Absolution in Your Cup

The real meaning of Fair Trade coffee.

Kerry Howley from the March 2006 issue

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Gregorio Martinez grows coffee on 30 hectares of land in Lepaera, Honduras, where he lives with his wife and four children. In 1998 Hurricane Mitch destroyed his crop, leaving him deep in debt; by 2004 he was set to lose his farm to foreclosure for lack of $800. That same year, he sent a bag of beans to the Princess Hotel in San Pedro Sula, where a U.S. nonprofit was hosting a contest known as Cup of Excellence. Martinez took top honors, attracted attention from buyers, and auctioned off his crop for $19,500. In his acceptance speech, he expressed relief that he would be able to pass his farm on to his family rather than the bank.

Martinez owns a small family farm and produces a high-quality coffee, but none of his beans carry the Fair Trade label. His farm isn't part of a cooperative, a Fair Trade non-negotiable that disqualifies small, independent farmers, larger family farms, and for that matter any multinational that treats its workers well. "It's like outlawing private enterprise," says former SCAA chair Cox, who now serves as president of a coffee consulting company. "What about a medium-sized family-owned farm that's doing great, treats their employees great? Sorry, they don't qualify." In Africa, many coffee farms are organized along tribal, not democratic lines. They're not eligible either, a problem that has prompted some roasters to charge cultural imperialism.

One can argue, as Katzeff does, that Fair Trade spurs disempowered growers to form cooperatives, creating islands of democracy in often autocratic regimes. Others challenge the assumption that encouraging farmers to form cooperatives is an efficient way to leverage the premium consumers are paying for social justice. "Co-ops can be just as corrupt as any organization," says Cox. In a system meant to eliminate middlemen that pitches itself as a direct connection to growers, co-ops add a level of bureaucracy between consumer and producer. Explains Cox: "It's not the farmer who is getting that $1.26. The co-op decides what the farmer is going to get." A corruptly managed co-op, like a coyote, can mask the real price of coffees from individual farmers.

Yet TransFair, roasters say, has based well-funded public relations campaigns on the idea that only Fair Trade coffees are traded on a transparent, abuse-free basis. "They drew a very deep line in the sand about this issue," says Mark Inman, president of Taylor Maid Farms, a coffee roaster based in California. "They secured quite a bit of money for a P.R. campaign, and the P.R. campaign came out with: Fair Trade is good, and everything else is bad."

Global Exchange, an international human rights organization and Fair Trade retailer, has adopted this stance in its marketing and politicking. In 2002 it pushed Measure O, a Berkeley ballot initiative that would have legally required that all brewed coffee in the city be certified as Fair Trade, organic, and shade-grown. In defense of the measure, the group's Web site declares, "Almost all coffee that isn't Fair-Trade, shade-grown, or organic exploits workers and our environment."

That assumption, absorbed by at least some of the coffee-drinking public, drives roasters and retailers nuts. They say the idea that coffee without the Fair Trade label is based on coercion penalizes independent farmers who don't conform to the Fair Trade vision. (They also say consumers who drink only Fair Trade coffee are missing out on some of the best roasts available.) Nick Cho, owner of Murky Coffee in Arlington, Virginia, says customers often ask whether his coffee is Fair Trade, but quality-conscious coffee shops like his would never deal in coffee bought for less than $1.26 a pound. He finds the very suggestion that he's dealing in cheap beans grating. "You don't walk into a four-star restaurant and demand to know whether they pay their chefs minimum wage," says Cho.

Specialty coffee roasters have always paid above-average prices, but that hasn't stopped activists from launching smear campaigns against high-end retailers who resist the Fair Trade model. In 2000, activist groups including Global Exchange launched an attack on Starbucks that has left the company stained with a reputation for mistreating farmers. Yet given its size, Starbucks likely has done far more than the Fair Trade movement to improve the lot of coffee growers in the 25 countries from which it purchases coffee. Starbucks buys 2.2 percent of the world's coffee production, and its infamous growth fuels demand for high-priced specialty coffees. In 2004 it bought that coffee at an average price of $1.20 a pound, slightly below the $1.26 Fair Trade pays but more than twice the average price for beans on the global commodity market.

Among the litany of complaints roasters voice about TransFair, cost is most resented. Roasters and retailers must pay the company to be registered as legitimate purveyors of Fair Trade goods. Organic labels cost about two cents per pound of coffee; TransFair demands ten, and there are controversies about how the money is being spent. "TransFair went on an all-out attack against Starbucks," says Taylor Maid Farms' Inman. "Do I care whether Starbucks participates in Fair Trade? Absolutely not."

