How Transparent and Ethical Trade Helps Coffee Farmers

Introduction:

Farmers in the world of coffee face many obstacles, from fluctuating global prices to natural disasters, and coffee producers can’t seem to catch a break. But what about the people who drink their product every day? What about you and me? Where do we fit in as conscious consumers?

This article looks at how transparent, and ethical trade practices help farmers in the developing world and right at their homes.

What Is Fair Trade?

Fairtrade is a system that allows farmers in developing countries to receive a fair price for their coffee. The idea is that the price for selling their coffee should be enough to outpace even subsistence living. But how can a coffee farmer be assured of this money?

Fairtrade has set up a group of farmers trained to use the Fairtrade label to ensure that they know what fair trade is and how it works. In addition, they are in charge of monitoring their coffee production practices and ensuring that everyone involved in the trade knows what fair trade is and how it works.

Fair Trade Principles:

  1. The stakeholders should ethically handle the product on all sides of the transaction.
  2. The product should be from a fair trade area where farmers are paid a reasonable price for their coffee and pay their workers a living wage.
  3. The product should be from a democratically organized producer or small farmer organization that is democratically controlled.
  4. Companies should minimize waste and pollution in the growing and production process through efficient production methods, recycling wherever possible, and re-using packaging materials such as cardboard boxes.
  5. The product should be sold directly to the consumer or through a Fair Trade wholesaler.
  6. The cooperative needs to be fully open about its trading practices and financial accounts, and these should be independently audited.
  7. With further revenue from the sale of Fair Trade products, community projects are encouraged in the areas that they are produced. These can vary from environmental campaigns to literacy and health care. In addition, cooperatives can invest in building equipment, tools, and resources.

What Is Direct Trade?

Direct trade is when coffee farmers are directly connected with the consumers of their products. Coffee can be grown anywhere globally, and it’s up to the farmer to decide what they want with their coffee. Direct trade means no middlemen such as a roaster, wholesaler, or supermarket involved in the process. The farmer sells directly to either a roaster, wholesaler or directly to a consumer.

Direct Trade Principles:

1. The farmer knows precisely who is buying their product and the price they are getting for it.

2. The farmer has a relationship with the buyer to continue to improve growing and trading practices so that both parties get the best possible deal.

3. Coffee is stored in environmentally friendly ways so that there is no waste or environmental damage.

4. Farmers can use resources to improve production processes, fertilize the soil, buy tools, educate themselves on coffee production methods and environmental issues, etc.

Similarities Between Direct and Fair Trade:

1. Both Direct and Fair Trade are sometimes referred to as “Third Wave” because they share similarities with other movements that began in the 1970s, such as the counter-cultural movement against ready-to-wear clothing.

2. Both Direct and Fair Trade coffee are organic. By using new tools in agricultural research, farmers have been able to produce “organic” coffee by making it without the use of chemical fertilizers or pesticides.

3. Both Direct and Fair Trade seek to connect coffee drinkers with the source of their coffee to feel more connected with those farmers.

4. Both Direct and Fair Trade offer a way to improve the quality of life for farmers in Central America.

5. Both Direct and Fair Trade use transparent pricing mechanisms so that consumers can make informed purchases.

6. Both Direct and Fair Trade can help farmers get out of poverty.

Differences Between Direct and Fair Trade:

1. Direct Trade does not require that farmers meet specific minimal criteria. While fair trade has minimum price requirements and promotes transparency, direct trade must meet some requirements.

2. Direct Trade is a marketplace. It is a place to meet and exchange goods between producers in developing countries and consumers in developed countries. Fair Trade, however, goes beyond that as it has a set of strict criteria that producers must meet so that they can receive the fair trade label.

3. Fair Trade certification requires minimums and maximums in each of the following categories: Fair Labor, Working Conditions, Environment, and Sustainability (organic). This is why you see the Fair Trade Certified label on a coffee bag stating no pesticides or chemicals used. You won’t see this on a bag of Direct Trade coffee.

4. For Direct Trade, it’s the buyer who makes the rules. Depending upon the roaster or wholesaler, this can mean anything from sharing their profits to working with individual farmers rather than cooperatives or other organizations. The Fair Trade system is regulated by several prominent organizations and government-affiliated boards, including California Certified Organic Farmers (CCOF), the Fair Trade Federation, and FLO-Cert, which is one of the most well-known organizations in Europe.

5. Fair Trade certification is a process that can take up to two years. Direct Trade relationships can be formed within a few months if people are actively seeking them out. Fair Trade certification is not a “quick-fix” solution like some people may think it is. It takes time and money to train producers in sustainable growing and trading practices.

