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March 20, 2006
Fair Trade coffee is a major boost to farmers and the environment, researcher tells Fletcher students
The fair trade coffee movement is having a major impact on creating sustainable livelihoods for Mexican farmers and in driving organic farming, Timothy Wise of the Global Development and Environment Institute (GDAE) at Tufts University told students at The Fletcher School.
Wise's talk, titled, “Revaluing Peasant Coffee Production – Organic and Fair Trade Markets in Mexico,” is part of a regular program that brings in experts to speak and discuss issues in Latin American political economy with Fletcher students in a seminar format.
“What is really important about fair trade is that it posits an alternative model for trade, and raises livelihoods as well. The demonstration and organizing effect of the fair trade movement is also very important,” Wise explained.
Fair trade coffee sets a minimum price for the sale of coffee beans, regardless of whether the market price is lower or not. The development of the fair trade movement for coffee came at a time when coffee prices were in a prolonged slump due to overproduction. While this might be surprising to customers of many coffee shops, the bulk price for coffee beans often does not cover the costs of production for many peasant farmers in Mexico.
Fair and sustainable prices also have a major impact beyond providing a decent living for farmers, Wise pointed out. “Healthy coffee growing communities in southern Mexico support local ethnic and linguistic diversity,” he said.
In addition, small-scale producers also have a major impact in protecting the environment. According to Wise, their coffee trees and the surrounding subtropical forests help prevent erosion, preserve biodiversity, and reduce carbon dioxide in the atmosphere. The current price for coffee does not reflect these important services, he said.
The rise of fair trade coffee has also helped boost organic coffee, since most free trade coffee buyers also want to purchase organically grown beans. The higher price of fair trade coffee supports this trend, Wise explained, since “(F)air trade coffee shows real profits, and the higher incomes cover the cost of switching to organic production. Fair trade externalizes the costs of environmental protection, and it cross subsidizes the shift to organic production.”
“You have to give the fair trade movement credit for driving an environmental transition they didn’t set out to do,” he pointed out.
However, despite the success of the fair trade coffee movement, Wise warned that it isn’t enough to solve the fundamental problems facing Mexico’s coffee farmers. “The limitation of a niche market [like fair trade coffee] is that you can’t get everyone into them,” he explained. The supply of fair trade coffee is already growing faster than demand, and a large amount of fair trade certified coffee must be sold at normal prices, in part because fair trade coffee is largely confined to a small premium market in developed countries.
For a more definitive solution, “(G)overnment intervention is critical – market based mechanisms aren’t going to do it,” Wise argued. He pointed to parallels in other agricultural sectors. “In Europe, governments subsidized the organic transition. That’s what needs to happen in Mexico as well. You can’t expect the fair trade market to solve the problem of overproduction. We need to get to a level where coffee isn’t so cheap that that people are starving,” he explained.
By Charles De Simone, MALD '07
Posted by fletcher at March 20, 2006 03:42 PM
