A review of Coffee in 2011

It’s always nice to look back at where we’ve been, so we know where we are now, and where we might be able to go in the future. A lot has happened in our coffee program over the last year. Here are some brief reflections.

Producers

Visited long term trading partners in Honduras at RAOS co-op to select lots and review sorting & processing techniques Visited our other Honduras trading partner, the COMSA co-op, to cup samples with farmers from the Marcala region that were developing a specially prepared lot for us Visited Aida Battle in El Salvador to learn about her revered agronomy and processing techniques that have earned her top awards at the Cup of Excellence and one of the most sought after coffees in Latin-America. Visited the Mzuzu Coffee Planters co-op in Malawi, Africa twice to explore organic farm development and sourcing possibilities for the future Visited our long-term trading partners in Ethiopia, the Oromia union of co-ops, to visit farmers and washing stations in the Sidamo and Yirgacheffe regions and to see their community projects funded by fair trade coffee premiums Visited our long-term trading partner the UCIRI co-op, the pioneers of fair trade, to plan a delegation tour in Mexico to witness the coffee harvest in an indigenous community.

Fair Trade

A large organization of producer co-ops across Latin-America (the CLAC) launched their new Small Producers Symbol and certification system as a means to maintain the founding principles of “REAL Fair Trade”, as the Fair Trade International (FLO) system is increasingly co-opted by multinational corporations. Just Us! becomes the first company in North America to join in alliance with the small producers and register to use the symbol We participated in 3 important meetings to plan the introduction of the Small Producers Symbol in El Salvador, Houston and Nova Scotia. I was elected to the Board of Directors of FUNDEPPO (organization of the CLAC) that manages the symbol and certification system, composed of 4 Latin-American producer representatives and 2 international traders After years of advocacy from small farmer organizations, FLO finally raised the minimum fair trade price, as well as the social and organic premiums FLO standardizes a new fair trade logo across the world to be fully implemented within a couple of years Global Market The global commodity price for coffee soared to a 34 year high, after concerns about supply in Brazil and Colombia and aggressive speculator activity; Coffee companies across the world, including us, scrambled to raise prices in order to survive Small-scale coffee farmers saw higher prices for their harvest but with the soaring costs of food, fuel and farm inputs, say that they are still struggling for basic necessities The high prices meant ‘coyotes’ (middlemen) increasingly offered famers cash at the farm gate as buyers scrambled to secure imports, resulting in less coffee being delivered to small producer co-ops, putting these important community organizations at risk.

Roasting

Our vintage 1954 Gothot roaster was delivered from a shop in Arkansas where it was being refurbished Completed the propane, electrical and chimney hook-ups on the roaster along with a new bucket elevator to load green beans Gave our 1970s U22 Probat roaster a tune-up which has brought out improved acidity, intensity and body in our roasts Removed automated controls from our UP22 and started experimenting with craft roast profiles by hand for each of our coffee lines; After extensive trials and cupping, set new profile targets using data logging software and incorporated into production Built a new cupping and quality control lab Ran into delays because of mechanical challenges with the Gothot, but the machine is starting to show us that it is not only beautiful to look at, but also roasts beautiful coffee Launched a new line of ‘Single Origin Reserve’ coffees that are small lots sourced from individual or small groups of farmers with exceptional beans that are given special treatment; and a line of distinctive ‘Limited-Release’ coffees that we source and offer for a limited time Promoted 2 staff members into roasting positions; the whole team is helping lead our artisanal focus on coffee.

Baristas

Implemented the first 2 levels of a multi-stage barista training program, with both coffee theory and hands-on coffee and espresso education Created 2 new coffee training centres in Halifax and Wolfville Purchased Nuova Simonelli espresso machines and Mahlkonig grinders for all 4 of our coffeehouses Baristas and roasters changed the components and roast profile of the Gondwana espresso blend, bringing a clean balanced flavour and consistency Phuong Tran, former US barista champ, worked with the Head Barista team to polish techniques on the espresso bar 2 Head Baristas volunteered at the US Barista competition in Houston and 1 attended Camp Pull-a-shot in California Coffee really is a dynamic business. I am looking forward to the possibilities in 2012.

Could you elaborate?

Hi Austin,

Would you be able to expand on this a bit more?

"...as the Fair Trade [sic] International (FLO) system is increasingly co-opted by multinational corporations."

Specifically, could you elaborate on how multinationals are co-opting the system (the mechanism and the evidence)?

