Best of the Blog – Fair Trade

Wade is off the grid, so please enjoy this re-posting of a blog on Fair Trade from October 2011.

NeFairTrade-300x300w Orleans While I was out of the country it seems Paul Rice, the CEO of FairTrade USA, came to speak at one of the local colleges, Tulane University, as part of a promo for a new department on civic engagement and social entrepreneurship there.  He seems to have argued that “profitability and sustainability were compatible” according to the report in the Times-Picayune by Naomi Martin.  Though Martin raises the issue of whether or not producers are “compensated fairly” at one point, she reports perhaps more correctly that with “’fair trade’ goods…suppliers are compensated at a higher rate than they would be otherwise.”

ACORN International is preparing to issue a report that looks more carefully at the claims of fair trade products and attempts to sort out the substance from the sizzle.  Additionally, since I’m wrapping my arms more firmly against the real business of buying and selling fair trade coffee and other products at Fair Grinds Coffeehouse in New Orleans, I’m also learning the real lessons that can be wildly different than what we hope might be the case every time we take a gulp.

I originally became skeptical of some of these claims while visiting with our partners, the women’s coffee and aloe vera cooperative, COMUCAP, in Marcala, Honduras in the mountains of the La Paz district, several hours from Tegucigalpa.  The way fair trade certification works there is a slight premium for fair trade certified coffee over the bulk market price of roughly a 10% per pound and if also certified as organic, then add roughly another quarter a pound.  This is what the actual producers with dirt on their hands receive at the point of production.
In the article Tulane professor Rick Aubry averred that “FairTrade USA has leveraged the consuming power of people who buy coffee and bananas in a way that lifts the millions of people who grow those products out of poverty.”  Wow!  I wish!!!

Looking at a Food First! Study a couple of years ago, the real economics are clearer:
In March of 2007, FLO [the international certifying agency] raised the floating Fairtrade premium from 5 cents to 10 cents [per pound], and the Organic differential—the additional premium for coffee that is certified Organic—from 15 to 20 cents (FLO, 2007a). This move came in response to a cost study by a farmers union that showed that Fairtrade prices were below the cost of production for many farmers.

Couple this with the fact that a that time the pricing by the certifiers was:
The trademarked Fair Trade Certified packaging label informs consumers that farmers received a $1.26 price floor and a 10 cent (floating) price premium above the market price.

By the time Fair Grinds makes a purchase either through national suppliers like Café Campesino on the West Coast or Gene’s Beans in Boston or wherever the cost after roasting and delivery is pushing $10 bucks a pound now.   Getting fair trade right off the docks at the Port of New Orleans, which we are now doing since we started managing the coffeehouse, we are paying almost that same rate for the finished beans.  The premium that is still sitting at the bottom of that cup of coffee for the real producers is mighty damn small and puny, and certainly not a ticket out of poverty for the farmers I have met and spoken to in Honduras and elsewhere.

The notion in a competitive market that Fair Grinds can charge more than Starbucks and other local competitors also seems wrong.  FairTrade USA (formally TransFair USA) may have some surveys that indicate that people say they will pay substantially more, but many on the other side of the counter do not hear the willingness in a recession to go as high as the claim.  Of course Costa’s, the big international coffeehouse chain, charges a quarter more for a fair-trade cup of coffee and simply keeps the quarter, while the customer is hoping somehow that they just helped the poor farmer in the global south.
What’s my point?  Yes, we need to support fair-trade.  But, we also need to do more to make sure that this is not simply marketing and hype and that the money really does move to improve the livelihoods of the producers and their communities.  This is part of real transparency as well, and we owe it to ourselves and our neighbors in the rest of the world to not just feel good, but to do good.

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Fairtrade Coffee and the Port of New Orleans

containers stacked at the Port of New Orleans' Napoleon Avenue Wharf

New Orleans   This week for the first time I attended a meeting of the Port Commissioners of the Port of New Orleans.  Having written the head of the Port for help in getting more fairtrade coffee shipped through New Orleans and receiving no answer, it seemed I had little choice but to take a shot at the “public comment” portion of their meeting, so there I was.

I thought the problem was simple.  Fair Grinds Coffeehouse only sells fairtrade coffee.  When we took over we changed our buying pattern and instructed our roasters that we would only buy fairtrade coffee that came through the Port of New Orleans thereby not only supporting fairtrade and organic farmers in the Central American cooperatives where we source our beans, but also guaranteeing that the coffee was handled locally by union labor paid good, living wages.  Our coffeehouse supports organizing and our slogan is “great coffee for a change,” and we source everything we can locally, so this all seemed natural.  Furthermore, our coffeehouse isn’t in Iowa or west Texas, but in New Orleans which always ranks between number one and number two as the largest coffee handling port in the United States and also boasts Dupuy’s warehouse, which is the largest coffee storage facility in the world.  How hard could this really be?

