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Thread: Does Fair Trade Coffee Eliminate Poverty?

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    Does Fair Trade Coffee Eliminate Poverty?

    for all your liberal "feel-gooders" out there.


    Does Fair Trade Coffee Eliminate Poverty?
    Monday, 08 November 2010 06:58 Anders Riel Müller
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    roasted_coffee_beansThe most frequently used argument for Fair Trade is that it provides small scale producers with the additional income needed to avoid lives mired in poverty. But poverty in coffee growing communities is a multi-faceted problem that cannot be reduced to a simple question of price mechanisms and improved trade relationships. Despite the rapid growth of Fair Trade and the tangible benefits it provides in terms of higher prices, poverty remains a persistent problem in many coffee communities, even those who sell all their coffee under Fair Trade terms.

    The majority of coffee produced and sold under Fair trade Certification comes from small-scale producer cooperatives in Latin America, Africa and Asia. The size of farms vary widely, but in general, a small scale coffee farmer tends to have between one and ten hectares of coffee. For most of these small scale farmers, coffee is the primary source of income, so they are highly vulnerable to fluctuations in global coffee prices. Small changes in coffee prices during harvest season can be decisive for whether their families will be able to feed themselves throughout the year, send the children to school, and in the worst cases whether they can remain on their land. They are at the mercy of a global trading system in which prices and conditions of trade are set in commodity exchanges in the US and Europe far beyond their reach and control.

    Fair Trade challenges the unfairness of the conventional trade system, by ensuring small-scale producer cooperatives are paid higher prices. Also, by eliminating many of the middle-men between the producer and the roaster, growers receive a larger share of the total value generated through the coffee chain. Fair Trade also emphasizes the need for access to pre-finance and long terms trading relationships that allow farmers and cooperatives to reinvest in their coffee business and plan for the longer term.

    In most research and articles these very tangible benefits are highlighted as making a difference in the lives of small scale coffee farmers. And there is no doubt that Fair Trade does have a positive impact, especially for the producer cooperatives. The additional resources allow the cooperatives to reinvest in better processing facilities, provide credit to farmers, improve the quality of coffee, marketing, etc. However, cooperatives also have an explicit function as a social organization whose mission is to improve the lives of their members, and this is where I think it is important to be critical of the claim that Fair Trade eliminates poverty.

    Claiming that higher prices eliminate poverty is based on a very simplified and incomplete notion of poverty. It represents a failure on our part to fundamentally understand what it means to be poor. To eliminate poverty we need to understand the fundamental reasons for poverty and the many faces of poverty.
    A market based approach to poverty alleviation may see increased trade as contributing essential financial resources to marginalized producers, but it is important to realize that fairer pricing is only one of many means needed. If we truly want to help coffee farmers improve their livelihoods, we need to better understand their life situations, their hopes, and their aspirations. If we take this point of departure in our understanding of poverty, we will see a much more complex picture and also a more multifaceted understanding of what it takes to address poverty among coffee farmers and their families.

    coffeeflowersmarcelocorrea

    Symptoms and Causes of Poverty

    This assessment is based on my own research conducted in three coffee communities in the states of Oaxaca and Vera Cruz in Mexico as well as in person interviews conducted by the International Center for Tropical Agriculture in Nicaragua, Mexico and Guatemala on behalf of Green Mountain Coffee Roasters, one of the largest buyers of Fair Trade Coffee in the US. What these surveys have in common is that they all took place in communities that have a relatively high share of their annual production sold through Fair Trade channels and thus in many ways are economically privileged compared to communities that have to sell their coffee on regular market terms.

    The results from both surveys show that despite the high share of coffee sold through Fair Trade channels, symptoms of poverty are still widespread throughout the communities. Food security, in particular, is a major problem in all communities and many farmers also reported that they were still forced to find work outside of their communities for parts of the year in order to secure the financial means to sustain their families. In the survey conducted for Green Mountain Coffee Roasters, 84% of the respondents indicated that food security was an issue for at least one month a year, but the majority faced food security issues for 3-8 months of the year.

