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Fair Trade Coffee

*Disclaimer: This may be the worst paper I have ever written. Hey, cut me some slack, I had really bad senioritis at the time. I actually wrote the thing the day it was due. On the other hand, given the fact that it’s about coffee, I thought it might be worth posting.

Fair Trade Coffee: Why Was the United States Such a Late Bloomer?

(May 15th, 2010)

How many people have never seen the ubiquitous green mermaid that symbolizes Starbucks, whose coffee empire extends worldwide? Since Starbucks began as a largely American phenomenon, it is not surprising that Americans consume more coffee than any other country. This was not always the case, so what caused coffee to become our national drink, and why is this even significant? First and foremost, anything that involves as much money, transportation, exploitation of workers and economic strategy as coffee will never be just a “beverage.” Whether or not the consumer is aware of it, the beans ground to make that drink have passed through an elaborate network—one that likely has negative environmental and social consequences. Consumers, however, are becoming increasingly aware, as demonstrated by the Fair Trade and Organic movements. Although this paper focuses on Fair Trade ideology and practice, the two are not mutually exclusive. While many conscious consumers will purchase any coffee with a Fair Trade certification, others are more skeptical: What does “fair” even mean, and how can a middleclass businessman really believe that workers hundreds of miles away are being treated any differently? This iffy credibility is one of the Fair Trade movement’s weaknesses: good intentions or not (this will be discussed later on), most writers on the subject have agreed that these “sustainable” coffee movements alone will not solve what has been referred to as the “Coffee Paradox.” The aim of this paper is to explain why the United States was the most reluctant to join the Fair Trade Coffee movement, focusing on its political, ethical, and economic factors. As it turns out, the addition of the U.S. to Fair Trade treaties has changed Fair Trade to fit, rather than oppose, Neoliberal ideology. Canada, our more Northern “European” neighbor is used as a convenient foil. Finally, Starbucks will be referenced throughout the paper: it may be popular, but it is more concerned with market manipulation than with ethics.

The main idea behind Fair Trade is the distribution of wealth between producer and consumer: paying producers fairly and maintaining personal relationships. Oftentimes, this means eliminating middlemen (“coyotes”) and paying a minimum price to producers.[1] A complex certification process is required: it take six to twelve months to obtain certification, which requires a certain amount of organization. Fair Trade is not only applied to coffee, but to handicrafts, tea, bananas, and chocolate, to name a few. In the United States, it took much longer to make the transition from handicrafts to coffee, whereas in Europe Fair Trade spread more quickly.[2] Regardless of these differences, Fair Trade movements on both continents had religious origins: churches in North America and Europe in the late 1940s provided relief to refugees and other poverty stricken communities by selling their handicrafts to Northern markets. Organizations such as Church of the Brethren and the Mennonite International Development Agency led to ATOs, or Alternative trade organizations. The Netherlands were the first country to come up with the idea of Fair Trade certification, with groups like Oxfam in the UK following closely after. From this stemmed “umbrella” organizations such as FLO (Fairtrade Labeling Organizations) that transformed Fair Trade from a local to an international movement. Today, the countries with the largest Fair Trade markets are the Netherlands, Germany, the U.S., Denmark, and the U.K.[3] However, compare the size of the U.S. to these other countries: is it not to be expected that such a large and populous country dominate most markets? It still fails to explain why only a fraction of the coffee we consume is Fair Trade.

