Does Fair Trade Coffee Lift Growers Out of Poverty or Simply Ease Our Guilty Conscience?

How many times a day do you consume a food produced by a subsistence farmer on the other side of the world? Whether it's chocolate, coffee, tea, sugar or bananas, most Americans regularly enjoy inexpensive tropical foods, but far fewer actually think about the effects on the people or the environment where those products are grown. The Fair Trade movement represents one attempt to change this by reminding consumers that their lifestyles rely on faraway farmers and laborers and offering them an opportunity to ensure their purchases come from farmers paid a fair price.

At least, that's what consumers believe when they consciously select Fair Trade products. Is the consumer truly raising subsistence farmers out of poverty by buying Fair Trade? Or is Fair Trade just a marketing scheme to ease our guilty consciences as we exploit people of the developing world?

While a number of products are now certified Fair Trade, the first one introduced into the United States -- coffee -- is also one of the most widely available. Fair Trade means more than just a fair price to the coffee grower; it also means the growers are organized into democratically run cooperatives. Often (but not always) the cooperative model extends into the U.S. where roasters of Fair Trade coffee are also worker-owned cooperatives. Yet, nowadays even Wal-Mart -- the very embodiment of everything Fair Trade values oppose -- sells Fair Trade coffee.

As it turns out, Fair Trade-certified coffee is not all equal, even if all Fair Trade coffee pays growers more than the market price. Clearly the philosophies of major retailers like Starbucks, Wal-Mart and Smucker's (which sells Fair Trade coffee under its Millstone brand) differ from those of grassroots activists like the founders of Just Coffee in Madison, WI who went into the coffee roasting business specifically to help improve the lives of Mexican coffee growers they met in Chiapas.

Starbucks, for example, announced it would begin selling Fair Trade coffee the day before a planned national day of protest against the company. For any publicly traded company, increasing returns to shareholders is the bottom line and Fair Trade coffee only plays into that if it can help a new market segment or generate positive PR. Just Coffee, on the other hand, operates as a worker-owned cooperative that pays its workers a living wage and health care benefits and also pays coffee growers well above the minimum fair trade price.

Despite the certification program and the often intimate relationship between growers in the Global South and roasters in the Global North, it's not easy to quantify how the Fair Trade price translates into improved quality of life. Coffee comes from countries on several continents, each with its own currency and economy. Thus, a living wage in Ethiopia may not be a living wage in Peru, or vice versa.

Also, the grower may not sell his coffee in the familiar form we think of as coffee beans. Coffee is harvested in the form of a cherry-like fruit and then the flesh is removed to reveal the coffee bean (which is actually the seed of the fruit). The grower may sell coffee in the cherry, but the market price for coffee is for the beans. To get from the cherry to dried green (unroasted) coffee beans, the coffee must be depulped, washed or rinsed, and dried on patios or in mechanical dryers, dehulled, and graded.

This further confuses any attempt to translate coffee prices paid by roasters into prices, incomes and quality of life for individual growers. Even the term "grower" is not without nuance; are we referring to the owner of the land where the coffee is grown or the laborer who grew or picked the coffee, and is that person one and the same or not?

Despite these difficulties, we can begin to understand how the Fair Trade program affects growers. The market price of coffee fluctuates, but as an example, it was $1.40 per pound on January 18, 2010. Fair Trade coffee, on the other hand, goes for a minimum of $1.21 per pound plus a specified Fair Trade Social Premium ($.10 per pound) and an additional organic premium ($.20 per pound) if the coffee is organic. When the market price exceeds $1.21 per pound (as it currently does), then the Fair Trade coffee price rises to the market price plus the Fair Trade Social Premium (and the organic premium if applicable). Thus, Fair Trade organic coffee goes for at least $1.51 per pound, but with a market price of $1.40 per pound, the Fair Trade organic price becomes $1.70 per pound.