The Quest for the Equitable Bean: Fair Trade Coffee in
              Mexico (by Hannah Renglich)

Today, specialty coffee shops litter the cityscapes of the modern world; however, the acceptance of the beloved beverage did not always exist. In fact, in the seventeenth century, the emergence of coffeehouses in England was a highly controversial social development, prompting the publication of The Women's Petition Against Coffee, since women were excluded from these venues. The coffee business has exploded, as the drink's unique flavour and energizing properties have made it a desirable product on the world market, and today represents one of the largest world industries, second only to oil. With the growth of the commodity market, which is distinguished by having its producers in the cheap-labour countries of the South and its consumers in the North, world trade is beginning to experience a shift in consumer values thus stimulating fair trade. The development of the practise of fair trade, specifically with regard to coffee, is ultimately progressive and beneficial to local economies and societies, as can be seen through observation of Mexican international coffee trade.

As the world undergoes increasing globalization, the nature of trade continually evolves. Unfortunately, for a majority of participants in the commercial chain, trade indicates a method of exchange by which the rich get richer and the poor get poorer. For example, international commodity markets can be intensely lucrative ventures for retailers; however, the onset of environmental disaster or the ambiguous change of hands of corporations in a far off city can drastically harm the production end of the chain. In his No-Nonsense Guide to Fair Trade, David Ransom asserts that the idea of fair trade has developed in parallel with the process of globalization over the past thirty years. Indeed, it is on time with a rising interest in ethical consumption, which is manifest in consumer movements that question companies such as The Gap, Nike, and Starbucks. Beginning with the coffee market and extending to such products as bananas, tea, chocolate, honey, sugar, and mangoes, fair trade is based on the fundamental principle of social awareness, which links consumers to producers. Prices of marketable goods are determined in order to ensure that farmers receive a fair price for their crops and therefore a chance for a sustainable future.

Sources: ICO, www.ico.org; Bank of England,
www.bankofengland.org; RPI, www.statistics.gov.uk.

As the above graph illustrates, there is an enormous disparity between the cost of two virtually identical jars of coffee beans, which is entirely dependent upon the vendor's locale. The intervention and thus profit of many intermediary people, including traders, shippers, roasters, and retailers, make up for the difference between the two prices. Indeed, for every dollar spent on retail coffee in the United States, approximately ten to twelve cents go back to the growers, while two to three cents go to local traders of the commodity, and four cents return to the shippers. This leaves roasters, such as Nestle, Sara Lee, Procter & Gamble, and Philip Morris, affectionately known as the ‘big four', earning between sixty-five and seventy cents on every dollar of retail coffee, with the remaining ten to fifteen cents being pocketed by the retailers themselves. In a commodity chain that gives little credit to its source, it is increasingly difficult for growers to survive and support families on the income afforded to them; however, fair trade is creating inroads for farmers to continue growing coffee.

At its core, the conception of free trade aims to make consumers socially responsible for the products they buy by actively engaging them in supporting the producers. This active participation in the product and its history is only possible when the consumer is made aware of the economic and social repercussions of his or her purchase. Through the use of fair trade signifiers, as ensured by the Fairtrade Labelling Organisation (FLO), fair trade products become easily identifiable, marking a product which has been developed under transparent trading partnerships, which benefit and respect all involved. The International Federation for Alternative Trade (IFAT) is comprised of over 145 fair-trade organizations and together with FLO, it upholds several common principles of fair trade that include democratic organization, and recognized trade unions. In addition, fair trade connotes decent working conditions, a lack of child labour, environmental sustainability, community development, fair prices, direct trade, and long-term commitments. These conditions make fair trade a wholesome method of economic operation, allowing poorer countries to be supported by their work in the commodity market.

For the producers and manufacturers of raw goods in the commodity market, the world prices of commodities have dropped relative to the world price of manufactured goods, which leaves countries at the first level of the commodity chain in a difficult position. In addition, commodity exports are frequently used to cover foreign debts; therefore increased amounts of the product must be shipped off without any monetary compensation for the country that is already in debt. Mexico, being one such country, is the fourth-largest coffee producer in the world, whose poverty is directly tied to its reliance upon the cash crop.

