Editorial: A Fair Trade Reality Check

Written by Cafe Campesino on Jul 1, 2004 in Editorial, NEWSLETTER |
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“Time and time again, our producer partners tell us that the timing of payments provided for by the practice of Fair Trade is as critical to them as is the payment of a fair price for their coffee,” says Bill Harris, president of Café Campesino. This statement and the message it conveys present us with a meaningful opportunity to take a necessary, hard look at what we are trying to accomplish by buying Fair Trade coffee and other Fair Trade products. Our producer partners have made it clear that Fair Trade is not just about paying a fair price for their goods, it’s also about issues like pre-financing, quality control and technical support, dialogue, long-term relationships and capacity-building – where the proverbial rubber hits the road. So often, the critical on-going dialogue between producers and buyers is undervalued or even overlooked when considering its contribution to Fair Trade. Well, the message from our producers is clear and sobering and, ultimately, offers a reality check.

Our intention in this article is not to preach about the virtues of Fair Trade; rather, it is to remind all of us that: 1) Fair Trade does not miraculously lift producers in the developing world out of their subsistence life circumstances and 2) until Fair Trade practices are adopted by the free market, meaningful, sustainable socio-economic advance for the masses of working poor is still in an embryonic or perhaps even a pre-embryonic stage.

One might think that because Fair Trade offers a number of benefits to the producers they are suddenly, somehow, able to build a larger house, buy a truck or take a week off for a family vacation. Nothing could be further from the truth. To the contrary, Fair Trade producers continue to struggle to survive, even with the contributions of their Fair Trade relationships. For the vast majority of farmers involved in the Fair Trade system, less than 25% of their crop output is sold to the Fair Trade market. This leaves most of their crop to be sold at much lower conventional prices. Clearly, fair trade’s impact, though very real and tangible, is not the magic wand. The typical producer lives in a 1-2 room house, often without plumbing or electricity. They and their families depend on much of the food they grow on their own land to feed themselves, with their protein supply often coming from the animals with whom they share their land. And, access to medical services and education remain severely limited.

While life for producers remains hard, the additional income from the sale of their coffee to Fair Trade partners does boost the quality of their lives, albeit in what may seem small ways and at a slow pace. Income from their Fair Trade coffee sales often enables producers to send more of their children to school or give them the ability to buy basic foodstuffs when necessary. But what we know to be one of the most important benefits of Fair Trade commerce — a fair price for quality coffee — is only one small component of what Fair Trade does…and has the potential to do.

To understand how Fair Trade penetrates the total quality of life for producers requires that we measure both the impact of Fair Trade today and what it is doing vis-à-vis capacity building for the future.

In terms of the here and now, in addition to offering a higher, fair price for qualified coffee, Fair Trade relationships have a very real impact on the cash flow of producers. Under the commodity system, producers take what they can get in lump sum cash payments from middlemen, who typically suppress the price per pound. The insufficient cash the producers receive must last until the next crop is harvested a year later, without guarantee of future sales opportunities.

For a Fair Trade coffee producer, this annual cycle is quite different. Using Central America as an example, the payment cycle might look like this: during September farmers project their future deliveries to the coop and receive a small advance payment against these future deliveries. From November to February, farmers deliver coffee to the coop and receive the balance of payments at a price determined by the cooperative. After the cooperative sells all of the harvest and collects funds, an additional payment is made to the farmers based on the profits of the coop. Meanwhile, throughout the year, coop members receive technical support for improving composting techniques, using better field terracing strategies, and developing effective pruning techniques needed to ensure quality output.

The net result of this system is a predictable cash flow, at a fair price level, that enables producers to plan as well as enjoy a degree of financial security they would otherwise not have with the traditional commodity system. This is, without doubt, one of the benefits producers claim helps them the most. The farmer knows before the harvest begins that the crop is sold — and sold at a good price. Fair trade also provides producers with instruction and support in financial management — a tool to which people living in poverty would otherwise not have access.

On this foundation of improved financial security and management, producers are also able to enter and participate in the running of their cooperatives, of which they are equal voting members. Providing a forum for dialogue, the Fair Trade model establishes and maintains a critical role for producers in the management of their business, a role that does not exist in the commodity model. Coop managers are accountable to the producers and their Fair Trade partners in the buying countries; producers meet with their buyers at regular intervals; and, perhaps, most importantly, producers develop their leadership skills, which they then use in their communities, giving them a voice in and ability to impact other quality of life issues like education, health care, infrastructure and the like.

Is Fair Trade the panacea for coffee producers…maybe not. But, it is a bona fide start to what we believe is a needed paradigm shift in the global economy…from the win —lose approach of the past to a win-win commitment to Fair Trade today and into the future. As Elvis Costello once said, “what’s so funny about peace love and understanding?” If you are a subsistence farmer, gaining a say in your own destiny and securing a fair price for one’s labor are no laughing matter.

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