Financial Post
May 2, 2000
By Carolyn Pritchard

Fair-trade advocates want you to choose between more than just fat or no-fat when you order your morning coffee.

They want you to choose to pay coffee farmers a "fair price" for their beans. The chance to decide may come soon. Once found exclusively in specialty roasters or natural food stores, at least one major coffee chain has agreed to stock yet one more choice on its shelves. On April 13, activist group Global Exchange was scheduled to picket 30 of Starbucks' U.S. stores to demand they carry coffee for which farmers were paid a living wage.

But just three days before the scheduled protests, Starbucks announced it had signed a licensing agreement to buy an undisclosed amount of "fair trade certified" coffee beans and to keep them in its U.S. stores and on its Web site for at least one year.

The protests were cancelled. Members of the fair trade movement seek a "fair price" to be paid to the producers of commodities, from coffee and tea to honey and bananas. Licensees will certify a product if they determine that it has met certain fair trade criteria. Coffee must be grown under safe working conditions and be sold directly to retailers, rather than through middlemen or "coyotes," as they are commonly known.

The farmers must be guaranteed a minimum price of $1.26 (US) a pound, a price hike of pennies per cup for the consumer. Starbucks signed its licensing agreement with TransFair USA, a member of Fair Trade Labelling Organizations International (FLO). TransFair USA's northern equivalent is Fair TradeMark Canada (TransFair Canada).

The first fair trade label for coffee was affixed by a Dutch organization in 1989. According to Fair TradeMark Canada, each year in Europe more than 24 million pounds of coffee beans are licensed for commercial sale through over 130 brand names.

Sandy McAlpine, the president of the Coffee Association of Canada, says fair trade coffee sales in this country have increased substantially in percentage terms, but remain a small part of the market. "I think it presents one option amongst many for people choosing to look for alternative ways of approaching the coffee industry," he said.

Bob Thomson, managing director of Fair TradeMark Canada, doesn't disagree.

"It's a niche market," says Mr. Thomson. "Look, we represent half a million out of 20 million small farmers. We're a very narrow focus. We don't claim to be the only solution to a lot of really complex problems in the coffee industry. We claim to be just one particular approach."

Starbucks had been in serious discussions with TransFair USA for more than eight months leading up to their announcement. Well-timed as it may have been, it was hardly reactionary, says Mr. Thomson. "They wouldn't have just done it if it was because some wild fringe group was threatening to picket their stores," he says. "They did it because they were pretty sure that it was a product that would sell." Starbucks is the first major coffee retailer in North America to be so convinced.

Timothy's president Becky McKinnon says the company has sampled many cups over the years, but are just not satisfied with the quality. Furthermore, Ms. McKinnon says, "to the degree that we can trace it back and figure it out, the coffees that we are buying are as fairly traded as we can identify."

Shawn MacLeod, vice-president of operations at Second Cup, is of a similar mind. "We don't carry the fair trade stamp, but we believe -- at least as it relates to labour, which is what I understand fair trade's mostly concerned about -- we're adhering to the same principles, philosophies and beliefs."

Nestle Canada, whose brands include Hills Brothers, Taster's Choice and Nescafe, says they are "committed to paying a fair price to coffee producers and offering a fair price" to its customers. But it "relies on the international market system" for procurement for most of its coffee. It does, however, say it has been purchasing coffee directly from local farmers and their co-operatives in countries where the company owns coffee factories and is able to make long-term commitments.

Sara Lee's Superior Coffee division makes primarily European coffee brands like Douwe Egberts, Marcilla and Merrild. It does not purchase fair-trade certified coffee, but according to Sylvia Wulf, the division's vice-president of marketing, buys about 5% of its coffee directly from organizations of small planters. Philips Morris, whose Kraft Canada unit sells Maxwell House, Sanka and General Foods International Coffees, does not buy fair-trade certified coffee.

"We're aware of the opportunity, let's put it that way, and have been for a number of years," says Guy Nadeau, the division's director of corporate affairs. "We just don't necessarily see it as an opportunity for our own business right now."