Coffee What a difference a penny makes

Coffee What a difference a penny makes

Coffee What a difference a penny makes

Coffee What a difference a penny makes

Coffee What a difference a penny makes

‘Coffee’ comes from an Arabic word meaning ‘invigorating’ . And so it is for the balance sheets of the roasters, the big businesses that control the big coffee brands. For the growers from whom these brands source their beans, coffee is less than invigorating. Coffee growers are used to back-breaking labour. It’s what they have done for generations. But since the collapse of the coffee price through globalisation of the world market, what they get for their beans is now just over half what it costs to grow them.

An estimated 25 million of them now face starvation and disease because their labour no longer provides a living.

The Co-op does not believe it is fair that the coffee we drink in the well-off West should be subsidised by the world’s poor, while the roasters cream off the profits. To redress the balance, we are now taking the major step of switching our entire range of Co-op brand coffee to Fairtrade, meaning that growers, many of whom don’t have basics like clean water, can at least have a better chance of the living standards that we in the West take for granted.

Coffee What a difference a penny makes

Contents 2 Executive summary 5 Winners and losers 7 Oxfam’s coffee rescue plan 8 Fairtrade: a ‘glimmer of hope’ 12 The Co-op’s Fairtrade coffee initiative 14 Where does our coffee come from? 16 Join the campaign 17 About the Co-op 1 What a difference a penny makes: in fact the extra cost of drinking Fairtrade coffee is much less than a penny a cup. But for the people who grow it, this can make a world of difference.

Coffee What a difference a penny makes

these fluctuations were kept under control. When the agreement collapsed, due in part to the withdrawal of the US, vulnerable smallholders became exposed to the massive swings of free market economics, without any power to negotiate with the roasters, the big multinationals who control the world’s coffee brands.

Winners and losers Now, many coffee growers, especially small producers, are getting just over half of what it actually costs to grow the beans – back-breaking labour on which they have relied for generations. They are getting poorer and poorer, while effectively subsidising our coffee-drinking in the well-off West. This is bad enough. But while growers are getting in real terms the lowest returns for 100 years, the roasters are posting profits so high they are lauded by food industry analysts.

In the UK alone, we drink around 30 billion cups of coffee a year. The coffee culture in the West is thriving, with premium outlets opening every day, especially in Europe. So rewarding are the returns to the businesses at the top of the value chain in the US, that the City of Seattle announced in September 2003 it was considering introducing a ‘latte tax’ – 10 per cent on coffee sold in coffee shops – to fund childcare projects. “We have been coffee workers all our lives and have reached a great crisis now. We are ashamed at having reached this situation. It is the first time I have been at such a low level.

” BERTHA SALINAS Organiser, ‘March of the Hungry’, Nicaragua 2 Executive summary Collapse of the coffee price When Hurricane Mitch hit Central America in 1998 it created floods and mudslides that took the lives of an estimated 10,000 people.

It tore away houses, fields, roads and trees, devastating the plantations on which the small countries in the region depended for a living. The same year saw another event, which, although not at first as dramatic as Hurricane Mitch, was to have a ruinous effect on agricultural communities in Central and South America and beyond in Africa and the Far East. This was the collapse of the global coffee price. Prices for arabica plummeted from above 250 cents/lb in 1997 to around 45 cents/lb in October 2001, the lowest ever level in real terms. Prices then hovered at around 30-year lows of 50 cents (100-year lows in real terms, adjusted for inflation) before settling at around the 63 cents mark in August 2003.

25 million people at risk The situation is now so bad that Oxfam estimates that 25 million people in the world’s poorest countries who depend on coffee can no longer pay for basics such as food and healthcare. Coffee is a global commodity and market prices fluctuate. Until 1989, there was a safety net in the form of the International Coffee Agreement, which ensured

Coffee What a difference a penny makes

At the bottom of the chain, people are starving. In July 2003, in Nicaragua, a gathering of 5,000 destitute growers and their families set out from their homes in the coffee- growing region of Matagalpa to walk 90 miles to the capital Managua.

The ‘March of the Hungry’ was an act of desperation in which at least 14 of the marchers died from malnutrition and related diseases. Oxfam’s campaign Oxfam has long campaigned for greater fairness and compassion in trade between the rich and poor countries of the world. In 2002, it published a report called ‘Mugged: poverty in your coffee cup’ which mapped the scale of the crisis, analysing cause and effect. The report found that not only was the excessive drive for profit impacting on growers, but also on the environment and on the quality of the beans finding their way into our coffee.