Coffee production in Mexico goes back over two hundred years to a time when coffee was sold on the domestic market alone; however, with the advent of international trade, demand for coffee has allowed Mexico's industry to expand. While plantations imposed slave-like conditions on workers, the agrarian revolution of the 1930s allowed peasants to buy land for the first time, although this proved to be of little significance. Mexico once looked eagerly toward the establishment of the North American Free Trade Agreement, which was meant to benefit its members by removing trade barriers between them; however, today many Mexican farmers and workers have come to the realization that they are being exploited for cheap goods and labour as a result. The majority of the country's wealth is still concentrated in the hands of few; thirty-five families control as much wealth as is distributed among fifteen million of Mexico's poorest citizens. This situation was only exacerbated by NAFTA's influence, which led Mexico to facilitate privatization under the preconception that it would greatly benefit its economy. As workers were forced into maquilas, or export-processing factories, many grew desperate and in 2001, six Mexican coffee farmers died trying to make their way across the Arizona desert to the United States; the promised land. As a response to the cycle of poverty in which they were trapped, in 1994, indigenous peasants known as the Zapatistas led a revolt in the coffee-growing Chiapas region of Mexico, demanding land reform and civil rights. The Zapatista uprising occurred on July 1, 1994, not coincidentally on the day that the NAFTA agreement was signed, since their extreme poverty and thus marginalization were manifest in global economic policies.

In order to understand fully the plight of Mexico's coffee industry, it is necessary to observe its core component, the coffee farmer. A typical Mexican family is deeply enmeshed in the country's coffee industry as a primary unit of its production. One of the unique features of a coffee farm is that it is entirely self-sustaining. Farmers harvest seeds from their own plants in order to cultivate fresh saplings in personal nurseries; however, the process of maturing a sapling takes nearly three years before it produces a single bean. The continual process of coffee production is a family enterprise, requiring the participation of women and children during the harvest season, at which point, time is of the essence. Most farmers have between one and one and a half hectares of land on which to grow coffee plants, which may be situated in fields as distant as a two hour walk from their homes. The process of cultivating and harvesting coffee is seemingly never-ending, as farmers must attend to their crops throughout the year in order to develop the best possible product to be sold to a cayote, or a middleman, who pays in cash for under-priced beans. Careful timing is imperative to coffee growing, as berries must be picked from the plants before they dry out and lose their value completely. A second hazard lies in letting the berries ripen too long, which puts them in danger of being knocked off by a heavy rainfall. After being carried home, the berries are put through a mill, left to ferment for a day, washed, and then spread to dry on rooftops and patios under the sun. This process sounds idyllic, conjuring images of contented farmers offering an honest day's work in return for an honest profit; however, no such return exists. Mexican coffee farmers barely manage to survive on wages from coffee, which for many is the only source of income due to its requisite high maintenance and time costs. Many growers survive on corn (which is also a local crop) as their main source of food, which is a leading cause of malnutrition in many rural areas: "People eat a lot of tortillas…they generally have enough to eat, in terms of quantity, but not in terms of quality". More nutritious foods replete with essential vitamins and minerals are out of the fiscal reach of many Mexicans, as items such as fruits and vegetables are imported, and are therefore costly.

The poor living conditions of coffee farmers have been exacerbated in the last half-decade as a direct result of the coffee crisis. So-named for the collapse of coffee prices on international markets in 2001, the coffee crisis has greatly reduced farmers' incomes, as well as national incomes of countries that are dependent upon the crop. According to OXFAM International, the price of coffee has more than halved, falling to a thirty-year low, yet, as any consumer can testify, the price of a coffee at any local café has certainly increased steadily during this same period of time.

