Costa Rica has also been a place for child labor, with an estimated 1400 children under 15 working in coffee production around the country. An additional 1600 adolescents (15-17) worked in coffee production.
Côte d’Ivoire is estimated to have thousands of children under 17 working on coffee plantations. Many were recruited either forcibly or through deceptive means and brought from neighboring countries through traffickers. Many are forced to work 3-4 years without deferred wages before being allowed to return home. Threats of physical violence, denial of food, and withheld payments to ensure they work even when sick.
Forced Labor
Forced labor is another concern for coffee production. In Minas Gerais in Brazil, which produces nearly 70% of all coffee in the country, there are many reports of forced labor of adults. Recruiters called Gatos gather people from poor neighboring areas and lie about working conditions and wages to get people to come. Once they arrive at the plantations, they often work 15-hour days with unsanitary living conditions and no access to potable water, bathrooms, or cooking facilities. They are paid well below minimum wage, and since they rely on the plantation owner for food and travel to the plantation, they often are in debt with no natural ability to leave.
This debt patronage results in essentially slave labor & what money they do earn, they are forced to spend at an estate shop at inflated prices.
Environmental Impact
Coffee naturally grows in a shaded environment below tropical and subtropical forests. This is often beneficial and sustainable for the environment while providing an ecosystem that encourages biodiversity. However, the demand for coffee has increased the development of sun-grown coffee, resulting in deforestation as growers raze forests to prepare growing areas more easily accessible for harvest. As coffee needs high-elevation locations to grow, the stripped land results in more water runoff, and with the added pesticides and fertilizers draining down the hills, a broader ecosystem is affected.
Additionally, sun-grown plantations often deplete the nutrients in the soil much faster than naturally shade-grown areas. Rather than re-cultivating the land, they frequently abandon the spot and move to clear another location, resulting in further ecological destruction.
Awareness is lacking
While most coffee consumption occurs thousands of miles from where it is grown, consumers can view coffee from an out-of-sight, out-of-mind perspective.
Some organizations are trying to inform the consumers so they can make decisions to reduce the exploitation of both workers and the environment in those growing regions. While attempts to compare fast fashion with cheap coffee could work for some consumers with the means to spend more, inflation does hit the pockets of families around the world, and it isn’t easy to encourage a working family to spend more than they could on coffee with the promise it will help someone else. Altruism can be noble, but when people already feel their budget is stretched, it’s difficult for them to pay more.
What is Fair Trade?
Fair Trade is a defined set of standards related to the original producer of the coffee beans. Standard fair trade certifications include Fair Trade USA, Fairtrade International, and the Rainforest Alliance. The premise is to ensure that the farmers are fairly compensated for their labor while promoting sustainable farming approaches.
In general, fair trade coffee will be more expensive than coffee that isn’t certified fair trade. But this stems from the idea that a lot of people are involved in getting coffee into your hands. While the farmer is the starting point, some coalitions of farmers may come together to ensure sufficient volume to make shipping worthwhile. The exporter will work with importers worldwide to ship coffee to them. Most coffee is delivered via container ships, so a container is needed for the volume to each destination. The exporter delivers the container to the shipping provider, who brings it to the destination port where the importer receives it. The importer now breaks the container into smaller packages and ships it to the roasters who have ordered the beans. The roaster will now roast the beans as they receive orders and then ship them to each coffee shop (assuming the coffee shop doesn’t roast themselves), and then finally, the consumer purchases the roasted beans from the coffee shop either as a prepared beverage or as a whole or ground beans.
Each of those steps provides a markup on the initial cost of the beans from the farmer, so when we say fair trade, the % of the end consumer’s price for coffee that went to the farmer isn’t all that great. For example, for washed Arabica beans, the farmer is typically paid about $1.80 per pound, while those same beans may sell at retail for $20-35 a pound. But from the farmer’s perspective, it is better than when they may have been paid a quarter per pound.
What is Ethically Sourced?
Ethically sourced coffee is another way of describing the intention behind fair trade. It builds on top of fair trade’s better farmer’s price to ensure the coffee is produced in an environmentally sustainable manner and the farmers have reasonable living conditions.
This will mean that the farmers and any workers they use are paid fair wages and treated with dignity and respect. It will also ensure that the farmers have safe working conditions and access to education for their families. The coffee will also be produced using methods that conserve water, reduce chemical usage, and protect biodiversity. This often means organic farming, using fewer synthetic pesticides or fertilizers. It will also ensure that farmers use renewable energy.
How does environmental sustainability fit in?