Oxfam put forward a Coffee Rescue Plan to be imple- mented globally by negotiation and agreement between governments, roasters, development organisations and others active in the coffee industry. The Fairtrade solution In its report, Oxfam described the Fairtrade initiative as a ‘glimmer of hope’ for beleaguered growers, arguing that while Fairtrade alone could not be expected to solve such a massive and complex crisis, it at least enabled growers who had no alternative to coffee production to make a living; and served as the ‘threat of good example’ to the roasters, on whom they called to pay a fairer return for their raw materials.

As part of this, Oxfam called on the roasters to commit to sourcing at least two per cent of their beans under Fairtrade within one year. The Fairtrade contract pays a sustainable price to grower co-operatives in return for high standards of quality and environmental care. It also pays a social premium on top of the basic price to be used democrat- ically for business, welfare or environmental projects that benefit the community.

At the time of going to press, the Co-op is not aware of any move by the top three roasters behind the big coffee brands sold in the UK to source through Fairtrade. We believe the arguments put forward against doing so are motivated primarily by fear: fear of the financial consequences of paying more for beans, fear of losing control of negotiations with suppliers and fear of the effect on their reputations and brands by conceding to source Fairtrade on one line but not all. A real and immediate difference The Co-op recognises that Fairtrade can only be part of the solution. But we believe that, from the point of view of the man or woman in the street, getting behind Fairtrade is the only practical way people who care about the situation can do something to help.

Most people can’t or won’t get involved in lobbying global companies and governments. Whereas switching to Fairtrade provides a simple means for all coffee drinkers to make a real and immediate difference. Real, because growers can get double or triple the price they receive on world markets. Immediate, because all they have to do is switch brands. And the cost of this switch is well under a penny a cup. 3

Coffee What a difference a penny makes

Co-op brand coffee: now 100 per cent Fairtrade The Co-op has been involved with Fairtrade since its inception and has pioneered new lines in our stores, as varied as bananas and chocolate cake. As a business driven by co-operative values, we are committed to play our part in taking Fairtrade out of the niche and into the mainstream. In November 2002, we converted all Co-op brand block chocolate to Fairtrade in a move which was welcomed by shoppers. Now we are doing the same with coffee. We will still offer conventional brands and continue to support other Fairtrade brands such as Cafédirect and Percol, but from November 2003, all Co-op brand coffee, whether ground or instant, will be Fairtrade.

The move will triple the total value of Fairtrade coffee sold in Co-op stores, quadruple sales of Fairtrade instant coffee and increase the value of Fairtrade coffee sold in the UK by 15 per cent overnight.

We are sourcing our coffee primarily from five producer co-operatives, four in Central and South America – Colombia, Guatemala, Nicaragua and Costa Rica – and one in Tanzania, East Africa. Join the campaign The Co-op is optimistic shoppers will welcome the initiative as much as they welcomed the switch to Fairtrade for Co-op brand chocolate, which has outstripped growth of conventional chocolate brands by a factor of seven. “Now prices are so low, growing coffee has become just a hobby. I cannot cut those trees. I have nothing else to plant, I have nothing else to do. So I look to my trees as you go swimming or play football.

One man considered cutting his trees but his friend said: But what will you talk about with other men?

” JOHN KANJAGAILE Kagera Co-operative Union, Tanzania We are inviting consumers to join Oxfam’s Make Trade Fair campaign, which puts pressure on the roasters to introduce their own Fairtrade lines. In support, we have posted a template letter on our website at for anyone who wishes to contact their current coffee manufacturer. 4

Coffee What a difference a penny makes

Winners and losers Profit and loss 15 years of free market boom-to-bust economics is ravaging 25 million of the world’s most vulnerable people. Following the collapse of the managed global market in 1989, coffee growers are now getting one quarter of what they were getting for their beans 40 years ago.

In real terms, about the same as they got 100 years ago. This at a time when the roasters – the multinational companies who buy the beans from the growers, process them into instant or ground coffee and turn them into consumer brands – are posting profits so high that they are lauded to the skies by food and drink sector analysts.

For although between 1993 and 2000, the volume of the UK coffee market declined by 1.6 per cent, the value of sales increased by 22 per cent1 . The big brands have made more while the growers have made less. Economic misery Oxfam’s 2002 report describing the crisis facing the world’s coffee growers is called ‘Mugged: poverty in your coffee cup’. It is an uncompromising read. Conditions for growers are now desperate. The collapse of the coffee price means they are not even able to pay for their families’ most basic needs, such as food and medicine, still less cover their production costs. Many growers, especially small producers, are getting just over half of what it costs them to grow the beans.

