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Brewing JusticeFair Trade Coffee, Sustainability, and Survival
By Daniel Jaffee
University of California PressCopyright © 2007 The Regents of the University of California
All right reserved.
Chapter OneA Movement or a Market?
There are collective and qualitative needs which cannot be satisfied by market mechanisms. There are important human needs which escape its logic. There are goods which by their very nature cannot and must not be bought or sold.... These mechanisms carry the risk of an "idolatry" of the market, an idolatry which ignores the existence of goods which by their nature are not and cannot be mere commodities. Pope John Paul II, Centesimus Annus, 1991
The market has no brain It doesn't love it's not God. All it knows is the price of lunch. Bruce Cockburn, "You've Never Seen Everything"
The unfairness of international trade has for centuries troubled many people who have witnessed its human and environmental effects. The terms of trade between North and South-the low prices paid for agricultural products relative to the cost of imports (on a national level) or the cost of living (on a household level)-have long been unequal, but they have worsened significantly for the global South since the 1970s. Such "unequal exchange" has a number of harmful effects: for example, subsistence farmers are displaced and hunger increases as land is converted to export crops and cheap-usually subsidized-agricultural imports undermine small producers' viability. Fair trade constitutes one attempt to address this structural injustice.
A SHORT HISTORY OF FAIR TRADE
The roots of the fair-trade movement, ironically, go back to the same postwar moment when the Bretton Woods institutions (the World Bank and the International Monetary Fund) and the General Agreement on Tariffs and Trade, or GATT-the precursor to today's WTO-were being created. From its inception, the movement has contained at least two distinct (though sometimes overlapping) currents-a "development" strain and a "solidarity" strain.
In the "development trade" approach, charities in the United States and Europe, usually linked to churches, began trying to create markets for the products of impoverished and displaced people. The Mennonite Central Committee established trading links in the late 1940s with poor communities in the Southern United States to generate employment and income. An increasing number of these efforts, later known as Alternative Trading Organizations or ATOs, began to emerge in the 1960s and 1970s. Some initiatives developed networks of church-based sales and stores, such as Ten Thousand Villages, which grew out of the Mennonite effort, and SERRV, an initiative of the Church of the Brethren. Another facet of this approach came from large development and religious agencies working in the global South, such as Oxfam, Bread for the World, Caritas, and others. These groups helped found partner cooperatives and associations in Southern nations that organized disadvantaged groups to export their products, principally handicrafts. The ATOs in Europe framed their work as "alternative trade." They established a network of "world shops" in many cities to sell these craft products, as well as some coffee and tea. While the total volume of this trade was negligible, sales did grow rapidly, and the profile of alternative trade increased to the point where it began to take on movement status.
However, many new trading groups, especially in Europe, were associated with secular activist movements on the political Left, and this solidarity focus has also been fundamental in shaping fair trade's identity. Twin Trading in Britain was founded in the 1970s to generate markets for products from socialist countries such as Mozambique, Cuba, North Vietnam, and later Nicaragua, whose access to consumers in the rich countries was partly or entirely blocked. Oxfam Wereldwinkels in Belgium and Stichting Ideele Import in the Netherlands emerged from the same tradition. In the early 1980s, U.S. groups opposing the government's policies in Central America sold "Café Nica" in violation of the official embargo on Nicaraguan imports. The cry of this nascent movement was "trade, not aid"-an attempt to differentiate its philosophy of local development and empowerment through trade from the paternalism of charity and the inefficiency and corruption of foreign aid by (and to) governments. These solidarity groups viewed the creation of alternative trade networks as part of a much larger critique of capitalism and the global economic system. Pauline Tiffen, a fair-trade pioneer formerly with Twin in London, recalled what was likely the first use of the phrase "fair trade": "We organized a conference, 'Who Cares about Fair Trade?' And in that case I think the choice of fair was a deliberate decision to broaden a concept that was for us quite anticapitalist. Like alternative as in alternative system, a parallel system to the market, a challenge to the capitalist system."
In 1988 came a watershed event for fair trade-the creation of the Max Havelaar label. Indigenous Mexican coffee farmers from the UCIRI cooperative in Oaxaca had approached the Dutch development aid organization Solidaridad two years earlier with an unprecedented proposal. After several years of selling small amounts of coffee through world shops, UCIRI (which was led by a Dutch liberation-theology priest, Franz Vanderhoff Boersma) wanted access, on equitable terms and in larger quantities, to European consumer markets. Essentially, the cooperative was asking the European alternative trade movement to go beyond its largely symbolic purchases and buy coffee in volumes sufficient to make a significant difference in the incomes of UCIRI's peasant farmers. Solidaridad initially considered starting its own alternative brand to compete alongside commercial coffees in mainstream supermarkets. Instead, it opted to create a label, Max Havelaar, which could be placed on coffee sold under any brand, certifying that the coffee farmers had received a premium price that constituted a "fair return." The Max Havelaar foundation licensed the use of the label to existing coffee roasters and retailers who agreed to comply with its criteria of fairness in trade.
