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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Cooperatives and Building Productive Democracy

Madison  I took one wrong turn and ended up on the wrong side of the track waiting for a train, which only heightened my anticipation at what the Just Coffee Cooperative of coffee roasters might be like.  From across the tracks the street seemed to be smaller multi-unit apartments nicely appointed running down a row.  Finally getting around the train found me driving to the back of a small parking lot to a small warehouse with a solid metal door and a rollout delivery bay, but when I opened the door the whole roasting facility seemed larger and bustling.  This was Just Coffee!

Just Coffee is a fascinating operation.  Less than ten co-op members with another dozen or so employees roast, pack, and deliver about 250,000 pounds of coffee locally and via UPS around the country.  They left TransFair USA some years ago, and there website is full of the reasons.  They have direct partnerships with growing cooperatives in some areas and a cooperative liaison whose job is to visit their sources and make judgments at the point of sale and support on a wide range of questions they take very seriously.  Just Coffee left the fair-trade certification system connected to TransFair and FLO when they realized the process for certifying them as a fair-trade roaster was a quick 5 minute telephone call asking them what percentage of their roasting was fair-trade.  Gulp and they were gone. 

It wasn’t the money.  To be certified they were paying a penny or two per pound roasted to TransfairUSA/FLO, but they felt it wasn’t serious.  They are trying to carry a label now from with certification from small producers in Central America directly.  They were candid with me that Equal Exchange (which I need to find out more about?) was critical to them starting because they had made building cooperatives a big project in Madison along with several other cities, so they were able to build on that critical work.  Unfortunately, Equal Exchange got a reputation of roasting the kind of beans that gave too many consumers the impression that they might be helping producers more by drinking fair-trade but the coffee wasn’t good.  Yikes!

Later in the evening I talked about Battle for the Ninth Ward at the Rainbow Book Store Cooperative.  Three hundred members paying $30 a year fuel this operation which started selling textbooks to University of Wisconsin students and now has a great collection of progressive books, including a stack of Citizen Wealth sitting on the counter.  A great experience!

These cooperatives aren’t huge, but they are effective, friendly, and value added in the community.  Visiting with them made lengthy discussions with Joel Rogers, professor at the University, guru of COWS, the high road economic development research and advocacy center, and long time friend, collaborator and fellow traveler about what he termed “productive democracy” make even better sense.  In imagining the world we are building and practical, scalable alternatives to the constant neoliberal refrain and contemporary ideology, there’s no going backwards, and elements of productive democracy might be a path forwards as a way to combine the strengths that democracy heralds for good governance as well as increasing its applications of equality of opportunity, social contribution, deep civic engagement, and other intrinsic values not only the public sphere but also in the economic environment where value can be more equitably distributed, dispersed, and shared.

Interestingly I heard this same discussion about a renewed role cooperatives might play as one small part of this puzzle when I visited with ACORN Czech last year in Prague where such formations and transitions were part of the common discussion.   In too much of the country’s cooperatives are something that is out there in the rural areas and not real presences in our urban realities and futures.  They have electric cooperatives, ginning and grain cooperatives, banking cooperatives for farmers while we have precious few examples in most of our daily experiences other than perhaps a credit union or a struggling and often higher priced food outlet.

Productive democracy in Rogers formula is a much, much different thing and at a scale that can make dreams soar and plans come together.   Worth more thought and some real work seeing where it might grow in our concrete and towering urban future.

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The Paradoxes of Certification in Fair Trade & Social Responsibility

New Orleans   The ineffective anarchy of FLO certification through the various national fair trade organizations (though not the USA, since ours has disaffiliated, further weakening the standards) is crumbling before my eyes based on their own inability to change and the constant assault by both major corporations on one hand, who assert that they can do better themselves, and progressives on the other, who assert that they can do better themselves.  Coffee producers who originally were the supposed beneficiaries of fair trade certification in Central America are now organizing their own self-certification programs in protest against FLO and what they argue are unfair fee structures and other practices of FLO that tilt the scale in favor of big cooperatives, almost as large as the corporations themselves.  ACORN International in our own report Unfair Fair Trade has echoed that case.

For Jane Consumer there has to be confusion, if the consumer even realizes this is going on, and as a purveyor through Fair Grinds trying to wend our way through this maze to undertake direct trade, while maintaining our established reputation as a the oldest and most consistent exclusively fair trade provider, we are caught on the horns of a dilemma, squeezed by pricing in the middle while trying to hold competitive prices for our customers and increase the livelihoods of the producers.  Oh, my!