The Transparency Paradox:

Most people in the developed world won’t have the slightest idea where their coffee comes from. Because of this lack of transparency, many companies and consumers turn to fair trade practices. However, there are different levels to fair trade; for instance, some producers will follow general guidelines set by fair trade organizations. To ensure that farmers are fairly dealt with, fair trade practices must be transparent.

Transparent practices help the consumer know which companies are providing fair trade commodities and their living standards. In addition, it encourages better practices for both producers and consumers by ensuring that farmers receive stable wages or higher prices. Effectively, transparent trade helps farmers improve their standard of living.

Which is more transparent and ethical?

While some allegations of direct trade practices have surfaced, no such conflicts have arisen with fair trade. However, it could argue that the more open direct trade is about its process, the less likely it is to engage in unethical practices. If people actively seek out how they can keep themselves from being exploited and learn to buy at fair prices for good quality coffee, they’ll naturally gravitate toward fair trade. Going with direct trade means you have to seek it out and buy it. It’s not just sitting there on the shelf, begging you to pick up a bag.

Although fair trade can be an expensive alternative to direct trade, it costs far less than buying non-ethically sourced coffee. Remember that even the most ethical companies can be involved in making non-ethical choices. That’s why we need laws and regulations that protect people from being exploited or oppressed economically or otherwise.

Coffee as a Fair Trade Product:

As consumers, we are among the essential links in the chain of coffee production. We provide financial and social capital, allowing companies to advance and produce better quality coffee for farmers. For example, with a higher price per pound of green coffee, farmers can use their extra income to invest in better growing methods or even higher quality processing facilities.

Coffee as a Fair Trade product is also the most widespread variety of coffee in the world. According to The International Coffee Organization, over 18 million farmers are marketing Fair Trade coffee in 146 nations. This is up from 10 million sold in 100 countries two years ago.

Coffee Producing Countries:

To understand how transparent practices are beneficial for coffee production, we must first look at the three main coffee-producing countries. These countries include Colombia, Brazil, and Vietnam. There can be a disparity between the earning of a farmer to a coffee merchant in each of these countries. In Colombia, for example, farmers make between $1–3 per pound of Arabica and $8–11 per pound of Robusta.

The developing world’s share of global coffee production:

Fair Trade certification makes up about 17 % of the global market share for whole bean and ground coffees. This is up from 14 % just one year ago. In 2012, the total amount of coffee sold as fair trade was 26.6 million 60kg bags (9.4 million 60kg bags in 2009).

In short, there has been an enormous increase in the number of farmers producing fair trade coffee beans over the last decade. The larger this growth becomes, the more power producers will have to negotiate with retailers and wholesalers for better prices and improved production methods.

How Transparent and Ethical Trade Helps Coffee Farmers?

1. Sustainable Livelihoods

In both direct and fair trade relationships, farmers have a stable source of income. They can make a more profitable income because they are being paid fairly for their hard work instead of growing coffee and not being paid or receiving only subsistence wages, as many workers have to do in developing countries.

2. Improved Education

In both direct and fair trade relationships, farmers are better educated on growing and selling coffee beans in ways that benefit them more. They receive more money, making it possible to send their children to school instead of having to pull them out of school and sending them out to work.

3. Improved Farming Practices

The standards for fair trade are set high so that farmers are forced to adopt better farming practices and learn new production methods to meet these standards. The coffee is not processed with chemicals and, as a result, has a lower likelihood of being contaminated by pesticides or other chemicals, which can cause health problems amongst consumers later on.

4. Environmental Good

The fair trade methods are environmentally friendly because it encourages the use of organic growing practices that use about 80% less water than conventional agriculture and helps preserve the health of local ecosystems.

5. Social Progress

Direct and fair trade methods have helped farmers in the poorest parts of the world, such as Nicaragua, where farmers have been able to afford clean drinking water, nutritious food, access to medical care for their families, and pay off their mortgages.

6. Market Opportunities

Fairtrade coffee is more likely to become available globally because companies choose to support and promote it as an alternative to direct trade. This means that if a farmer’s quality standards are too prohibitive for a company, they might not be able to sell their coffee unless demand is strong enough. The demand for fair trade, in general, is growing, so with this growth in demand, the producer will also receive more business opportunities and will be able to make a better income from selling their coffee.

7. Community-Based

Fairtrade strategies encourage community development and economic growth. The farmers are organized into cooperatives that allow for better bargaining power and a voice in organizations like the Fairtrade Labelling Organizations International (FLO). The development of social capital, or networks among farmers, is one of the primary benefits brought to developing countries by fair trade. Coffee producers have increased bargaining power with exporters and higher prices for their coffee beans.

