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Fairtrade: Are fair trade models so positive?

Today we are more aware than ever about the complexities and problems we face as a society. This is increasingly reflected in the decisions we make, in the products we buy and consume. One of the factors that has become more important is social development. We want, and increasingly have, the power as consumers to improve the living conditions of the most disadvantaged people.

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Photo by Tim Foster on Unsplash

In the case of coffee, various initiatives have emerged to tackle the challenge of lifting coffee growers from producing regions out of poverty, among which are fair trade models. These models are based on the creation of standards that guarantee an improvement in education, wages, infrastructure and in general the living conditions of producers. Its maximum exponent is the Fair Trade Foundation. Surely you have seen his stamp on coffee packaging you have bought, right? This seal or certificate indicates that the coffee meets the requirements imposed by Fair trade to guarantee fair conditions for coffee growers.

The Fair trade certificate is a way to verify that by purchasing this coffee, we can help disadvantaged producers. Coffee with Fair Trade certificate costs a little more, but if with a slightly higher expense that we can assume, we can contribute our grain of sand to lift producer families out of poverty, it is worth paying, right? With this objective, Fair Trade and the other fair trade models are born.

But despite their good intentions, Are Fair Trade models so positive about Fair Trade? >

Unfortunately, the system has a number of problems that cause it to make a minimal, and sometimes even negative, difference in the lives of producers in the long run.

To understand these issues, we need to understand how the fair trade system works. Let's look especially at the Fairtrade case. This is based on creating a minimum price for coffee growers. If market prices drop below this price, Fairtrade guarantees its affiliated coffee growers the minimum. In this way producers are protected from extremely low price periods in the market. In addition to this, Fairtrade guarantees a small premium on the market price that is intended for social development (Education, infrastructure, etc.). Its objectives are good, but the system is poorly designed.

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< span> Photo by Niclas Illg on Unsplash

To begin with, many studies have revealed that the benefits that producers can receive are neutralized by the costs of obtaining the fair trade certificate. Sometimes the costs can exceed any benefit, so the net effect is negative.

This indicates that fair trade models are not an efficient way of transmitting benefits to producers, who remain an extremely weak link in the production chain. If as consumers we are willing to pay a premium for a coffee if it is certified, coffee growers receive too little of that premium. Most are distributed throughout the rest of the production chain.

Also, in the case of fair trade, we find that the certificate attracts poor quality coffee. It is a vicious cycle, which works like this: the free trade system is based on creating a minimum price for coffee growers in order to protect them from extreme price drops in the market, and also guarantees a small premium over the market price that It is intended for social development (education, infrastructure, etc.). But this has the detrimental effect that poor quality coffees priced below fair trade are sold on fair trade channels as they guarantee that minimum price. This ultimately hurts the entire market as many consumers who would be willing to pay more for fair trade coffee do not do so due to the poor quality of the coffee. Models like the one implemented by Fairtrade, which are not able to combine quality coffee with development by the poorest producers, are not a sustainable model in the future.

In summary, even though as consumers we are willing to pay more for certified products, this does not have the desired effect. Does this mean that there is no way to achieve these goals? No.

Direct Trade is presented as a much more viable alternative. Direct trade simply means the direct purchase of coffee from producers instead of operating through intermediaries, importers or brokers. Until recently, direct trade was not as viable for roasters. The difficulties of traveling to the coffee regions and the irregularity and poor viability of the producers made it necessary to provide intermediaries to connect roasters and producers. Importing companies and brokers, who buy coffee directly at the origin and sell it at its destination to roasters, were essential in the production chain. Unfortunately, producers were and still are the weakest link in this chain. They were and are those who obtain less benefits from their own work. But the rules of the game have been changing in recent years. More and more roasters are encouraged to travel to farms and establish personal relationships with coffee growers. The great advantage is that buying directly from coffee growers eliminates the need for intermediaries, and in this way the coffee farmers receive a better price and obtain greater benefits and contribution.

At Elixir Café we are great believers and promoters of direct trade as an alternative to Fair trade.

< h3 style = "text-align: left;"> We work directly with a small number of coffee-growing families in the town of Buesaco, in the Nariño region. We conceive of this project as a model in which these families are partners and friends, not providers, and therefore are beneficiaries of Elixir's success.

But regardless of the model, we must not lose sight of the most important thing: we coffee lovers should take more responsibility for informing us about the benefits of a certificate. A certificate, whether Fairtrade or not, does not automatically mean that we contribute to sustainability and social development. We have to go further, look deeper and analyze more clearly.

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