Positive Environment News

Fair trade coffee buzz gaining momentum

Date: 07-Aug-02
Country: PERU
Author: Missy Ryan

"There's a certain type of consumer who's ready to pay extra if they know that what they're paying is going to the producer and helping him improve his living conditions," said Simon Pare, head of responsible products for the French branch of Fairtrade Labelling Organizations (FLO) International.

Non-governmental organization FLO, the world's largest fair trade certifier, puts a "fair trade" label on products like coffee, bananas and rice consumed in 17 countries after it determines producers comply with conditions such as a "decent wage" for farmers, workers' rights to unionize, safety and environmental standards and shunning of child labor.

Once FLO inspectors give their approval, coffee producers can sell their beans with the "fair trade" label for at least $1.26 a pound, more than twice Tuesday's New York September coffee KCU2) price of 47.35 cents a pound (0.45 kg).

"It's a small part of the world market to date, but it's gaining momentum. The biggest obstacle is raising (consumer) awareness," said Kimberly Easson, marketing director for U.S. fair trade certifier TransFair USA.

Officials say shoppers in North America and Europe are increasingly willing to buy fair trade goods. Worried their hamburger might give them mad cow disease after recent scares in Europe, or that their sneakers were made in an Asian sweatshop, consumers are more and more discerning and willing to pay a bit extra for products with the "fair trade" label.

But while fair trade coffee sales have leaped in the last five years, they are still a drop in the bucket compared to sales of giant coffee producers like Kraft Foods Inc., Nestle and Sara Lee. Pare said fair trade coffee only accounted for around 0.8 percent of world sales.


But just how big a premium must socially minded consumers pay? According to Martin Meteyard, chairman of British fair trade coffee trader Cafe Direct, fair trade coffee is about 25 percent dearer than regular brands of java in supermarkets.

U.K coffee chain Costa, owned by British leisure group Whitbread Plc, charges only around 10 pence ($0.02) more for a fair trade cappuccino, and U.S.-owned Starbucks absorbs the hike entirely.

Fair trade advocates say one of their chief concerns is making sure farmers get their due pay. And they say the fair trade label ensures they do - with FLO's minimum price of $1.26 a pound, farmers pocket around $0.90-$1.00.

According to Easson, farmers who get market price for their coffee end up with only $0.18-$0.25 a pound.

Their production costs, meanwhile, are $0.50-$0.80 a pound, prompting some farmers to let their beans rot on the bush or to abandon farms for work in big cities.

"That price gives us a better lifestyle and more income. We can send our kids to school, see a doctor, pay for medicine," said Alfredo Rumaldo, part of a small coffee producers' association in El Salvador. Rumaldo says that fair trade is small coffee farmers' only hope for the future.

FLO says sales of the fair trade products it certifies benefit 800,000 families in 39 countries. Those sales increased to 45.5 million tonnes in 2001 from 26.0 million in 1997.
While industry advocates are not aiming to take over the coffee market, they say fair trade, popular in Europe, has made big strides in places like the United States and Mexico. In rich Switzerland fair trade bananas make up 20 percent of the banana market.

"With fair trade coffee at 1 percent (of market share), Nestle isn't going to sit up and say 'Oh damn, I'm going to lose my market,' but when we get to 5 percent, it puts issues on the agenda," Pare said.

© Thomson Reuters 2002 All rights reserved

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