What is the Future of Fair and Sustainable Coffee?

Contributing Writer:
Lee Wallace

Peace Coffee was founded in 1996 by the Minneapolis non-profit Institute for Agriculture and Trade Policy (IATP). At the time, IATP was working with partners in Mexico who were searching to build a market for their fair trade organic coffee, and they were also talking to allies in Europe about bringing a fair trade label to the U.S. Ultimately, the organization birthed a successful coffee company and was one of the founders of TransFair USA, the first fair trade certification program in the U.S. Understandably, while the staff at Peace Coffee worked to get into the community as much as possible to explain fair trade and our model, both IATP and Peace Coffee continued to be among the biggest boosters of third-party certification, pointing out the benefits of the system to both coffee-growing communities and consumers.

The split between Fair Trade USA (TransFair USA) and Fairtrade International (FLO) served as a precipitating event to reassess our approach and system. The fair trade movement is clearly at a crossroads with major implications for much of the marketplace, but specifically the specialty coffee sector. At a time when social, environmental and economic sustainability is finally becoming a mainstream consideration for many companies and consumers, there remain a number of gaps and challenges for creating fair and sustainable value chains. As a result, this is an opportune time to reflect on how far we have come and, perhaps more importantly, how far we still have to go to achieve our mission. This necessitates a real and frank analysis of the strengths and weaknesses of existing tools and frameworks, and it pushes us to explore what we need to continue on to the next stage of this journey.

coffee1Are our current definitions and tools up to the task of providing fairer and truly sustainable coffee value chains? What will inspire all of us to continue on this journey? What role can and should various initiatives play in this process?

With the support of Catholic Relief Services’ Fair Trade Fund, and partnering with a renowned sustainable standards expert, Sasha Courville, we embarked in 2012 on a journey to try to understand what the next steps are for Peace Coffee and our farmer-partners. Over the last year, we have conducted interviews along our own value chain (covering producer, importer and roaster perspectives), as well as across the fair trade standards world and the broader sustainable coffee community. A longer paper that describes the project in greater depth will be available in the summer of 2013 (visit: www.peacecoffee.com). While admittedly many questions still remain, one thing is clear: the world around all of us is shifting, and we need to think differently in order to keep pace.

In the seventeen-year history of our company, we have seen the market for fair and sustainable products explode. According to The Economics of Ecosystems and Biodiversity Report for Business (TEEB), the worldwide market for certified agricultural products (including organic) was $40 billion in 2008, and it is estimated to grow to $210 billion in 2020 and $900 billion by 2050. Voluntary standards and certification systems have become widely accepted by many governments, businesses of all sizes and a large number of civil society organizations as effective market-based tools to raise awareness and drive desired sustainability outcomes. Leading businesses have recognized that sustainability is necessary for their long-term viability, and they are using multi-stakeholder standards as tools to transform their value chains.
That success is clearly reflected in the system we work within. If we look specifically at the growth of certified fair trade, there are now over 827 certified (FLO) producer organizations in fifty-eight producing countries, representing over 1.2 million farmers and workers. Sales of certified fair trade products grew 27% between 2009 and 2010, and FLO estimates that six million people benefit directly from the system today. Fair trade coffee imports grew worldwide by close to 19% in 2010.

We have come a very long way from the early days pioneered by the solidarity movement, where fair trade products could only be accessed through dedicated fair trade outlets. However, while the growth numbers tell one story, the challenges of success that fair trade and the broader sustainability standards movement now face are significant indeed.

First, the tool of fair trade certification itself has limitations. It was initially set up as a demonstration project to highlight the injustice of international trade rules and to offer an alternative vision. The business models, governance structures and infrastructure used to get us to this point are not well-suited to rapidly scaling up impacts, transforming entire value chains and regions, and integrating with systems that are working to achieve broader change. At the same time, it is difficult for those same systems to experiment with what might be the next big transformation towards fair and sustainable value chains.

