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.

Wednesday, November 08, 2006

Latin American Fair Trade news and more

Well ... I know it's been a while since my last post. It's been a busy couple weeks as I prepare for my first site visit and apply for funding for this project for next year. Meanwhile, tomorrow I'm heading out to an encuentro in Ayacucho at a co-operative called El Quinacho. It will be my first time outside Lima and away from the coast! And it is about time - for fresh air, new experiences, and the all-important reality check.

But first, some catch-up:

Two weeks ago I attended the CLAC - Coordinadora Latinoamericana y Caribeña de Pequeños Productores de Comercio Justo - or, Latin American and Caribbean Small Fair Trade Producers Association - in the Dominican Republic. It was a very interesting conference, full of co-op representatives, traders, and members of labelling initiatives. I ran into Paul Rice, CEO of TransFair USA, whom I worked with as an intern last summer (2005); he introduced me to Miguel Zamora, project manager for Global Producer Services, which brings technical assistance to producers at origin (i.e., in their home countries.) Learn more about them at http://www.fairtradeimpact.org. It's my opinion that the linking of Fair Trade with agricultural development and commercialization projects in developing countries is essential to the future of the movement. So... more about that later.

The conference opened on Thursday morning with opening remarks by the current (and outgoing) CLAC president, Victor Perezgrovas of Mexico, followed by a fiery speech from the Dominican Secretary of Agriculture, who talked about the struggle of small producers in Latin America to get fair prices for their products in a world dominated by transnational companies from the North. This is something most politically aware and educated people in the U.S. are aware of, I _think_ - it's amazing sometimes what people don't know.

Then there were reports from the CLAC Board, and reports from each producer network. Bananas were the most interesting. The issue of Fair Trade bananas is the most interesting, because in that industry, small firms compete directly with transnational companies that own plantations. This means that allowing transnationals into Fair Trade is a lot more complicated than in coffee, where you can allow the big trading firms to buy small producers' coffee without admitting large plantations. In bananas, if you let Dole in, you let them in all the way: Dole-produced bananas get certified Fair Trade. At least that's my current understanding of it.

Small banana producers were afraid that letting the transnationals into Fair Trade would force them out of the market. I don't have data to back this up, but it seems like a natural thing to be afraid of. The problem, as Paul Rice explained it to me, was that the shipping channels for small producers from Latin America to the U.S. are inadequate to handle bananas. They are too slow. So shipments of bananas from small producers were arriving on U.S. shores rotten and being thrown out. The transnationals have their own transport lines, meanwhile. The idea behind allowing bananas produced by transnationals to be certified Fair Trade was that the small producers would be allowed to use the transnationals' shipping. However, for the small producers, allowing transnationals on board was unthinkable. For that and other reasons, the expansion of Fair Trade bananas is currently stalled.

I'll skip forward to Friday, where there was a very interesting presentation by Chris Bacon on the competitiveness of the FLO (Fair Trade) certification model with respect to other sustainable coffee labels. Most of the other labels, from Utz Kapeh to Starbucks' Cafe Practices, use a pure premium model. So in a low market, they still may end up below production cost. However, in a high market they out-compete Fair Trade. This touched off a lengthy discussion about raising the premium. Later in the day, a proposal was generated to raise both the premium and the minimum price. The more business-savvy producer representatives were against it, but this proposal passed with about 95% approval.

Now to Saturday - I'm giving you the whirlwind tour here, a ton of other stuff happened that I'm not going to go into - the CLAC elections took place. Raul del Aguila from Peru's COCLA was voted in. COCLA is the leading coffee co-op in Peru, and the country's fourth-largest coffee exporter. 8,000 families are members, divided into about twenty-five first-tier organizations who send delegates to the General Assembly. The co-op is a smartly run business, which sells a suite of highly differentiated coffees to a variety of niche markets the world over. They use local, national, and international capital markets to raise funds for investment, and are very active in the Junta del Café.

So now the CLAC is moving to Peru, and opening an office in Lima.

It's an exciting time to be here, and to be doing this work.

I could write another twenty pages about the CLAC, but to keep things accurate, I'm going to wait to do so until I've gone over the recordings of the sessions I made with my hand-held digital recorder. I think it's worth the trouble.

More to come!


Anonymous Anonymous said...

Hello Noah,

Congrats on your blog!

I´m actually finishing up an internship at FLO in Bonn and several of colleagues here were at the CLAC meeting so it´s quite interesting to hear your perspective.

Keep up the good work! Please let me know if you ever need any information for your research on the FLO / NI perspective. My email is v.lagace at fairtrade.net

Good luck!

1:27 AM  

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