Absolution in Your Cup

The real meaning of Fair Trade coffee.

Oakland, California, 1990: A mundane meeting of coffee cognoscenti dissolves into a spectacular clash of personalities. The Specialty Coffee Association of America (SCAA) represented an undeveloped but rapidly growing industry, a loose collection of young entrepreneurs just learning the gourmet coffee trade. The three-day conference was meant to hash out pretty dry stuff: where to buy raw beans, where to store them, how to ship them--the nuts and bolts of a gourmet industry in its infancy. A day into the meeting, roaster Paul Katzeff burst into the hotel lobby with dozens of fellow protesters, banging drums and shouting about Salvadoran death squads. They underscored the message by pouring a dozen "buckets of blood"--watered-down red paint--on the steps of the Claremont Hotel.

The demonstration was, in the words of one participant, "calculated to produce rage." Another recalls an audience half stupefied, half infuriated. "We just wanted to talk about coffee," he explains.

Katzeff wasn't the only overcaffeinated maverick trying to inject political controversy into the industry, but he was by far the loudest. A strong supporter of the Nicaraguan Sandinistas, Katzeff earned notoriety in 1986 by suing President Ronald Reagan, Vice President George H.W. Bush, and Attorney General Edwin Meese over the embargo on Nicaraguan goods, a policy he considered illegal. He had defied the sanctions by shipping Nicaraguan beans through Canada, carving deep rifts into the turf of the then-new gourmet coffee world. By 1990, he was insisting on an industry-wide boycott on coffee from El Salvador, where landowners stood accused of stoking civil war. He was, says former SCAA chief Dan Cox, a "walking time bomb."

Today it's legal to buy coffee from Nicaragua but illegal to trade with Cuba, so Katzeff sells an "End the Embargo" dark roast with Che Guevara's image on the bag. Katzeff has done as much as anyone to force social concerns into the coffee market; 15 years after he dumped mock blood on the steps of the Claremont, politics and gourmet coffee are inextricable. "I went from being a pariah to being an icon," he told me with characteristic understatement--and to some extent, he's right. Roasters like Katzeff have transformed politics into yet another marketable attribute, pitching a clean conscience alongside a clean flavor. The phrase "Fair Trade coffee" has percolated into the vernacular, and the label it represents pervades the business at every level.

If the movement has shed some of its intensity since those heady days of conference crashing, you can chalk that up to the complacency of success. Fair Trade certification, intended to raise the living standards of coffee farmers in Nicaragua and elsewhere, has grown into a complex bureaucracy and an industry in itself. Starbucks, the longtime Enemy No. 1 of the Fair Trade crusaders, agreed to purchase a limited amount of Fair Trade certified coffee days before a planned protest in 2000. The company bought 10 million pounds in 2005. In 2003 Dunkin' Donuts agreed to make all of its espresso drinks certified. Nestle, one of the biggest coffee companies on Earth, launched a Fair Trade line in October 2005; the same month, McDonald's agreed to test Fair Trade in 658 outlets. High-end specialty coffees are the fastest growing sector of the industry, and Fair Trade is the fastest growing specialty coffee; demand for it has ballooned by around 70 percent annually for the last five years.

You'd think this confluence of social responsibility and double lattes, good business practices and lefty politics, would make Katzeff a happy man. But he and a growing number of roasters say the Fair Trade movement has lost its way. The movement has always aroused suspicion on the right, where free traders object to its price floors and anti-globalization rhetoric. Yet critics from the left are more vocal and more angry by half; they point to unhappy farmers, duped consumers, an entrenched Fair Trade bureaucracy, and a grassroots campaign gone corporate.

Stream of Conscience

The Fair Trade label was born in the Netherlands in 1989 under the brand name Max Havelaar, taken from the title of a 19th-century novel about oppressed Javanese coffee plantation workers. When the company came to the U.S. a decade later, the American branch billed itself TransFair USA. TransFair's stated goal is simple: to ensure that farmers get a decent price for their beans, and to let consumers know it. By cutting out predatory middlemen and selling a clear conscience at a premium, coffee idealists hoped to achieve humanitarian goals by capitalist means.

