We’ve blogged before on our trading practices and business objectives, we’ve talked about the merits of various certifications, and we’ve shared stories of our relationships with the growing cooperatives that we buy from. Our kaupapa of ethical trade is the crux of our business, and the reason that Peoples Coffee exists. We’re constantly asking ourselves what it means to be a truly ethical coffee company, and we are always looking for opportunities to bring our customers and supporters in on that conversation.
You are right to be skeptical of brands claiming to be 100% ethical, we wouldn’t expect any less of you. It is true that ethical trading certifications can be subject to lots of different agendas, and sadly the reality is – there’s money in appearing to be fair (if you’re big enough). Being seen to be ethical secures access to a niche market, and there is a strong monetary incentive for brands to market their products as ethically sourced. This is fuelling growing distrust of those who claim the moral high-ground in coffee, and (yes we are biased) but we would advise consumers who are concerned about this to try and be as informed as possible about brands you interact with. So, in the interest of information and transparency, here is another soul-searching blog on what ‘ethical’ means when it comes to coffee.
The Invisible Hand
We partner with talented expert growers who provide us with high quality coffee. Unfortunately, people who rely on coffee as their main source of income have traditionally been subject to exploitative market realities. Peoples Coffee was born first and foremost out of a desire to contribute to increased justice for disadvantaged and exploited coffee growers.
Coffee is a raw commodity, and its market price is governed by the good old invisible hand. Since the end of the International Coffee Agreement in 1989, which regulated the price of coffee, its Wall Street price has wildly fluctuated, often dropping below the cost of production. Many families rely on coffee as their sole source of income, and the powerlessness that comes with this is the true tragedy of the coffee industry. We believe that what it means to be an ethical actor in the global coffee industry, whether fair trade certified or not, is an aim to assist and enable coffee growers to regain power over commodity chains, and to have the autonomy to participate in trade as equal partners.
How this is achieved is contested and controversial. Increasingly articles in the media challenge the principles and execution of fair trade (see Huffington Post, and The Guardian). And there are academic arguments to be made against elements of the fair trade system, notably the idea of cooptation: As more and more coffee producers look to become fair trade certified, international fair trade bodies need to find bigger and bigger markets for that certified coffee. These markets are becoming increasingly mainstream – meaning cooperating with large actors such as Nestle and Starbucks, who inevitably demand compromises and threaten to weaken the fair trade system as a whole. The way to challenge this, as we see it, is through the power of the specialty market: Small, dedicated coffee companies committing to ethical trade, and being completely accountable to their customers. We feel that the only way to be completely accountable is to provide the third-party assurance that is the WFTO label. However, importantly, our commitment to ethical trade does not end there.
What ‘Minimum’ Means
I should mention the fair trade pricing structure. There are many misconceptions about the purpose and impact of the fair trade minimum price. (Minimum being the operative word). The price is designed as a safe guard for when market prices fall below the cost of production (i.e. it costs more to produce the coffee than farmers can sell it for). This means that if growers are fair trade certified, they don’t have to worry about losing their livelihoods when the price falls. Fair trade also requires that a US0.20c premium be paid on top of the sale price, to go back into community development and capacity building.
Commonly, prices are determined by grower and roaster based on a number of other variables, and ethical specialty companies (like Peoples Coffee) pay well above the fair trade minimum. We pay an average of around 50% more per pound, with some coffees going for well over twice the minimum price per pound. Andy Fawkes, Managing Director of Masteroast in the UK, explained nuanced pricing structures in a recent Guardian article: “The conversation has become too much about the fact that the scheme just happens to provide a minimum price, and this has become so strong as to eclipse any correctly informed discussion about quality – like all coffee sourcing, it is down to the roaster to build strong relationships and demand/encourage/reward growers to produce better quality, Fairtrade or not.”
Ah, relationships. Remove the standards, remove the price structures and the certifications and the premiums, and what it all boils down to is maintaining relationships of respect, equality, and partnership. This is implicit in the principles of the fair trade system, but it is slightly harder to measure.
Like many coffee roasters, we regularly visit origin, spend time with cooperatives, and witness the realities of growing, harvesting, and processing coffee. It is always exciting to sample the fruits of the latest harvest, but more important to us is understanding challenges facing our trading partners, and exploring ways we can strengthen our support for them. I couldn’t put it better than Rene does in a similar Peoples Blog post over a year ago: “We choose co-ops that are organized in such a way that our trade will have a tangible positive impact on the sustainability of production, and on the lives and communities of the farmers who produce it.” This is why we visit origin, this is why we invest in relationships. There are many companies who are not fair trade certified who place equal importance on relationships with farming communities, and there are many direct traders who have equitable and ethical partnerships at the heart of their business. This is something that you don’t necessarily need a fair trade label to do.
But we do feel that the World Fair Trade Organisation certification informs, underpins, and to a point guarantees our ethical-ness as a business. We are accountable through our certification to a set of minimum standards that underpin prices, premiums and relationships. We will always endeavor to hold ourselves to a higher ethical standard than our fair trade certification does, but our customers can be guaranteed, through our certification, that we are at least doing the least we can do.
Of course it is possible to not be fair trade certified and still be a direct trader and an ethical company. Unfortunately it is also possible to have fair trade certification and to not always be as ethical as you should. We hold ourselves to our own, very high standards of equitable trade and partnership, and we hope that our customers do too.
August 27th, 2014