“Prices are now well below the cost of production of the most efficient coffee producer and are imposing serious hardship on coffee farmers worldwide.

” Association of Coffee Producing Countries report, quoted in ‘Spilling the Beans’ (Fairtrade Foundation) Families are going hungry, children are forced out of school, healthcare is worsening. In a desperate attempt to make ends meet, growers who have relied on coffee for three generations are tearing out their crops to grow something else. Alarmingly, the alternative is sometimes coca, the raw material of cocaine, fuelling crime in their communities and in ours. Costa Rica, for example, once relatively free of crime, has become a transit country in the supply chain.

The major coffee-growing countries are not only heavily reliant on coffee exports to finance imports, but among the poorest countries in the world.

So for them the collapse of the coffee price brings further economic misery. Double whammy The collapse in the coffee price is only one side of the coin. The other problem identified by Oxfam is falling quality, as new technologies enable roasters to mask the taste of lower quality beans. For the growers, this means even lower prices. For coffee drinkers, this means beans that were once rejected are now finding their way into the finished product. Causes of the crisis Oxfam points to four major factors behind the double whammy of collapsed price and falling quality. 5 1 - From managed market to flooded market All markets are subject to fluctuations in supply and demand, but until 1989, the International Coffee Agreement acted as a safety net against the fluctuations of boom and bust by keeping prices reasonably stable through quota agreements between coffee-producing nations.

Since the breakdown of the Agreement, prices have plummeted in a global free-for-all. The breakdown coincided with the entrance of Vietnam into the market as a coffee producer and a massive production increase in Brazil. These factors led to an over-supply which drove down prices. Demand for coffee in the West has failed to keep pace with supply.

2 - Power imbalances in the market Growers are small, fragmented, remote and at the bottom of a long chain of middlemen who are all taking a cut in exchange for the value they add: millers, baggers, traders, transporters, exporters, importers, shippers, insurers and others. A typical grower in Uganda gets only 14 cents for a kilo of beans delivered to the roaster’s factory gates for $1.64. They have little negotiating power against the middlemen on whom they rely, let alone against the multinational roasters who control the global market. 3 - New roaster technologies and techniques New techniques are enabling roasters to disguise flavours and aromas such that they can use less of the higher quality, higher price arabica bean and more of the lower quality, lower price robusta bean.

And not just more robusta, but lower quality robusta, too. New technology means that processes that would once have been unacceptable to roasters can now be used because they are no longer detectable in the final product. For example, Oxfam found evidence of robusta growers in Vietnam drying coffee beans over fires fuelled with coal and rubber tyres2 .

Our own people have witnessed roasters actively supporting poor quality. Co-op representatives in East Africa watched in disbelief as a trader supplying one of the roasters bought up large quantities of poor quality beans in preference to good quality ones widely available. Roasters have also impacted on local environments through introducing techniques that increase short- term yield at the expense of long-term sustainability. Increased competition has led to more intensive farming that degrades the environment as well as reducing quality. In some areas, planting density has increased by a factor of five times and more.

So in a desperate bid for viability in the short term, these techniques are threatening the long-term sustainability of the land on which the growers rely.

“Most small farmers around Matagalpa are having to sell off what little they have, to pay for what they need immediately. They cannot invest in their farms. And they cannot invest in their children’s futures. They are taking their children out of school. ” BLANCA ROSA MOLINA Cecocafen, Nicaragua 6 4 - The failure of rural development In circumstances like these, it may seem surprising that growers do not pull out of coffee in large numbers. Some are doing so, but many growers have no alternative but to continue.

They lack the skills and the money to transfer to alternative so-called ‘cash crops’, and these may also take time to bear fruit.

Plus there is little incentive to do so: the future for these commodities is no brighter than that for coffee. Oxfam puts much of the blame for this at the door of Western governments, the World Bank and the IMF, who have failed to invest in rural development and infrastructure and so help growers rise up the value chain. Instead they have kept them at the bottom, so that growers are forced to continue, simply because there is no alternative.

Situation desperate These factors have combined to cause a major crisis. Governments recognise that the plight of the growers is desperate and dangerous. Even the roasters acknowledge the situation is unsustainable. Yet there is precious little evidence of effective action. Where the roasters and those with the interests of the growers at heart part company, is in deciding what to do about the crisis. Having identified its causes, Oxfam put forward a strategy to tackle it, including a Coffee Rescue Plan.

Oxfam’s coffee rescue plan Oxfam’s strategy was to tackle the crisis on five fronts, involving action by many different agencies.

