Iowa Public Television


Fair Trade

posted on April 19, 2002

Beyond price, environmental issues also plague the coffee world. The practice of clear-cutting forests to create coffee plantations increases yields, but also requires chemicals and reduces coffee quality.

Public concern over corporate philosophies concerning workers and the environment has existed for some time. Increasingly, socially conscious consumers have found their forum in food co-ops, natural food stores, and farmer's markets.

But businesses formed to educate the broader public and create alternatives to the traditional marketplace are not as common. Equal Exchange is one company leading the campaign for fair treatment of trading partners and a regard for the environment. Tyler Teske explains.


Fair Trade

In Lutheran churches, coffee is sometimes jokingly referred to as "the third sacrament." Many consumers miss the connection between what they hold in their hand and some of the smallest players in the world market. But these parishioners are drinking fair trade coffee, a product that cuts out the middle man and puts more money in the pocket of impoverished farmers.

Fair trade is a business practice that embraces a philosophy of partnerships between producer and processor and strives to create an economy that sustains both entities. Fair trade rules have been established for a variety of products, but, as the world's second most heavily traded commodity behind crude oil, coffee may be one of the most visible.

The Fairtrade labeling Organization International, or FLO, establishes the rules for how companies selling fair trade coffee must conduct business.

It all starts at the local level. Coffee coops selling to the fair trade market must be registered and certified as democratically organized and free of corruption by FLO. Companies that buy fair trade coffee are required to pay no less than the minimum price of a dollar twenty-six per pound for regular Fair Trade beans, or the dollar forty-one minimum for certified organic coffee. If market prices rise above the minimums, there is a five cent premium per pound. In return for the fair trade price, the farmers provide high quality beans and use environmentally sound production practices. For example, fair trade organic coffee is shade grown in the presence of other plants. The practice provides natural pest protection along with biodiversity and a higher quality bean.

Rink Dickinson is a co-founder of Equal Exchange, a Boston-based, for-profit business that sells Fair Trade coffee.

Dickinson: "It's interesting reviewing the fifteen years we've been doing this. There's been a lot of positive changes. Small farmers are now at the table, they have some power and they're using it. That's happening throughout Latin America, Central America, Africa and Asia."

Extra money earned by coffee co-ops is used within the local community to build schools or make other necessary societal improvements.

Last year, Equal Exchange paid fair trade premiums of nearly one million dollars to its partner coffee coops. Along with the difference in farmgate price, Equal Exchange is one of the few companies that offers credit to the small farmer cooperatives allowing the co-ops to pay farmers up front for the beans.

Equal Exchange is a cooperative owned by the 33 employees who work there. Financial profit is a goal of the company, but a commitment to fair trade principals creates a different business environment. Besides having worker ownership, the company by-laws include: a maximum salary ratio of three-to-one between the C-E-O and the lowest paid employee, a ten percent profit donation policy to other fair trade organizations, and mandatory reinvestment of a portion of the profits back into the company.

The success of Equal Exchange was originally dependant on food co-ops. One of the first customers was Harvest Co-op Market, a natural foods store. The grocery has two stores in the Boston area and today is the largest customer of Equal Exchange coffee, selling 540 pounds of the beans each week.

Harvest Co-op Market general manager John Higgins considers the coffee a logical fit.

John Higgins, Harvest Foods Co-op: "The fair trade focuses, and the term fair trade focuses on what's fair for the producer or the product. It implies a whole complex of values that is about social responsibility and about sustainability. So, it's not just about getting the most money into the hands of the farmers. But it also is about more responsible forms of agriculture, more honesty in the food distribution system, higher quality products for the consumers."

Another draw is price. The cost of a pound of equal exchange coffee is comparable to other gourmet-type beans.

While food co-ops and natural food stores still make up the largest percentage of Equal Exchange sales, the socially conscious, high quality coffee is finding an increasingly broader market. Equal exchange coffee is now found at restaurants and food service facilities, major grocery store chains, and most recently in churches.

While it might not be an obvious market, the idea of socially responsible coffee seems to have struck a chord within the faith community.

Jonathan Frerichs, Lutheran World Relief: "We have ties to the land, we know what a farmer is, a lot of us still. When we can see that a farmer is going to get what he needs from the product we buy from him I think that speaks to everyday life in a way that really matters."

Jonathan Frerichs is the communication director for Lutheran World Relief, the major aid organization of Lutheran denominations. Though perhaps best known for their quilt project which annually sends half a million quilts to those in need worldwide, Lutheran World Relief also spends a considerable amount of resources on community development to help impoverished areas become self-sustaining.

Fair Trade coffee piqued the interest of Frerichs because of the economic development potential in regions where the aid organization was already working. LWR and Equal Exchange scrutinized each other's operations and in 1998, the Lutheran World Relief Coffee Project was born.

Since that time, more than twenty-six hundred Lutheran congregations across the country have participated in the L-W-R Coffee Project.

Frerichs: "There's a lot of depth when you look into that cup. You can see a lot of things there, everything from the farmer who doesn't get what he deserves to a world that works in a way that is a little fair to more of the people who are small players and I think that the success of the project is defined by that dynamic that we see there in that cup we hold. It's a reason why something so unusual hasn't had more trouble."

The coffee is sold for home use, used during Sunday social hour, brewed for special events, and used as a way to increase awareness while raising funds for special projects. Religious institutions of a variety of denominations and faiths now comprise 10 percent of Equal Exchange coffee sales.

The company continues to broaden both its market and its product offerings. Fair trade tea has recently been added to the product list, just the first of what Dickinson hopes will be many additions. And while he would like to see continued success for the business, Dickinson is also dedicated to a changed marketplace where more companies embrace fair trade.

Dickinson: "The Equal Exchange model, we think, is really relevant in other places. Coffee was where it worked for us. We originally imagined doing a wide variety of food products. One of the founders of Equal Exchange is working with local farmers in New England and the Northeast. We'd like to see it happen in a whole variety of agricultural commodities. A lot is based on getting consumers involved and using education as a tool to do that. We think that's really the only way that, that's the most effective way to support farmers at this stage where we're at."

For Market to Market, I'm Tyler Teske.


Tags: agriculture coffee news trade