Thanks,
Michael

Thanks for your question

Hi Michael, The current issues in the fair trade movement really come down to power. This movement was created to work against the neo-colonial and neo-liberal globalization realities faced by small-scale farmers, who only farm a few acres of land of coffee or other cash crops to generate a basic means of survival for them and their families. Although the fair trade model has roots in ‘slavery-free produce’ from the Quakers beginning in the 1700s and alternative trade artisan products, post WWII, the modern fair trade movement really started with Frans Vanderhoff and the UCIRI farmers co-op in Oaxaca, Mexico in the late 1980s. They brought the concept to traders in Holland initially and began trading and certifying fair trade coffee under the Max Havlaar label. As traders in more European countries and eventually North America and other consumer nations began to certify, other licensing bodies like Transfair Canada were set up. Then it was decided that an international entity should be set up to ensure consistency in the global movement and to audit producers, so FLO (Fair Trade Labeling Organization, now called Fair Trade International) was created in 1997. The problem from the beginning was that FLO only had token representation from producer co-ops. The licensing organizations had a vast majority of the seats on the international board of directors. In many ways the movement has been successful and benefitted small-scale producers, giving them direct market access, minimum prices, premiums to invest in community projects, advance credit and perhaps most importantly, gave them the ability to organize into democratic co-ops. Still, since producers did not maintain control of this successful ethical trade initiative that they created, critical decisions were made that went against their interests. FLO and the licensing bodies have been focused on growth of the movement through increasing volumes as their revenue stream comes from a percentage of total FT products traded. The issue is the strategies that were used to attain the incredible growth that we have seen in FT. Decisions were made like allowing big estate and plantation growers into the system in some products like tea, and allowing huge multinationals like Dole, Sara Lee, Nestle and Walmart into the system to market a very limited percentage of their products as FT and use it as a sort of corporate social responsibility mark. The small-scale producers created fair trade to find a new market alternative that would allow them to get out of the hopeless life of being exploited by these same corporations. They also wanted to overcome the unfair competition they faced from huge plantations, which are often owned by a minority of rich families that have capitalized on the legacy and corruption of colonialism and the displacement of indigenous peoples. The multinational corporations are now the largest customers of the licensing bodies are influencing the system to their advantage. FT USA split from FT International last year and has created their own brand and certification system called “Fair for All” so that they can water-down standards and easily certify corporate supply chains and increase their revenues from volumes. They have switched focus from small producer empowerment to auditing conditions for workers. You can see how this could open up a world of CSR (Corporate Social Responsibility) auditing for all kinds of consumer products sold in box stores and grow FT USA revenues. Small producers have protested these changes in standards and the entrance of the huge global commodity players into the FT system and tried to work within FLO, but have ultimately felt that their voices have not been heard. The CLAC (Coordinadora Latinoamericana y del Caribe de Pequenos Productores de Comercio Justo) is a regional organization of small farmer co-ops across 20 counties in Latin America and the Caribbean including 200,000 small farmers, in 300 Fair Trade certified co-ops, selling 10 different products. The CLAC holds 2 of the 13 board seats on Fair Trade International. After years of patient negotiations to create a sustainable system within FT International, the CLAC decided to develop its own fair trade system and label, the “Small Producers Symbol” that is run by producer organizations. The CLAC created a body called FUNDEPPO that manages the standards, auditing and labeling and also screens traders for their alignment with Fair Trade principles, which is something that the FLO system never did. This is a fair trade system for small producers only, no plantations will be certified. The FUNDEPPO board and standards are primarily governed by directors from producer co-ops. I am also on the international board of directors, along with a rep from Ethiquable in France, to help bring perspective around the marketing and consumer education for this label in North America and Europe. Just Us! is the first company to register to use the Small Producers Symbol in North America and we will introduce it on some of our products this year. If you have time, I would really recommend that you listen to this 11 minute CBC interview with Franscisco Vanderhoff, the founder of the modern FT movement, about the crisis that the model faces, both the challenges and the opportunities. Thanks for your interest, Austin Anderson Director of Coffee

Thanks for your response

Hi Austin,

Thanks very much for your thoughtful response. Hopefully you're willing to engage a bit further on this, because I think a few things need clearing up.

First, producer auditing existed before the creation of FLO and, in fact, plantation certification in both tea and bananas predate FLO. If I'm not mistaken, tea plantations were first certified under Transfair International, and banana plantations first came in through (I think) the Fairtrade Foundation. FLO was the beginning of a harmonization process that continues today, and that meant incorporation of the different standards used by the Transfairs, Max Havelaars, and the Fairtrade Foundation.

Second, producers originally had no representation on the FLO Board of Directors. Again, if I'm not mistaken, Board representation of the Producer Networks happened in or around 2003. They do have one fewer seat than the Labelling Initiatives, though each Producer Network is guaranteed a seat on the Board (no LI has this) and the CLAC is the only FLO member to have two seats. Producers have also consistently been the most represented stakeholder group on the FLO Standards Committee, and they now control 50% of the FLO General Assembly.

Third, you seem to suggest that all Labelling Initiatives pursue the same strategies, hold identical positions, and otherwise operate as a bloc against the interests of producers. This is simply not the case, as evidenced by the departure of Fair Trade USA to pursue its own vision, a direction that hasn't been taken by other members of FLO. The same is true of the Producer Networks, who don't always share the same positions.

