[NYTr] Brazil: "Fair Trade" Coffee Pays Off for Farmers

[All the News That Doesn't Fit]

The New York Times via Truth about Trade - Oct 3, 2007
http://www.truthabouttrade.org/article.asp?id=8286

Fair Trade in Bloom

Varginha, Brazil — Rafael de Paiva was skeptical at first. If he wanted
a “fair trade” certification for his coffee crop, the Brazilian farmer
would have to adhere to a long list of rules on pesticides, farming
techniques, recycling and other matters. He even had to show that his
children were enrolled in school.

“I thought, ‘This is difficult,’” recalled the humble farmer. But the
20 percent premium he recently received for his first fair trade
harvest made the effort worthwhile, Mr. Paiva said, adding, it “helped
us create a decent living.”

More farmers are likely to receive such offers, as importers and
retailers rush to meet a growing demand from consumers and activists to
adhere to stricter environmental and social standards.

Mr. Paiva’s beans will be in the store-brand coffee sold by Sam’s Club,
the warehouse chain of Wal-Mart Stores. Dunkin’ Donuts, McDonald’s and
Starbucks already sell some fair trade coffee.

“We see a real momentum now with big companies and institutions
switching to fair trade,” said Paul Rice, president and chief executive
of TransFair USA, the only independent fair trade certifier in the
United States.

The International Fair Trade Association, an umbrella group of
organizations in more than 70 countries, defines fair trade as
reflecting “concern for the social, economic and environmental
well-being of marginalized small producers” and does “not maximize
profit at their expense.”

According to Fairtrade Labelling Organizations International, a group
of fair trade certifiers, consumers spent approximately $2.2 billion on
certified products in 2006, a 42 percent increase over the previous
year, benefiting over seven million people in developing countries.

Like consumer awareness of organic products a decade ago, fair trade
awareness is growing. In 2006, 27 percent of Americans said they were
aware of the certification, up from 12 percent in 2004, according to a
study by the New-York based National Coffee Association.

Fair trade products that have experienced the biggest jump in demand
include coffee, cocoa and cotton, according to the Fairtrade Labelling
Organizations.

Dozens of other products, including tea, pineapples, wine and flowers,
are certified by organizations that visit farmers to verify that they
are meeting the many criteria that bar, among other things, the use of
child labor and harmful chemicals.

There is no governmental standard for fair trade certification, the
same situation as with “organic” until a few years ago. Some fair trade
produce also carries the organic label, but most does not. One
important difference is the focus of the labels: organic refers to how
food is cultivated, while fair trade is primarily concerned with the
condition of the farmer and his laborers.

Big chains are marketing fair trade coffee to varying degrees. All the
espresso served at the 5,400 Dunkin’ Donuts stores in the United
States, for example, is fair trade. All McDonald’s stores in New
England sell only fair trade coffee. And in 2006, Starbucks bought 50
percent more fair trade coffee than in 2005.

Fair trade produce remains a minuscule percentage of world trade, but
it is growing. Only 3.3 percent of coffee sold in the United States in
2006 was certified fair trade, but that was more than eight times the
level in 2001, according to TransFair USA.

Although Sam’s Club already sells seven fair trade imports, including
coffee, this will be the first time it has put its Member’s Mark label
on a fair trade product, which Mr. Rice of TransFair called “a
statement of their commitment to fair trade.”

He added, “The impact in terms of volume and the impact in terms of the
farmers and their families is quite dramatic.”

Michael Ellgass, the director of house brands for Sam’s Club, said the
company could afford to pay fair trade’s premium because it has reduced
the number of middlemen.

Coffee usually passes from farmers through roasters, packers, traders,
shippers and warehouses before arriving in stores. But Sam’s Club will
buy shelf-ready merchandise directly from Café Bom Dia, the roaster
here in Brazil’s lush coffee country.

“We are cutting a number of steps out of the process by working
directly with the farmer,” Mr. Ellgass said.

Some critics of fair trade say that working with thousands of small
farmers makes strict adherence to fair trade rules difficult.

Others argue that fair trade coffee is as exploitive as the
conventional kind, especially in countries that produce the
highest-quality beans — like Colombia, Ethiopia and Guatemala. Fair
trade farmers there are barely paid more than their counterparts in
Brazil, though their crops become gourmet brands, selling for a hefty
markup, said Geoff Watts, vice president for coffee at Chicago’s
Intelligentsia Coffee and Tea, a coffee importer.

But in Brazil, a nation with little top-grade coffee, the partnership
between small producers and big retailers is a better blend, Mr. Watts
said.

Fair trade coffee farmers in Brazil are paid at least $1.29 a pound,
compared with the current market rate of roughly $1.05 per pound, said
Sydney Marques de Paiva, president of Café Bom Dia.

Most coffee farmers are organized into cooperatives, and some of that
premium finances community projects like schools or potable water.

Like most of his cooperative’s 3,000-odd members — and three-quarters
of coffee growers worldwide — Mr. Paiva, the coffee farmer (no relation
to Mr. Marques de Paiva), farms less than 25 acres of land. He produces
around 200 132-pound sacks for the co-op, with 70 percent of that sold
as fair trade to Café Bom Dia.

The company would buy more if there were more of a market for fair
trade coffee, it said.

The fair trade crop brought Mr. Paiva about 258 reais ($139) a sack,
compared with about 230 reais for the sacks that were not fair trade.
For the latest crop, that meant an additional 3,920 reais ($2,116) for
him, a huge sum here in the impoverished mountains of Minas.

“It’s been great for us,” Mr. Paiva said with a huge, toothless grin.
“I call the people from the co-op my family now.”

Mr. Ellgass, the Sam’s Club executive, said the chain hoped to expand
its fair trade goods.

So do Brazil’s farmers. “Everybody is doing their best to come up to
standard so we can sell our coffee as fair trade,” said Conceição Peres
da Costa, one of the co-op’s growers. “Everybody wants to earn as much
as he can.”