How fair is your fair-trade coffee?

White, no sugar: Ben Drury, a barista at Coffee Aroma in Lincoln, says that they don’t use fair-trade coffee because it’s counter-productive. Photo: Samuel Cox

The charitable British purge their moral consciences by buying fair-trade coffee. They think they are doing their little bit to help the people working back-breaking fourteen-hour shifts in sun-scorched fields. But as they sip their socially-responsible espressos, how much of a difference does a fair-trade sticker really make?

Fair-trade coffee works by setting a minimum price to pay the producers, which is based on their costs. Fair-trade companies must pay the minimum price for coffee, unless the world market price is higher, in which case they must pay that. They are also required to put a premium on their coffee products, which goes towards social, environmental, or economic development projects.

However, this leaves some producers of good coffee unable to compete unless they are fair-trade, as demand is skewed towards that end of the market. This, it is said, undermines free-market trading.

If coffee crops aren’t providing enough yield, or are producing poor-quality coffee, then should we continue to flog a dead horse? It’s argued that fair-trade clamps some otherwise unsustainable producers to the coffee industry. Instead, investment in new industries is needed, to allow these people a chance for a fresh start and to enter markets with plenty of demand and growth potential.

Coffee Aroma in Lincoln’s city centre is an independent coffee shop which doesn’t buy fair-trade. Ben Drury, a barista at the shop, says fair-trade is a double-edged sword: “It can bring you trade and business because you’re a fair-trade registered company, so now the [hypothetical] fair-trade Colombian Farmers PLC are fair-trade they’ll get business, whereas a smaller farm which produces a tiny amount of coffee will not be able to get the same prices in their area [compared with others] because everyone else is fair-trade,” says Drury.

El Salvador coffee costs, on the world market, around a dollar a pound. Fair-trade prices are little more. Coffee Aroma pay £6.07 per pound for the same coffee.

“There’s a massive gap in paying for good quality produce than paying for a label. That label really doesn’t mean much. Most fair-trade coffee is awful quality and it doesn’t live up to standard. It isn’t treated well and it’s not handled correctly. It’s not even marketed very well. People just slap a fair-trade sticker on an espresso brand and think it’s fine and dandy,” Drury says.

The 2008 report “Unfair Trade” by the Adam Smith Institute, a right-leaning think-tank, found that four fifths of fair-trade goods end up in non-fair trade products, and just 10% of the premium price on fair-trade goods goes to the producers, as well as other findings.

The report concluded: “Fair-trade is not an answer to poverty. For those who promote it, fair-trade is not even necessarily intended to aid economic development. Instead, fair-trade operates to keep the poor in their place, sustaining uncompetitive farmers on their land and holding back the changes that could give their children a richer future by encouraging mechanization and diversification.” In response to the report, the Fairtrade Foundation “refutes the unsubstantiated claims that Fairtrade ‘does more harm than good’”.

“[The Adam Smith report] applies totally inflexible dogma and outdated information to criticise Fairtrade producers, without offering any constructive alternative for development other than ‘leave it to the market’.”

Stephen Leighton runs Has Bean Coffee Ltd and is Coffee Aroma’s roaster. He once used fair-trade coffee farmers, but made the decision in 2002 to stop buying from them. In an article on Has Bean’s website, he justified this move: “I’m not an evil capitalist that believes farmers should be suppressed so that coffee roasters can make all the money from coffee,” writes Leighton.

“The only way the speciality market can possibly grow and succeed is via sustainable methods, rewarding coffee farmers for the hard work they put in.”

He pours scorn on one major fair-trade organisation, who he believes waste money acting like a corporation. “Does the farmer need a full-page advertisement in The Sunday Times Magazine which, trust me, is very expensive. Does he need an army of administrative staff based in a swanky London office, or many other expensive cities around the world? Fairly traded produce has the ability to sell itself on its own merit and doesn’t need all these things,” he wrote.

Leighton also criticises the supermarkets who push guilt on the consumer despite their own unethical practices: “Calculating that, in general, and being generous, the fair-trade farmer gets 12p extra for a fair-trade pack of coffee, compared to a standard, commercial brand.