Green Mountain, Starbucks and others tout their own programs exhaustively and claim that they serve fair trade by their lights even though it is only a small percentage of their coffee.  The latte licker there thinks it is all good without really knowing and can pick up brochures touting the program.  Part of the reason that the FLO affiliate in the US has left the pack is to try to make more of these big time deals and collect the fees for doing so.

Joining the New Orleans Archdiocese Fair Trade Committee last week as it was meeting at Fair Grinds; I got a quick education on the Catholic Relief Service (CRS) Fair Trade program for coffee.  Once again this is a self-certification program.  CRS has two types of relationships under the CRS Fair Trade banner.  One is a direct partnership with a dozen outfits around the world where it sources, some of whom are FLO certified and some of who are not, yet all are CRS Fair Trade “certified.”  The second partnership is with some of the great fair trade coffee brokers in the US, such as Café Campesino and Dean’s Beans, both of whom were fantastic providers for Fair Grinds Coffeehouse until we changed policy to acquire fair trade coffee directly at the Port of New Orleans from union workers and have it roasted locally to make it fresher.   If a consumer buys through CRS Fair Trade and those companies, a portion of the price (10% or so) goes to the CRS Fair Trade fund which CRS grants back to its partners and other worthwhile projects.

One of the members also sent me to Just Coffee, a coffee roasting cooperative in Madison, Wisconsin, which I hope to meet later this week to learn and observe.  The Just Coffee website indicates ad nauseum and very effectively the reasons why they left the FLO fair trade system some years ago to direct source from partner cooperatives – much as we are trying to navigate — because it was superior to FLO in so many ways.  Hear, hear!

But, what are we to really do with this mayhem around fair trade coming at us from every side?  Are we all in the best position to judge?  Hardly!  Do we need a fair and objective arbiter?  Absolutely!  So what is to be done?

Part of my uncomfortability with this fair trade mess goes squarely to the even larger, bigger headline problems associated with the scandal that passes for Corporate Social Responsibility (CSR) programs with big companies from the old Nike and sweatshop campaigns conducted by ACORN International’s partner, Press for Change, and the current slippery slope involving Apple and Foxconn along with many other Chinese suppliers of that company, Walmart, and others.  For years Apple has claimed it was all over wages and working conditions, regardless of how many stories from China contradicted the claims.  Furthermore the fact that the “certifiers” were so often miles away from being unbiased and trusted intermediaries, but in fact bought and paid for as a matter of business model, if not ethical lapses, also meant that their inspections and reports were worthless.  [Yes, I have also been arguing over recent months that the current inspection of Foxconn for Apple was bound to be a whitewash even though they have gotten better grades than the earlier tests would have warranted.]

Big time CSR programs now exist in all big companies.  I was sickened by even imagining the recent report of the head of the Environmental Defense Fund (EDF) bunking in a cabin with Walmart’s then CEO Lee Scott to work out enviro-deals.  All of these big money maneuvers and rationalizations demand a clean-handed middle force that can be relying depended upon as unbowed and unbought.

How can that be different for fair trade with a similarly huge imbalance of power between producers and brokers, and what now has to be conceded as total chaos among consumers in the developed countries?  We are simply saying, “Trust me!” and frankly, whether Fair Grinds Coffeehouse, Just Coffee, or Catholic Relief Service, I’m not sure we are really qualified and able to reliably play that role.

I love the coffee cooperatives we have visited and partnered with in Honduras, but I am a long way from an expert, and could be easily embarrassed far out on the limb of a coffee bush.  We can’t simply say “trust me,” because that is self-certification precisely like the big corporations claim, and unfortunately their size, branding, marketing, and advertising guarantee that they will win more customers on such a claim.

How can we find solid middle ground that is something sturdier than the quagmire where we currently stand?