Before we turn our attention to the United States, the pros and cons of the Fair Trade movement must be assessed. Naturally, no issue is black and white, and the definition of “fair” has been controversial. The fact that Fair Trade has no legal definition has an upside and a downside: it operates independently of government trade, but it also has the potential for “counterfeit” movements to develop.[4] Third party certification, which is also expensive, is really the only guarantee the consumer has of knowing if something has been produced “fairly” or not, but the subjectivity of the word itself has also been up for debate. Gavin Fridell argues that Fair Trade is simply impractical, since it is using nonmarket logic in a free market economy, stressing morality at structure’s expense.[5] Hypocrisy and corruption are also debatable: some say ATOs are in fact market driven by corporate interests, Fair Trade being part of a larger strategy that has nothing to do with morality. Another problem is what has been referred to as “yuppie syndrome”: Just as specialty coffee (discussed in the next paragraph) targets a largely upper-middle class audience, so does Fair Trade.[6] Because Fair Trade is unlikely, to grow beyond this specific group of people, an alternate model must be proposed. Although this is an extremely divided issue, both parties agree on one thing: ATOs are not the final solution, and there is always room for improvement and new ideas.

Coffee’s role as America’s national drink, placed in a political context, can be traced all the way back to Independence. Although the first reference to coffee in North America was in 1668, even the Boston Tea Party was instrumental in making us more of a coffee-loving nation than the British. Not only was coffee easily imported from the French and Dutch colonies, but drinking it was patriotic, as opposed to tea, which was seen as “un-American.”[7] There was already a reason to drink coffee besides the taste and caffeine benefits. Coffee consumption in the U.S. grew and grew, reaching a peak in 1963. The growth of coffee industry can also be attributed to three main factors: the centralization of roasting industry, technical innovations and transport, and geopolitical movements.[8] For example, our power was used in producing countries to promote our politics, as seen in Cold War Latin America. Equal Exchange, the first American FLO, was founded in 1986 and came out of the Central American Solidarity movement, its goal being to circumvent Reagan’s embargo in Nicaragua.[9]

In the post WWII era, the Inter-American Coffee Agreement was divided among major producers to help the European market, reinforcing America’s dominant role of consuming 80% of the world’s coffee.[10] During the 1980s, there was a decline in coffee prices, giving room for the gourmet coffee market to develop, causing the specialty coffee industry to become a booming business. By 1998, specialty coffee represented 18% of the U.S. coffee market.[11] Although Starbucks today is seen by coffee snobs who drink locally roasted beans such as Intelligentsia and Stumptown as mainstream, shortly after its founding in 1971, it revolutionized the café’s role in coffee industry. Starbucks, as mentioned earlier, catered, and still does, to the middle class, who were attracted both to the coffee-drinking space itself (sometimes referred to as the “Third place”), but to the idea of a “small indulgence” more decadent than home-brewed coffee, yet more acceptable than a piece of cake. By 1998, Starbucks had expanded to more than two thousand U.S. stores, with plans to open more in Asia and Europe.[12]

Although Starbucks now offers Fair trade coffee, most conscious consumers argue that they have joined the movement for all the wrong reasons. Although they may have better policies and wages for workers than a company like Dunkin’ Donuts, the fact remains that they are profit-driven. They only carry Fair Trade coffee, as opposed to tea or fruit, suggesting that Fair Trade is part of a broader economic strategy. In fact, Starbucks is known for exploiting certain loopholes, even using local prison labor on major holidays.[13] When sustainable coffee movements are approached from this angle, it is not surprising that since Starbucks joined the Fair Trade movement, the definition of Fair Trade itself is changing. Considering Starbucks’ role as an American company, it also makes sense that the U.S. was late in joining the Fair Trade movement. The aim of the rest of the paper is to compare the U.S. to Europe and Canada, and to link this reluctance to intrinsic economic and political ideology.

However, whereas Europe was quick to adopt Fair Trade ideology, the U.S. was quicker to go organic. Today, 50% of our worldwide coffee sales are organic, whereas only 15% are Fair Trade.[14] Although this is a paper about Fair Trade, not organic movements, it is worth examining the main difference between them: the organic movement is more concerned with the ecological consequences of industry, seeking to maintain the natural environment as opposed to changing it.[15] It would not be too much of a stretch to argue that the organic movement is much more individualistic: the individual wants to ensure that what they are putting into their body is not harmful and does not harm the environment around them. We live in a country founded on individualism and competition, whereas Europe’s feudal tradition gives more easily to charity and moral obligation. Organics also fit more easily into the economic strategies of a market economy, unlike Fair Trade. This is the essential difference between America and Europe, and the difference that has transformed the Fair Trade movement since the U.S. joined.

