about to rant on about global trade, governments and spreadsheets you are wrong, instead the under-qualified bum is going to try and talk about the cup of coffee you bought this morning. 

Whether you agree with it, dislike it, or don’t give a damn, chances are you have heard of fair trade.  The same goes for Rainforest Alliance and some of you may have even heard of UTZ Certified.  These 3 are the main players in handing out badges that say “this product is ethically produced”.  They all have different interpretations and benchmarks and they all do ‘similar’ things.  There is also direct trade which is growing rapidly. 

Let’s be honest, coffee drinkers are turning in to hipster wankers, when we grew up as kids our parents bought the cheapest instant coffee possible in massive big tins and drank it constantly.  There may have been some freshly ground stuff in the house but that was only for special occasions, the kind of occasion where you had to sit at the kiddy table and not touch the olives on the grown ups table.  The ‘fresh’ ground coffee was ground half way along the coffee and tea isle of the supermarket in the self grinder that still had residue from the 48 other people who had used it that day and probably the cockroaches that used it as a love nest overnight. 

Now coffee is a once a day affair, it can’t be cheap or instant.  It has to be served in a cafe that is either decked out in retro styling or one that is minimalist and industrial preferably replacing chairs for uncomfortable up turned buckets or milk crates with your Nanna’s cushion on them.  Coffee is now drunk in tiny mugs and the most important part is how exotic the beans are, the aroma and the body, is it smooth, is it nutty.  Were the beans grown and picked at the right altitude, is Mumford and sons being played in the cafe.  Do they roast them out the back of the cafe and sell them direct to the scarf wearing patrons.  A new major part of this trendy cafe culture is direct trade. 

direct trade is essentially a cafe purchasing their beans direct from an overseas farmer. 

Is direct trade a bad thing?  Well I don’t think the concept is bad and I think a farmer who has worked hard on his produce should have the right to sell to whomever he wants but is it being executed well and why do trendy cafes love it so much?  I think cafes love it because it makes them feel elitist and set apart from their competitors, it means they can brag that their coffee comes straight from a farmer that they know personally and they can ensure the best of quality.  Often their choice to not take part in purchasing certified ethically produced coffee using which ever certification program is that is costs more and the money gets split between different layers and stages in the import etc.  By using direct trade they are bypassing the bureaucracy of certification and are in their view providing a strong relationship with the farmers and contributing to their development. 

But coffee is very rarely grown in well to do and developed countries, in fact it is very rarely even grown in English speaking countries.  Yes yes I know that we grow some coffee in NSW and blah blah blah, but the majority of the world’s coffee beans are grown in poor south American countries and poor African countries.  A cafe may set out with the best intentions of assisting a poor farmer and sourcing their beans ethically through direct trade but my concern is that best intentions do not mean best practices. 

A Cafe on the northern fringes on Sydney may make the best coffee you have ever drunk, the beans are sourced from an Ethiopian farm in an area that has the perfect altitude and climate.  A highly trained barista and his business partner travel to Ethiopia and hand pick the farm and farmer, they strike up a bond and commit to sourcing their beans from this farmer, with the best of intentions of not only sourcing great beans but having a positive impact on the life of this farmer.  But there are some holes, firstly a great barista from Sydney does not qualify them as a great human rights and community development officer in a country where they don’t even know the language.  How do they know what the rights of workers are in a country tens of thousands of km’s away from their cafe.  How do they know that once they are back in cafe that the farmer and his workers are being treated fairly and ethically.  Where is the accountability that the cafe is actually paying a good price for the beans.  Who was the dominant negotiation in the price of the beans, you can be assured that in a majority of cases it was not the farmer. 

Direct trade does provide a direct link to the good you are purchasing, and a cafe may have a really thriving relationship with the farmer but is their arrangement really providing the empowerment and stability that workers in developing countries require if they are to be lifted out of poverty. 

Without accountability what happens if the cafe changes owners, or they suddenly want to pay less for beans. 

How does a cafe owner in a foreign country rock up unannounced to audit the working conditions of those who picked the beans. 

How does a cafe owner even know what those working conditions should be. 

The problem with direct trade is that it’s main focus is on the product not the producer. 