The creation of this first certification-the structure that allowed fairly remunerated coffee from small-farmer cooperatives to move beyond marginalized world shops into the mainstream market-is arguably the moment when "alternative trade" became fair trade. It was also the point at which the movement's center of gravity shifted away from crafts toward agricultural products. In that shift, paradoxically, lie the seeds of the dilemmas now confronting the fair-trade movement.
Coffee became the first certified fair-trade product in part because of the particular configuration of forces that brought UCIRI and Solidaridad together. However, fair-trade coffee owes its growth and continued success to coffee's global importance-more than $70 billion worth of coffee is traded yearly-and to its significance as the largest cash crop for twenty to twenty-five million peasant families around the world, many of whom are able to integrate it fairly easily with their subsistence (food) crops. Coffee was also in many ways the ideal fair-trade product: from the point it is picked to the moment of grinding, it remains a discrete physical commodity; it undergoes relatively few transformations and changes hands fewer times than many other commodities; it is not perishable (green, or unroasted, coffee beans can be stored for up to a year); and it is produced in large part by peasant farmers on small plots that they own. Thus consumers can visualize a more or less direct link with the producer and imagine (even if inaccurately) that every fair-trade-certified bean in their morning cup was picked by democratically organized, fairly paid farmers in one particular coffee cooperative. It is this ability of fair trade to put a face on commodities, to convey information about the social conditions under which they were produced-and about the people who produced them-that is key to the movement's moral power.
The certification initiative spread quickly across Western Europe. With the combined efforts of Max Havelaar, the German group Transfair, and the FairTrade Foundation in the United Kingdom, by the early 1990s virtually every country had a "national initiative" to promote and certify fair-trade products. Coffee with the fair-trade labels began appearing in mainstream stores, and sales volumes quickly jumped. In the Netherlands and in Switzerland, for example, fairly traded coffee went from a negligible 0.03 percent of the market to almost 5 percent in 1995. While much of this increase came from the sale of certified coffee under recognized brand names, the coffee market continued to be dominated by a few transnational corporations who were indifferent or hostile to fair trade.
Not all fair-trade coffee was sold under mainstream brand labels, either. In Britain, a consortium of Twin and three other ATOs started a company called Cafédirect, which today commands an impressive 14 percent of all the nation's roasted and ground coffee sales. In the United States, a group of activist entrepreneurs in 1986 formed Equal Exchange Coffee, which forged partnerships with producer cooperatives in Latin America, Asia, and Africa. According to the company's cofounder, Jonathan Rosenthal, "Our goal was to prove to the world, and to ourselves, that it was possible to do business and social change work as one integrated concept.... At the time we started, people said, 'you can't work with co-ops and social movements; you won't survive as a business.' ... To use the current jargon, part of what we set out to do was to move people's perception of what was possible, and change the location of the perceived tipping point." Yet while worker-owned Equal Exchange pioneered the fair-trade concept in the United States, it would be more than a decade before formal fair-trade certification reached North America.
Coordination between fair-trade practitioners continued to increase. Forty ATOs joined together to form the International Federation for Alternative Trade (IFAT) in 1989, with Southern producers represented. A number of craft-oriented initiatives founded the Fair Trade Federation (FTF) in the United States. In 1997, all of the national certification entities formally united their efforts, creating a worldwide umbrella fair-trade certifier, Fairtrade Labelling Organizations International (FLO), based in Bonn, Germany. In the same year, fledgling certification entities began in the United States, Canada, and Japan under the Transfair name, bringing the total number of certifiers to seventeen.
Meanwhile, fair traders had cast their sights beyond coffee. If fair trade was to make a meaningful difference in the living conditions of impoverished farmers in the global South, it would have to expand to a wider range of commodities. During the 1990s, fair-trade-certified bananas, tea, cocoa, sugar, honey, rice, and orange juice appeared on the European market-virtually all tropical commodities associated with the colonial agricultural legacy. In a few cases, where these debuts were accompanied by strong promotional campaigns, the results were dramatic. For example, fair-trade bananas have captured 50 percent of the national banana market in Switzerland.
