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Coffee Industry Tries Fair Trade Reforms


Small farmers make up three-fifths of the world's 25 million coffee producers, but typically they receive the smallest portion of the industry's profits. That is slowly beginning to change as a profit distribution scheme known as "Fair Trade" is finding wider acceptance across the industry. Melinda Smith narrates.

Coffee is the world's second-most traded commodity, generating a greater level of income than any other unfinished product except petroleum. But the distribution of that income has become the focus of increasing concern in recent years.

"Traditionally coffee has had positive economic benefits primarily at the consuming side, and the producing side has often been left behind," says Rick Rhinehart, head of operations at the Groundwork Coffee Company in Los Angeles. They import from growers around the world, and use a policy called Fair Trade to try to end income disparities, especially for coffee growers.

"Our goal is to create a much more equitable distribution so that the producing communities feel the same economic benefit as the consuming community and see the same kinds of impacts on quality of life that we see on the consuming side," he says.

Those benefits are perhaps most apparent at large coffee distributors such as Starbucks Coffee of Seattle, Washington, one of America's 500 largest corporations. Starbucks is a global company with plans to eventually operate some 25,000 outlets around the world. But, says its president, Orin Smith, his firm is also committed to helping coffee growers get a better deal.

"We have made a pact with our customers that we will provide them with very high quality coffee but we will charge a very high price. This is important for us but it is equally important for the farmers, because that high price enables us to pay the farmers the highest price for their coffees of any buyer in the world."

Starbucks says it channels those higher prices through "preferred providers" - suppliers who can demonstrate that the small farmers who produce the crop do indeed receive above market payments as intended. But Fair Trade campaigners, like Mario Monroy of Mexico, question whether the system is working, as it should.

"It (Starbucks) doesn't actually know who the money is going to,” he says. “And if you want to pay a fair price, it has to also mean that you are concerned about who the money goes to and making sure the money goes straight to the coffee-growers."

Mexico, where Mr. Monroy campaigns, is the world's fifth-largest coffee producer. But the same concerns that farmers have there are shared in premium coffee growing nations from Guatemala to Ethiopia. Seeing that they receive the payments they deserve often comes down to personal relationships.

"And we try and work directly with the farmers, or the farm communities, often with co-ops, and to pay a premium for things like organically produced coffee,” says Rick Rhinehart. “So our model looks at identifying those factors that contribute to sustainable high prices. And the number one factor of course is quality."

That focus on quality also spills over to promoting better, more sustainable environmental practices among small farmers.

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