Coffee drinkers embrace fair factor

Michael Allpress says the restrictions of Fairtrade mean it can't meet the high quality standards of his brand but his in-house system ensures the growers still get a fair deal. Photo / Dean Purcell

Fairtrade - it's the buzzword of "ethical" consumerism in the 21st century.

Many in the West sing its praises but fewer understand the complex forces governing the lives of Third World farmers from Burkina Faso to Bolivia.

Most of us have busy lives so for the ethically minded it's far easier to assuage your conscience with a Fairtrade latte than spend too much time contemplating the problems facing impoverished farmers.

But how important is it for those suffering a twinge of guilt to track down coffee branded Fairtrade? One roastery reckons it's not, and has set up its own system which it says still guarantees a fair deal for farmers and a better brew for coffee drinkers.

Coffee makes up 90 per cent of Fairtrade's retail sales in this country. Coffee certified and labelled by the organisation has had phenomenal revenue growth in the New Zealand retail market over the past six years, rising from an estimated $240,000 in 2004 to $16 million last year.

According to industry experts, total retail coffee sales were about $150 million last year, meaning Fairtrade has managed to capture 10 per cent of the market in just six years.

The amount of Fairtrade coffee being traded these days may lead some consumers to assume that everything else on the market is somehow unfairly traded.

Michael Allpress, director of boutique coffee roastery Allpress Espresso, says that isn't the case.

"Part of the problem with Fairtrade is, in their whole brand and marketing, there's this idea that if it's not Fairtrade it's not fairly traded," he says.

His company - which has operations in Auckland and Sydney and will soon be established in Dunedin and London - has opted out of using Fairtrade.

Allpress says this decision was made, in part, because Fairtrade would not be able to guarantee the high quality standards his firm demands.

Steve Knapp, Fairtrade's executive director for New Zealand and Australia, says that would have been a valid excuse not to import coffee beans certified by his organisation 10 or 15 years ago, but not today.

But with many start-ups entering the coffee roasting market and pushing Fairtrade as a point of difference, Allpress says his company became aware it had to do something to assure its customers it was giving the farmers that grow its coffee a fair deal.

So instead of buying Fairtrade certified beans, Allpress Espresso set up its own "Standards of Trade", which the coffee exporters or estates it deals with must sign off on if they are to deal with the Auckland-based company.

The standards include Allpress Espresso being in direct contact with its coffee growers, as well as the firm being guaranteed access for regular farm visits to provide first-hand assurance that the standards are being met.

Allpress Espresso representatives have recently visited coffee farms in Latin America, Asia and Africa.

Unlike Fairtrade, however, Allpress Espresso hasn't set a standard minimum price for its coffee producers. Allpress says Fairtrade's minimum price and premium may encourage the production of mediocre coffee, and says his firm is prepared to pay top prices for top quality beans.

"There's a lot of coffee farmers out there that have added value to their products, but are not part of Fairtrade, and are being fairly rewarded," he says.

Allpress Espresso is now confident enough with its own set of standards to place its Fairly Traded mark on a number of its coffees and is quickly extending that number to cover its entire range.

Justin Purser, food manager at Trade Aid Importers, one of New Zealand's main importers of Fairtrade certified coffee, says when companies "design their own fair trade label" it's vital they offer transparency for their credentials to be assessed.

"It would be useful, for example, for Allpress to explain in greater detail the degree of financial or social benefit they are offering to farmers or coffee estate employees," says Purser.

Knapp says any company working towards a more sustainable supply chain is positive, but worries Allpress Espresso's Fairly Traded mark could lead to consumer confusion.

"If consumers see the Fairtrade label, they know that's a guarantee of Fairtrade standards being met.

"If it's a company making those [Fairly Traded] claims off their own back then I think consumers have to do a bit more research and feel comfortable that those claims are valid."

Pete Davies, co-owner of Christchurch-based Underground Coffee, which roasts 100 per cent Fairtrade beans, says switching to what he calls "directly traded" coffee, like Allpress Espresso, would give his firm more control over the quality of its product.

"[Fairtrade] has a huge hierarchy driving it, and it's becomes less and less flexible," he says.

The amount of Fairtrade products on offer is becoming ever more vast, from bananas and chocolate to sugar and even puppets.