    Food insecurity has a significant impact on the lives of coffee farmers and their families. In my own research, I found that malnutrition was a significant issue for many children affecting their physical and mental development. Food insecurity also forced many families to be split apart for several months of the year because either one parent or both had to leave the community in order to find work. In some cases, parents would leave their children to themselves and in other cases they would bring the children with them, which meant that they could not attend school for several weeks or months. Food insecurity thus impacts many other aspects of the daily life in coffee communities including health, education, migration, and economic activity.

    Understanding the causes of food insecurity requires an understanding of the role of coffee in the local economy. As mentioned earlier, most small scale farmers own 2-5 hectares of land with most or all of it dedicated to coffee production. Coffee is a long term investment for most growers as it takes 3-5 years for a coffee tree to bear fruit and they remain productive for 30-100 years depending on the variety and local soil and climatic conditions. Coffee is also a very labor intensive crop that requires pruning and maintenance throughout year, and during the harvest season, that can last for several months, most family members are required to help out. Some families would have a few fruit trees growing on their land as well for their own consumption or for sale, but most were trapped in a mono-crop situation where scarcity of land and lack of knowledge and resources to diversify left them extremely vulnerable to coffee price fluctuations on the global market. The lack of land for food crops also meant that almost all food was purchased in the food markets, leaving families in a situation of double vulnerability as they are subject to fluctuations in both coffee prices and food prices.

    oldwomenface3Trapped in Coffee and Poverty

    In my interviews with farmers, most expressed sincere pride in their profession as coffee growers. Coffee cultivation and processing not only requires hard manual labor, but also intimate knowledge of pruning and caring for the coffee trees. Coffee cultivation is not just a job, it is a way of life and a craft that takes years to learn and perfect. But the reliance on coffee as the primary source of income also leaves most farmers at the mercy of a global commodity chain that they have absolutely no influence on. Some farmers and cooperatives were aware that the dependency on coffee was a threat to the long term viability of their communities. Some had started initiatives to seek to establish greater autonomy from the global coffee market by helping families grow food crops and diversify in to other products for which there was a local or regional market, but it is was difficult balancing act, because it was also necessary to reinvest in coffee activities. Rarely was there enough resources to feed the household, reinvest in coffee cultivation, and diversify economic activities.

    It is important here to note that Fair Trade premiums are paid to the cooperative and not to the farmers directly. In most cases the cooperatives will reinvest part of the Fair Trade premiums in improving coffee related activities such as processing equipment, coffee tree nurseries, quality control and marketing. What money remains is usually distributed to the individual households. In some cases the cooperatives will also divert some of the Fair Trade premiums towards economic diversification projects and social services, but this was secondary to reinvestment in the coffee business, the core economic activity of the cooperatives.

    The results of these surveys show that while Fair Trade does benefit coffee communities, we must also be clear on the limitations of Fair Trade. To claim that Fair Trade lifts coffee growers out of poverty is an overstatement that does disservice to Fair Trade and the growers alike. To address poverty in coffee communities we need to understand that the heavy dependence on coffee as the primary source of income is what keeps communities caught in the poverty cycle. To address poverty, there needs to be a more comprehensive approach that establishes more independence from coffee through greater self-reliance and by shifting some parts of the land under cultivation to food and products for local and regional markets in which farmers have greater influence and control. In short, in order to break free of the poverty trap, farmers need to break free from the coffee trap.

    Addressing Food Security and Economic Dependence

    Addressing food security is one of the most pressing concerns as it impacts everything else in the lives of coffee farmers. If there is not enough money for food, there is no money to reinvest in the coffee business, diversify economic activities, secure their children’s education, and so on. In my own research, this seemed to be a well acknowledged fact by most cooperatives I visited, but the resources were often not available to do much about it. However, one cooperative had shown significant progress in assisting households by providing training workshops on vegetable gardening and nutrition. The same cooperative had also opened their own food store to ensure that families could have access to affordable food staples such as maize and rice throughout the year. Finally, the cooperative was actively engaged in producing other commodities for local markets such as honey and sugar. The results were very tangible in our interviews with local families. In general, families in that specific cooperative expressed that their lives had improved significantly. This response was in contrast to the two other cooperatives visited where the cooperatives themselves were struggling to stay afloat even with the Fair Trade premiums they received.