Fourth, are you able to provide any clear examples of multinational corporations exercising control over Labelling Initiatives? Fairtrade Canada has certainly never been approached by any large company in an effort to sway our voting within FLO, or affect what influence we have over standards.

It's also worth noting that Francisco has been in favour of tapping into multinational retailers from the beginning, and accessing large (particularly grocery) retailers was one of the main reasons for establishing the Max Havelaar label in the first place. He has not been supportive of multinational traders, however.

That said, producers are not aligned on the issue of multinational traders within the FLO system, many of whom are understandably more interested in the percentage of their own products sold as Fairtrade certified than the percentage of their clients' products. The message that most consistently comes through producer surveys, conversations, research, etc. is to increase the volumes/percentages sold through Fairtrade certified channels. That isn't to say volume should be pursued to the exclusion of all other things (value being of at least equal importance) and, though it may be my ignorance, I'm not aware of any attempt or position of the CLAC to keep multinational companies from participating in the (FLO) Fairtrade system.

So, with a trend that seems to be headed toward greater producer ownership and control over the FLO system, no consistent anti-multinational platform from producers, no member standing for multinationals, and quite variable positions among the different Licensing Initiatives, I'm not clear where you see multinational companies co-opting the FLO system.

Though perhaps unnecessary, I'd also like to check your position that small-scale farmers created fair trade. Though most of your explanation is referring specifically to the FLO Fairtrade system, even there you'd have to acknowledge that many of the producer co-ops who now lead the CLAC and other important producer voices in fair trade came into being after the invention of fair trade labelling (and that includes PRODECOOP, the co-op from which the current president of the CLAC comes).

Where the idea came from originally I can't say, whether it was UCIRI or Solidaridad, Francisco Vanderhoff or Nico Roosen, or something that developed through conversation and collaboration. But, to me, it seems abundantly clear that it's evolved over time through the collective effort of a lot of different actors, including Just Us! incidentally, and not acknowledging that doesn't seem quite right to me.

Anyway, I apologize for the long response and do appreciate your willingness to engage.

In the interests of transparency, I do work for Fairtrade Canada. I've also been in fair trade, as an academic, activist, and even a bit of policy work for just over ten years, only the last three being at Fairtrade Canada.

Sincerely,
Michael

Hi Michael

Nice to meet you Michael. I am not an academic and policy writer like you are but am just stating the obvious that when Nestle, Starbucks and Walmart type companies become the primary retailers of FT products, the value chain and policies will be designed with their interests in mind. They have to, as they control most of the market for FT products. They are now key stakeholders in the movement. Seems like a paradox to think that Walmart is part of a movement to end the exploitation of peasant farmers from trade liberalization.
My perspective comes from what I have heard from coffee farmers, co-op managers as well as buyers from big coffee businesses. The common theme is that the big corps don't really care about what comes of farmers. They just care about price, the bottom line and tapping into the certified products market. Of course this is a generalization. I guess the main issue in my mind is that these huge corps are going to see more profits from selling FT products while few producers can earn enough to make ends meet. Rising production costs are keeping them on the brink and FT prices do not reflect the cost of production for small farmers and co-ops, even with the long awaited, small FLO premium increase last year. The co-opting comes as the movement towards economic justice slows and big industry players find ways to glean big profits in the trade between producers and consumers.
Austin

Fair Points

Hi Austin,

You're quite right in equating market share with market power, but the purpose of an external system like Fairtrade certification is to bring other forces to bear.

For example, you say, "when Nestle, Starbucks and Walmart type companies become the primary retailers of FT products, the value chain and policies will be designed with their interests in mind".

My point earlier was that large companies have almost no direct influence over the development of Fairtrade certification standards, whereas Producer Networks and Labelling Initiatives have much more.

The premise that Labelling Initiatives have been captured by the interests of large companies, either overtly or because LIs will seek to cater to them to grow revenues, also requires scrutiny. It's certainly not the case with us, but I would suggest work needs to be done to minimize the risk of it happening in the future. As with FLO, this comes down to making sure at least governance has a good balance of interests, accountability to those interests, and transparency to allow for greater scrutiny.

But let's also remember that the same is true of any representative body, and that includes Producer Networks. In many respects, they are further ahead than many of the LIs on these matters. But even within a large PN like the CLAC, some voices carry more weight than others. The point is to promote accountability and good governance so economic power isn't the sole determinant of political power.

Finally, in my opinion, the Fair Trade movement is a very amorphous thing and certifiers aren't its gatekeepers. There are all sorts of actors considered to be part of the movement that have no tie to certifiers, and whether or not a company has certified product doesn't have to mean that company's part of the movement. It's all very subjective, frankly.

Cheers,
Michael