When the lads and I were thinking of recording a frivolous podcast we put feelers out asking for topics to discuss.
There was suggestions like “If a man speaks in the forest and there are no women around to hear is he still wrong?” and “you are in a zombie outbreak, you get bitten and find yourself in a costume shop … what costume do you put on before you die to be dressed as when you become a zombie?” but there was also one serious one which was asked by Luke.
He asked “What are the limitations of fair trade?”
So that is loosely what this post is based on. (fair trade, not women and zombies)
I’ve been mulling over this topic in my head for quite some time, not so much the limitations of fair trade but the rise in direct trade and what impact it may and can have.
Before you turn off and think an under-qualified bum is about to rant on about global trade, governments and spreadsheets you are wrong, instead the under-qualified bum is going to try and talk about the cup of coffee you bought this morning.
Whether you agree with it, dislike it, or don’t give a damn, chances are you have heard of fair trade. The same goes for Rainforest Alliance and some of you may have even heard of UTZ Certified. These 3 are the main players in handing out badges that say “this product is ethically produced”. They all have different interpretations and benchmarks and they all do ‘similar’ things. There is also direct trade which is growing rapidly.
Let’s be honest, coffee drinkers are turning in to hipster wankers, when we grew up as kids our parents bought the cheapest instant coffee possible in massive big tins and drank it constantly. There may have been some freshly ground stuff in the house but that was only for special occasions, the kind of occasion where you had to sit at the kiddy table and not touch the olives on the grown ups table. The ‘fresh’ ground coffee was ground half way along the coffee and tea isle of the supermarket in the self grinder that still had residue from the 48 other people who had used it that day and probably the cockroaches that used it as a love nest overnight.
Now coffee is a once a day affair, it can’t be cheap or instant. It has to be served in a cafe that is either decked out in retro styling or one that is minimalist and industrial preferably replacing chairs for uncomfortable up turned buckets or milk crates with your Nanna’s cushion on them. Coffee is now drunk in tiny mugs and the most important part is how exotic the beans are, the aroma and the body, is it smooth, is it nutty. Were the beans grown and picked at the right altitude, is Mumford and sons being played in the cafe. Do they roast them out the back of the cafe and sell them direct to the scarf wearing patrons. A new major part of this trendy cafe culture is direct trade.
direct trade is essentially a cafe purchasing their beans direct from an overseas farmer.
Is direct trade a bad thing? Well I don’t think the concept is bad and I think a farmer who has worked hard on his produce should have the right to sell to whomever he wants but is it being executed well and why do trendy cafes love it so much? I think cafes love it because it makes them feel elitist and set apart from their competitors, it means they can brag that their coffee comes straight from a farmer that they know personally and they can ensure the best of quality. Often their choice to not take part in purchasing certified ethically produced coffee using which ever certification program is that is costs more and the money gets split between different layers and stages in the import etc. By using direct trade they are bypassing the bureaucracy of certification and are in their view providing a strong relationship with the farmers and contributing to their development.
But coffee is very rarely grown in well to do and developed countries, in fact it is very rarely even grown in English speaking countries. Yes yes I know that we grow some coffee in NSW and blah blah blah, but the majority of the world’s coffee beans are grown in poor south American countries and poor African countries. A cafe may set out with the best intentions of assisting a poor farmer and sourcing their beans ethically through direct trade but my concern is that best intentions do not mean best practices.
A Cafe on the northern fringes on Sydney may make the best coffee you have ever drunk, the beans are sourced from an Ethiopian farm in an area that has the perfect altitude and climate. A highly trained barista and his business partner travel to Ethiopia and hand pick the farm and farmer, they strike up a bond and commit to sourcing their beans from this farmer, with the best of intentions of not only sourcing great beans but having a positive impact on the life of this farmer. But there are some holes, firstly a great barista from Sydney does not qualify them as a great human rights and community development officer in a country where they don’t even know the language. How do they know what the rights of workers are in a country tens of thousands of km’s away from their cafe. How do they know that once they are back in cafe that the farmer and his workers are being treated fairly and ethically. Where is the accountability that the cafe is actually paying a good price for the beans. Who was the dominant negotiation in the price of the beans, you can be assured that in a majority of cases it was not the farmer.
