Denver Post
October 21, 2001
By Bruce Finley

UNILDE, Nicaragua -- Standing in a cloud forest on the side of a volcano, Santiago Rivera closes his calloused fingers over green coffee fruits blushing ripe -- future flavor for U.S. consumers.

He descends a twisting trail, past banana trees and the donkey he fondly calls "the squirrel," to his adobe house with an earthen kitchen floor and no plumbing.

He gets by thanks to the "fair trade" deal that gives him 91 cents a pound -- double what most growers here get. In fact, Rivera is the model campesino pictured on brochures touting Starbucks Coffee's participation in fair trade, in which companies and consumers team up to get more money to peasants.

But millions of other coffee producers, across Central America and much of the Third World, are mired in some of the planet's worst poverty. A few hours from Rivera, women give birth in fly-infested black-plastic shanties without medical help, and barefoot children grow up on one meal a day.

The survival or suffering of people who produce your coffee is one of many aspects of today's world that U.S. consumers can control. Today, poverty and despair are spreading, creating breeding grounds for trouble in a world where the threshold for violence rose Sept. 11.

Leading analysts, including former Sen. Gary Hart of Colorado, who recently led a sweeping appraisal of U.S. national security, say we must confront global poverty -- especially to combat terrorism.

"There must be much more concerted international effort to do what the Army calls drying up the swamp. The swamp is composed of four things - money, weapons, shelter and the fourth thing -- recruits," Hart said. "The only way you do the fourth is by ending the despair and offering hope through concerted economic-development programs."

The emerging fair-trade movement tries to accomplish this within the market system instead of relying on aid handouts or moving farmers into low-wage factories. The way it works is U.S. consumers pay 5 to 10 percent more for products with fair-trade labels. Those additional cents, and savings from companies buying the products more directly from producers and co-ops abroad, can give producers in the field a minimum price. Inspectors verify whether the money gets through.

This movement brought "fair trade" coffee to Starbucks a year ago along with other coffee shops -- Kaladi Brothers in Denver, Coffee Jones in Boulder and Bongo Billy's Coffees in Buena Vista, among them. Now, movement leaders target giant corporations that drive world prices -- owners of Maxwell House, Folgers and the like. More than 80 percent of the coffee Americans drink is this relatively inexpensive canned coffee.

Fair-trade leaders also plan to broaden their strategy to encompass producers of other commodities -- bananas, sugar, chocolate, clothing.

But consumer-led poverty reduction isn't possible unless corporations agree to offer fair-trade products. Many refuse. As it stands now, few coffee growers benefit because less than 1 percent, or 2.19 million of the 219 million cups of coffee Americans drink daily, is certified as fair trade.

Meanwhile, a global coffee crisis caused by overproduction drives millions ever deeper into poverty.

"We eat only beans," said Paula Mercado, 40, in a dark hillside shack near Rivera. "We're killing ourselves working, and we can't get a decent price."

Highly traded commodity

Four in five U.S. adults drink coffee, helping to make coffee the world's second most-traded commodity after oil with $55 billion in annual sales. And industry experts say the very best coffee generally comes from small-scale farmers like Santiago Rivera laboring in tropical highlands from Ethiopia to Indonesia.

This fine coffee grows on shaded plots, under diverse canopies considered ecologically healthy, where complex flavors develop. Here in the mountains of northern Nicaragua, brilliant blue butterflies bounce around Rivera's carefully tended coffee plants.

His classic method and wise, weathered face made him a modern-day Juan Valdez for Starbucks, which distributes its fair-trade brochures at 3,000 shops around North America. Soon Starbucks will offer fair-trade coffee worldwide, chief executive Orin Smith said. "We're going to be a force within our industry . . . working very hard to make this program work."

It isn't charity, he said. To keep selling top-quality coffee, "we need these people to survive."

For his role, Rivera gained a public-relations tour of America last year. He saw "streets made of nothing but buildings -- beautiful."

Now back home he struggles, perched on a wood chair teetering on an uneven floor, weighing his finances. His wife, Ermelinda, brings him a cup of his own coffee -- one of the few luxuries in his life. His earnings as a coffee grower aren't enough even to afford Nescafe instant from the village store, let alone an $11.45 bag of his beans in America.

He collects 91 cents a pound because he's part of a cooperative - Prodecoop based in Esteli -- that sells 60 percent of its coffee at fair-trade prices -- $1.26 a pound for fair-trade beans and $1.41 for beans also certified as organic. Directors said farmers usually receive about $1 a pound depending on deductions for transport, processing and community projects.

Rivera's 91 cents means his six children can attend school and, at this time of drought, eat store-bought rice and corn. He still relied on aid handouts after Hurricane Mitch to repair his roof and an outhouse.

Yet his struggles are minimal compared with those of neighbors around him who must sell their beans for 45 cents a pound. They beg regularly to let them join his co-op. Rivera must say no until demand grows - which torments him.

"You should be able to work and have a better life," he said.

Sales are still low, but the volume of fair-trade coffee imported by the United States has more than doubled since 1999, said Paul Rice, director of the TransFair USA organization that coordinates monitoring and labeling.

"U.S. consumers are a sleeping giant," Rice said. "As it awakens, corporate America has to sit up and listen."

But fair traders face an uphill battle.

