Oakland Tribune
May 21, 2000
By Eve Mitchell

For decades, they've tended their coffee plants on small family farms, eeking out meager livings from selling crops to middlemen -- who pay them little for their harvest then turn around and sell it at a much higher price to exporters.

While coffee sells for an average of $1 a pound on the wholesale market, struggling growers in remote pockets of coffee producing areas of Latin America, Asia and Africa have ended up with far less for their toil. Now, they have found a way to improve their lives by cutting out the middleman and joining fair-trade coffee cooperatives, which provide them a premium price for their raw, green beans to be roasted into coffee -- the second most profitable commodity after petroleum.

Since it was introduced nationwide last year, about a dozen Bay Area importers and roasters of gourmet coffee, also known as specialty coffee, have become licensed to sell fair-trade certified coffee to stores and coffee houses. Nationwide, more than 40 have signed up.

It's a movement that first began in Europe 12 years ago and is now reaching the United States. Many local coffee companies are already involved in programs intended to better the lives of coffee workers. Some see paying fair-trade prices as another way to help.

But others who also have strong commitments to social justice don't view fair-trade coffee certification as the long-term solution to bettering the lives of coffee workers and growers. They also have concerns that the quality of fair-trade coffee does not always make the specialty cut.

It all makes for a situation that is as complex as a well brewed cup of gourmet coffee.

"I think the Bay Area is very receptive. I think coffee drinkers in general are (socially) responsible. They care about the quality of life of those who produce" coffee, said David Griswold, president of Emeryville-based Sustainable Harvest, which last year became the first U.S. coffee importer to sell certified fair-trade coffees to wholesale roasters. "You can have the quality of life for the (coffee-growing) family and a high quality coffee." By banding together in certified fair-trade cooperatives farmers can receive a premium price for their crops. Currently, the cooperatives are paid a minimum of $1.26 per pound, compared to the $1 range that is the average wholesale price for commercial-grade coffee. Organically grown fair-trade goes for a minimum of $1.41 a pound, a sector that accounts for most of the fair-trade coffee sold in the United States.

Worldwide, there are about 300 of these cooperatives selling the crops of more than 550,000 farmers in 19 countries in Latin America, Asia and Africa. Part of the profits go directly to the farmers, with the rest going to the cooperatives to help fund social programs.

Fair-trade advocates hope socially conscious consumers who buy gourmet brands will opt to buy gourmet coffee produced under the fair-trade label in the United States.

Oakland-based TransFair USA, which oversees the U.S. certification program, is directing its efforts at the $6 billion-a-year gourmet coffee sector.

While gourmet coffee accounts for about 8 percent of the coffee beans roasted, the sector accounts for one-third of the $18 billion in retail coffee sales in the United States, according to industry statistics. "We really see an opportunity to work closely with the specialty coffee industry," said Seth Petchers, certification manager for TransFair USA. "It's entirely consumer driven."

While the fair-trade certification movement is being directed at the gourmet coffee sector in the U.S., the movement that began in Europe in 1988 is targeted at the much larger commercial coffee sector. And that is one reason it is difficult to find sufficient supplies of fair-trade certified coffee that meets specialty coffee standards, according to Gerry Baldwin, chairman of Peet's Coffee & Tea, a Berkeley-based company founded in 1966 that helped pioneer the specialty coffee industry.

Such coffees are carefully cultivated in specific geographic regions, regions from which their evocative names are derived: Sumatra, Jamaica Blue Mountain, Kona and Guatemala Antigua, among others.

"A lot of us in the specialty coffee industry are working with the fair-trade movement to improve the quality, so there's more to buy," said Baldwin.

While Peet's buys small quantities of fair-trade coffee, it is not listed on the TransFair registry of licensed importers and exporters. That's because all coffee sold and bought under the fair-trade label has to be 100 percent derived from a fair-trade cooperative.

Most of the fair-trade coffee that Peet's does buy is mixed in with an organic blend. "The quality has not been high enough to roast by itself," said Baldwin. Peet's did recently find a supply of coffee from a fair-trade cooperative that meets its standards.

"I feel like we're making progress here," said Baldwin.

Still, Baldwin thinks a better long-term solution than a fair-trade subsidy is to help growers improve the quality of their crops so they can meet gourmet standards and get an even higher price than the fair-trade price, he said. "It's important to look at this over the long haul," said Baldwin, whose company has worked with coffee cooperatives over the years to help them improve the quality of their crops. "In order to produce specialty coffee, you need altitude and experience in growing the coffee and selling it and producing it as a high-valued product. That is what is sustainable because the coffee has inherent value rather than being fair-trade certified."