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Life in the Coffee Mountains with Co-ops Big and Small

Sorting at RAOS

Marcala    Thanks to our friends at the small women’s coffee and aloe vera cooperative, COMUCAP, we usually stay at their cabinas high in the mountains.  There’s no water or electricity, but the setting is beautiful and the bunks work fine for us.  They hope someday eco-tourism will come their way, who knows?  We started driving up before dark and a light, intermittent rain quickly turned some of the clay and rock road up the mountain into gumbo.  We were almost there and two large multi-ton work truckers were stuck ahead of us.  One got through, leaving deep ruts wounding the road and bleeding red clay.  The other backed down the rise, forcing us over to the shoulder.  We tried to climb through twice, each time lacking enough clearance in the small rental car to make it, and ended up backing down ourselves.  We found a $20 hotel in town with hot water, then jumped a ride with a 4×4 diesel Toyota pickup first thing in the morning to recover our gear, none the worse for wear.  Life in the coffee mountains!

COMUCAP and its hopes for eco-tourism

The late morning and early afternoon were spent in productive meetings with COMUCAP about plans to buy coffee and to sell aloe vera.  They are now fair trade certified by FLO in Germany, so we believe we may have potential customers for them in Canada, if we can figure it all out.

The trick for us in coffee is now bringing back crop samples to New Orleans so that our roaster at Fair Grinds can test the quality of various crops and see if we can get others to join us in buying a larger lot of coffee to directly ship to the city.  Before this trip is over we will lug 30 pounds of green, dried coffee beans back for roasting to see if we can organize a buying cooperative from the cooperatives, as it were.  The devil is in the details though, and we are struggling to get the pricing in line.

Cupping some of the coffee for us at RAOS

We had run into a fellow I had originally met at COMUCAP on my first visit three years ago, who was now working at another, larger coffee cooperative in Marcala called RAOS.  He invited us to take a look at their operation.  Wow!  We were impressed.  It was huge comparatively.  Two shifts of workers, including rows of women sorting out bad beans to ensure the quality and gangs of young men bagging the beans, including fair trade and multi-certified beans, as well as rakers to keep the beans dry, and other workers cupping the coffee in the lab, working the drying machines, and altogether adding up to probably 100 workers employed not as producers but in the final process after the beans left the coffee plantations.  RAOS produces enough coffee to ship 30 containers to various markets.

Filling a Fair Trade quintal at RAOS

It was encouraging to see how producers could come together to get to the next level!

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On the Farm in Paterno: Organic versus Fair Trade

Paterno   I had been to Paolo Guarnaccia’s family farm in 2009 when a group of us had dinner with his family while talking about the Simeto Valley.  Now I saw it differently as we joined his wife for a simple and delicious lunch there.  I had not fully realized that the farm was still in Paterno, simply on the other side of the hill from the Norman castle, old church and cemetery I had visited several times this trip.  With 23 hectares of land assembled over 30 years this was a large set of groves tended by Paolo, tenants, and volunteers that came throughout the year to help and to learn organic farming techniques.  Everything about this operation had a “social” purpose, as they say here, right down to the room that hosted school field trips and the vegetable plot tended by various people in rehab or other programs.

For the first time I toured the huge “warehouse,” as Paolo calls it, which is leased from the regional government, but is a combination packing shed, orange sorting and processing operation, olive oil manufacturing plant, and much more.  Consorzio Terre Di Sicilia is a model, organic, educational, and experimental farming location, but it is also largely empty, inoperative, and laden with debt.  At one point serving 1000 customers all over Sicily with certified organic products, it now was little used, waiting for an EU loan of 200,000 euros over the last number of years, which still hadn’t arrived, and only a place for a couple of small farmers to sort their oranges by size with one of the giant machines.  Paolo had tried to turn it all into a cooperative over 5 years, but it didn’t work out…just not enough interest.

Warehouse Waiting for Action

Similar to our friends with COMUCAP in Honduras and their coffee and aloe vera looking for markets, I started asking what it would take to get the marmalade made here over to North America where ACORN International could move it through Fair Grinds and other places to support the survival of farming in Sicily.  Get ready for a headache.

The blood oranges as fresh fruit are impractical to even consider because of cost and requirements to prevent Mediterranean fly from coming to our shores.  Scratch that.

How about fair trade, organic marmalade?  Well, organic is easy.  Rigorous Italian and European Union inspections are already in place which would meet any requirements.  Fair trade, though, probably not it seems.  This is not a co-op.  Looking at the FLO affiliate website FairTrade Italia it seems they only bring in products from the rest of the developing world.  When my friends have described Sicily as the Appalachia of Europe and of Italy, that doesn’t seem to count.

There has to be a way.  This stuff is too good not to save and survive.

Paolo and the Products They Once Made

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