Across coffee-dependent Central America -- where good times mean living on $2 a day -- relief agencies estimate 1.5 million peasants lack food as a coffee crisis worsens. World market prices plunged to all-time lows last week -- 19 cents a pound for low-quality robusta and 45 cents for arabica beans. In Nicaragua alone, a quarter-million people are suffering, and United Nations officials said more than 12,000 coffee workers now receive emergency food aid.

What caused this crisis? Investors over the past decade sensed profit opportunities in Vietnam, where peasants work as cheaply as anywhere in the world. Financiers and Vietnam's government directed rapid development of coffee plantations. Vietnam now is the second-largest coffee producer behind Brazil -- churning out cheap robusta coffee that corporate giants like Procter & Gamble buy. A resulting glut of this coffee sucked down world prices.

Vietnamese peasants win.

But in Nicaragua, Victor Manual Alvarez, 45, sat on the floor of his two-room house measuring out the last of the corn that feeds his family. His four barefoot children watched listlessly.

"When this runs out . . ." His voice trailed off. The family has no money, he said. A dry cornfield behind the house isn't planted. He still counts on coffee, but unable to sell at fair-trade prices he must settle for 50 cents a pound. After tending to his coffee plants and harvesting, moving his coffee to local middlemen requires five day-long donkey treks down the volcano and then along a rocky 5-mile road to Somoto.

He devotes more time now to searching for construction work that might bring some money for food. Sometimes he's gone for weeks.

"It's not fair," he said. "Fifty cents a pound is not enough to provide coffee."

There was a time when he envisioned a better life for his children. "I've been working with a machete since I was a little boy. I never studied."

Now he just wants them to survive. "Give a good price to us, the poor producers of your coffee," he implored. "The coffee we produce is good coffee."

United Nations World Food Program supervisor Rosario Sanabria laments that too many commodity producers are falling behind.

"The companies play an important role," Sanabria said. "Their values are not human. They are commercial. What is their responsibility? In general, we're not taking care of human values. The world would be a little more fair if we thought more about human values."

Inside a Starbucks cafe on Denver's 16th Street Mall, bank-loan specialist Beth Bockenstedt, 44, ordered up a $3.80 Caramel Macchiato last week. She knew about fair-trade coffee. She'd seen the brochure featuring Santiago Rivera. The cafe in Denver offered no fair-trade coffee as a daily brew. Bockenstedt said she might be inclined to try it or buy fair-trade beans for home instead of French Roast -- even if those beans aren't quite as good.

But she doubts fair-trade money really reaches peasants. She views fair trade as "just a gimmick" to hook socially conscious consumers.

At Starbucks headquarters in Seattle, chief executive Smith worried about the quality of fair-trade coffee. He said he wants fair-trade leaders to work with industry leaders to find cooperatives that can produce the best coffee in large volumes.

Specialty-coffee lobbyists fear this is happening too slowly and that an industrywide roughening of quality will result as Vietnamese robusta drives out savory arabicas.

Fair-trade pitch rejected

"We can't do what we need to do with fair trade," said Ted Lingle, director of the Specialty Coffee Association of America. "We can't get consumers to connect with the issue fast enough to make a real difference for the farmer." Lingle wants coffee-market leaders in New York and London to remove "triage" waste products that inflate global coffee volume, in an emergency effort to resuscitate prices.

Meanwhile, Procter & Gamble directors at a shareholder meeting Oct. 9 rejected a pitch to offer fair-trade coffee. P&G prefers to help impoverished producers by giving aid, spokeswoman Margaret Swallow said.

Executives are looking for groups that work with farmers to help them switch from coffee into growing more profitable crops, she added.

Pressure groups plan to attack P&G as suppliers of "sweatshop coffee."

And in the U.S. Congress, lawmakers are trying to make up their own minds about what kind of coffee to drink. Last week lawmakers tested fair-trade blends in a congressional cafeteria.

Yet so far nobody is making a real difference for coffee workers. In a fly-infested shanty camp near Matagalpa, Dimas Carrazo, 40, grips an ax, trolling for wood to cut and sell, the only way he can afford food for his four starving kids. Frustrations mount. Carrazo and others once fought as U.S.-backed contra fighters to subvert Nicaragua's Sandinista government. Many still wear blue contra caps emblazoned "Guardians of Democracy."

Americans should help with the coffee crisis, said Marcos Molina Velazquez, 40, an ex-fighter now raising five kids. "If they helped us before to get arms, now they should help us get tools."

In another roadside camp, Samuel Tinoco, 53, suggested: "Maybe I should go to Vietnam?"

Leading a group of 350 landless coffee workers, who marched all the way to Managua pleading for aid to sick children and then camped at the National Assembly, Maria Victoria Picado, 45, announced: "If nobody does anything, this will get violent."

This year, a U.S. State Department report warned that "endemic poverty" in Nicaragua is driving entire communities into smuggling drugs from Colombia north to the United States.

Even Santiago Rivera questions the free-market system right now. He has friends in the United States, and excused himself tearfully after watching the Sept. 11 attacks on the World Trade Center. "We're all brothers."

Yet in Nicaragua's election next month, he's backing ex-Sandinista leader Daniel Ortega, a man with questionable connections to Libya and Iraq who once tried to lead Central America toward socialism. He's worth another try, in Rivera's view, as a leader responsive to real people.