‘Fair trade’ coffee gets big buyers, set to improve growers’ lot

‘Fair trade’ coffee gets big buyers, set to improve growers’ lot

Rafael de Paiva was sceptical at first. If he wanted a “fair trade" certification for his coffee crop, the Brazilian farmer would have to comply with a long list of rules on pesticides, farming techniques, recycling and other matters. He even had to show that his children were enrolled in school.

“I thought, ‘This is difficult,’" recalled the humble farmer. But the 20% premium he recently received for his first fair trade harvest made the effort worthwhile, Paiva said, adding, it “helped us create a decent living".

More farmers are likely to receive such offers, as importers and retailers rush to meet a growing demand from consumers and activists to adhere to stricter environmental and social standards.

Paiva’s beans will be in the store-brand coffee sold by Sam’s Club, the warehouse chain of Wal-Mart Stores Inc.Dunkin’ Donuts, McDonald’s Corp. and Starbucks Corp. already sell some fair trade coffee in their outlets.

“We see a real momentum now with big companies and institutions switching to fair trade," said Paul Rice, president and chief executive of TransFair USA, the only independent fair trade certifier in the US.

The International Fair Trade Association, an umbrella group of organizations in more than 70 countries, (www.ifat.org), defines fair trade as reflecting “concern for the social, economic and environmental well-being of marginalized small producers" and a practice that does “not maximize profit at their expense".

According to Fairtrade Labelling Organizations International, a group of fair trade certifiers, consumers spent approximately $2.2 billion (Rs8,734 crore) on certified products in 2006—a 42% increase over the previous year, benefiting over seven million people in developing countries. Like consumer awareness of organic products a decade ago, fair trade awareness is growing. In 2006, 27% of Americans said they were aware of the certification—up from 12% in 2004, according to a study by the New York-based National Coffee Association.

Fair trade products, which have experienced the biggest jump in demand, include coffee, cocoa and cotton, according to the Fairtrade Labelling Organizations. Dozens of other products, including tea, pineapples, wine and flowers, are certified by organizations that visit farmers to verify that they are meeting the many criteria that bar, among other things, the use of child labour and harmful chemicals.

There is no governmental standard for fair trade certification, the same situation as with “organic" until a few years ago. Some fair trade produce also carries the organic label, but most do not. One important difference is the focus of the labels—organic refers to how food is cultivated, while fair trade is primarily concerned with the condition of the farmer and the labourers. Big chains are marketing fair trade coffee to varying degrees. All the espresso served at the 5,400 Dunkin’ Donuts stores in the US, for example, is fair trade. All McDonald’s stores in New England sell only fair trade coffee. And in 2006, Starbucks bought 50% more fair trade coffee than in 2005.

Fair trade produce remains a minuscule percentage of world trade, but it is growing. Only 3.3% of coffee sold in the US in 2006 was certified fair trade, but that was more than eight times the level in 2001, according to TransFair USA.

Although Sam’s Club already sells seven fair trade imports, including coffee, this will be the first time it has put its Member’s Mark label on a fair trade product, which Rice of TransFair called “a statement of their commitment to fair trade." He added, “The impact in terms of volume and the impact in terms of the farmers and their families is quite dramatic."

Michael Ellgass, the director of house brands for Sam’s Club, said the company could afford to pay fair trade’s premium because it has reduced the number of middlemen.

Coffee usually passes from farmers through roasters, packers, traders, shippers and warehouses before arriving in stores. But Sam’s Club will buy shelf-ready merchandise directly from Café Bom Dia, the roaster here in Brazil’s lush coffee country. © 2007/International Herald Tribune