[Dryerase] The Alarm!--How fair is Fair Trade?

[The Alarm!Newswire]

How Fair Is Fair Trade?

By Carlos Armenta
Translated By Armando Alcaraz
The Alarm! Newspaper contributor

The green mountains in the north of Nicaragua offer a friendly welcome 
to visitors. The greenery and lushness of the region, where one finds 
the town of Matagalpa, gives the visitor an impression of exceptional 
richness and fertility. However, contrary to what one might think, this 
region is one of the poorest in all Nicaragua, a country that has the 
distinction of being one of the poorest in the western hemisphere.

The reason behind the deep contrast between the potential wealth in 
such a fertile land and the extreme poverty which most of its 
inhabitants suffer, is the sharp fall of the price of the main product 
of the area: the grano de oro or “the grain of gold,” the name given to 
the coffee bean when it is ready to be roasted. The golden coffee beans 
are sent to the roasters in the countries that consume the best quality 
coffee.

During the fifth annual assembly of CECOCAFEN (Center of Cooperative 
Coffee Growers of the North), an organization that commercializes the 
coffee produced by the cooperatives that belong to it, many coffee 
growers of Matagalpa offered their impressions on the difficult 
situation of the Nicaraguan coffee growers and on the real benefits 
received by those who, like them, can market their coffee as Fair Trade.

The generalized opinion of the CECOCAFEN members was that Fair Trade is 
not that fair. According to José Cornejo and Victorino Peralta, members 
of the La Providencia Cooperative of Wiwili, the maximum price that 
they receive for a “quintal” (1 quintal=100 lbs.) of unroasted coffee 
is $141.

“The buyers pay us $1.40 per pound—in the best of cases—and the final 
consumer pays $1.50 per _cup_ of coffee,” said Peralta, pointing out 
that a pound of coffee can make from twenty to forty cups of coffee. 
Also, the individual grower only receives $96 per quintal after the 
CECOCAFEN subtracts market expenses and five additional dollars that go 
to a social fund, used for public social works in the coffee growers’ 
communities. In addition, according to Peralta, if one factors in the 
production expenses, which with organic coffee are approximately $0.45 
per pound, the grower ends up making only about half a dollar per pound 
of coffee.

Even comparing the price per pound of Nicaraguan Organic Fair Trade 
Coffee in Santa Cruz, which sells for $8.95 per pound at the Santa Cruz 
Coffee Roasting Company, with the $1.40 that the buyers (in many cases 
the roasters buy the coffee directly from the grower) pay to 
well-organized cooperatives such as CECOCAFEN, it is possible to 
understand why the growers often say “Fair Trade is not that fair.”

“And that is only if we do it inside the Fair Trade, which requires our 
coffee to be 100% organic and of better quality,” said Peralta. 
Cornejo, in a sarcastic tone of voice, refers to the coffee growers who 
sell through Fair Trade as the privileged. “There are people, even 
inside our cooperatives, who have an even worse situation,” said 
Cornejo, as he introduced us to Fabiana López Arauz, a member of the 
cooperative in La Pozolera, a municipality of Waslala.

López Arauz, a widow and a mother of seven, explains that her husband 
died during the civil war, when the “contras,” supported by the US 
government, tried to take the power from the Sandinistas by means of 
force. López Arauz told us that she is the owner of a small piece of 
land of about two acres, on which she sometimes grows 65 quintales of 
coffee per season, but sometimes she can barely grow three quintales. 
Even thought López Arauz has never used chemical products to produce 
her coffee—she has always used cheaper organic fertilizers and 
insecticides—they still don’t certify her coffee as organic. “They pay 
me $0.60 per pound (without production costs) and that is barely enough 
to survive. I have the hope of being certified organic next year so 
that I can sell my coffee at a better price…but they are also saying 
that the price could go even lower.”

The international price of coffee in the stock market of New York is at 
a historical low, and it is not expected to climb in the short term. If 
not part of an organization, a small coffee grower in Nicaragua only 
gets, on average, $0.45 per pound for non-organic coffee, when the 
production costs for this type of coffee are about $0.60 per pound.

As Cornejo says, “the fact that we are organized, that CECOCAFEN has 
the necessary infrastructure to offer select coffee, clean, organic, 
and of the best quality, and that we have sampling laboratories (where 
they determine the quality and flavor of the coffee), gives us the 
possibility of making the minimum income that allows us to survive. 
However, there are many small growers who don’t have the same 
possibilities because they are not organized.”

Peralta is saddened by the reality of the market. “The price we get 
paid keeps going down and the price that consumers pay in rich 
countries keeps going up. Even being a member of CECOCAFEN, I can only 
sell a small part of my coffee as Free Trade. Even though it is not 
that fair, at least I can, if badly, make ends meet,” said Peralta.

The consensus amongst the producers is that Free Trade should continue, 
but that both the coffee marketers and the consumers in developed 
countries should become aware that Fair Trade should be fairer to be 
able to justify its name and its price.

As Cornejo explains, “Fair Trade will be fair only when the growers 
gets to keep at least 40% of the earnings from their own coffee, which 
is very far from happening when one looks at the numbers.”

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