Cost of coffee.indd - RISC

actionpage: how fair’s fair?
s Read the four scenarios for the production of coffee and consider the following questions:
• What is the power relationship between producers and coffee companies in the various
scenarios?
• To what extent do the different scenarios benefit producers and their communities?
• How sustainable are the different production scenarios?
• How far do the different scenarios bring fair trade into the mainstream?
small-scale family farmers
Small-scale family farmers grow subsistence crops for their staple diet between the coffee
bushes produce organic coffee. Labour is primarily from within the family including children,
but hired labour is also often used on a small-scale seasonal basis. The dried coffee beans are
purchased directly from a local community group of small farmers by an Alternative Trading
Organisation (eg Traidcraft) which operates outside of the mainstream trading and marketing
structures – selling mainly through small outlets such as FT shops, churches or by mail order.
The families need cash to pay for expenses such as school fees, medicines etc. The Alternative
Trading Organisation maintains regular contact with the farmers to discuss issues such as
supply, credit and pricing. The use of the social premium is determined collectively by the
community of farmers.
producers co-operative
Coffee is produced in accordance with fair trade criteria by small and medium sized producers
organised into several co-operative organisations; each owned by its members. A large-scale
umbrella co-operative ultimately purchases and processes the dried beans (which adds
around 50% to the value) produced by the several thousand farmers belonging to the Coops.
The umbrella Co-operative sells the processed beans to a dedicated fair trade company
for processing and marketing, eg Café Direct, which supplies mainly commercial outlets, eg
supermarkets and cafés. Producers are likely to employ waged labour as well as using that
of family members. The social premium is disbursed by the umbrella Co-op for use in local
community development projects.
commercial plantation
Coffee is grown on a large-scale plantation owned by a commercial company in the South in
which there is significant foreign investment. The company employs local wage labour in its
production, many of whom are resident migrant workers. The company’s employment practices
comply with fair trade labelling requirements – roughly equating with International Labour
Organisation minimum standards – local minimum wage, freedom to organise trade unions etc,
and with minimum environmental requirements. The crop is purchased on fair trade terms – at
the guaranteed price level from the production company – and marketed under the FT Mark by
a transnational corporation, alongside its mainstream coffee brands.
non-fair trade
KNP & S is a transnational corporation involved in food processing. Hot beverages are an
important part of its business, especially coffee. It purchases beans on the international market
at prevailing prices and processes the beans into a range of products. It does not offer a fair
trade brand but contributes 5p from every jar or packet of coffee to Coffee Kids, an international
non-profit organization working with coffee-farmers and their families in Mexico and Central
America on sustainable community development projects. It helps small-scale coffee farmers
address their own communities’ problems with health-care, education and micro enterprise
projects that help coffee farmers establish alternative incomes so they are no longer totally
dependent on coffee as a sole source of income.
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