There are programs like Cup of Excellence where farmers are encouraged to produce the perfect coffee bean and each year a couple of farmers are awarded as the finest in their field.  The price for these beans sky rockets and the farmer is rewarded with extra cash.  But not all the cash.  A large proportion is passed on to the farmer for achieving the goal but not all.  And a cash injection does not guarantee that the workers will see any of this money. 

So what do the accreditation organisations offer? 

Lets start with Fairtrade’

Basically the fairtrade symbol that you see on consumable products is a guarantee that the product has been produced in such a manner that the producers were paid a fair wage, in fair conditions and with extra benefits. 

When you buy a $3 cup of coffee the farmer who grew the beans probably gets around 1-2 cents.  But this can go up and down depending on world coffee prices which fluctuate like anything else.  So one day a farmer could get 2 cents the next less than one.  Under the fair trade system there is a set minimum price that is locked and guaranteed.  Let’s say it’s set at 20 cents per kg of beans.  If the global price goes down to 18 cents a fair trade farmer will still get 20, if it goes up to 23 he will get 23.  But there is a safe guard not offered under other systems.  Fair trade is also not like direct trade, it is not a coffee farmer who sells to exporters etc it is a co-op.  Farmers get togther and it is their co-op that does the negotiating and in return they also split the profits on wages for workers but also health care and education for their families. 

It costs to be fair trade accredited, you need to be audited and accountable, but this is the same with all sorts of certifications.  You have to pay and be audited if you want the heart foundation tick on your products. 

Rainforest alliance is similar although it is often dubbed as the weaker brother of fair trade or fairtrade lite.  It’s certification is only at a farm level and there is no real auditing of the supply chain from farm to consumer.  There is also no minimum price set to protect farmers and it is harder for small farms to get involved as the system is mostly for large producers. 

You may have heard recently that Nestle has committed to sourcing all their cocoa ethically in the next few years, this is a major major step for an organisation that hasn’t had a great track record for human rights.  they have chosen to go with UTZ Certification which seems to be even weaker still than Rainforest.  No base price, but the most disturbing part of UTZ is that to be producing ethically sourced products the workers only need to be meeting local laws and requirements.  So if a country has very weak working condition laws then it is those laws that determine if a product can be certified.  Fair Trade and Rainforest both have international standards that they require. 

So it’s a step in the right direction and a massive step for a super massive company but it’s also giving them accreditation with worrying gaps. 

It’s no secret that I’m biased to fair trade, and I’m not biased towards it because I sell it at markets.  I sell it at markets because I believe in the system. 

There are a few reports and studies that say Fair Trade is a terrible system and not all the money gets back to the farmers etc. 

The reality is no system is going to be perfect when humans are involved, every system is going to have a minority that find ways of skimming off the top, but the fact is the fair trade system is the most robust in terms of requirements and benchmarks for the fair wages and working conditions of workers.  It’s been around a long time now and maybe needs an overhaul but all systems and methods need tweaking. 

It does however provide an accountability level that can never be achieved through a cross cultural relationship between two parties that have very different skills and needs such as a cafe using direct trade. 

rant over. 

Oh and i don’t even drink coffee I was just using it as an example the same could be said about any product or produce really. 

And remember I’m not a professor or trade expert, just an opinionated bum. 

You have beaten me to my critiqe of direct trade.  It is a well motivated idea, different in every individual roaster’s opinion but very flawed in practice.  The last time I wrote ahead and said I was coming to visit a troubled African church, everything looked very nice when I arrived and the people agreed with what I saw though underneath it was not so.  We do the same at our homes when guests are coming. 
We would not want it of our guests, but a good certification has to have teeth, back up and a good dose of ‘I don’t believe you, let me check for myself’ before it is worth anything! 

Very interesting.  I realise there is a lot I don’t know about this.  I do probably agree with you that fair trade sounds like the best system but I will say Martin has been working with some organic cocoa farmers here in Peru who are a bit frustrated by it.  They are associated and an NGO does the negotiating for them as you said but they don’t feel the organisation is being entirely fair and they have stated they would like to be able to sell directly and I think they would do the right thing.  But I guess not everyone would.  We have also met some other cocoa growers who would like to get involved but are not associated and the costs etc of the process makes it impossible for them.  But as you say everything does and nothing is perfect. 