Coffee is particularly susceptible to global warming and its impact on climate. It is only viable in a thin band in the tropical region between 25º north and 30º south latitude at high altitudes with specific soil conditions. With rising global temperatures, this region will shift and shrink, which can devastate coffee producers.
Because coffee grows only within a narrow range, growing locally in many markets is impossible. Therefore, it depends on exporting from coffee-producing countries. Over 2 billion cups are drank daily, so the volume needed to be produced is very high.
While everyone loves to complain about the price of a cup of coffee, leading Starbucks to be derisively called FiveBucks, the coffee producers usually make so little money that they are below the international poverty line of just $3.20/day. With so many transactions in the supply chain between the coffee producer and when it finally arrives in a consumer’s hands, the difference in price paid by a consumer for a pound of beans compared to what the farmer receives is substantial.
What is the controversy about Fair Trade?
Douglas Irwin, in his book Fair Trade under Fire, described fair trade as “Fair Trade Organizations buy coffee, tea, cocoa, cotton, and other developing country exports at above-market prices as a way of giving poor farmers extra income. They certify the goods with the fair trade label and sell them to Western consumers who are willing to pay a higher price to help lift those farmers out of poverty, provide them with a more stable source of income and encourage them to engage in environmentally sustainable cultivation. … The question is whether it [the Fair Trade movement] is effective in achieving its goals. Studies have shown that Fair Trade-certified producers do receive higher prices for their goods than conventional farmers. However, the gains to these farmers are much lower than they appear once one takes into account the costly administrative process of becoming and staying certified, which requires multiple reports and audits.”
Some estimates suggest that for each additional dollar an American consumer pays for coffee via fair trade, just 3 cents of added income goes to the farmer. Fair Trade organizations require a certification fee to be paid by the farmers they aim to support. There are often audits that ensure the working conditions and environmental processes match the certification’s intention. The various applications and interviews are an administrative overhead for the producer that adds to the cost. The net cost for the certification is often too high for the individual farmers, leaving only the large coops or “corporate farms” to absorb the cost.
The added middlemen of the certification group add to the net price consumers pay, possibly making it harder for individual farmers to compete. While this doesn’t suggest avoiding fair trade products, it does mean that a simple logo on the package doesn’t ensure that the intent of benefiting the small producer is realized.
Is Direct Trade the answer?
Recently, a related effort called direct trade has arisen. While it has the same goal as fair trade, it is effectively the roaster working directly with the farmer to ensure a fair price to them based on the country they are in. Fair trade creates global prices, which doesn’t account for regional variation in cost of living. Fair Trade ultimately means roasters buy beans from importers or other large sellers. It maintains the commodity nature of coffee on the global stage.
A roaster works directly with the farmer to define the desired quality and process and pays them accordingly. This can also create a more artisanal relationship between the roaster and producer. Over time, this approach could reduce or eliminate many intermediaries, resulting in a less severe retail-to-grower price ratio. It has the added benefit of not requiring the producer to pay a certification fee to a Fair Trade organization.
But even direct trade has limitations. There is no accountability, as it is negotiations between a single roaster and a producer. The roaster could still offer a low-ball price as they don’t need to adhere to a standard. There are still opportunities for an extended supply chain, as a roaster might work with an arbiter rather than directly going to the farm.
In truth, if we all agree with the goals of putting a livable wage into a coffee producer’s pocket and ensuring sustainable practices are used, direct trade and fair trade play a role. There isn’t a one-size-fits-all approach. Both have pros and cons that are difficult to resolve at scale.
Coffee has a very long supply chain between producers and consumers. Whether it is certification groups for fair trade, arbiters for direct trade, exporters, importers, farming cooperatives, distributors, or wholesalers, each is another point in the chain and requires their cut of the profits.
While direct trade does eliminate many intermediaries, it lacks the checks and balances to ensure the farmer is compensated fairly or that the market price reflects the improved supply chain. It also lacks the validation of working conditions and the environmental impact of the grower’s cultivating techniques.
We have a few competing goals:
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Improved labor conditions for workers
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Improved money for the growers
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Environmental considerations with the techniques used for growing
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Reducing market prices consumers pay
The best approach is to work toward reducing the length of the supply chain. With all of those other hands in the process, the ratio between what a consumer spends and what a grower earns is at an all-time high of 10:1. While I don’t think most roasters are aiming to exploit the farmers they work with, it is a valid concern that a direct trade approach could lead to exploitation. I believe direct trade is probably the best approach today, while fair trade is the next best option.
