Fair Trade Coffee in Peru: An Economist's Notebook

Travelogue of a social scientist studying Fair Trade on a Fulbright in Peru. Personal anecdotes and interviews with coffee growers, importers, and exporters, as well as Andean cultural leaders, Limeña intellectuals, business people, professors, writers, and anyone else I meet on the journey. Fair Trade as both an alternative to the dominant model of globalization and as a way of life that is practiced by an increasing number of people who testify to its great benefits.

Tuesday, May 23, 2006

How I Got Involved in Fair Trade

A couple years back, in 2001 while taking a course on Economic Development at UC Berkeley taught by Prof. Alain de Janvry, I heard tell of a crisis in the world of coffee. The price had crashed in 1989, leaving most of the 25 million coffee producers worldwide in dire poverty. In response to this crisis was born the movement for Fair Trade in coffee, whereby a third-party, non-governmental agency ensures farmers a price above the cost of production, and labels the products that meet their standards for the benefit of consumers. This way, we know that the people who we're buying from lived and worked under decent conditions.

This was the best system for poverty alleviation I'd come across yet. Instead of providing a pure cash transfer or handout, it rewards people justly for what they are already doing, and provides them with the income to do it better. It also deals with the problems of access to information and infrastructure that lie behind a lot of poverty issues. Coffee growers are selling into a market they don't know, either because they don't have access to the statistics through any of the usual channels - try getting the New York Times in a remote village in Peru - or they may not be able to read at all. The buyers, of course, have no incentive to provide this information and have every incentive to remain in control over the price the farmer gets.

So three years later, in 2004, after applying to graduate schools, enrolling at UMass, and spending a couple years primarily focused on macro issues, the Fair Trade issue came back to the forefront. I think what drew me back to it was a desire to return to the grassroots. Macroeconomics is a great discipline and perhaps one I will return to someday - but for those of us who like to see action on the ground, the macro perspective is a bit distant, like watching the Earth from a spaceship. It's good to go up in the spaceship and try to construct some valid model of the big picture, but it won't help you address local issues and it won't bring you into contact with people whose lives are shaped by these issues. Nevertheless, it was the macro perspective, being aware of global inequality, which got me into the search for grassroots initiatives and brought me back to Fair Trade. I applied to be an intern at TransFair USA and spent the summer of 2005 at their office.

The rest, they say, is history… and I'll save it for later.


Anonymous Rodney North said...

I look forward to following your journey and seeing what you learn.

About the "25,000,000 farmers" number. I've seen that number for years, but have never seen the real origin for it. If anyone bothers to give any citation its just from someone else who in turn had borrowed it. My vague memory from the late 90's was that the number represented ALL the people involved in green coffee production & export, including field laborers, coffee mill & warehouse workers, stevedores, etc., but that the statistic transmuted over time into "25 M _farmers_". At 25 M, that would mean an avg. production for each farmer of only 600 pounds (world production avg's around 15 billion pounds annually http://www.ico.org/prices/po.htm )

I bother to ask as the number is always cited to demonstrate the importance of reforming the coffee sector (which I certainly support, whether its 25 or 2.5 million farmers) but we should probably get it right, and it seems like a researcher like you might be just the kind of person to settle the matter.

11:00 AM  
Blogger Noah H. Enelow said...

Thanks Rodney - that is a good question, I will look into it further - Noah

8:19 PM  

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