Second, the coffee industry faces some key challenges that are going to require some new ways of thinking. Climate change poses an unprecedented threat to the viability of coffee production across many regions. Mitigation and adaptation strategies will be critical to ensure continued supply and to manage the social, economic and environmental impacts on affected communities. More broadly, it needs to be recognized that – despite decades of work on fair and sustainable coffee supply chains – many coffee producers still face fundamental challenges with ensuring sustainable livelihoods for themselves and their families. Ultimately, the industry will need to figure out how coffee farmers can make ends meet, not just from day to day or season to season, but decade after decade. This may require a mix of higher prices, other forms of income such as support for conservation and other environmental benefits that organic and sustainable coffee farms provide, and other ways to diversify farm income and/or increase productivity while maintaining environmental benefits and services. Managing these challenges effectively will require collaborative work across the value chain and beyond, as well as unprecedented partnerships – partnerships that demand fair-trading relationships as a fundamental building block.

Certification is still an important tool, though. For example, it provides an external check that producers are complying with the core values and activities represented by the standards. It also provides a vehicle for capacity building and a systematized approach towards organizational strengthening. For most, finding an alternative way to check at the producer level is too hard, too expensive and just not viable, especially as the number of producer partners grows.

The pioneering successes of FLO and others have led to a host of next-generation initiatives which are intended to learn from the mistakes of the past and take advantage of new technologies. Some of this proliferation muddies the waters and makes it hard for consumers to distinguish credible and legitimate efforts from “green-washing,” while some allows for much-needed innovation and renewal. A key challenge facing anyone interested in experimenting with how to do better is how best to balance the need to open up a safe space for learning and innovation, while also ensuring the credibility of the process at the same time. From our perspective, the only way to achieve this is through transparency of process and a commitment to demonstrating tangible results.

While the FLO-TransFair USA split may have exacerbated the situation, tensions between the small, dedicated fair traders and the big players have been growing over a number of years in the coffee industry. As fair trade and sustainable coffee enters the mainstream, what is there to differentiate a small-scale 100% fair trade company from a multinational? There are indeed unique strengths, as well as weaknesses, that come with both being small and embedded in communities and with being large and having access to significant resources. It is our view that points of differentiation should be based on commitment and impact, not on size.

We still have a lot of work to do to digest the information we have gleaned from our interviews and to determine how we are going to integrate the findings into our operations. I would be remiss if I did not point out that a number of our peers are already doing really good work, and we have been excited to learn about it.

As part of my job, I give a lot of talks and presentations. I stand up in front of college classes, congregations, business associations and conferences and explain who we are at Peace Coffee and what we do. I tell the story of how the company started and what we are trying to achieve, and I leave hoping that I have helped people in their efforts to better navigate the very confusing (often intentionally so) terrain of the grocery aisle.

coffee2A few years ago, I was speaking to a social work class at a local university. Predictably, I got a question about what can be made better, especially at the origin, and how we intend to not only continue to meet our mission but also to have even greater impact. By the time I got done explaining our importing model (we import cooperatively with over twenty other coffee companies) and our aspiration to be one of the best buyers a growing organization has, one of the students said “I’m sold – and I want every purchase I make to go above and beyond, the way Peace Coffee does. But how can I figure that out without getting completely overwhelmed?”

The answer to that incredibly important question, sadly, is still not there. However, as we begin to look at new ways to think about and measure impact, it is increasingly clear that we also need to look at new ways to communicate with consumers. As new models proliferate, it becomes difficult for even experienced coffee traders to keep track of the legitimacy of various efforts. What tools and assurances are we going to provide to consumers to cut through the “green- and trade-washing?” At Peace Coffee, we have been heartened to see a positive response from consumers to our transparency initiatives – such as adding QR codes to our packaging, allowing coffee drinkers to travel virtually to the region and cooperative and trace the purchase process all the way back, including being able to view our contracts, see the prices we paid and read the terms of purchase.

We are excited to continue pursuing this work, and we encourage others to join us on this important journey.



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