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 experts say there is only so much they can do compared to the trade of the world's leading coffee sellers such as Kraft Foods Inc. , Nestle and Sara Lee .

"Even though fair trade coffee has been around for a while, it has never really developed any sizable consumer volume," said Ted Lingle, executive director of the California-based Specialty Coffee Association of America.

He said that while Dutch fair trade brand Max Havelaar had 85 percent consumer awareness, only about 2 percent of customers actually bought it. And Europe's niche market has been around for much longer than that of the United States.

"They've (the fair trade coffee industry) hit a limit. Essentially they're tapping into the goodwill about why an individual would buy (fair trade coffee) when coffee traditionally has been purchased for other reasons," he said.

Fair trade advocates - like Oxfam, which launched a worldwide campaign last week to help poor coffee farmers - are lobbying for the big coffee companies to adopt fair trade.

Some experts are skeptical, saying that because the giants move such large quantities of coffee, they are not willing to work with micro-dealers selling fair trade-certified coffee. "It just doesn't fit their business model," Lingle said.

Securing viable, stable prices becomes even more crucial in times of crisis for the world's second most traded commodity after oil - like now, when prices are haltingly improving from a December 2001 record low of 41.5 cents a pound.

"With prices what they are, farmers can't cover costs; they don't take care of their crops, and that makes for bad coffee," said Juan Osco, president of the La Florida cooperative to which Alto Incariado's farmers belong. "That way, the only option we have is coca." Coca is the raw material for cocaine.

The higher price they get tips the scales for farmers torn between trying their luck with traditional coffee, yucca or banana crops, and those joining the growing ranks of producers of illegal coca leaf. Peru is the world's second biggest producer of cocaine.

La Florida's members - who also receive technical assistance from the cooperative and loans that can tide them over until harvest time - produce an annual average of 15 to 16 132-lb sacks of coffee, 95 percent of which is shade-grown. La Florida's total coffee exports were worth $2.4 million in 2001.

"The result is that we have a better quality of life and a high-quality, sustainable product," said fair trade farmer Signecio Atalaya, sipping a steaming cup of dark brew.