Two different kinds of coffee must be taken into account in order to grasp the price plummet on the world coffee market. Robusta is a species of coffee which is considered to be of low quality, yet produces many more beans per season since its trees produce fruit all year long in West African and South East Asian countries. On the other hand, the Arabica variety produces what many consider to be the ideal drink, and is grown in Mexico and other Central and South American countries with a single annual harvest. With respect to most people's preference for the taste and quality of the Arabica bean, it follows logically that even at appallingly low prices during the coffee crisis, Robusta manages to still be worth less than Arabica. Interestingly, it was Vietnam's entry into the world coffee market with a one thousand percent increase in coffee production that contributed to the coffee crisis. Suddenly flooding the world market with Robusta coffee, Vietnam became the second-largest coffee-producing nation after Brazil, offering inexpensive and low-grade beans. This contribution aided the massive increase in world coffee production during the last decade of the twentieth century.

In order to curb the effects of the global coffee crisis and its resultant meagre wages for coffee growers, many farmers have begun to form community co-operatives that sell coffee on the fair trade market. In so doing, farmers in Mexico have experienced a number of benefits such as assistance in transportation and processing, education, and increased earnings. Because ninety percent of Mexico's coffee is grown and produced on smallholdings, or properties of less than twelve and a half acres, many independent farmers struggle to survive. In some cases, the connection to a co-op implies a change in farming methodology, with a transition to organic coffee production that is overall a more sustainable process. As a side benefit, organic coffee sells for nearly three times the price of regular coffee, an incentive that appealed greatly to Mexico, today's leading supplier of certified organic coffee in the world. The basic guiding principle of fair trade coffee co-ops is the elimination of a middleman, known as a cayote to Mexican farmers. This co-op affiliation brings producers in direct contact with importers and roasters and offers growers a guaranteed floor price of $1.26 for each pound of raw beans, compared to the low price of 50 cents that most growers receive per pound of coffee. The following diagram exemplifies the benefit to coffee growers of selling fair trade products, since their prices remain stable despite market declines, yet benefit from market increases as they occur.

Modern day Mexico has both feet firmly planted in the fair trade market, with co-operative initiatives across the country, such as Kulaktik, Majomut, and La Selva. The Kulaktik co-op, located in Tenejapa in the poverty-stricken Chiapas region, began nearly fifteen years ago in order to address the needs of the small landowner. Members stand to benefit from access to guidance with regard to the international world market, as well as information to facilitate decisions for improved business. In days gone by, the Mexican Coffee Institute established in 1958, INMECAFÉ, offered money for a harvested crop after it was sold on the international market thus offering better prices than local middlemen; however, farmers often felt forced to go through the cayotes, who gave them immediate credit. Perhaps most importantly, co-ops allow smallholders to access credit, which assures them payment throughout the harvest and not just at the time at which the crop is shipped off. Through co-operatives, affiliates profit from improved technology and harvesting techniques, which thus increases the general price of the product. Union Majomut is another co-operative that was founded in 1982 in the Altos de Chiapas region of Mexico. This collective uses organic production, which is costly to implement; however, its returns greatly outstrip the original expenditures. By growing coffee in shaded canopies amid different native species of plants, other food products may be harvested simultaneously, and the use of chemicals may be avoided. While the shaded growth of the coffee plant is slow as compared to that in the sun, the world is at a stage where more than enough coffee is being produced. If there exists less coffee, but it is of a higher quality, everyone will benefit. Finally, Union de Ejidos de la Selva is a fifteen-year-old co-operative with a feature that makes it unique; a coffeehouse in Mexico City called Café La Selva. This allows producers to eliminate all intermediaries in the commodity chain, as they directly control the retail of their own product. Through the coffee crisis, fair trade prices have allowed coffee farmers to maintain their families, without having to pull children from school or move from their villages to seek work in large cities or in the capitalist economy of the United States. In this way, communities prosper by allowing indigenous peoples to thrive on their own soil, thereby stimulating local development.

