World Environment News

Peru jungle farmers raise cups to fair trade coffee

Date: 27-Sep-02
Country: PERU
Author: Missy Ryan

But villagers might be raising cups of steaming coffee since this dirt-poor settlement of around 80 Ashaninka Indians in central Peru is betting its future on its fair trade coffee crop, which they hope will end up in the foamy cappuccinos of well-heeled and environmentally-minded consumers across the world.

Farmers in Alto Incariado have joined up with the local La Florida Cooperative selling coffee carrying the "fair trade" label - a seal guaranteeing consumers that producers comply with conditions like a "decent wage" for farmers, the right to unionize, environmental standards and shunning child labor.

They, like a growing group of third-world farmers across the world, are hoping that first-world consumers will be willing to pay a little extra for a coffee - or a banana, or a bag of rice - which carries that fair trade guarantee.

What do the farmers get? Quite simply, they get a price they say they can survive on. The fair trade coffee price for producers who work with Fair Trade Labeling Organizations (FLO), the world's biggest fair trade certifier, is $1.26 a pound (0.45 kg) more than twice the price of coffee futures in New York.

Coffee futures for December delivery on the New York Board of Trade were fetching 55.65 cents a pound Wednesday morning.

"We are going to keep on working to improve our coffee production. We get much better prices from the cooperative," said Alto Incariado farmer Melesio Mayunga.

Of the $1.26 the cooperative is paid per pound for fair trade coffee, farmers working with La Florida say they get $0.63-$0.94 per pound for their fair trade beans compared to a ceiling of $0.63 per pound for common coffee.

That price premium is a big deal for farmers in Peru, where more than half the population of 27 million lives on $1.25 or less a day and unemployment and underemployment together top 50 percent. Some 1 million people have jobs related to coffee, which is Peru's top agricultural export product.

MARKET SMALL, BUT GROWING

Fair trade coffee is one of the niche coffees like organic and shade-grown coffee that in many cases carries a price premium. While industry experts say fair trade coffee's market share has leaped in the past few years, it is still tiny and only accounts for around 0.8 percent of world sales.

"If you look at (fair trade coffee) from a market perspective, it's pretty frustrating. But from the perspective that these sales, however small, give farmers access to other markets and international financing, it's significant," said Raul del Aguila, president of Peru's National Coffee Board.

And fair trade officials say the trend is promising: According to nonprofit group Oxfam International, fair trade coffee sales grew 12 percent in 2001 while world coffee consumption grew just 1.5 percent.

Some of the world's biggest coffee cafe names like U.S.-owned Starbucks and U.K. coffee chain Costa have signed up for the fair trade system, promising to offer their higher-paying customers fair trade coffee.

Starbucks, the leading U.S. specialty coffee company, says it will buy more than 1 million pounds of fair trade coffee in 2002 and will serve around half a million cups of it.

"There is certainly a group of consumers who are interested in those products. They are a symbol of a company's commitment to doing business in a responsible manner," Starbucks vice president of business practices Sue Mecklenburg said by telephone.

She said Starbucks' fair trade packaged coffees are not its most expensive, and it does not charge extra for brewed fair trade Java. U.K coffee chain Costa, owned by British leisure group Whitbread Plc , charges only around 10 pence ($0.02) more for a fair trade cappuccino.

According to Martin Meteyard, chairman of British fair trade coffee trader Cafe Direct, the cost hike passed along to consumers in supermarkets there is usually around 25 percent.

COFFEE GIANTS STILL DWARF THE REST

But companies like Starbucks and industry expe

Reuters
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