TransFair USA certifies Fair Trade products and audits the chain of custody from producer to finished product, verifying that Fair Trade standards are met by everyone along the line. But it relies on the Fairtrade Labeling Organizations International, a global group based on Bonn, Germany, to certify coffee farms. TransFair is one of 20 members of FLO, an umbrella organization that has channeled ideas about social cooperation into pages upon pages of mind-numbing certification standards. The FLO defines a fair farm as a family farm that is a part of a large democratic cooperative. Farms cannot be "structurally dependent on hired labor," which means that hiring even one laborer year-round makes a farm ineligible for certification. Even more controversial is the cooperative requirement. Rather than deal with individual farms, the FLO exclusively certifies large cooperatives composed of hundreds of small land-owning farmers, each with a single vote on how to best spend the Fair Trade profits.

The organization charges between $2,000 and $4,000 to check out a cooperative, plus annual recertification fees and a small percentage of the price of each pound of coffee. The benefits, for those that pass muster, are not insignificant: a guaranteed price floor of $1.26 a pound to Fair Trade retailers--more than double the going rate for beans globally--and a stable price in a famously volatile market.

The Fair Trade apparatus is intended to mitigate a system that seemed especially cruel just as the movement was gaining steam. Until 1989 the price of coffee was relatively stable, held in place by an international agreement that imposed both import and export quotas. That year, as the Cold War ended and stability in producing countries was less of a priority in consuming ones, the pact--known as the International Coffee Agreement--dissolved completely. When supply and demand kicked in, new producers from Vietnam to Papua New Guinea were free to try their hand at the coffee game, drastically redrawing the java map. The resulting glut sent prices spiraling downward. By autumn 1992 coffee cost 50 cents a pound--a level, according to Fair Trade marketer Global Exchange, that's comparable to prices in the 1930s.

Counterintuitively, as prices were plunging for coffee farmers, middle-class Americans were learning to pay double or triple what they once had for a single cup of joe. The major coffee companies--Sara Lee, Kraft, Procter & Gamble, and Nestle--were paying less than they had for years, and the quality of their products, connoisseurs complained, was getting progressively worse. Around the same time, specialty companies such as Green Mountain started buying high-quality beans and pitching coffee as a luxury good rather than a commodity. A "specialty revolution"--the Starbucksification of America, driven by latte-toting yuppies--spawned a massive market for pricey brewed java. By 1998 Starbucks could plan on opening a store a day, and the satirical newspaper The Onion ran a story headlined "New Starbucks Opens in Rest Room of Existing Starbucks."

As they grew in numbers and influence, it was the small, quality-obsessed specialty roasters who absorbed and perpetuated the Fair Trade ethos, thus distancing themselves from the big four, which continued to pay rock-bottom prices for low-quality coffee. Against the backdrop of schizophrenic prices, in the face of a glaring gap between impoverished Third World farmers and affluent First World consumers, Fair Trade advocates sold a vision of socially just consumption. Men like Katzeff began to travel abroad to source beans, and the industry's inequities started to emerge: Farmers were being squeezed by middlemen, known as coyotes, so that even the dismal profits from cheap mass-produced coffee failed to reach them. Growers lacked basic information about what their crop was worth, how to maximize production, and how to market their beans, and it was to the coyotes' advantage to keep it that way. Fair Traders, by contrast, sought a direct relationship between coffee farmers and coffee drinkers: clean, just, transparent transactions.

Fair Trade's pioneers sought the one best way to reform this culture of abuse, and they settled on a bucolic vision of small farms working for the collective good. The system would serve growers who formed cooperatives of small family farms. Such organizations represent only a very narrow swath of the world's 25 million coffee farmers, but as the Fair Trade brand has grown, the eligibility requirements have not budged. The result is a marketing machine meant to spread wealth across class divides that in practice draws sharp lines between winners and losers.

Co-Opting Equality

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