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I was sent an interesting thesis analyzing Fairtrade (i.e., FLO) in coffee in Laos.

The chapter titled Economic Sustainability contains the following information:

In addition to the overload of work the farmers must invest to gain 34 cents per pound extra, they also have to pay the Fairtrade Certification fee of US$3,460 per co-op (Euro2,378) per year and the administration fee and other fees of around US$5,000 per co-op which is not paid for by buyers (Wilson, 2006; Fridell, 2007B). Moreover, to gain the 15 cents per pound extra for organic coffee, they have to pay the Organic Certification fee of US$3,000 plus other administration fees of US$6,000. There are only 500 farmers in the co-op (JCFC, 2008), hence, it costs each farmer about US$35 to keep the certifications up to date.
This indicates that regardless of the higher gross incomes that result from higher Fairtrade prices, there is no guarantee of a positive net household income for these farmers who are charged the high costs of foreign inspectors and certification.

If these figures are correct, it costs this co-op (JCFC) over US$17,000/year to maintain both Fairtrade and organic certification. At a combined premium of US$0.20/lb it means the co-op must sell about 42 tons of coffee just to recoup the cost of certification out of the premiums paid

The thesis also reports that the per-capita annual income in the region is US$580. This means that co-op members spend the equivalent of about 7% of their annual income to pay for certification. Many farmers report that they won't join, or have dropped out of, the co-op because the amount of work involved to meet Fairtrade standards for quality is not worth the extra effort involved.

Can anyone tell me how this is "Fair" trade?

Tags: FLO, Fairtrade

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Dear Mark, 


Thanks for the observations, and you are right, applying P & K is not the most environmental sustainable solution (although the N is normally causing the most harm in terms of soil acidification and related N2o emissions. The basic issue is that crop removal (cocoa beans to be consumed in the West) equals nutrient removal. In a closed system (amazon rainforest) cocoa pulp is eaten by animals and the beans end up on the soil to regenerate. When humans start to harvest and remove the beans the nutrients should be replenished to be able to produce cocoa on the long run. The other option could be to accept relative low yields (250 kg), but more hectares are needed to grow cocoa (world demand is growing with 2% per year). 


These extra hectares needed are just the remaining forest patches with high biodiversity value (and enormous carbon content in the biomass and soil!). So that's basically why a better management of what already has been cut down would make sense, first by applying all nutrient recylcing measures, and supply the missing nutrients in sufficient cuantities to maintain a healthy balance. The Soil Organic Matter content should be maximized and soil life be supported as much as possible, but where nutrient reservoirs are low, some sort of replenishment should take place (organic or in-organic). The basic reason is that low yields will push farmers in the end towards the remaining forest borders in order to start cocoa farming in these buffer zones (high prices have the same effect!). 


I think you are right with your suggestion to maintain a 30% in tact, but farm preparation has been (sometimes) done by timber companies. As free service they offer to remove the trees so farmers can plant cocoa. As extra service they also take away the trees, so the farmers don't need to worry about them anymore. That is the reality of the world we live in. 


Perhaps we should consume less chocolate, or chocolate made from beans that can only grow combined with other trees (like the criollo's)? 


In terms of envirmental impact the fine flavour beans are much much better that the full sun cocoas! But we should be prepared to pay a decent price for these cocoa beans (at least to compensate for the lower yields). 

The current limited premium for fine flavour actually is perhaps not and incentive for farmers to grow more fine flavour beans. 


Best regards


Is being "smug" a part of the challenge that needs to be overcome?

Earlier today, Equal Exchange posted the following table on their Facebook page:

and then bragged about the fact that their pay ratio (the ratio between the highest-paid and lowest-paid workers in the company) was only 4:1.

I asked them if their computation of the pay ratio included what growers got paid.

They poasted no, but then tried to justify their position in a very long reply by saying that, when they included an estimated annual income for an average grower at US$3000 that their pay ratio was still "only" 33:1 - a much more "egalitarian" figure than companies whose CEOs would have pay ratios of thousands:1 or more if the wages of foreign farmers were considered in the mix.

Is "egalitarian" "fair?" Is that the measure of the success of these programs? 

For me, trumpeting the pay ratio is a symptom of an attitude that is prevalent in programs like FLO, and reminds me of a shell game where our attention is deliberately distracted so we can't see what's actually going on.

On the same topic you may also want to check this short but well written opinion piece:

[Edited to add: The study, "which followed hundreds of Nicaraguan coffee farmers over a decade, concluded that farmers producing for the fair-trade market “are more often found below the absolute poverty line than conventional producers.

“Over a period of 10 years, our analysis shows that organic and organic-fair trade farmers have become poorer relative to conventional producers.”]


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