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Fair trade coffee flourishes

By Angel Gonzalez Special to the Daily Planet
Friday November 10, 2000



Rosario Castellon, the Nicaraguan economist who came up with the concept of Fair Trade, visited the Bay Area Sunday, where she explained how U.S. and European retailers’ trade agreements with agricultural cooperatives in the developing world help coffee farmers earn a better living. 

Berkeley has been at the forefront of the movement in the Bay Area. In June last year, Mayor Shirley Dean proposed to the Council that the city buy only Fair Trade Coffee, following the tradition set by the European Parliament in 1997. The legendary venue Peets’ Coffee has been selling Fair Trade coffee since October. And the Free Speech Movement Café, at UC Berkeley’s Moffit Library, has been offering it for six months. 

For a movement unknown in the United States until 1998, Fair Trade has certainly acquired momentum. After protests by organizations such as San Francisco-based Global Exchange and Oakland-based Transfair, Starbucks, the country’s foremost coffee retailer, announced that it would start distributing coffee produced under Fair Trade conditions. 

“All of our house coffee is Fair Trade,” said Jaime Diaz, manager of the Free Speech Movement Café. “We sell 80 pounds a week, but only a few people have actually asked for Fair Trade coffee.” According to Transfair representative Nina Luttinger, the biggest challenge to overcome is lack of consumer awareness. The movement needs to establish a brand name which consumers can recognize. 

Fair Trade coffee has been fairly successful in Europe, but it still represents only a small portion of the U.S. market. But Transfair expects the amount of coffee sold in the U.S. to reach 12 million pounds in 2003, from the 1.5 pounds sold today. “In today’s competitive market, this is a way for coffee houses to distinguish themselves,” said Luttinger. 

Coffee is the world’s second most traded commodity, after oil, representing a market of $80 billion dollars – 75 percent of American adults drink it. The market has grown since the 1990s, when frapuccinos became the drink of New Economy workers. 

But coffee farmers didn’t benefit from this bonanza, according to a 1999 Transfair survey in Central America. They received an average of about 38 cents per pound, while the market price is around one dollar. “This is not enough to buy medical insurance, or put kids to school,” said Luttinger. 

The fair trade movement has built a network of small farmer cooperatives. It provides them with transportation and a guaranteed price of $1.26 per pound, with a premium for organic coffee. After transportation costs are deducted, approximately $1 per pound goes to the cooperative. 

According to the United Kingdon-based Fair Trade Foundation, this price is expected to cover the cost of production, a basic living wage, and to allow a margin above the market for social or environmental investment. 

Retailers must agree to pay $1.26 per pound of coffee from a certified cooperative to be able to display the Fair Trade logo. For cooperatives to be certified, they must be composed of small farms employing family labor. The cooperatives must also be democratically run, and invest a certain amount of money in education and health care.