    Green Mountain Coffee Roasters has gone to great lengths to understand the relationship between Fair Trade and poverty. The company’s involvement with asadontrabajadorati

    coffee communities has gone beyond buying Fair Trade certified coffee in recent years. Since the initial surveys were conducted in 2006, the company has invested several millions of dollars in addressing food security, economic diversification, health, and education. On food security alone, Green Mountain Coffee Roasters now funds 20 food security projects in 12 countries touching more than 25000 families or more than 120,000 individuals. It is encouraging to see that some companies in the industry are beginning to acknowledge that Fair Trade is not the end all solution to alleviating poverty in coffee growing communities.

    As consumers, we also need to better understand the actual impact of Fair Trade, to acknowledge the benefits that Fair Trade does provide, but also be aware of the limitations of the system. Supporting Fair Trade is a good first step, but there is much more that needs to be done if we want to lift small scale farmers out of poverty, and in the end isn’t that why we choose to buy Fair Trade coffee in the first place?

    --------------------------

    Anders Riel Müller is the founder and Executive Director of ClimateAdapt, a non-profit organization assisting cities, towns, and communities identify, implement and manage climate mitigation and adaptation initiatives. Anders has led a wide range of local, regional and international initiatives within the areas of climate change, renewable energy and sustainability. He has worked with communities and institutions across the globe on regional and local strategies for climate change mitigation, climate adaptation, and sustainable food systems. Prior to entering the world of renewable energy, his research focused on corporate social and environmental responsibility in global supply chains. He also did research on international agricultural trade policy, Global Commodity Chains, and rural poverty in Asian and Africa. Anders holds an MA in Business Studies and Technological and Socio-Economic Planning from Roskilde University in Denmark.

    The article was originally published in Conducive Magazine, we thank Conducive Magazine and the author Anders Riel Müller for their generosity.
    http://www.conducivemag.com/2010/11/...inate-poverty/

    Photos: Wikipedia: coffee beans rosted, coffe flowers. Bo Persson: Santiago Atitlan, Women. Barbara Schieber: Trabajando con azadón, Atitlan.
    “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

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    DOR
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    The only proven ways to alleviate – not eliminate – poverty are:
    1) Tackle corruption. There are no rich corrupt states (leave out the oilers), and no poor honest ones.
    2) Educate women; the ROI is phenomenal.
    3) Respect women’s right to work and keep what the earn.

    That’s it. Good geography helps, but in a nutshell the key is an honest administration (and courts) and educated women in the workforce.

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    Quote Originally Posted by DOR View Post
    There are no rich corrupt states
    Oh please. Now that's an utterly ridiculous statement.

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    Quote Originally Posted by kato View Post
    Oh please. Now that's an utterly ridiculous statement.
    OK, fair cop.

    Go to Transparency International, the only reliable cross-border comparison of corruption. Or, find a better one; your call.

    Match their rankings to, say, the World Bank's per capita income figures.

    Find the (non-oiler) corrupt rich, and the honest poor.

    My research shows that there is an extremely close correlation between (the perception of) honest governments (as measured by TI) and income per head.

    Ex-oilers.

    Prove me wrong.

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    wow, ok DOR, you got me hooked, some surprises there for me....... does this mean we will have to bow our heads to Pari now when he shows his presense to us

    Great link thanks DOR.
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    Quote Originally Posted by DOR View Post
    Find the (non-oiler) corrupt rich, and the honest poor.
    Okay, let's play this game.

    Italy versus Botswana.

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    How about fair-trade soybeans, corn, and wheat as it relates to the small family American farmer?

    It seems that this fair-trade coffee issue relates to economies of scale and production. Giant farming conglomerates move in, coffee (or any crop) generally becomes much cheaper, small farmer cries "foul" (even though there's nothing inherently unfair going on) and asks for artificial pricing.

    I'm not sure that is the way to go. I can't say I like it, but the Wal-Martization of the world continues because people want cheap stuff.

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    Chogy - response

    Or put another way Chogy.......... want the best for the low(cheap) prices.....cake and eat it attitude.
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    Quote Originally Posted by T_igger_cs_30 View Post
    Or put another way Chogy.......... want the best for the low(cheap) prices.....cake and eat it attitude.
    Don't get me wrong - I LIKE mom & pop operations, and I find it particularly sad that businesses like the corner grocery store, the retired-guy's hardware store, and yes the family farm, are vanishing. I've got a hardware store nearby that is a classic - cluttered aisles, vast selection, good ol' boys hanging out, and high prices. I go there and spend my money.