The debut of fair-trade-certified coffee in the United States in 1999 was an important event. After years of growth, fair-trade sales in Europe had begun to stagnate and in some cases even decline. The United States consumes an astounding one-fifth of the world's coffee-more than any other nation-making coffee the country's single most valuable food import. The movement was looking to this huge market to expand the impact of fair trade for farmers.
But the larger coffee retailers were still reluctant to participate. Activists, aiming to push fair trade into mainstream retail channels, targeted the coffee colossus Starbucks, which dominates the U.S. specialty coffee market. Several groups, including San Francisco-based Global Exchange, demanded that Starbucks begin to purchase and offer fair-trade coffee. The company resisted, claiming that the quality and supply were inadequate. In April 2000, on the day before Global Exchange was to launch simultaneous "Roast Starbucks" protests in twenty-nine cities, the company relented and agreed to sell fair-trade coffee in all 2,300 of its U.S. stores. This accomplishment produced a flood of interest on the part of other specialty (or gourmet) roaster-retailers, who saw the need to compete in this new terrain of social-justice marketing, and soon consumers in most large coastal cities-and many smaller communities-could find fair-trade-certified beans.
Since then, the fair-trade market here has grown dramatically: U.S. imports of certified coffee exploded from 1.3 million pounds in 1999 to almost 45 million pounds in 2005, for a total value of $499 million. More than 350 companies now roast fair-trade coffee, and it can be purchased in more than thirty thousand stores and cafés. As of this writing, fair-trade-certified coffee represents almost 5 percent of the U.S. specialty coffee market, and more than 2 percent of total U.S. coffee consumption.
Yet, despite this growth, the Starbucks victory has been bittersweet. Five years later, just over 3 percent of the company's coffee is purchased under fair-trade terms, and consumers can buy fair-trade coffee by the cup in Starbucks cafés only a few days per year. Critically, the terms of the agreement between Starbucks and Transfair did not stipulate the amount of fair-trade coffee the company was required to buy; the premise was that consumer demand would do the rest. But here the groups discovered some of the pitfalls of working with mainstream market players. To the activists, the goal was clear: all gourmet coffee should eventually be made "fair." For Starbucks, on the other hand, fair trade represents a lucrative niche market: it is just one variety of coffee alongside Breakfast Blend, Ethiopia Sidamo, and Serena Organic Blend. Fair trade also constitutes a powerful tool in the brand's "social-responsibility" strategy. Given that many consumers now identify the fair-trade concept with Starbucks, it would appear that the company has achieved maximum public-relations benefit with minimal changes in its actual practices.
While these activist-versus-corporate struggles continue, fair-trade coffee has moved further into the mainstream (as opposed to only the specialty) segment of the coffee market. In 2003, after substantial pressure from activists, Procter & Gamble-the maker of Folgers, and one of the "Big Three" global coffee retailers-announced that it would sell fair-trade-certified coffee under its Millstone brand. As of 2005, grocery chains such as Safeway, restaurants as un-gourmet as Dunkin' Donuts, and the warehouse retailers Sam's Club, Target, and Costco are all offering fair-trade products in some form. Campaigns at hundreds of colleges and universities have succeeded in placing fair-trade coffee in campus cafeterias and coffee shops. Yet it is still far from clear whether fair trade will have any significant impact on the exploitative practices of the conventional global coffee market.
At the root of fair trade's "success" lies a dilemma. Because of the corporate dominance of the market for coffee and other commodities, many fair traders feel they need to work through powerful mainstream market players in order for the system-and the benefits it generates-to grow. Yet the motivations and actions of most large corporations are at odds with the philosophy of social justice at the heart of the fair-trade movement. This need to embrace the "enemy"-essentially, to dance with the devil-sets up a series of tensions and thorny contradictions that I explore further in chapter 7.
Moreover, the origins of the fair-trade movement itself are divided. Whereas some important organizations are firmly grounded in a radical political and economic critique, other segments grew out of a more moderate, faith-based charity and development orientation. As the movement expands, new viewpoints have been added to these two camps: those of Southern producer organizations and, more recently, a marketing- or business-oriented constituency made up of large coffee roasters and retailers-some of them multinationals-as well as organizations that promote and sell fair-trade products. These differences have not been aired within the movement until quite recently. Although they have emerged over questions of strategy, they reflect deeper philosophical disagreements about the nature of the market and the movement's challenge to that market. Can fair trade change the structural unfairness of world trade from within? Is it a transformative alternative that works from inside the belly of the beast? Or is the logic of the market such that only alternative institutions can effect meaningful change from outside?
Excerpted from Brewing Justice by Daniel Jaffee Copyright © 2007 by The Regents of the University of California. Excerpted by permission.
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