Such products don't seem to be too hard on the wallet, either. A quick price check at New World's Victoria Park store finds little difference between the prices of Fairtrade and non-Fairtrade coffee and tea brands.

For example, a 100-bag packet of Scarborough Fair (Fairtrade labelled) black tea is only 76c more expensive than a packet of Pams (non-Fairtrade labelled) black tea of the same size.

A 200g packet of Robert Harris' Fairtrade-labelled Ethiopian coffee costs no more the same brand's non-Fairtrade offerings of the same weight, at $6.99 each.

Presumably, this means the extra money Fairtrade pays its producers - while it might be noticeable to farmers - shouldn't be enough to greatly affect the prices of consumer goods in the West.

Cut-throat competition in the cafe scene also means you're unlikely to be charged more for a Fairtrade flat white than the regular variety, although it has been known to happen.

University of Canterbury senior economics lecturer Eric Crampton says a cafe on his campus was recently charging a 50c premium to customers who opted to have Fairtrade coffee.

Economics lecturers then began informing their students that the premium was bogus, he says.

Shortly after the cafe removed the premium, although Crampton says it was unclear if it had been the economics students who had pressured the cafe management into removing the charge.

"The price difference between the coffee that they're purchasing on Fairtrade and commodity [non-Fairtrade] coffee does not warrant a 50c [mark-up] at the till," says Crampton.

He says most of that 50c premium would have been going to the university cafe's bottom line, rather than the Third World farmers some unsuspecting customers may have assumed it was benefiting.

All of this begs the question: is the Fairtrade system really changing the lives of coffee producers around the world? Naturally, Fairtrade's Steve Knapp says it is making a difference.

"When you visit a [Fairtrade] village and you compare it to other [non-Fairtrade] villages, you really get that sense of pride that people have of being part of Fairtrade," he says.

Knapp says the minimum price the organisation guarantees stops farmers losing their land when prices crash, and the problems associated with that, such as the rural poor drifting into urban centres - a serious problem facing many Third World nations.

Some economists, however, criticise Fairtrade as being an ineffective system for lifting coffee producers out of poverty. A common argument is that the minimum price and premium discourage coffee farmers from branching out into different crops, which they say leads to over-production.

In his 2006 book The Undercover Economist, Tim Harford argues that coffee farmers are poor because they lack any form of "scarcity power" - meaning there are many places coffee is grown and its production requires a lot of hard work, but little technology and skill.

He says crashes in the global coffee price will recur until the majority of the world's people become rich.

"High coffee prices will always collapse, until workers in sweatshops become well-paid blue collar workers in skilled manufacturing jobs, who don't find the idea of being even a prosperous coffee farmer attractive.

"We need to understand that narrowly focused initiatives on 'fair trade coffee' or 'sweatshop-free clothes' will never make a substantial improvement to the lives of millions," says Harford.

Knapp says he doesn't believe there is a general oversupply of coffee, but admits that Fairtrade has its shortfalls.

"I don't think there's a perfect system out there," he says.

One of the issues facing Fairtrade coffee, Knapp says, is trying to work out a standard minimum price for a commodity that is grown all over the world. Different countries have different production costs and currency fluctuations.

Fairtrade is trying to address that problem, and others, by holding "product-based round tables" where all the members of Fairtrade's supply chain get together to try to make improvements.

WHAT IS FAIRTRADE?

* If a product carries the Fairtrade mark, that means producers and traders have met the standards the Fairtrade organisation says are designed to address the imbalance of power in trading relationships and unstable markets.

* All the Fairtrade labelling organisations around the world are governed by one umbrella body - Fair Trade Labelling International (FLO) - which is based in Germany.

* A separate organisation, FLO-CERT, inspects producers and traders to ensure they are complying with Fairtrade standards.

How does Fairtrade work in the global coffee industry?

* Fairtrade assures a minimum price and premium for coffee producer groups which supply the organisation.

* The global minimum price is set at US$1.25 a pound ($3.80 a kg), plus a premium of US10c per pound of coffee supplied.

* The global market price, set by New York's Intercontinental Exchange, is currently quite high - about US$1.70 a pound.

* Producer groups working with Fairtrade receive the market price if it is higher than the minimum price set by the organisation.

* Fairtrade says its minimum price is a "safety net" that guarantees producers a reasonable return should the market price fall.

* The premium is always paid, and producer groups decide how it is reinvested back into their communities.