“However, the price on the pack in [one leading supermarket] is around 75p more than their own brand offerings, resulting in a small reward for the farmer from the supermarkets, but a large return for the supermarkets hitting the guilt strings of its customers.

“Consequently, it is the very people that drive prices down on many items, to a degree that makes it difficult to make a decent living, who are making the consumer feel guilty, whilst increasing their profit margins? This is a perverse situation to say the least.”

The Fairtrade Foundation did not respond to The Linc‘s request for comment.

6 Responses to How fair is your fair-trade coffee?

  1. David Clare says:

    I’m sure I heard about another scheme somewhere. One that offers a good price for every farmer, no matter how much they produce… can’t remember where though. I’ve always been wary about fair-trade. Does Coffee Aroma have suggestions of what we should buy? That gives a ‘fair’ deal, but is not necessarily fair-trade.

  2. I can only say this is off base about Fair Trade and what it does here in Costa Rica.

    I live in a town that has 2 beneficios one is part of Coocafe ( FairTrade) ,and one that is not.

    The Coope that is fair-trade certified has a direct impact on over 8,000 people.

    I cannot tell you about other countries, I can show you where it works here every day.

    You may what to see what we do Here in Costa Rica.

  3. Gareth McMillan says:

    I buy a lot of coffee from hasbean, although not the cheepest their basic stuff is about the same as fair trade, and they have some stunning quality coffee.

    They pay producers based on the quality, which means most of the time they are getting more than they would if they went fair trade.

  4. Richard Danstead says:

    I have just come back from Nicaragua where I saw first hand where Fairtrade makes a difference. Left in the free market after the collapse of the international coffee agreement some producers were getting just 10cents a kilo for their coffee. To suggest that this allows them the luxury of diversifying into other crops or that they should seek employment elsewhere shows that people don’t understand the hardships these producers face.

    By guaranteeing that they receive a price that covers their sustainable costs of production empowers producers to invest in their business and choose how they want to progress – sometimes by growing other crops such as sesame and sometimes by increasing the quality and yield of their coffee or converting to organic.

    An unchecked free market would leave these producers with little choice but to abandon their community and join the masses in seeking what little employment opportunities there are in the cities. This would mean there was less of the great coffee being grown that coffee shops like Cafe Aroma and others rely on.

  5. Britney says:

    A few comments, Fair Trade does not provide workers in developing countries a minimum price, they pay them a premium price. And based on all of the research I’ve done the market price for coffee is 95% of the time below the fair trade premium prices these workers are guaranteed.

    And it’s not only about fair wages, Fair Trade also encompasses cooperative workplaces, consumer education, environmental sustainability, community development and public accountability. It’s about giving people the opportunity to build a life for themselves and their families.

    Americans and Western Europeans take so many things for granted. If you want water, you can go to the sink. The reality is that most countries do not have that option. They don’t have roofs over their heads. People are so ignorant and feel inclined to disagree with rising movements simply because they’re becoming mainstream. Educate yourselves people, the goal of Fair Trade is to improve the quality of life.

  6. Peter says:

    Fair trade or not.
    This is a very emotive subject with both sides if the argument making sense.
    I believe fairly or ethically traded coffee is the better option, if for no other reason there are no large organisations with hundreds of staff driving BMW’s (and they do).
    My understanding is Fairly traded or Ethically traded coffee is bought directly from the farmers, sourced by coffee hunters generally with a 20% premium paid over the market value.
    With agreements to purchase the full harvest in place before the growing season allowing the farmer to cherry pick the coffee through the season instead of one harvest at the end makes sense, the alternative is over ripe or under ripe beans being harvested together along with the ripe beans making for a poor quality coffee.
    The result of cherry picking is a better quality coffee, this demands a higher price on world coffee market. The workers are fully employed and wages will be spent in local shops, on schooling and medical treatments, this means the money paid to the farmer moves through the local economy so everyone benefits, a win, win situation I feel.
    Of course this is only my opinion and my understanding, however, maybe anything is better than nothing to help people in these countries, and I think it is up to everyone’s own conscience. I applaud anyone who makes an effort to help even if I don’t like the fair-trade organisation myself.