Feature Article: Coffee Conundrum: Toward a Missional Just Trade Movement

–       Dave Price

Moving beyond the ideas of fair trade and direct trade, a discussion during a “Coffee as Mission” workshop at Partner’s Worldwide’s recent Chicago gathering birthed the idea of forming a new marketplace entity, Just Trade Movement International (JTMI). The vision behind JTMI is to infuse hope into every life touched by coffee – from producers to consumers – to empower the lives of everyone in the value chain, by creating connections, value, and mutual benefit, and inspiring confidence, dignity, and trust between all parties involved.

While fair trade and direct trade hope to financially benefit coffee growers, just trade hopes, through the development of relationships, to benefit all the players in a holistic way. Most especially that this movement, as a Christian endeavor, will make Christian disciples all along the trade routes and in every nation connected by coffee.

Coming to Here . . . some coffee history

Coffee, after only oil, is the most traded commodity in the world. It is said to have been discovered by a 9^th century Ethiopian goat herder named Kaldi. Coffeehouses began to spring up in the Middle East and by the mid-1600’s it had spread throughout the Arab world and into Europe. Its popularity has continued to grow and coffee has become a well-travelled, highly-coveted, sometimes-prohibited, aggressively-traded, globally-consumed commodity. Coffee sales in 2011 in the United States were around $32 billion, a little less than half of the global total of $70 billion (International Coffee Organization, 2012).

Coffee growing followed the popularity of the drink and, as consumption grew, coffee trees and coffee bean processing spread around the globe. But consumption regions and growing regions have not been consistent with one another. While consuming markets grew, especially in developed economies, coffee growing was introduced to the Caribbean, Central and South America, and Indonesian by the early 1900’s. It has since spread to other regions of the southern hemisphere.

Coming to Here . . . the kind we drink

As coffee has grown in popularity, palates have become increasingly discerning and new classifications of coffee have been created. According to the Specialty Coffee Association of America (SCAA), the phrase “specialty coffee” was first coined by Erna Knutsen in 1974 and originally referred to products from “special geographic microclimates [that] produce beans with unique flavor profiles.” Today, that phrase means much more as it incorporates factors affecting coffee quality at various points in the supply chain from the farm to the cup. Various controls of those factors have been put in place creating industry standards to ensure consistency and quality throughout the process (SCAA, 2009). Specialty coffee has become the benchmark by which all coffees are judged. Over the last thirty years, the specialty coffee industry standards have spread around the world and established the baseline for coffee quality in cafés, for roasting, barista skills, and the coffee supply chain itself (SCAA, 2009).

Coming to here . . . some foundational problems

Historically, the price of coffee was kept low as the labor-intensive growing activities were performed by slave labor, initially Africans (Wikipedia, 2012). In some growing contexts, the use of slave labor is still at work. Free and independent growers are, unfortunately, often met with impoverishing wages because coffee commodity prices remain low. In coffee consuming regions, consumers typically do not significantly change consumption patterns based on price. However, growers must sell their products at market fixed prices, globally between one and five percent of the consumer retail price. Those commodity prices do not cover the costs of production. When transportation or other costs waver, coffee cartels and large companies, to keep prices as low and consistent as possible to consumers, manipulate their margins on the backs of growers. This creates an unjust economic imbalance within the coffee supply chain, though consumers remain largely unaware.

The Rub

One might assume that in coffee production the party performing the most work, the farmers, would glean the greater share of financial benefit. They do not. As mentioned, globally they receive between one and five percent of retail prices. If a one pound bag of coffee sells for $10.00, the farmer will only receive $0.10 to $0.50. It typically takes one coffee tree to produce one pound of coffee. Coffee prices are largely determined by the commodities market based upon global supply. Surpluses in one growing region then can wreak havoc on farmers’ incomes in other parts of the world.

More than 25 million people in over fifty countries (many considered developing countries) worldwide depend coffee farming for their livelihood. At the same time, 48% of the world’s population lives on less than $2 per day (Population Reference Bureau, 2011), a majority of whom live in coffee growing regions.

The disparity of income between producing and consuming regions and nations was the impetus for the Fair Trade movement. Edna Ruth Byler is claimed to be the founder of fair trade when she began selling handmade products from Puerto Rico in hopes of alleviating poverty there. She and Ruth Lederach sold products at the Mennonnite World Conference in 1952, efforts that would eventually create the Ten Thousand Villages project (Ten Thousand Villages, ND).