You and I have chatted about this, and while I agree 100% with everything you write about Fair Trade, I have also had conversations with cafe owners & baristas who are frustrated with the quality that Fair Trade produces – from what I had learnt, there is no incentive for the farmer to produce good coffee; they just need to produce coffee to get paid. 

Obviously, as you said, Cup Of Excellence fits in the middle there… and just like all these options, it has flaws too, and you’ve already covered that.  And CoE is designed for small batches of high-quality….  not commercial quantities. 

And so this is where I’d said to you that I felt direct trade was good – and I had heard about it through Air Coffee in Castle Hill.  One of their head roasters was super keen because they’d just negotiated a deal with a farmer to buy their entire crop next season.  For him, it meant that they were getting an (in his words) unbelievably good crop of coffee (as they’d been trialling their current year’s crop), and it meant the farmer knew they were getting paid a decent price for their crop, and so could invest in the next year already. 

However…… I definitely agree that it is a very flawed, un-regulated process of buying coffee (or any other product).  And it is highly susceptible to abuse. 

And Mil’s comment also throws another thought up: what about those farmers who do want to direct trade themselves?  It’s not right to believe that all farmers in developing countries don’t have the capabilities to negotiate on their own and still get fairly treated by big corporates.  And they may want to direct trade because they believe their stuff is brilliant and deserves a better price than their Fair Trade co-op will pay. 

In the end, yeah, nothing is perfect where humans are involved.  I agree that Fair Trade is brilliant and the best of the lot.  But I also think there’s a heap of merit in direct trade – both for the quality of the coffee, and for the farmer themselves.  And whilst a lot of risk exists in the execution of the trade, I choose to trust certain cafes or roasters who I know are direct trading with a farmer to obtain their beans, based on conversations I might have with them to ask about their beans and where they come from.  Could that be seen as naive on my part?  Yeah, probably. 

Mil said it was an NGO that was negotiating price, that is not normally the case, normally the co op is just a few farmers working together to sell their beans.  kind of like forming a small union. 
The co-op can choose who they sell to. 

CoE is only about product not producers, the workers could be whipped and abused but if the bean tasted good they could get an award and the farm owner would get some cash. 

I think places like Air probably are trying to not only get great beans but also support the farmers they purchase from, but they could at any point for whatever reason suddenly stop buying those beans.  Also they would just be supplying cash not healthcare and education for the workers and their families. 

There is merit in saying if a company is not willing to take part in a program that audits their supply chain what are they hiding? 

A farmer should be able to chose whom they sell too, but a poor farmer negotiating with a rich buyer is never going to be the dominant player in a negotiation. 

and then there is the whole other issue of them growing coffee in the first place.  Farmers in poor countries forced to grow crops of produce they don’t even consume. 

African don’t eat chocolate or drink coffee but they have to grow it for the west because their governments force them thanks to the stiff arm of corporations wanting a better bottom line. 

I remember in Uganda I met a farmer who had grown tea for a major corporation and what did he want to be growing, he wanted to grow maize and bananas because that’s what his people ate. 

Also I know everyone hates on Starbucks but to respond to the point that fair trade produce is inconsistent, Starbaucks is a company centered around consistency and a major purchaser of coffee beans. 

the case that there is no incentive of farmers to grow higher grades of coffe etc is flawed because the average farmer doesn’t the risks associated with it, they could grow the best crop ever but suddenly market prices drop and then get no money for their investment.  They don’t want to be rich, they want to survive and provide for their famalies so if there is a way they can get a guaranteed minimum that’s great. 

Thanks Howie for a very interesting and informative post.  Does the Fair Trade system include provisions that a portion of the money received by the farmers goes into the community’s education and health systems?  Or something like that, so that the whole community benefits?  And in terms of Mil’s comment that some farmers didn’t have the money needed to become Fair Trade certified – do you know of any ways we can assist in funding that kind of initiative?  From an ignorant mostly tea and sometime coffee drinker. 

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The views expressed are my own and are not on behalf of any persons or organisations I may or may not be affiliated with. 
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