In Coffee, Avoiding ‘Great’ Being the Enemy of ‘Good’: The fair-trade model isn’t perfect, but it provides an essential foundation for improving livelihoods
In April, the Fair Trade, Employment, and Poverty Reduction (FTEPR) project at SOAS, University of London, released its study, “Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda,” which asserted that fair trade doesn’t help the poorest agricultural workers. The study was met with a fair amount of criticism (here is one take), with a chief complaint being that in the countries of focus, Ethiopia and Uganda, fair trade has not permeated the landscape.
We work closely with the fair-trade world at Sustainable Harvest: Ninety percent of the coffee we import is fair-trade certified. While I am enthused to see researchers conducting new studies that probe the effectiveness of the fair-trade system, I would be more interested in viewing studies done in countries where fair trade has a greater footprint. One suggestion would be Mexico, where fair trade originated. Another is Peru, which produces the most fair-trade-certified coffee in the world. By measuring the countries that are most prominent in the fair-trade world, we’d likely see a more accurate representation of the system’s impact.
The positive impact of fair trade is something we’ve witnessed time and time again. Sustainable Harvest operates on a sourcing initiative called the Relationship Coffee Model, which stresses inclusiveness and collaboration while strengthening the entire supply chain. The model uses fair trade as a basis, with most farmers working with Sustainable Harvest receiving the fair-trade premium. Here are a few ways in which fair trade benefits growers and where the Relationship Coffee Model builds on its foundation.
In traditionally rural, highly fragmented supply chains such as coffee – with very small production units of less than an acre – a guiding entity is needed to serve as an aggregative force. This entity takes the fragmented production system and brings efficiencies to it, including ensuring that quality standards are met, transportation costs are reduced and rural markets are engaged. The fair-trade system aims to supply this aggregation by enabling smallholder farmers to band together via farmer cooperative systems, but at times the supply chain can still be very opaque and compartmentalized. Our Relationship Coffee Model enters the mix by encouraging these aggregators and other market participants to operate in an open, transparent, inclusive way. Our approach toward origin and production systems was a major shift in the industry and it has gone a long way to shift transparency into the mainstream.
Fixing the broken supply chain
A healthy supply chain cannot operate without knowing the origin of a product, but in many cases this information is surprisingly hard to come by. There can often be information arbitrage, where companies and intermediaries benefit from their counterparts’ lack of information. In that situation, it’s a zero-sum game with no value creation, which leads to a lack of cohesion and an essentially broken supply chain.
Sustainable Harvest learned early in our 17-year history that an ethical importer makes money selling coffee rather than buying coffee, and that we must truly value where the coffee comes from. Without the intrinsic work of the farmer, there’s no coffee value to be realized. We see our role as simply helping and enabling farmers and their farmer-led institutions to properly handle and process coffee, and look for its quality checks, verifications and consistencies. These processes allow our growers to engage in the global market and ensure the health of the supply chain.
Building capacity for growers
Capacity building is another area that helps strengthen the supply chain, and it isn’t done in a vacuum – you cannot wave a magic wand and say, “I want all coffee farmers to understand the quality expectation of third-wave roasters in the Pacific Northwest,” for example. Our approach to solving this issue through the Relationship Coffee Model is to build the core capacities that enable farmers to compete better in their marketplace. We connect them to channels that enable them to produce better quality, to institute farm practices that lead to increased production and to manage their local logistics in ways that allow them to stay competitive in the context of a global supply chain.
A valuable model
Perhaps the greatest contribution of the fair-trade system is that it’s focused on helping farmer cooperative systems, which account for more than 90 percent of Sustainable Harvest’s supply chain. These farmers’ associations are among the best entities to procure and deliver market benefits; in the absence of cooperatives, you would have thousands and thousands of unorganized, disenfranchised smallholder producers with zero leverage in the marketplace.
The fair-trade system might not be perfect, but it is not the ineffective model that the FTEPR study claims. Fair trade has clearly focused its efforts in coffee on the strengthening of farmer associations and farmer cooperatives, and its impact has been tremendous. Nicaragua is a strong example: The nation came out of a civil war in the 1970s and ’80s, and farmer cooperatives are resilient despite the near absence of any government presence or other regulatory body. And those cooperatives are effective: They bring order, employment, opportunity, education and, most importantly, dignity to areas where it would otherwise not exist.
Fair trade puts those cooperative structures into action, ensuring efficient delivery of market benefits to the people at the bottom of the pyramid. It’s an essential contribution, and Sustainable Harvest’s Relationship Coffee Model builds on that foundation to make a more transparent, scalable impact on growers’ lives.