Well, harder than we thought.  There was this Katrina problem.  Some coffee importers, including we learned the fairtrade coffee buying cooperative and its two dozen members which had always brought their coffee through New Orleans, lost some stock, and had not been back for seven years.  Furthermore, in Honduras and elsewhere we kept hearing about a tariff that favored the Port of New York/New Jersey.  At first I thought this was a tariff snuck in after Katrina, which turned out to not be the case.  All of this was counterintuitive.  Why, as I was now learning, would shippers bring the beans through the Port of NY/NJ and then truck or rail them back to New Orleans?  Our roasters finally told me that it took some weeks to fill our order, they were buying re-routed beans to roast rather than beans that had been directly shipped through the Port of New Orleans.  We can talk another time – and we will – about the fact that shipping currently is one of the single largest contributors to global warming, but there is no logic that would have coffee coming to the South, Midwest, Texas and other areas at greater expense and distance for shipping, rail, or trucking through New York rather than New Orleans.  What’s up with that?

The Port of New Orleans meetings are pro forma.  The business has been sliced and diced through the staff and the committees made up of the Commissioners, so the meeting is a stopwatch affair, where the chair calls on committee chairs to report, the chairs call on the professional staff to explain and present, motions are then moved, seconded, and unanimous.  Wham-bam!  I had called the brothers of the International Longshoremen’s Association (ILA Local 3000) before coming and their advice was pointed:  don’t waste time making a public comment, first we’ll introduce you around and see where to go.   Seemed like good advice, so with their help, before and after the meeting I met people from the marketing department, the international guy, and said hello to the one commissioner I knew from his time at Delgado where our union represented workers and my mother had worked until retirement.

Some of the experience was a little like a short visit to the Tower of Babel, where everyone suddenly spoke different languages.  Everyone knew about my letter and many had read it, but it seemed like a hot potato that had been passed from the CEO to the International guy to the marketing people, and still no one wanted to touch it.  In one conversation I was asked repeatedly if I had contacted coffee traders in New York about buying fairtrade coffee from them, while I had to continue to repeat that Fair Grinds was unwilling to buy coffee from any place other than the Port of New Orleans.  Was I talking to a Port of New Orleans employee or a Port of New York /New Jersey employee?  I was confused.  Yes, they wanted fairtrade to come back through New Orleans, but as we spoke our different languages past each other, it became clear that they really had no idea what I was talking about.  Even my ILA 3000 brothers were shaking their heads as they listened to these exchanges, so at least I knew I wasn’t crazy.  Yet!

Nonetheless we were learning something, especially about this tariff problem.  It seems in the 1970s (I’m still trying to track down specifics and an hour of Google searching got me nowhere yet), an international commodities group which sets tariffs or perhaps this is the International Tariff Commission (more to learn) saw an inequity in ocean going traffic and set a tariff to balance this problem so that it didn’t penalize the Port of NY/NJ.  Fair enough, if this is right.  But, that was over 40 years ago, and many decades ago all ocean going tariffs were equalized to all ports, so this tariff had become a legacy that now favored New York and not only hurt us in New Orleans, but in all of the Gulf Coast ports like Houston, Gulfport, and so forth.  This was all mystifying to me?  Who was on first?  What was on second?  Could it really be possible with all of the commercial and political strength of cities with great ports like New Orleans, Houston, and Miami that individually or collectively they had never been able to get this unfair advantage eliminated?  Seems like poppycock, but so they all maintained at the Port of New Orleans after the Commissioners meeting in the only thing that seemed like a collective refrain.

We’ll get to the heart of this, but we’re not there yet.

We’re having an open meeting as our Fair Grinds Dialogue on September 18th at 7 PM in the Fair Grinds Common Space on the 2nd Floor and we’re inviting everyone we know from our own community of customers and supporters, who love drinking fairtrade coffee, to our roasters and suppliers to our friends with the Archdiocese Fair Trade Committee to every politician, high and low we can find (Senator Ed Murray happened to run into me getting a cup during the week, and couldn’t believe we couldn’t do everything possible to get more coffee through the Port – I’m with him!), to Port representatives and my brothers at the ILA.

We may not always agree on the path forward for New Orleans when it comes to equity, race, and much needed social changes, but it will be interesting to see when it comes to economic development for New Orleans, more business at the port, and more jobs and work for New Orleans port workers and others, if we can all come together to do the right thing here, level the playing field, and bring more fairtrade coffee into the Port of New Orleans.

We’ll all be counting heads and taking names on September 18th!

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