Companies respond to buyer demand for ‘fair trade’ goods that wear their social, environmental practices on sleeves
Press Democrat – October 29, 2006
By Carol Benfell
A new wave of consumers are bucking the trend of buying cheap products made by low-wage workers and instead are eagerly paying more for coffee, tea, chocolate and gift items that carry a “fair trade” label.
A fair-trade logo on a bag of coffee or a handcraft means an independent organization is guaranteeing that growers and artisans were paid a living wage, worked in safe, healthy conditions and used sustainable environmental practices.
Fair trade is still a young movement – U.S. certification began in 1999. But the potential is being compared to organic foods, once available only in health food stores and now on display at almost every supermarket and produce stand.
Many Sonoma County grocery stores already carry some fair-trade items, primarily coffee and tea.
G&G Market, a grocery chain with stores in Petaluma and Santa Rosa, is certified as a store carrying fair-trade goods. It’s a matter of meeting consumer demand, said Dick Gong, G&G’s buyer and vice president.
“We have a wide range of consumers and they are a lot more sophisticated and much more into world events and causes than 20 years ago,” Gong said. “Our customers want fair-trade products, and we’re trying to satisfy what our customers want.”
Gong and his Sonoma County customers are part of a national trend, said Robert Girling, professor of international business at Sonoma State University.
Surveys show that 30_percent of U.S. adults – a $229_billion market segment – are looking for products that reflect their values for health, the environment, social justice and sustainable living, Girling said.
The organic and fair-trade market segment is growing 15_percent to 30_percent a year, while the rest of the market is growing 2_percent to 3_percent a year, he said.
“There is a very large market segment in the U.S. of people like many of us in Sonoma County,” Girling said. “We don’t want to put food in our bodies that’s not healthy, and we’re concerned about how our dollars affect people in other parts of the world.”
Coffee in high demand
Fair-trade coffee is the biggest seller among dozens of certified fair-trade products worldwide. More than 16_billion pounds of coffee are traded annually on the world market, second in value only to oil. That’s significant because more than 1_million farmers in developing nations depend on it for their livelihoods.
“When coffee prices fall, people starve to death. Child mortality rates escalate. People live in cardboard boxes in shanty towns because that’s all the money they make,” said Mark Inman, president of Taylor Maid Farms, a fair-trade coffee company in Sebastopol.
Fair trade means the growers, most of them working plots smaller than 5 acres, get two to five times more for their coffee than in the conventional market. It doesn’t make them rich, but they can cover their costs of production, keep their children in school, obtain health care and have money left over to reinvest in their own business, Inman said.
Taylor Maid, founded in 1976, accepts a lower profit margin in order to pay growers more and maintain a competitive price on store shelves, Inman said.
Inman sells his organic, fair-trade coffee for $9.95 a pound. He pays his growers $1.95 to $2.60 a pound. The fair-trade price is $1.26 a pound. Growers without fair-trade contracts currently get about $1.07 a pound for coffee that costs them $1 a pound to grow and ship to market, Inman said.
His business is growing by about 20 percent a year, and now roasts, packages and sells more than 500,000_pounds of coffee annually with $2_million in revenue.
He pays above fair-trade prices because he believes that helping impoverished growers in developing countries is ultimately good policy for the United States.
“When coffee prices collapse, it throws the entire Third World into turmoil,” Inman said. “It increases the production of illicit crops and illegal immigration, and it happens overnight.
“If you want to win the war on drugs, if you want to stop Central Americans from crossing over the border, you should pay living wages for coffee,” Inman said.
Paul and Joan Katzeff ran one of only six specialty coffee companies in the nation when they launched Thanksgiving Coffee Co. in Fort Bragg in 1972.
In the first year, they roasted 2,200_pounds of coffee, packaging it themselves in clear plastic bags secured with twist ties.
Today, they sell 900,000_pounds of coffee a year and have $5_million in annual revenues.
“We have created a model that is profitable, that is successful, and that cares for every person from the tree to the cup,” Paul Katzeff said.
The Katzeffs switched from paying conventional coffee market prices to paying above living-wage prices for coffee in 1985, after Paul Katzeff made a trip to Nicaragua as president of the Specialty Coffee Association of America.
“I had never been in a coffee-growing country before,” Katzeff said. “I saw I was making my money off the sweat and blood of poor people who couldn’t send their children to school. When I got back, I dedicated my life to changing the way coffee is bought and sold in the world.”
Fair-trade products, which appeal to a sense of social justice, are on the rise.
Gross sales of fair trade goods in the United States, Canada and the Pacific Rim doubled in four years to $376.4_million in 2004, up from $187.7_million in 2001, according to the Fair Trade Federation, one of two organizations that certify goods as fair trade.
That’s still only a fraction of the world economy. Sales of fair-trade coffee tripled last year, but are still only 2.2_percent of the conventional coffee market in the United States, according to TransFair USA, an Oakland-based nonprofit group that certifies fair trade products.
“We are independent of industry. We are not beholden to them. Our duty is to independently verify and certify fair trade practices. Our standards are stringent and we don’t compromise,” said Nicole Chettero, a TransFair spokeswoman.
The concept of paying growers more than the market price has been criticized by conservatives and libertarians, who argue that the economy works best when prices are the direct reflection of supply and demand.
Not so, Girling said.
“It’s a bogus argument. Fair trade builds on the market. It gives consumers a wider range of choices so they can choose goods that reflect their social values. If you go to Starbuck’s, you can choose to buy fair-trade coffee and pay a little more. Without fair trade, that option isn’t there.”
But idealism doesn’t always translate into dollars.
Rebecca Amissah-Aidoo owns two Fort Bragg stores that carry fair-trade gift items, Ananse Village and Culture Shock. She spends three months abroad each year, working with artisans and buying goods for her stores.
But it has been a struggle, she said.
“It’s not a get-rich-quick thing,” she said. “But we’re still here, and we’re still hopeful. We know we’ve made a difference in people’s lives.”
On the other hand, Kindred Handcrafts, a fair-trade gift store in Santa Rosa, is thriving.
The 4-year-old business is growing by about 20_percent a year, and two years ago the company moved to larger quarters, said owner Lien Cibulka.
“When we first started the store about one customer in 10 would know what fair trade was. Now, it’s at least five out of 10. It’s a good leap,” Cibulka said.
“My husband and I try to think globally,” Cibulka said. “We have been to many countries. It has helped us learn other cultures, but we also learned of the huge potential for exploitation. Fair trade makes sure we can enjoy our life here and protect our global community as well.”
Question: What does fair trade mean?
Answer: The supplier guarantees a living wage to the grower or artisan, provides healthy and safe working conditions, engages in environmentally sustainable practices and is open to public accountability.
Q: How do I know if something I buy is fair trade?
A: Look for fair-trade logos on the package. The Fair Trade Federation certifies nonfood products, such as clothes and gift items. TransFair USA certifies food products, including coffee, tea, chocolate products, rice, sugar, vanilla, bananas, mangoes and pineapple.
Q: Why does a business sell fair-trade goods?
A: Many businesses become interested in fair trade for humanitarian reasons. Others recognize it is good for the company’s bottom line. Fair trade and organic products (the two often overlap) are the fastest-growing market segment in the U.S. economy, according to Robert Girling, professor of international business at Sonoma State University.