This individualistic argument can be traced back to where we started, the Boston Tea Party.  In Europe, colonialism dictated coffee cultivation, but in U.S. it represented the end of colonialism. Concern with how workers were treated in former colonies was the main cause of Fair trade, but the United States, imperialistic as some of its policies were, had no official “colonies.” Although geography and timing are important, FLO having been initiated in Europe and naturally taking longer to get to the U.S., there must be a reason why FLO began in Europe in the first place. Much of this is owed to the difference between European and American traditions: Europe has stronger labor-based parties, as well as a history of feudalism and a moralistic upper class, mentioned earlier. America was founded by the most liberal middle class Brits, pushing individualism and severing ties with Europe.[16] The differences between the U.S. and Europe increased after the Inter-American Coffee Agreement of the 1940s: as the gap between U.S. prices and those of producing countries grew, the U.S. found themselves in direct economic opposition to these producing nations.[17]

This individualism is best demonstrated by American Neoliberalism; that is, the free market fundamentalism that caused economic reforms at the end of the Cold War. Before America joined the Fair Trade movement, its ideas were in direct opposition to neoliberal globalization; now, rapid growth comes with compatibility to these reforms. Fair Trade is now the neoliberal version of the earlier model, changing its definition as the U.S. becomes more and more involved. In the 1970s, as the United States adopted the Dollar-Wall street Regime, they compelled Europe to adopt neoliberal reforms. They abandoned the dollar-gold convertibility in 1971, abolishing capital controls to finance the trade deficit in 1974. These controls were required to preserve policy autonomy of states.[18]

While it may be difficult to examine the influence of these controls on Europe, it is easy to use their impact on Canada to compare the difference between Canada and the United States. Because Canada’s political and economic traditions resemble more closely those of Europe, while being geographically closer to the United States, they represent a middle ground. Unfortunately, the impact of Fair Trade on Canada does not speak very well for the U.S.: For example, since the 1984 Free Trade Agreement with U.S., the gap between rich and poor has increased. Canadian Starbucks sell Fair Trade coffee both whole bean and brewed, whereas U.S. only has whole bean bags.[19] Gavin Fridell, who makes this argument, is Canadian, so his writing must be taken with a grain of salt, but there is still something to be said of the fact that Starbucks also maintains a strict anti-Union position, almost directly contradicting Fair Trade’s roots in UN human and labor rights.[20]

This paper is not necessarily a critique of American economic policy, or even an advocate of Fair Trade coffee. Rather, it is to demonstrate the relationship between coffee and politics, economics, and ethics. It is to trace the gap between America and the rest of the world all the way back to fundamental ideological differences and political events. Fair Trade is by no means perfect, still searching for its place in the midst of a seemingly contradictory market economy. It has been found that since America has joined the Fair Trade movement, it has used its power as leading coffee consumer to actually change its definition, adapting it to fit a neoliberal ideology. All this stems from a tradition of individualism and coffee as a patriotic American movement. What lies in the future of the Fair Trade movement is unclear, but it is unlikely to expand much further: it targets too narrow an audience and despite its changed definition, is not well enough adapted to the capitalistic society we live in. Luckily, consumers are becoming more and more aware of the impact their purchases have on the world and people around them, an awareness that will hopefully continue to grow. A new system will be proposed soon enough: Barratt Brown, in the 1990’s, said Fair Trade had to be combined with the international market in order to avoid manipulation and speculation.[21] This is easier said than done, but acknowledging the existence of alternate models is a step in the right direction.

Works Cited

Barratt-Brown, Michael. Fair Trade: Reform and Realities in the International Trading System. Zed Books, 1993.

Daviron, Benoît, and Stefano Ponte. The Coffee Paradox: Global Markets, Commodity Trade, and the Elusive Promise of Development. London: Zed in Association with the CTA, 2005.