Coffee came under the purview of the fair trade movement in 1988 in the Netherlands and expanded when TransFair USA became a third party certifying agency. TransFair USA set certification standards and established a “minimum fair trade price” for coffee at $1.26 per pound (FOB) to be paid to growers. When world market prices rose above the floor price, growers would receive an additional $0.05 per pound (Coffee Research, 2006). In 2010, TransFair USA became Fair Trade USA and redefined their mission. According to President and CEO Paul Rice: “Fair trade is about so much more than price. Fair Trade is a comprehensive approach to sustainable development that supports farmers with quality improvement, environmental stewardship, business capacity training, access to credit, and community development funds to help improve lives” (Fair Trade USA, 2010). Fair trade now encompasses many producers and products beyond coffee, and many other certifying organizations and labeling practices have entered the market, with varying degrees of success.

Fair trade labeling and certification practices have come under fire in recent years, accused of being ineffective due to offering farmers very little gain but at higher (certification) costs. Fortunately, the fair trade movement has at the very least raised awareness of the income disparity between coffee producers and consumers.

Next Steps

As fair trade has evolved, the notions of “Fair Trade Plus+” and “direct trade” have gained popularity. According to the Fair Trade Plus+ website, it is a “partnership between family farmers and the companies that bring the farm’s produce to market.” In this model, raw materials are purchased at market prices plus an additional three to five percent for the producer (Kestral Growth Brands, Inc., 2008). Just Haiti, and other organizations, have redefined fair trade plus by committing all profits from the sale of their coffee be returned to the farmers. Just Haiti reported that farmers received two thirds (67%) of the price of a bag of coffee (Just Haiti, Inc., ND).

In many of these relationships, farmers must still work through third parties (such as freight consolidators) to move their product from the farm to the consumer. However, an increasing number of organizations are developing direct trade relationships where middlemen between the producer and consumer are being eliminated. By reducing the number of middle points the costs of the supply chain are lowered allowing for greater returns to the farmers. While these models are increasing in number, pressure can come in the relationship between the producer and importer / roaster as many small lot farmers are unable to fill container loads.

More Holistic Model Still Needed

Rising awareness of the coffee famers’ plight has sparked action and confirmed that producers’ needs extend beyond the financial. New approaches need to focus holistically on people, not just products and markets. But despite efforts to date, many farmers, their families, and communities still face debilitating poverty and starvation. “After the Harvest” is a documentary that illuminates the economic hazards of the “thin months,” exposing food insecurity and starvation in coffee growing regions. The film’s makers propose sustainable solutions and partnerships to address these challenges (After the Harvest, 2011).

There are a wide variety of challenges in both coffee producing and coffee consuming regions of the world. Whether the challenges are political, physical, emotional, financial, social, familial, or spiritual, they foster feelings of helplessness and despair. While a holistic approach, taking into account the whole person, is not a new concept, it requires a new approach. At the foundation of just trade, as a holistic model, is commonality. This commonality is a poverty shared across borders, cultures, socioeconomic boundaries, and the human race. Only God can restore the poverty that we all share and meet our every need.  So, can coffee help solve this deeper issue?  And can it work practically?  We believe it can, especially with God’s help.

Coffee growing regions are typically also the most impoverished (where, in some cases, coffee represents a substantial percentage of GDP) and the least evangelized. That is no coincidence. Historically, mission-minded Christians have been the voices of advocacy to rattle the conscience of those benefiting from injustice against other humans, whether be they the victims of slavery, brutal colonization, persecution (such as the Jews in Nazi Germany or ethnic cleansing), or the economic injustice of unfair trade.

Today, many Christians are joining together to create models of holistic mission, not simply to address issues of economic disparities but to be the voice of the Gospel among marginalized coffee producers.

A New Approach

At the beginning of this article, I introduced Just Trade Movement International (JTMI) as a new vision aimed at bringing greater hope to everyone coffee touches. By leveraging a methodology and set of principles central to the business-as-mission (BAM) movement, JTMI seeks to empower every life in the coffee community, to createconnections, value, and mutual benefit, and to inspire confidence, dignity, and trust.

JTMI proposes a holistic approach through global life-saving partnerships, leveraging relationships to bring efficiencies, products, services, and needs-based solutions to BOTH producers and consumers in the coffee value chain. Solutions will be locally grown within partnership areas, focused on solving local problems. There are still poverty, corruption, oppression, and the lack of hope in consuming regions. While the problems between producing and consuming regions may appear dissimilar, many are rooted in common cultural and personal issues.