Although the fair trade movement appears to be growing in leaps and bounds, many issues need to be addressed. The following are a few of the problems that have arisen with fair trade coffee production:

1. Globalization – Fairtrade International has become a global company and has gained much recognition for improving the lives of farmers and their communities. However, there is a growing sense of concern that a global organization is now dictating which products are considered fair trade certified. There is a concern that the standards of a fair trade product are manipulated to please consumers.

2. Market Effectiveness – Since the market is global, there is an effect of reduced competition. In other words, farmers no longer have to compete with each other for contracts they can sell their coffee beans into. Instead, they are competing only with other producers of Fairtrade certified beans. This has led to farmers producing crops at the highest and lowest possible prices to meet these standards. One of the effects of this is that farmers cannot make much money off selling their beans and instead have been forced into debt.

3. Mechanism for Producers’ Representation – There is a dispute on whether Fairtrade markets will always represent the best interest of farmers or if there is a potential for manipulation of this representation. This is because the producers are no longer in control of their crops and how they are sold. This concern is not unfounded as there have been cases in which farmers have received as little as 25% of their agreed-upon price for Fairtrade-certified coffee beans. In addition, this lack of representation has led to many cases where the actual farms producing coffee beans, such as Colombia, do not receive fair trade certification because the farmers do not meet the standards set by Fairtrade International.

4. Owned by Markets and Not the People – One of the problems that both fair trade and direct trade have in common is that markets control everything. There is a growing feeling among many market-based people that the best way to help farmers improve their lives for themselves and their families is not to pay them fairly or with a genuine improvement in their standard of living, but rather by increasing prices on these products. The main issue concerns this notion of being owned by markets instead of being controlled by the people.

5. By-Product of the Mass Consumer Culture – Fairtrade responds to the growing demand for ethical trade in the United States and Europe. In many ways, fair trade has become a marketing tool used to promote and sell products at higher prices.

6. Mass Consumerism – Fairtrade certification has become another way for companies to sell products at higher costs to make more money by appealing to consumers’ willingness to spend more money on goods that have been produced ethically.

Responsibilities of Farmers in Fair Trade:

1. Protecting Indigenous Farmers’ Rights And Culture

Indigenous farmers’ participation in Fairtrade is indispensable for conserving indigenous farming practices and protecting indigenous cultures. This is because fair trade is founded on a holistic concept that rejects the standardization of agricultural products. To put it another way, fair trade seeks to preserve traditional farming practices and rely on local communities to uphold these traditions.

2. Supporting Indigenous Farmers’ Knowledge

The Fairtrade concept is based on the premise that “knowledge is power.” Farmers who sell their beans only to fair trade organizations are often unable to get their crops to market and have not had the opportunity to participate in an international market. This stems from the fact that fair trade certification mandates using a specific type of fertilizer, growing coffee beans in one particular manner, harvesting everything within two weeks, and requiring that coffee beans never be exposed to light.

3. Increasing Their Income

Even though fair trade certification requires that farmers do not earn more than a minimal amount, fair trade certification of crops and coffee increases the earnings farmers receive for their crops. This is because many farmers who sell the beans they produce for a higher price earn more money.

4. Having Their Voices Heard

Fairtrade certification requires that a permanent farmer organization be created. This type of organization promotes the interests of the local people in the community. It provides a forum for farmers to share their concerns and ideas about fair trade with each other. The formation of such a group is also more difficult for corporations and government institutions to disband and control, given that these organizations are not based on individuals who can be easily bought off or bribed. Instead, these organizations are at least arguably representative of farmers.

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Conclusion:

All in all, fair trade seems to be the way to go. As consumers, we have great power in dictating how coffee is produced and sold by choosing fair trade products over direct trade or non-certified coffee. Our support for direct and fair trade will help foster the growth of both channels of coffee production.

FAQ: 

Q: Is Organic Coffee Better?

A: Organic coffee is produced without harmful synthetic chemicals used in conventional coffee production methods. The use of chemical fertilizers, pesticides, herbicides, and industrial fertilizer sources is wholly prohibited.

Q: How do I know if my coffee is organic?

A: There are several ways to find out if your coffee is organic. You can purchase certified fair trade beans, which will be labeled as certified organic on the bag.

Q: How do the farmers grow coffee?

A: The farmers who grow coffee in fairtrade cooperatives follow organic farming practices, raising crops without pesticides or chemical fertilizers. They also do not use chemical treatments that would alter the flavor of the beans.

Q: How are Fair Trade and Direct Trade Different?

A: Fairtrade is a trading system designed to promote social, environmental, and economic justice in developing countries by providing marketing opportunities for farmers. Fairtrade certified products are sold at higher prices than their direct trade equivalents to ensure a fair price for farmers.