Want Some Justice in Your Coffee?

Using the market to make social change.

Millions of Americans kick their brains into gear each morning with a tall mug of steaming coffee. Until recently, the most important decision they had to make was, "one lump or two?" But now, the sleepy masses can bring their sense of economic fair play to bear as well: They can choose to gulp certified "Fair Trade" coffee. The product promises impoverished Third World growers a larger portion of the profits, while consumers get a more eco-friendly cup of java. There's more at stake than what's in the percolator, however. Fair Trade coffee may demonstrate that compassionate social policies don't have to pour from Congress's spout. They can be shaped by individual shoppers armed with a few spare coins and a little information.

Massachusetts-based Equal Exchange pioneered "fairly traded gourmet coffee direct from small-scale farmer co-ops in Latin America, Africa and Asia" in 1986. Until now, however, the product has been limited to relatively high-end outlets. That's changing in a hurry. Starbucks began offering a Fair Trade blend through its 2,400 retail outlets last October. Earlier this month, the Safeway grocery chain announced that it would start peddling a line of premium products from Seattle's Best Coffee, including a Fair Trade-certified French roast.

The move is based on two developments. First, wholesale coffee prices are at an all-time low. Farmers see as little as 20 cents for a pound of coffee that retails in U.S. stores for as much as $10. Government programs in Third-World nations exploded world supply when prices were high, and the resulting glut has brought economic chaos.

Enter TransFair USA. This California-based non-profit has launched the "Fair Trade" concept onto the national scene. TransFair slaps a seal of approval onto coffee entering the U.S. only if it meets a specific set of criteria. According to Deborah Hirsch, outreach coordinator for TransFair, the organization puts people on the ground in coffee-producing countries to ensure that farmers receive at least $1.26 per poun—as much as six times the going rate. In addition, TransFair provides assistance that allows farmers to unify into co-ops and bypass expensive middlemen. People who are willing to pay a little more for socially-conscious products (Hirsch estimated the cost difference comes in at about 25 to 50 cents per pound) can use the label to be sure their coffee meets these rigorous standards.

Kimberly Easson, marketing director of TransFair, said Fair Trade-certified coffee should capture 1 percent of the U.S. market by 2005, an effort that is gaining steam through deals with Starbucks and Safeway. "We've only been around for two years, so there has been pretty incredible market acceptance," Easson said. The growth is not unprecedented. In Europe, where organizations affiliated with TransFair have been certifying coffee, tea, orange juice, chocolate and other products for a few years longer, market share is as high as 5 percent.

Other organizations are pitching in. Co-op America, a D.C.-based non-profit, has formed the Fair Trade Federation to act as a clearinghouse for various certification programs popping up around the country. It also publishes the National Green Pages, a business directory featuring everything from eco-friendly lumber companies to labor-friendly investment advisors. "Our mission is to leverage the power of consumption choices and investment choices and business practices to affect social and environmental change," said Chris O'Brien, managing director of Co-op America's Business Network. "In other words, [we are] using market-based strategies to affect social change." Corporate America is beginning to realize that social conscience can be an effective marketing wedge. Starbuck's slick Fair Trade brochure, for example, claims that, "When you purchase Fair Trade Coffee, you know you're making a difference in the lives of coffee farmers."

These very issues will be the center of debate later this year when Congress takes up the matter of Trade Promotion Authority. The administration wants the right to negotiate international trade agreements and submit them for an up or down vote. Democrats in Congress won't budge unless they are assured the agreements will contain plenty of labor and environmental riders so American consumers and corporations won't exploit poor foreign workers. If people buy products with the Fair Trade label, that job is already being done. If they don't, Democrats may have to admit that Americans prefer a cheap cup of joe to a politicized ideal of "economic justice." The beauty of Fair Trade labeling is that it allows consumers to vote with their dollars.