Coffee’s Not Fairtrade, Because Melbourne Can Do It Better

In a world where consumers are increasingly questioning where their products come from, Global Voices youth delegate Laura McCormack suggests why Fairtrade is no longer the most ethical option.

As a professional in the burgeoning Melbourne specialty coffee industry I have lost count of the times customers have expectantly asked me if the beans we use are Fairtrade Certified. Most are horrified when I say they certainly are not, and they certainly never will be.

But this decision is not because we never bothered or because we reject notions of ethical trading; it’s because Fairtrade does not meet our quality control standards.

Put simply, Fairtrade is no longer our most ethical option.

Agriculture is the single biggest export economy for most of the lesser-developed countries in the world. Most small-scale family farm producers live in poverty and manage agro ecosystems in some of the world’s most volatile regions. The champion for the rights of the people living and working in these conditions has overwhelmingly been the Fairtrade Foundation: the people who put the blue and green logo on some brands of coffee, tea, chocolate, clothing and fruit to easily prove to you that your purchase is helping out someone in a developing country.

But more and more industries are rejecting it and the question remains as to whether the $500 million per year turnover that the Fairtrade logo draws in is relevant anymore in the age of ethical purchasing.  

The drawbacks of the Fairtrade model are numerous. Fairtrade’s main function involves artificially setting a ‘price floor’ against the global market price for various products. For example, a non-Fairtrade kilo of coffee is around $2.00: but if you’re a farmer who is part of a Fairtrade cooperative, that kilo of coffee sells for $3.80, which is why Fairtrade products are often so much more expensive than their supermarket counterparts. This extra cost is designed to help the cooperative invest in specific social enterprises like farming equipment and training, and turn a profit, thus lifting everyone involved out of poverty.

But the reality is less idyllic.  

The global Fairtrade organisation sets a global, rather than country specific, price for its products. Whilst this could be a small fortune in one country, it may be a pittance in another, and is inflexible to change quickly depending on country context.

A farm must also be part of a cooperative to gain Fairtrade Certification, so farmers living in remote areas or on family-run farms are automatically excluded from the process. This is not widely understood, and a study of Fairtrade in Nicaragua in 2009 revealed that most Fairtrade Certified farms had an extremely poor understanding of what they had signed on to. More than 60 per cent of farmers were also selling on the regular market and gaining higher prices than they were on the Fairtrade market.  This is not, evidently, ethical and informed trading.

The extra income from Fairtrade’s price floor must also be designated by Fairtrade to specific projects within the cooperative, such as tackling soil erosion or making transportation investments – but others get left behind, like soil pH levels, proper drainage, or any of the other things that affect the highly volatile coffee and chocolate plants.  Of all of these standards and regulations, none are concerned with the quality of the product.

Moreover, to become Fairtrade Certified is expensive. Both ends of the supply chain to some extent pay to use all of Fairtrade’s required intermediaries, which include a centralised exporter, an importer, a buyer, the packaging, associated tariffs and the additional costs to gain the rights to use the Fairtrade logo, which need to be renewed each year.

Money that could and should be going into the pockets of farmers in some of the poorest areas on earth is leaking into the pockets of these intermediaries and into the Fairtrade Foundation’s administrative costs as well.

Over the last 10 years, however, the specialty coffee industry has championed an ethical Direct Trade method in lieu of being able to satisfy quality and ethics simultaneously. While Fairtrade offers a protection in its price floor, Direct Trade is more aspirational.

The overall objective of a Direct Trade approach is to remove the intermediary processes and work directly with farmers specific to individual needs, to improve quality and power imbalances that often exist when the West and developing countries trade.

Coffee roasteries I have worked for have always gone directly to the source. One of the roasters will get on a plane and go to wherever they want to procure coffee from to taste (or ‘cup’) the coffees available in the region. Their offers for the coffee, far from the $3.80 of Fairtrade, is more likely to be $6 to $15 per kilo to the farmer growing the coffee lots that they like best, and much more for rarer lots.

If the coffee is good, the roaster will ask for it year after year, offering more money each time to invest in improving the conditions for the bean with regards to what is needed most, and establishing a long-term trading relationship.

This way, both parties are happy: we get great coffee, from an identifiable source who we know and trust, and the farmer is able to develop coffee quality and attract a price much higher than Fairtrade could offer.

The confidence of my bosses that their money is always going into hands that possess a vested interest in the coffee is a guarantee that the Direct Trade partnership is more secure, and unlikely to be interrupted by third party handling. Fairtrade’s insistence on costs associated with importers, exporters and purchasers, as well as label use and certification, reduces the security of the coffee making it to the cup should the supply chain fail at any intersection of involvement.

This security is a fundamental aspect of the direct trade relationship, and why its earliest movements have been such a success. The chocolate and grain industries are not far behind us, either.

So now that the World Trade Organisation has made a historic agreement on worldwide trade reform, I am hopeful that direct trade can start making real impacts for the people who need it most.

So get to know your morning coffee’s origin, and choose ethical options: just don’t presume that little blue and green logo is your latte’s best chance at making a difference.

About the Author: Laura McCormack is a student at RMIT University and was a Global Voices youth delegate to the WTO Ministerial Conference in Bali.