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Faceoff 2: Coffee - Fairtrade vs. Direct Trade

Coffee has grown beyond a staple and into a morning dweller's obsession in North American culture. The average North American consumes 10 cups of coffee each week and this number is growing each year.

The ethical issues surrounding coffee are numerous, ranging from what environmental conditions the coffee is grown in, to what conditions the people picking it work in, to how much of the purchasing price of the final coffee goes back to the farmers growing the coffee.

In this post, we will focus on defining each type of trade and then asking questions and providing sources to stimulate a discussion around the issue.

Conventional / Free Trade

Since the introduction of globalization and free trade systems in the 1990s, conventional trading systems have evolved from being more government controlled to being more market controlled. This change has allowed companies, producers, and buyers to trade across international boundaries with less interference than in the past from governments. Prices of products are said to be a reflection of true supply and demand and not influenced by protectionist policies through tariffs, quotas and subsidies. However, this is often not the case as most countries continue to sign inter-country agreements such as the North American Free Trade Agreement (NAFTA) and continue providing tariffs, trade quotas, and subsidies.

Fair Trade

Fair Trade is an organized social movement and market-based approach that aims to help producers in developing countries and promote sustainability. It is an increasingly popular alternative purchasing choice by ethical shoppers aiming to buy coffee and other products like chocolate, bananas, and sugar. It is also an official certification that is policed by the Fair Trade Labeling Organisation that guarantees a minimum set of standards for the producers of the product. These standards include:

  • a guaranteed minimum price for their goods;
  • a premium payment that must be reinvested back into the community;
  • producers are small holders and in democratically controlled groups;
  • producers hold a balance between environmental protection & business results;
  • that all producers work in fair and just working conditions

Direct Trade

Direct trade is a general umbrella term for coffees that are imported directly from the growers themselves, rather than brokered in bulk at an auction. The roastery develops a direct relationship with the owners of coffee farms, negotiating individual terms and prices. Because there are no middlemen or outside agencies involved to take their cuts, the growers often receive a much higher price for their beans than using standard country practices.

The Debate

Arguments surrounding these different forms of trade ranges from which of these forms of trade is the "best", to what products should consumers focus on when trying to be the most ethical. Some key questions we ask are:

  • What are the major pros and cons of each form of trade?
  • Is there a "best" form of trade or is it more a question of making a shift in the current trade balance in the world?
  • What is the form of trade that provides the most benefit to farmers / the environment / global economic development?

Resources:

To stimulate the debate, we've added the following resources to aid in the discussion:

Let the discussion begin!