In the coffee industry, you’ll often see the terms ‘fair trade’ or ‘fair trade certified’. Sometimes the word ‘organic’ is tacked on there. But, what is fair trade? To put it technically, when a product, in the case coffee, is certified as fair trade it means it has been ‘produced and marketed to a stated set of standards’ (Wikipedia). To break this down, when the fair trade standards are followed in coffee buying it means a higher price (above fair market value) is being paid to the small farmers that are often in 3rd world countries in order to promote a better quality of living.
The fair trade movement originated after WWII as a response to 3rd world poverty, the certification was then introduced in 1988 after a coffee crisis showed that the amount of coffee available was much greater than the demand – the market was flooded. The Netherlands then launched fair trade certification in order to raise coffee prices to help ensure that coffee producers were turning a profit. It was originally called ‘Max Havelaar’.
Over the past 10 years, fair trade certified coffee has become increasingly popular, with many customers willing to pay the slightly higher price in order to help the small farmers producing it. The largest fair trade is run by Fairtrade International. Many producers will pay this organization a high fee for the right to use the fair trade label, which in turn assures customers of the following:
- The coffee comes from a democratically run cooperative
- There is no child labor used on the cooperative
- That herbicides and pesticides are regulated
- and finally, that the exporter is paid a minimum price and price premium
There is a lot of controversy surrounding fair trade, however. There are many claims that importers insist that exporters give them a higher amount of coffee for the same fair trade pricing put in place, often negating the intentions fair trade. Many more complain that little, and sometimes none, of the extra pricing paid to the exporting cooperatives actually reaches the farmer for whom it is intended. There are also findings that often times retailers, who charge a premium price for fair trade, often do not send any of the money, or very little of it back to the original producers. In fact, a coffee chain in Britain was found to only be passing along 1% of the additional income, while in other countries such as Finland, were paying high premiums for fair trade certified coffee, and only 11% of it was reaching the producer.