A Rich Flavour? Meet the Makers of Fairtrade Coffee

Coffee is big business. Like oil, it’s often called "black gold" for the high prices it can command on international commodity markets in New York and London. In Vienna, coffee has shaped the cultural life of the city at least since the Armenian Johannes Deodatus opened the first Kaffeehaus in the Rotenturmstrasse in 1685. Today, the average Austrian consumes eight kilograms of coffee beans per year, amounting to 162 litres of brewed coffee, placing the country mid-field in Western per-capita consumption.

A growing proportion of that coffee bears the black-green-and-blue Fairtrade label: In 2010, Austria imported 1,400 tons of certified beans, a 20% increase on the year before. While this was still only 3% of Austria’s total coffee imports, the proportion of Fairtrade beans had trebled from 1% in 2005. For consumers, a Fairtrade cappuccino provides the peace of mind that coffee farmers in far-flung countries are making a dignified living. But is that really the case?

I travelled 10,000 km from Vienna to meet some of those coffee producers high up in the cloud forest of Nicaragua, a Central American country that has depended on coffee exports for a century and a half. From Matagalpa, the north-central city that serves as the gateway to the growing plateau, it was a three-hour, axle-scraping jeep ride until I arrived at Dionicia Valdivia’s farm.

Decked out in her Sunday best – bright pink blouse and skirt – the 54-year old woman showed me how to pick the raw coffee berries – the café en uva. They are the basis for the high quality Arabica coffee destined for the European market. With stubby, calloused fingers, she whipped the ripe red berries from the bush with precision, leaving the unripe green ones for a later harvest.

Since fighting off an abusive husband, Dionicia runs her tiny farm with her daughter. It looked idyllic: Nestled in a jungle-covered valley, her small growing patch was covered by a canopy of leafy mango, banana, and mandarin trees. Underneath, shiny-leafed coffee bushes sprawled amid gigantic ferns. Such "shade grown" coffee is supposed to guarantee the best quality.

But the beauty is deceptive. Dionicia’s farm is in a poor region in a poor country. In 2009, the International Monetary Fund (IMF) recorded 6% of Nicaraguans surviving on $1.25 per day, the international extreme poverty line. But in rural areas the figure stood at 11%. Even that estimate was too low, said the economist Nestor Avendano as we spoke at his home in Managua, the capital. He maintained that a staggering 35% of the rural population lived on less that 60 U.S. cents a day. The sharp contrast between the data recalled the difficulty of measuring poverty in developing countries.

The Sandinista revolution of 1979 brought land reform, turning many landless coffee pickers into small hold farmers with an average lot of three to five hectares. But they are still losing the war against poverty. These farmers, or campesinos, are called "los miserables" by their own government.

Dionicia’s village, Yasikas, was no more than a strung-out collection of wooden shacks, with tin roofs peeping out of the undergrowth. The village was only recently connected to the electricity grid.

A shelter from the market

But Dionicia’s growing patch is weaved into the global network of Fairtrade, a labelling association that guarantees producers are paid a minimum price. Among Fairtrade’s clients are large-scale coffee retailers such as Starbuck’s, but the label is granted only to coffee sourced from co-operatives of small farmers. They must be paid a minimum price currently set at $1.40 per pound of Arabica beans.

Founded in the 1970s in Bonn, Germany, Fairtrade thus aims to provide a safety net for producers in a notoriously volatile market. While new coffee plants take four years to bear fruit, the commodity price can take erratic turns that wipe out farmers’ investments: While a drought in 1997 saw the price for a pound of Arabica skyrocket to almost $2.80 at the New York Coffee Exchange, in 2001 it hit a record low of 45 U.S. cents. Factors that influence the price range from the weather, to investor speculation, to the politics of trade agreements. Yet with its minimum price, Fairtrade enables farmers to plan ahead and make predictable investments.

It was another two hours along a rain-eroded track to meet José Anselmo Espinoza, a recent convert to the Fairtrade system. He is considered relatively wealthy in his neighbourhood, employing up to 49 workers during the harvest and paying them between $4 and $8 a day. But wealth is relative in the mountains of Nicaragua. His farmhouse was built on small stilts and scrawny chickens hid from the heat under the floorboards. Close by, an open cesspit attracted flies.

Anselmo said he had "almost died of shock" when the global market fluctuations meant producers were getting as little as $5 for a kilogram  (2.2 pounds) of beans. Many of his neighbours had to sell up and move away, but Anselmo joined a Fairtrade co-operative at the next opportunity to insure himself against future slumps.

So why doesn’t everyone join? Many of the farmers hadn't heard of the scheme or didn’t understand it, Anselmo said. Or they feared potentially costly regulations, as Fairtrade requires farmers to adhere to certain social and ecological standards. Notably, farmers must pay hired workers a minimum wage, and cannot employ children who are often used for cheap labour during harvest. The partnership also restricts the kinds and amounts of pesticide farmers can apply. That might not seem unreasonable, but to farmers struggling to make ends meet, any forced changes can seem intimidating.

The democracy premium

There are incentives to joining the Fairtrade scheme that go beyond the minimum price. Certified retailers pay an additional 20 U.S. cents per pound of coffee that is returned to producer co-operatives for shared investments – as a "Fairtrade Premium". According to Fairtrade rules, the producer organisations have to decide democratically how to spend the money. One head, one vote.

Co-operatives can also decide to pool their resources: in Matagalpa, the umbrella-organisation Cecocafen represents over 2,600 farmers. The director, Maurizio Ruiz, pointed out that most of the Premium goes into education for the campesino children, with grants worth $300,000 a year providing books, pens, and scholarships for higher education. The money has also helped improve waste-disposal and local transport, and has been put into a cervical cancer screening programme.

The co-operatives’ democratic nature may be an added premium. In the small village of La Reina, Emelda Argo was elected general secretary of the local producer co-operative. As a woman, the 54 year-old struggled at first to gain acceptance from all the male farmers. But her election gave voice to the central role women play in Nicaragua’s coffee production.

Optimism amid hardship

At Cecocafen’s processing plant – or

beneficio – near Matalgalpa, I watched women workers rake piles of freshly picked beans laid out in the sun to dry. The women distributed the beans evenly to ensure equal exposure to the sun without letting any get burned. Their tools looked heavy, and for protection they wore scarves around their heads and faces, and long-sleeved shirts and trousers.

One of the workers, 25-year-old Maria, said it was better to be too hot than be burned by the sun. The work was hard, she agreed, but it was only seasonal and the money was "good": six dollars a day. At this wage, she was willing to work unbroken stints during the high season.

Maria’s optimism amid hardship signalled Fairtrade’s fundamental dilemma: The minimum price and community premium may enable farmers to make predictable, incremental investments with the chance of gradually improving their lot – and their children’s education. But the returns on a pound of coffee are still too low to raise farmers out of poverty. A typical farmer with three hectares will earn about $4,000 per year, less than half the amount a family needs to make ends meet, according to Santiago Dolmus, the chairman of the beneficio.

From the beneficio, the beans are taken down to the coast for shipment to North America and Europe where 98% of Nicaragua's coffee goes. Only the beans with the lowest quality stay in the country: They are valued the least.