Meanwhile, the nonprofit denies that it spends retailers' money attacking corporations. "We don't pursue corporate accounts," says TransFair's Nicole Chettero, "They come to us."

Nearly every major roaster I spoke to was pitching a pet coffee charity, a favorite solution to producer penury. Katzeff has started a series of "cupping labs," training centers where farmers are taught to detect nuance in the taste of the coffees they're growing. There's also Coffee Corps, which sends coffee experts to Rwanda and elsewhere to teach farmers how to jack up the quality of their crop; Coffee Kids, which funds education, health care, training, and microenterprise programs for coffee farmers; Grounds for Health, which screens coffee farmers for cervical cancer. The list goes on. Many see these as more efficient ways to help some farmers without penalizing others. Yet though a few roasters have left, many stay with TransFair because certification, however flawed, sells.

"TransFair has by far the best marketing out there for a seal," explains Inman, who is still a licensee of the organization he criticizes. "I'm a member of TransFair only because my clients insisted," says Cox. "It's not because I did it willingly."

Semiotics in Your Cup

It may have a corporate image in the coffee industry, but Fair Trade still cultivates an aura of grassroots revolution on college campuses, where hundreds of student groups have formed to hold rallies and promote the brand. This past November, Vanderbilt undergraduate Blake Richter and 20 fellow students stood outside a Tennessee Starbucks and handed out free Fair Trade coffee while explaining to passers-by their beef with the company: Only a small percentage of Starbucks' purchases are Fair Trade Certified. The demonstration, he tells me, was a "first step" toward more equitable exchange in the area. If handing out free stuff sounds like a pretty mild protest, consider the result: "A lot of people would come by and say, 'I appreciate what you're saying, but I still need my latte.'" Richter adds, "I think we probably increased Starbucks' business that day."

Richter's experience wouldn't surprise many specialty roasters. Since the early days of Fair Trade, many of them have argued that customer loyalty hinges on quality, not the perception of social justice. Fair Trade consumers, in other words, tend to be dabblers who are happy to pay extra for conscience-soothing coffee today, but will eventually go back to the beans they like best no matter what the social pedigree. That may be for the best: The specialty revolution, with its $4 lattes and emphasis on growing methods, has probably jacked up prices for farmers far more than the Fair Trade movement has. Starbucks buys more coffee each year than gets Fair Trade certified. When consumers become coffee snobs, prices rise, and some of that increase makes it back to growers.

Roasters talk about the wine market, with its highly differentiated prices and well-defined brands, as a model for coffee growers and consumers alike. To some extent, they're already moving in that direction. Coffee, after all, used to be far coarser stuff, liquid energy for a generation of young executives coming off cocaine. "Be a coffee achiever," David Bowie prodded consumers in a 1983 ad campaign. A cup a day was a conduit for caffeine; it was the fact that you needed coffee, not the brand that you bought, that said something about the person you were.

In the mid-'90s, as Starbucks stores popped up in rapid succession and the image of the overworked exec lost some of its appeal, coffee became associated with epicureans rather than workaholics. The luxury item of a leisure class, coffee was suddenly less speed than valium. "Almost overnight, coffee switched its meaning," comments Scott Hamrah, a semiotics consultant and expert in the field of brand identity. "It became the opposite of what it meant before. First it was this stuff that you drank that allows you to be a machine. Then it became this moment of serene contemplation."

Retailers encouraged the switch by providing space for contemplation. As caf�s appeared in urban crannies and suburban strip malls, they were stuffed with couches, books, and artwork. Consumers were encouraged to stay, peruse the paper, and ask for a second espresso. The act of ordering became a self-defining ritual; Starbucks developed a faux Italianate patois that made everyone sound like a sophisticate. "It's amazing to me that these terms have become part of the language," Starbucks' Dawn Pinaud confesses in Mark Pendergrast's coffee history Uncommon Grounds. "A few of us sat in a conference room and just made them up."

This "second wave" paved the way for the rise of the coffee connoisseur. Java cognoscenti, and the marketers who sought them, started talking varietals and altitudes. Most significantly, they spoke of origin. In place of French Roast and Breakfast Blend, coffee joints were stocking Ethiopian, Sumatran, Jamaican. For producers, the interest in origin is a step toward developing a marketable identity, which is crucial to expanding their market. "Everybody knows that in this world of branding, if you are a coffee farmer and you are anonymous, you are in the buyer's market," comments George Howell, a businessman involved with the Cup of Excellence competition.