JTMI will leverage technology, creating an Internet portal similar to the model used by Kiva.org, the fast-growing peer-to-peer system for borrowing and lending, to link producers with technical and financial services, to facilitate product tracking from farm to market, and to follow the cash-back value chain from the consumer back to the producer.

Conclusion

The logistics of undertaking this endeavor within the coffee supply chain are complex involving numerous activities. Consider that every aspect of the coffee supply chain has a set of needs, products, and services that are addressed in this process.  This includes every step from developing relationships with the producers, cooperatives, importer/exporters, warehousers, roasters, and retail outlets.  Within this process, there is the movement of money where products or services change hands, projects are funded, and microloans and saving programs are established.  In addition, the holistic aspect of this endeavor seeks to promote the value of the individual by creating jobs, developing job skills, training for quality, teaching sustainable agricultural and business practices, and addressing poverty alleviation. By consulting, connecting, and collaborating in the business and ministry relationships, the first goal is to increase revenues. By developing efficiencies and economies of scale, the second goal is to reduce costs within the supply chain, including product sourcing (finding the farmers), purchasing (which involves banking, ie., money transfers and a lot of bookkeeping if dealing directly with large numbers of small farmers), importation (acquisition and shipping logistics and costs, plus import duties and quality control management), warehousing, roasting and packaging, marketing (finding retailers), and distribution logistics and costs. Trying to squeeze margins out of any or all of the processes may prove daunting.

JTMI, as a business proposal, recognizes the newness of this discussion, but is encouraged that there are many organizations, corporations, individuals, and experts already engaged in life-transforming efforts in the coffee world. Several of these – Thrive Farmers, Hemisphere Coffee Roasters, Theta Ridge Coffee, Long Miles Coffee, Mobile Barista, and Guido’s Coffee – took part in the panel discussion in during the Chicago workshop.

There are many other agencies and individuals working in direct famer / ministry relationships that are yet to be discovered and invited to the conversation as potential partners. There are even some, which cannot be named here, working in coffee in creative access countries.

So what is JTMI’s overarching aim? To bring about just trade that is hope-filled, holistic, and empowering. The idea of just trade is founded on nothing less than the unfailing love of God and our eternal hope in Jesus Christ. It is only upon this humble foundation that trusting and enduring relationships can exist and be cultivated.

David Price has more than twenty years relationship-building experience in corporate, start-up, and non-profit entities. He is energized by people, relationships, and connections. Between the Internet, banking, and higher education, Dave spent two years in the coffee industry which God used to create a passion in him to see coffee used as a vehicle for hope. He lives in Omaha, Nebraska, with wife, Kristi, and son Brent. He enjoys photography, world travel, music and food. And lives to glorify God.

Works Cited

After the Harvest. (2011). After the Harvest Fighting Hunger in the Coffeelands. Accessed November 25, 2012, http://aftertheharvestorg.blogspot.com.

Coffee Research. (2006). Fair Trade Coffee. Accessed November 25, 2012, http://www.coffeeresearch.org/politics/fairtrade.htm.

Fair Trade USA. (2010). Fair Trade Certified Coffee Review 2010-2011. Accessed November 25, 2012, http://fairtradeusa.org/sites/default/files/Coffee_Impact_Report_2.pdf.

International Coffee Organization. (2012). The Story of Coffee. Accessed November 24, 2012, http://www.ico.org/coffee_story.asp.

Just Haiti, Inc. (ND). Fair-Trade-Plus. Accessed November 25, 2012, http://justhaiti.org/our-coffee/fair-trade-plus.

Kestral Growth Brands, Inc. (2008). Fair Trade Plus. Accessed November 25, 2012, http://fairtradeplus.com.

Population Reference Bureau, 2011 World Population Data Sheet. Accessed November 29, 2012, http://www.prb.org/pdf11/2011population-data-sheet_eng.pdf.

SCAA. (2009). About Us. Accessed November 24, 2012, http://www.scaa.org.

SCAA. (2009). Article by Ric Rhinehart: What is Specialty Coffee? Accessed November 24, 2012, http://www.scaa.org.

Ten Thousand Villages. (ND). Ten Thousand Villages – Our History. Accessed November 26, 2012, http://www.tenthousandvillages.com/about-history.

Wikipedia. (2012). History of Coffee. Accessed November 24, 2012, http://en.wikipedia.org/wiki/History_of_coffee.

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