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Fair Trade Coffee: Ethics, religion and sustainable production

It is a basic law of economics: when supply goes up, the price goes down. That is the situation now facing the coffee industry, since an excess of coffee resulted in very low prices in world markets for trade goods. Historically, coffee has been one of the most lucrative exports of many developing countries. Unroasted green beansof coffee are traded on the futures markets in London and New York; Volcafe and Neumann Gruppe are major coffee traders who buy about 25 percent of the world's coffee supply. Other key players are Procter & Gamble (P&G), Kraft and Nestle; all three are important suppliers to the grocery industry, which sells the highest percentage of coffee. For example, P&G sells about 1.000 billion dollarsannually of Folgers coffee. Specialty coffees, such as those sold by Starbucks, are considered niche products represent only 2 percent of world supply of coffee beans.

In 1999, the wholesale price of coffee was about $ 1.40 per pound in 2001, the price dropped to $0.42. By late 2003, prices had recovered to $ 0.50 per pound, but the cost of production and processing of green coffee beans is between0.80 and $0.90 per pound. The oversupply is another problem. Between 1990 and 2000, production in Vietnam increased from 84,000 tons to 950,000 tons, Vietnam mainly produces Robusta beans, which are cheaper and have a stronger flavor than arabica beans. According to the International Coffee Organization, the 2001-2002 harvest produced 115 million bags of coffee. However, world consumption absorbedonly 105 million bags. Low prices and oversupply meant bad news for the 25 million coffee producers in Latin America and Africa.

Since mid 1990, Starbucks has pursued a policy of improving the working conditions of its suppliers, but the annual purchases of coffee from Starbucks are only the amount of 180 million. Various NGOs have begun to address the situation faced by farmers who supply thelarger coffee market. For example, the Rainforest Alliance works with major corporations to monitor environmental and labor conditions in developing countries. It pioneered the certification of wood from tropical forests, certifies about 12,500 million dollars in coffee beans each year. The Fairtrade Labeling Organization International (FLO; www.fairtrade.net) is a certification authority based inBonn, Germany, which grants licenses its trademark in organizations such as Fairtrade Foundation UK (www.fairtrade.org.uk). The Fairtrade label on a bag of coffee indicates that the producers received a fair price for their crops. TransFair USA is a fair trade certification in the United States (www.transfairusa.org).

The coffee bearing the Fairtrade label is often traded with the help ofcharities organizations; for example Oxfam, a private charitable institution in Britain, joined Equal Exchange, a company distributing fair trade, Traidcraft, and Twin to create a new brand of coffee called Cafédirect (www.cafe. co.uk). In addition to providing support to prices, these organizations also sponsor training and development programs to help producers learn more about market prices andways to reach export markets. Catholic Relief Services (CRS) recently launched a program to encourage the 65 million Catholics of America to buy fair trade coffee (www.catholi f.org/ coffee/trade). The CRS Coffee Project is part of a larger organization, the Interfaith Program of Equal Exchange Coffee; this last one group includes participants from Lutherans, Presbyterians and Methodists. The finalresult: wholesale coffee buyers who participate in Fair Trade farmers are willing to pay $ 1.26 per pound for regular coffee and 1.41 dollars higher quality organic grains.

The Fairtrade movement is gaining strength among socially conscious consumers. For example, in 2002, the Interfaith Association of the United States sold nearly 1.7 billion dollars of fair trade coffee in 7,500 houses of...