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Corporate coffee greenwashing fair trade

Brewing a Better Cup
As fair trade coffee gains ground with consumers, the industry's big players join in, leading to calls of 'greenwashing'
by DEREK REIBER | posted 01.21.04 |

Try this: Walk into your neighborhood Starbucks and ask for a cup of freshly brewed 'fair trade' coffee. Chances are, you're going to be out of luck, unless it's the one day of the month (the 20th) that the company features fair trade brew as its 'coffee of the day.' Otherwise, you'll have to ask the counterperson nicely if they might whip up your own special cup with a coffee press. And it's going to cost you extra, by the way.

All of which begs the question: why is it so difficult to drink fair trade coffee at Starbucks, when the company is the world's biggest coffee retailer and has posted 12 consecutive years of increased sales? When the company buys tens of millions of pounds of coffee each year, a full one percent of all the coffee in the entire world?

Before we attempt to address those questions, a little background:

Coffee is the world's second-largest traded commodity after oil. The United States, the largest coffee importer, gulps down a fifth of the total coffee consumed worldwide. More than 25 million coffee farmers in dozens of developing countries depend on the trade, but they're often locked into a cycle of extreme poverty.

Two decades ago, when the world market price for coffee plummeted, these tens of millions of small-scale farmers were forced to sell their beans at below-production prices, as they often do today. World coffee prices have remained low as a glut of supply plagues the market. With new players such as Vietnam turning to coffee as an agricultural export, production far exceeds consumption, driving the price paid to farmers ever downward. Some varieties that retail for as much as $10 per pound often fetch farmers just $.30 per pound, less than a third of what it takes to produce.
That's where fair trade comes in. The certification and labeling scheme helps by buying directly from coffee farmers for a guaranteed minimum price, above market prices. The idea is that with farmers earning the guaranteed wage -- currently $1.26 per pound of conventionally grown coffee and $1.41 per pound for organic -- they can cover their cost of production, earn an equitable wage, and possibly reinvest in capital for their farms. The fair trade labeled coffee is then sold to discerning consumers, who pay a premium for aiding the farmers in a global market where their bargaining power is small compared to the big corporations that dominate the market.

By all accounts, those consumers are growing in number. During the first 18 months when fair trade coffee was available in the U.S. market, the number of retailers skyrocketed from 400 to 7,000. In 2002, global sales of fair trade coffee hit $400 million, and worldwide it's enjoying a healthy 37 percent annual growth rate.

Equal Exchange, which buys about 3 million pounds of fair-trade coffee each year and sells it in more than 1,000 U.S. grocery stores and co-ops, is harnessing the power of fair trade as a faith-based social justice initiative. The company's Interfaith Coffee Program recently teamed up with Catholic
Relief Services to spread the fair trade word among the country's coffee-drinking religious groups.

The program hopes to enlist 1,900 parishes, or 10 percent of U.S. Catholic churches, in the program by November, reports the New York Times. Last year ,7,000 congregations nationwide bought 125 tons of coffee, tea and cocoa from Equal Exchange, about 15 percent of the company's business.
"If we could get every Catholic in the country to drink fair-trade coffee, for instance, that would be a huge market right there," said Paul Rice, president of TransFair USA, the only U.S. fair-trade certification organization, in the Times. "But it's the ripple effect -- getting all those people up to speed on what fair trade is all about and getting them to ask for it at their local stores -- that's going to have a much broader effect on the market."
Indeed, the major players in the U.S. coffee market are beginning to take notice of fair trade's success, and are seeking to cash in. Which brings us back to our original question -- why is it so difficult to drink fair trade coffee at Starbucks?

While actually being served a cup of fair trade brew at Starbucks may be tough, the company is actually a forerunner among the mainstream coffee retailers when it comes to fair trade. In 2002, Starbucks sold a "combined 3.4 million pounds of fair trade and/or organic and/or shade-grown coffee in 2002" and 2003's numbers will be larger, according to Starbucks spokesperson Megan Behrbaum in Evergreen Monthly.

That sure sounds like a lot. But keep in mind the issue of scale, argue some fair trade organizations.

"We roast and sell 200,000 pounds of fair-trade coffee each year," said Paul Katzeff of Thanksgiving Coffee in Evergreen Monthly. His company is committed to 100-percent fair trade beans. "Our revenues are about $4 million. Starbucks does billions. Does it seem right they only do five to 10 times more fair-trade coffee than our company?"

Katzeff's comments echo concerns of other fair trade advocates, who see the transnational companies engaging in 'greenwashing' -- or 'trade-washing,' as Equal Exchange's Rodney North calls it -- as they profess newfound commitments to fair trade coffee.

"It must be noted that there's a two-tiered incentive for these profit-focused corporations to jump on the Fair Trade bandwagon," notes the Starbucks campaign webpage of the Organic Consumers Association. "In addition to sharing some of the revenue of an exploding Fair Trade coffee market, which grew an astounding 54% last year, these companies also enjoy a slather of media attention, upon announcing their decision to act as an 'ethical business' and support fair wages for farmers."

Proctor & Gamble, the U.S. conglomerate that sells two major coffee brands, Folgers and Millstone, announced last year it was introducing a fair trade coffee as part of its Millstone line. What's more, P&G spokesperson Tonia Hyatt was quoted by as saying that the company's goal is to lead the market in fair trade coffee in the near future.

"If we were to become a leading seller someday in the next few years, that would mean approximately two to three million pounds," Hyatt told SocialFunds, although she wouldn't reveal what percentage of P&G coffee imports that would represent.

But Equal Exchange estimates that between Folgers and Millstone, P&G imports more than 500 million pounds of coffee each year. That puts a decidedly different spin on the company's fair trade venture.

"If the likes of P&G, with their massive resources, can't commit to Fair Trade for even one percent of their coffee, their announcement appears more driven by marketing than substance," Rink Dickinson, president of Equal Exchange, told SocialFunds. "The company does not seem willing to honestly address the fundamental inequities inherent in the world coffee trade."

Indeed, P&G marketing strategy for its fair trade blend, 'Mountain Moonlight,' doesn't seem designed to generate maximum sales. The coffee is offered to customers only online, although it is made available for wholesale accounts. Plus, anyone buying the coffee online is going to pay nearly $9 for 10 ounces, not including shipping. When it's all said and done, the price comes to about $20 per pound.

"Unfortunately, their choice to only offer a single Fair Trade coffee, at a higher price, and not make it available in stores where people shop, says they're trying to do as little as possible," Dickinson said to SocialFunds.

Proctor & Gamble, for its part, counters that it's been monitoring customer interest in fair trade coffee and "the consumer will vote and the consumer will decide if and when we go into retail stores."

But Equal Exchange, which buys about 3 million pounds of fair-trade coffee a year, isn't going to let P&G off easy. The company is challenging the conglomerate to match Equal Exchange's volume of fair trade coffee sold in 2004 pound-for-pound. If the coffee giant can match Equal Exchange, the cooperative claims it will donate $25,000 to one of its small farmer cooperative trading partners in Latin America.

Most observers believe that if fair trade is going to make it in the mainstream, then the coffee giants will have to play a key role. But Equal Exchange and other advocates of fair trade are sending a message that's loud and clear: no greenwashing along the way. Conglomerates with the purchasing power of a Starbucks or P&G shouldn't be able to get away with buying just one percent of their total coffee as fair trade so they can turn around and
reap the public relations rewards.

The cooperative's pound-for-pound challenge sends that very message to P&G -- and other mass-market coffee retailers -- that if they're going to get into the fair trade game, they had better back up their talk with a walk to match.