Although the idea of fair-trade cooperatives might seem new to American coffee drinkers, a similar concept has existed for more than 70 years through the Colombian Coffee Federation, better known by the picture on certain brands of canned coffee of Juan Valdez, who promotes 100 percent Colombian coffee. Colombian coffee growers who opt to belong to the farmer-run Federation are guaranteed a minimum price for their crops when the volatile coffee market drops in value, as it did in the early 1990s. Part of the Federation profits are invested to improve the lives of coffee workers by building schools, roads and health centers.

The biggest gourmet coffee company to sign a fair-trade agreement with TransFair is the Seattle-based Starbucks chain, which plans to sell the certified coffee at more than 2,000 outlets nationwide by the end of the year. It expects to have the product in Bay Area stores in the coming months, said spokesman Alan Gulick, adding that it is expected to sell in the price range of other Starbucks coffees.

The agreement between Starbucks and TransFair gives Starbucks the option of reviewing its commitment a year after fair-trade coffee becomes available in stores, said Gulick.

"This is something that we're committed to building a market for it," said Gulick. "And that's why we are really looking to see what our customers tell us."

Uncommon Grounds, a Berkeley-based wholesale roaster, is one of several local companies that buy and sell fair-trade coffee. Customers are asking for it, said Kim Moore, the company's general manager.

"Say what you will about the American people, the one commonality is that Americans ... are interested in economic and social justice. The response is very positive," said Moore, who estimates that fair-trade certified coffee accounts for about 3 percent of his sales. Still, he points out, any new market takes a while to catch on, much as the organic movement has done.

Last year, the fair-trade coffee market accounted for about $13 million in sales, or 1.5 million pounds in the United States, a number that is expected to reach 12 million pounds by 2003, according to Petchers, the TransFair certification manager. That's just a tiny scoop of the entire U.S. retail coffee market, which accounted for about $18 billion in retail sales, or 1.8 billion pounds of coffee in 1999.

Arthur Stevenson, a commodities analyst with Prudential Bache, does not think the fair-trade certification movement will significantly impact the overall coffee industry, including the gourmet sector.

"As laudable as (fair-trade) issues may be ... I don't believe it will lead to nationwide changes in consumer or trading patterns. Some individual companies may put some more weight on these matters," he said. "I am not persuaded that the average consumer going into a shop or a restaurant is really going to make a distinction" as to whether the coffee is fair-trade certified.

Jon Rogers Sr. is founder of San Leandro-based JPR Gourmet Foods, a coffee wholesale roaster whose brands include San Francisco Bay Gourmet Coffee. While Rogers is sympathetic to the plight of small coffee farmers that fair-trade certification is intended to help, the company does not buy fair-trade coffee.

"The concept of fair-trade is sound except for one thing. Our only problem with it is the product," said Rogers, adding that while one farmer in the cooperative may produce good gourmet-quality coffee, another farmer may not. "It all gets lumped together."

He also thinks there are other ways to help coffee workers.

Six years ago, JPR started its Source Aid development program. Working in conjunction with the coffee farms JPR does business with, the program helps provide food, clothing, medicine, shelter and education to coffee workers. The program also pays farmers a fixed price for coffee over a five-year period to ensure a profit for the coffee farm and to help fund the social programs.

"(Fair trade certification) is targeting the farmer with a wife and two kids. I'm trying to take care of a farm that has 100 pickers," said Rogers.

TransFair's Petchers disagrees that fair-trade coffee cannot make the cut when it comes quality. "Nobody's going to import coffee that tastes lousy," said Petchers, adding gourmet importers are able to find fair-trade coffee that meets their taste standards. "They would never compromise quality. They know their reputation stands on the coffee they bring in."

That's an opinion seconded by Moore. "I would not bring in (fair-trade) coffee if it wasn't any good. The coffee that I've cupped has been top quality," he said.

Oakland-based Peerless Coffee Co. started buying fair-trade certified coffee a couple of months ago.

"We have a lot of people asking for it," said George Vukasin Jr., director of product integrity for Peerless. "It's small but growing and can be very good."

Vukasin said that while his company supports the concept of fair-trade certification, he can see why some roasters have concerns. For one thing, certification does not address the needs of the established coffee growers who have been selling gourmet beans for decades to roasters, he said.

"It completely excludes the farmers of specialty coffee (whose businesses) have been in the family for 100 years. They still have difficulties, but since they can't be in a cooperative, they cannot be certified," said Vukasin. Petchers said TransFair USA is not asking that these relationships be abandoned, but that buyers instead consider acquiring some of their coffee supplies from fair-trade cooperatives.

"The small family farmers we are talking about, these people have never grown enough to export," he said. "It's like a penny a cup. It can make a huge difference for the farmers," said Griswold, the president of Sustainable Harvest.

Eve Mitchell can be reached at (510) 208-6474 or emitchel@angnewspapers.com.