    It's a difficult problem. If we let the market decide, soon all we'll have in the U.S. are Super Wal-Marts, Home Depots, Dillard's, one or two other mega-corps that crush smaller competition. But can you (should you) protect "the little guy"?

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    I'm surprised governmental subsidies have not entered this discussion yet, as I feel it has alot of bearing.

    Out of 80 countries, only one (New Zealand) does not intervene in its commodity markets either to protect farmers from low prices or consumers from high ones.

    I think these billions in subsidies help depress global prices of some vital cash crops that developing countries count on. They may even widen the gap between the rich and the poor.

    More than 800,000 farmers and landowners receive subsidies, but the payments seem to be heavily tilted toward the largest producers.

    These subsidies are now on the chopping block, and I'm glad to see it.

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    Quote Originally Posted by Julie View Post
    More than 800,000 farmers and landowners receive subsidies, but the payments seem to be heavily tilted toward the largest producers.

    These subsidies are now on the chopping block, and I'm glad to see it.
    It matters how those subsidies are dropped though, for whom and when.

    In the EU, the small producers are increasingly forced out of the market by certain subsidies being dropped (while the ones that benefit the large producers persist). A couple years ago, for example, increased subsidies on small-scale milk production were dropped, resulting in everyone getting rid of their milk cows. Then the subsidies for growing your animals' own feed were reduced, resulting in most people getting rid of all livestock.
    And until two years ago, the EU even ran a buyout of sorts, giving one-off subsidies to everyone who converted their land from growing food plants to energy plants (which was done to make it cheaper to produce bioethanol, a market dominated by a handful companies).

    There's a couple other endemic problems. For example that a lot of Europeans don't eat chicken legs, only breast - and they pay for that luxury. The leftover couple hundred million chicken legs are then exported wholesale to Africa, where everyone buys them because they're cheap as dirt (in some areas it's the primary meat source actually...); they're effectively imported to those countries at shipping cost only, since the price of the whole chicken is already figured into the price of the breast that Europeans eat. Exporting them is cheaper than getting rid of the carcass, same with a lot of other products. And African farmers raising chicken locally can't compete against such prices. Subsidies don't even figure into that.

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    Fair trade is a good concept, if it remains a private initiative that's less intrusive and involuntary like government mandates. I, as a consumer, can choose to engage in this activity. I can freely choose to pay a higher price, suffer a little on my end, and hopefully make a difference in someone else's life. What I can't stand is government mandates and subsidies that forces me to support a project that I do not agree with.
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    gunnut,

    Fair trade is a good concept, if it remains a private initiative that's less intrusive and involuntary like government mandates
    by definition fair trade has to remain a private initiative. the best governments can do is "free trade", unless we somehow have a government that would rather subsidize imports rather than domestic goods!
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."¯- Isaac Asimov

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    Quote Originally Posted by astralis View Post
    gunnut,



    by definition fair trade has to remain a private initiative. the best governments can do is "free trade", unless we somehow have a government that would rather subsidize imports rather than domestic goods!
    Incorrect, govenrments can do a lot more. They can create level playing feilds in asociated areas like transportation, fuel costs, storage fees etc. By making dependent on volume large producers loose the ability to manipulate the ancillary costs of an operation in order to drive out smaller operations.

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    Quote Originally Posted by zraver View Post
    Incorrect, govenrments can do a lot more. They can create level playing feilds in asociated areas like transportation, fuel costs, storage fees etc. By making dependent on volume large producers loose the ability to manipulate the ancillary costs of an operation in order to drive out smaller operations.
    But the reason for the change from small farmers to larger farmers is due to the larger farmer's efficiency. To award small farmers artificially is the equivalent to artificially maintaining cultural traditions in communities. It does not help.

    Btw, fair trade is simply people who puts a price tag on "morals". If you want rapid economic growth, you want to "walmartize". This is why the Chinese(who LOVE economic growth and are getting it), are artificially keeping their prices low.

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