The range of prices between high- and low-quality coffees is still minuscule compared to what you'll find with a highly branded beverage like wine, but it is growing, and consumers have consistently demonstrated that they're willing to pay more for better beans. The best hope for farmers lies with consumers demanding better coffee, not just from Starbucks but from the supermarket shelf. This may be inevitable; a generation weaned on high-quality lattes is not going to turn to instant Nescafe as it grows more affluent. But there are signs that Fair Trade, with its predilection for uniformity, is retarding, not accelerating, that process.

"Fair Trade does not incentivize quality," explains Geoff Watts of Intelligentsia Coffee, who has spent the last nine years training coffee farmers in Africa and Central America. Fair Trade co-ops are composed of hundreds of farmers producing vastly different qualities of coffee. Often their output is blended together for sale to roasters, masking any quality improvements one farmer may have felt motivated to implement. Money then flows back to the co-op, not the individual farmer, and is distributed equally among the members. "There is no reward for the guy who works harder than his neighbor," says Watts. Nor is there much motivation for individual farmers to learn better farming techniques, experiment with new types of coffee, or seek new markets.

The system thus breeds anonymity and mediocrity in a business that desperately needs to focus on branding and identity. Ironically, this mimics the problems brought on by multinationals: Treating coffee as a single commodity, in large undifferentiated lots, prevents any single farmer from excelling and advancing.

Contrast that uniformity with the roasters themselves. Katzeff pitches his End the Embargo beans among a collection of cause-oriented coffees (slogan: "Not Just a Cup, but a Just Cup"). In Illinois, conservative "Contra Cafe" hawks beans from former Nicaraguan Contras (slogan: "Wake Up With Freedom Fighters!"). North Carolina's Counter Culture pitches coffee as a "connective force," and Chicago's Intelligentsia Coffee promises gourmet beans "nothing short of profound." It's a dynamic, creative group of entrepreneurs. Farmers doubtless could benefit from a similar plenitude, but Fair Trade is built on a simple dichotomy--fair trade, exploitative exchange, and nothing in between.

The Customer Is Always Righteous

One thing you can say for Fair Trade: Consumers like it. Amid the annoyance of roasters and retailers, Fair Trade sales continue to double annually, major corporations continue to adopt the label, and TransFair's harshest critics pay dearly for its seal of approval. Roasters often refer to consumers as "confused," but they--unlike the industry --seem to know exactly what they want.

Katzeff is now among TransFair's critics, but he is also an architect of the social awareness the company sells. The story of the impoverished coffee farmer lifted up by conscientious consumption is a message to which consumers clearly have responded--whether they're going to Starbucks or protesting in front of one. If Fair Trade's methodology has sometimes faltered, its marketing never has.

Coffee is not the only Fair Trade product--there are Fair Trade toys, musical instruments, diamonds, even soccer balls--but it is by far the most successful one. Unlike manufactured products, coffee readily lends itself to a deeply personal, bucolic story of creation and exchange. From planting to picking to roasting to pouring to drinking, there is no step in the process that does not require a human hand. The horror story Katzeff was telling 20 years ago was a simple one for consumers to envision, and the redemptive story TransFair sells--its literature thick with the smiling faces of coffee farmers the world over--invites the consumer to act as protagonist.

"This is seen by many as a direct way by which they can influence the way the world is," explains Lawrence Gould, a London-based consumer markets analyst. Fair Trade consumers are buying a story of personal connection, a vision of transparency, and an impression of political influence--not a bad deal for a few extra cents. If the picture of Fair Trade as a poverty panacea is off base, so too is that of the duped, defenseless consumer.

Coffee's long history suggests that its place in any one culture is shifting constantly to meet the needs of the millions who drink it. Today, consumers are driving a market for coffee that transforms the act of drinking into a muted act of rebellion against a centuries-old system of exchange. Yet what is revolutionary about Fair Trade is not the brand's focus on poverty but the suggestion that consumption is a moral response to inequality. "Instead of boycotting the wrong kind of wine or the wrong kind of rice," explains Hamrah, the semiotics consultant, "we can now buy the right kind, the moral kind, and buy more."

Katzeff--compassionate, articulate, and only slightly megalomaniacal--may have been most effective as a salesman pitching righteousness rather than a crusader fighting Central American poverty. The hippie spilling buckets of fake blood may never break bread (or sip coffee) with straight-laced businessmen talking quality, but the consumer has little to lose from a synthesis of strong words and strong lattes. Another Starbucks, a better coffee, a calmer conscience: What caffeine fiend can argue?

"I was a sparkplug," says Katzeff. "I changed an entire industry." He's talking about a revolution in coffee farming, but the transformation he inspired may be more lasting in the minds of coffee consumers in the First World than in the lives of producers in the Third.