
One month ago, Jerlin, Victoria, Seth and I arrived in Guatemala, eager to find a solution to the problems that face its poor coffee growers. We were excited to throw the politics aside and get to the fundamental economic issues. For months we had absorbed conflicting arguments from various publications, documentaries and key informants. It seemed like every scholar, government, humanitarian organization and multinational corporation had an opinion on the problems of the highly politicized international coffee market.
At a San Francisco Public Library screening of PBS documentary “Black Gold” in April, Fair Trade proponents conveniently packaged the solution for all the poor coffee growers worldwide into three small words. “Trade not aid,” an Oxfam representative repeatedly told the audience. By buying Fair Trade certified products, people can use their consumption choices to ensure that poor coffee growers receive a “fair price.” This price would supposedly ensure that they can live comfortably and keep their children in school.
As expected, the demon of the documentary and talk afterwards was Starbucks. One scene showed a Starbucks funded clinic in Kenya turning away a mother and her sick baby because he weighed too much and they needed to make room for babies that were more malnourished. The film suggests that aid to a few people does not make up for the “exploitation” of the entire community by paying such low prices for its coffee.
The talk afterwards was a classic San Francisco moment. Ex-hippies and affluent Bay Area mothers proudly declared their alliance to Fair Trade and organic products while sprinkling in the usual anti-Starbucks/Monsanto commentary. They were convinced that they were doing significantly more good than the average American simply by changing consumption habits. It reminded me of the Evangelist Christians that try to prove that you are a bad person because you do not live life the way they do.
After visiting the most important coffee organizations in the capital during our first three weeks in Guatemala, we realized that the Fair Trade vs. Starbucks debate is not as important as it seems. The National Association of Coffee (ANACAFE) and the country’s largest federation of coffee cooperatives (FEDECOCAGUA) were not talking about Fair Trade and Starbucks too much because they only represent a small portion of world coffee sales (less than 1% for Fair Trade and 2 to 3% for Starbucks). On the other hand, what is significant for these organizations is meeting the demand for unique specialty coffee that pleases the pallets of European and Japanese consumers. FEDECOCAGUA sells 80% to Europe and 15% to Japan. At ANACAFE, the cupping masters are able to taste a coffee and identify the country in which it will be most popular. For Guatemalan coffee growers large and small, quality is their comparative advantage and way to get a better price.
“A fair price is when a grower receives what he deserves for the quality of coffee he produces,” Jorge Villatoro of Kaffa coffee processing in Huehuetenango told us a few days ago. “The problem with cooperatives [and Fair Trade] is that they take the production from all of their members and mix it together. Therefore, the producer of higher quality coffee receives less than he deserves.” With its microclimates and variation in soils, Huehuetenango produces a wide variety of coffee qualities and flavors. Many of which only make it to the consumer in the form of a common blend because the transaction cost of taste testing and sorting each small producer’s harvest is too high.
Fortunately, Starbucks is willing to take on that cost to deliver a consistent, high quality cup of coffee to the consumer. In addition, it actually has to offer a higher price because it needs a constant supply of the best coffee and must coordinate with growers through its “Cafe Practices” certification. Basically, Starbucks depends on the growers more than the growers depend on Starbucks. The consumer wants to go to that café and know exactly what he is going to get for his money. Without rewarding growers for their consistent supply of quality coffee by offering a fair price, Starbucks would not be as successful as it is today.
Even with a fair price through Fair Trade or Starbucks, the additional income may not make that much of a difference for the poorest growers. To deal with risk, poor coffee growers in Guatemala divide their land into many other crops like corn and beans. Considering their off farm earnings as well, coffee is usually just a small portion of their meager income.
At a Fair Trade talk in Antigua two weeks ago, two indigenous women told the audience about their struggle to start a cooperative and get a fair price for their jams and dried fruit. After years of work and international help, they were able to place their products in a few supermarkets and bakeries in Guatemala. There is no doubt that this was an empowering experience that they will hopefully pass on to their children. But when an audience member asked how the business impacted their household income, one of the women answered, “It adds a little bit to my husband’s income.” And that is only when the cooperative is producing. The other woman agreed.
From what I have gathered here in Guatemala, it is not possible to make much of an impact by buying Fair Trade products. So if you prefer a cup of Fair Trade coffee, do not parade around like you are solving the world’s problems through your consumer choices. Do not forget about the thousands of dollars that the Fair Trade labeling organizations have to spend in order to regulate the mechanism and market their products. And when you pick up that cup of hot, aromatic, caffeine loaded, invariably delicious and high quality Starbucks coffee, do not feel guilty because a coffee grower in the developing world is being rewarded for producing an above average product. Nonetheless, in both cases we are only talking about a small portion of worldwide coffee consumption. No one clarified this point better than Don Octavio Perez, who in addition to producing 4,000 pounds of coffee per year, transports fertilizer and the harvests of other growers in Huehuetenango. “I work for this company that is called, umm… Starbucks. Do you know them?”
Josh Schellenberg 