Ironically, it would cost most coffee workers a full day of wages to buy a cup of coffee in North America, which explains the great divide between the producer and the consumer quite clearly. In a Western culture that revolves around high speed, deadlines, and consumerism, coffee retailers have found a clamouring market for their highly addictive products. For many, coffee is a daily routine, perfect for starting the day, offering sustained bouts of energy for long hours, and complimenting a good meal. With self-proclaimed coffee enthusiasts frequenting the likes of Timothy's and Second Cup stores daily, it is known that Starbucks customers visit the shop on average eighteen times per month. As a global chain, Starbucks is seen as an outpost of modernity, which would lead one to believe that they must be engaged in the fair trade movement. It was not until 1995, when protestors trashed a Starbucks shop in Seattle during a World Trade Organization summit that the company woke up and smelled the coffee, so to speak. Just nine years later, Starbucks increased their participation in the fair trade market by buying 4.8 million pounds of fair trade coffee in 2004, so that it accounted for 1.6% of its net earnings. While this is a step forward from Starbucks' noticeable laissez-faire approach, this number is microscopic compared to what it has the power and potential to offer to the fair trade industry. Known for "putting people first and profits last", Starbucks has a great deal of work to do before it can honestly call itself socially responsible. On the other hand, Second Cup promotes a chain of ‘Estate Coffees', including La Minita, a prime coffee-growing location in Costa Rica that grows directly and exclusively for the franchise. This coffee, though not considered fair trade per se, is fairly traded; however it does not hold up as an approach for small growers without international business connections. Suffice it to say, Mexico, as a producer of high-quality coffee beans, has profited from the rise of the specialty coffee sector. Indeed, the key issue holding major coffee retailers from embracing the fair trade coffee industry is the drive to make a profit, which will not occur if their products are perceived as too expensive. That is to say, fair trade coffee, while offering an ethically sound alternative, is pricier than its competitors, and ultimately, in order to compete, it will have to breach the commercial market from its more traditional goodwill selling tactics. Fair trade, as a niche market, must use conventional marketing principles in order to be ultimately successful, "competing on price and quality with brand leaders through mainstream outlets". To its advantage, coffee has emerged as a status symbol and specialty item in recent decades, inspiring customers to distinguish carefully between brands. In this way, the specialty coffee industry may well be the herald of socially responsible consumption. While fair trade coffee may not yet have reached sales equivalent to name-brand coffee, over the past decade, the fair trade market has experienced a vast expansion. Arriving around 1994 to North America from its European source, in the United States today, fair trade coffee accounts for two percent of the specialty market. One can only hope, for the sake of millions of coffee farmers worldwide, that the market's interest in the fair trade trend continues long into the future.

Fair trade is a smartly crafted economic remedy for a capitalist-driven international marketplace, and by examining its effects in Mexico, a struggling coffee-producing country, it is apparent that its practise is advantageous for coffee workers. While fair trade does not equate an escape from poverty, it signifies a positive step forward, offering security to its producers. In a society that is obsessed with lattes and espresso shots, it is now easier than ever for consumers to support fair trade practises, while still enjoying the coffee they love. Who knows what good would come to pass if only all social causes could be shouldered so easily!

Sources

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Golding, Kirsty & Peattie, Ken “In Search of a Golden Blend: Perspectives on the Marketing of Fair Trade Coffee.” Sustainable Development, vol. 13, pp. 154-165. 2005.

“Mugged: Poverty in your Coffee Cup.” Oxfam International. Jan 4. 2006. http://www.oxfam.org.nz/resources/mugged.pdf

Pendergast, Mark “Uncommon Grounds.” Basic Books, New York. 1999.

Ransom, David “The No-Nonsense Guide to Fair Trade.” Between the Lines, Toronto. 2002.

Snyder, Richard, ed. “Institutional Adaptation and Innovation in Rural Mexico.” University of California, San Diego. 1999.

“Spilling the Beans on the Coffee Trade.” The Fairtrade Foundation. Jan 5. 2006. http://www.fairtrade.org.uk/downloads/pdf/spilling.pdf

Waridel, Laure “Coffee with Pleasure: Just Java and World Trade.” Black Rose Books, Montreal. 2002.

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