Rewarding the Coffee Growers and the Coffee Drinkers: The Fair Trade Solution

By Nana Kim, President of NaS Coffee

What does paying an extra two cents per cup of coffee have to do with transforming the lives of farmers in such diverse nations as Ethiopia, Jamaica, and Brazil? And how could those two cents also benefit American consumers? That little extra bit of money represents the difference between "free trade" and "fair trade."

Current free trade policies are failing both American and foreign workers. Increasing globalization and a free market system have greatly expanded U.S. dependence on Third World exports. The American consumer has benefited in the short term from this equation, paying lower prices for imported goods.

But a downside has emerged: American manufacturing jobs have been lost as domestic factories have moved offshore while the developing world has been exploited for cheap labor.

The free trade market has hit Third World coffee growers exceptionally hard. Overproduction has pushed coffee prices to all-time lows of less than $1 per pound. Such low rates have benefited American consumers because coffee is the nation's second largest import (surpassed only by oil), with the U.S. consuming 20% of all the world's coffee. However, this overproduction means that farmers in the developing world are receiving prices for their coffee that are less than the cost of production, forcing them into record debt and jeopardizing the coffee industry's long-term stability. Though prices have fallen for farmers, large coffee companies have not lowered consumer prices, and are instead pocketing the difference because they control all of the intermediary steps of delivery (local middlemen, exporters, and brokers).

A shift to "fair trade" policies can rectify this imbalance. Fair Trade assures consumers that the coffee they drink was purchased under equitable conditions. Farmers ship their crops directly to participating Fair Trade certified importers who pay a minimum price of $1.26 per pound ($1.41 for organic crops) and who provide technical assistance for help in transitioning to organic farming. Thus, coffee farmers who participate in Fair Trade cooperatives are able to avoid price-gouging middlemen and can receive fair rates for their labor.

Instead of poverty and hunger, fair trade can ensure the very survival of the family owned farms that deliver much of the world's coffee. The difference to the American consumer is mere pennies per cup of coffee, a worthwhile trade to support family farms and to maintain a stable coffee market. It's worth noting that organically grown, fair trade coffee is free of petrochemicals and is tastier than regular coffee. It's a healthy bonus for those few extra pennies and a difference one can actually taste.

Nana Kim is President of NaS Coffee, an organic, fair trade espresso chain based in San Francisco, CA.