Direct trade does provide a direct link to the good you are purchasing, and a cafe may have a really thriving relationship with the farmer but is their arrangement really providing the empowerment and stability that workers in developing countries require if they are to be lifted out of poverty.
Without accountability what happens if the cafe changes owners, or they suddenly want to pay less for beans.
How does a cafe owner in a foreign country rock up unannounced to audit the working conditions of those who picked the beans.
How does a cafe owner even know what those working conditions should be.
The problem with direct trade is that it’s main focus is on the product not the producer.
There are programs like Cup of Excellence where farmers are encouraged to produce the perfect coffee bean and each year a couple of farmers are awarded as the finest in their field. The price for these beans sky rockets and the farmer is rewarded with extra cash. But not all the cash. A large proportion is passed on to the farmer for achieving the goal but not all. And a cash injection does not guarantee that the workers will see any of this money.
So what do the accreditation organisations offer?
Lets start with Fairtrade’
Basically the fairtrade symbol that you see on consumable products is a guarantee that the product has been produced in such a manner that the producers were paid a fair wage, in fair conditions and with extra benefits.
When you buy a $3 cup of coffee the farmer who grew the beans probably gets around 1-2 cents. But this can go up and down depending on world coffee prices which fluctuate like anything else. So one day a farmer could get 2 cents the next less than one. Under the fair trade system there is a set minimum price that is locked and guaranteed. Let’s say it’s set at 20 cents per kg of beans. If the global price goes down to 18 cents a fair trade farmer will still get 20, if it goes up to 23 he will get 23. But there is a safe guard not offered under other systems. Fair trade is also not like direct trade, it is not a coffee farmer who sells to exporters etc it is a co-op. Farmers get togther and it is their co-op that does the negotiating and in return they also split the profits on wages for workers but also health care and education for their families.
It costs to be fair trade accredited, you need to be audited and accountable, but this is the same with all sorts of certifications. You have to pay and be audited if you want the heart foundation tick on your products.
Rainforest alliance is similar although it is often dubbed as the weaker brother of fair trade or fairtrade lite. It’s certification is only at a farm level and there is no real auditing of the supply chain from farm to consumer. There is also no minimum price set to protect farmers and it is harder for small farms to get involved as the system is mostly for large producers.
You may have heard recently that Nestle has committed to sourcing all their cocoa ethically in the next few years, this is a major major step for an organisation that hasn’t had a great track record for human rights. they have chosen to go with UTZ Certification which seems to be even weaker still than Rainforest. No base price, but the most disturbing part of UTZ is that to be producing ethically sourced products the workers only need to be meeting local laws and requirements. So if a country has very weak working condition laws then it is those laws that determine if a product can be certified. Fair Trade and Rainforest both have international standards that they require.
So it’s a step in the right direction and a massive step for a super massive company but it’s also giving them accreditation with worrying gaps.
It’s no secret that I’m biased to fair trade, and I’m not biased towards it because I sell it at markets. I sell it at markets because I believe in the system.
There are a few reports and studies that say Fair Trade is a terrible system and not all the money gets back to the farmers etc.
The reality is no system is going to be perfect when humans are involved, every system is going to have a minority that find ways of skimming off the top, but the fact is the fair trade system is the most robust in terms of requirements and benchmarks for the fair wages and working conditions of workers. It’s been around a long time now and maybe needs an overhaul but all systems and methods need tweaking.
It does however provide an accountability level that can never be achieved through a cross cultural relationship between two parties that have very different skills and needs such as a cafe using direct trade.
Oh and i don’t even drink coffee I was just using it as an example the same could be said about any product or produce really.
And remember I’m not a professor or trade expert, just an opinionated bum.