Fridell, Gavin, Fair Trade Coffee: The Prospects and Pitfalls of Market-Driven Social Justice. Toronto: University of Toronto Press 2007.

Gray, Richard. “Fairtrade Fails to Tackle Poverty, Report Says.” Telegraph. 24 Feb. 2008. Web. 12 Apr. 2010. <http://www.telegraph.co.uk/earth/earthnews/3326576/Fairtrade-fails-to-tackle-poverty-report-says.html&gt;.

Luttinger, Nina, Gregory Dicum. The Coffee Book: Anatomy of an Industry from Crop to the Last Drop. New York: 2006.

Talbot, John M. Grounds for Agreement: the Political Economy of the Coffee Commodity Chain. Lanham, MD: Rowman & Littlefield, 2004.

“Frequently Asked Questions.” Global Exchange – Building People-to-People Ties. Web. 12 Apr. 2010. <http://www.globalexchange.org/campaigns/fairtrade/coffee/faq.html&gt;.

“TransFair USA | History.” TransFair USA | Home. Web. 12 Apr. 2010. <http://www.transfairusa.org/content/about/history.php&gt;.

“WFTO – 60 Years of Fair Trade.” WFTO – Home. Web. 12 Apr. 2010. <http://www.wfto.com/index.php?option=com_content&task=view&id=10&Itemid=17&limit=1&limitstart=1&gt;.


[1] “Frequently Asked Questions.” Global Exchange – Building People-to-People Ties. Web. 12 Apr. 2010. <http://www.globalexchange.org/campaigns/fairtrade/coffee/faq.html&gt;.

[2] John M. Talbot, Grounds for Agreement: the Political Economy of the Coffee Commodity Chain (Lanham, MD: Rowman & Littlefield, 2004), 203

[3] Benoît Daviron, The Coffee Paradox: Global Markets, Commodity Trade, and the Elusive Promise of Development (London: Zed in Association with the CTA, 2005), 190

[4] Richard Gray, “Fairtrade Fails to Tackle Poverty, Report Says.” Telegraph. 24 Feb. 2008. Web. 12 Apr. 2010. <http://www.telegraph.co.uk/earth/earthnews/3326576/Fairtrade-fails-to-tackle-poverty-report-says.html&gt;.

[5] Gavin Fridell, Fair Trade Coffee: The Prospects and Pitfalls of Market-Driven Social Justice (Toronto: University of Toronto Press 2007), 11

[6] John M. Talbot, Grounds for Agreement, 210

[7] Nina Luttinger and  Dicum Gregory, The Coffee Book: Anatomy of an Industry from Crop to the Last Drop (New York: 2006), 34

[8] Nina Luttinger and  Dicum Gregory, The Coffee Book, 35

[9] John M. Talbot, Grounds for Agreement, 204

[10] Nina Luttinger and  Dicum Gregory, The Coffee Book, 81

[11] John M. Talbot, Grounds for Agreement, 201

[12] Nina Luttinger and  Dicum Gregory, The Coffee Book, 154

[13] Gavin Fridell, Fair Trade Coffee, 253

[14] John M. Talbot, Grounds for Agreement, 205

[15] John M. Talbot, Grounds for Agreement, 209

[16]Benoît Daviron, The Coffee Paradox: Global Markets, Commodity Trade, and the Elusive Promise of Development (London: Zed in Association with the CTA, 2005), 200

[17] Gavin Fridell, Fair Trade Coffee, 255

[18] Gavin Fridell, Fair Trade Coffee, 256

[19] Gavin Fridell, Fair Trade Coffee, 227

[20] TransFair USA | History.” TransFair USA | Home. Web. 12 Apr. 2010. <http://www.transfairusa.org/content/about/history.php&gt;.

[21] Michael Barratt-Brown, Fair Trade: Reform and Realities in the International Trading System (Zed Books, 1993), 75

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