1 - Restore the balance of supply and demand Governments and companies should commit to the immediate destruction of five million bags of the worst quality coffee. The roasters should stimulate consumer demand for coffee in emerging markets. There should be international leadership co-ordinating collaboration to manage supply. Oxfam does not say this in so many words, but it is effectively pointing to a restoration of some of the authority of the International Coffee Organisation (ICO). 2 - Restore quality and raise productivity There should be an ICO-administered quality scheme, plus support for growers at the bottom of the pile.

3 - Raise prices, revive livelihoods Roasters should commit to paying prices that provide growers with a decent income. This is defined as at least higher than the cost of production. 4 - Retain and build value-adding capacity One of the few ways growers can get more for their coffee is by processing it, at least to the point that its quality becomes evident. There should be investment in enabling technologies.

“Our roads are not good. We need better water facilities. We need to pay for our children to go to school. You might say the government should see to this, but they say they do not have the money. So you are helping us to make our choices every day. ” GUILLERMO VARGAS LEITON Coocafe, Costa Rica 5 - Establish real alternatives for rural development Donor countries should support receiver countries that have workable plans to reduce their dependency on coffee. Oxfam’s Coffee Rescue Plan included a series of recommendations to be actioned within one year. The plan, part of Oxfam’s ‘Mugged’ report, is available at The crisis is a complex one, requiring co-ordinated action by many different agencies including national governments.

Oxfam’s strategy to cope with it is necessarily complex, rooted as it is in an in-depth knowledge both of the coffee market and of the plight of the growers within it.

The Co-op fully supports the direction of Oxfam's campaign, and in wanting to make a practical contribution, we have carefully considered how we can add value as a major retailer on behalf of customers and members dedicated to co-operative principles. 7

Fairtrade: a ‘glimmer of hope’ What is Fairtrade? Fairtrade helps disadvantaged growers work together in community enterprises by offering a guaranteed better price: one that covers the cost of production and a basic living wage. Importantly, Fairtrade pays an additional social premium, under which an agreed amount is dedicated to community development programmes, such as education, health and the sinking of water wells.

The producers themselves decide democratically how to invest this extra income, making co-operation, participation and joint responsibility of key importance. The Fairtrade Foundation awards an independent consumer guarantee – the FAIRTRADE Mark – to individual products which meet Fairtrade criteria regarding terms of trade and conditions of production. Benefits for growers Fairtrade brings enormous benefits. In the case of coffee, where producers are getting less for their produce than it costs to grow it, the key benefit for growers is the guarantee of a living wage. As at September 2003, grower co-operatives that sold all or part of their members’ crops to the Fairtrade market received a minimum of 126 cents/lb for arabica and 106 cents/lb for robusta, compared to world market prices of around 65 cents and 33 cents respectively.

The Fairtrade price is calculated to cover the cost of production and includes a five cents/lb social premium. “When we sell five per cent as Fairtrade, we can average the benefits across all that we sell. The percentage is small but it is very important. ” JOHN KANJAGAILE Kagera Co-operative Union, Tanzania This means Fairtrade producer groups currently receive around three times the international price for robustas and double the international price for arabicas. This in itself would be reason enough to source Fairtrade. At least we in the well-off developed world wouldn’t be asking the poorest people in the world to actually subsidise our coffee-drinking.

Consumer benefit But there is also a consumer benefit. Fairtrade coffee drinkers benefit from produce that has been grown on small, family farms to high environmental standards. These are agreed and monitored as part of the contract with growers. 8

Producers must implement integrated crop management and environmental protection schemes. Where growers live in rainforest areas, these help preserve delicate eco-systems. Many growers are close to being organic ‘by default’: they can’t afford expensive agrochemicals and use traditional means of coffee-growing handed down from generation to generation.

All of this contributes to the production of a better quality coffee. For these reasons, Oxfam describes Fairtrade as a ‘glimmer of hope’ in an otherwise desperate situation. Fairtrade alone cannot address the imbalance of supply and demand in the coffee market, argues Oxfam, but this shouldn’t stop the roasters from increasing their commitment to Fairtrade as providing some sort of safety net for vulnerable growers in a free market. Oxfam’s call on the roasters The Coffee Rescue Plan calls for the roasters to source at least two per cent of their coffee under Fairtrade conditions within one year; also to commit to increasing the proportion of coffee sourced under Fairtrade in the long term.

As far as we are aware, the top three global roasters behind the brands sold in the UK have made little progress towards this objective. Kraft is working to use some coffee from growers approved by the Rainforest Alliance, addressing environmental and some social issues, bringing closer links to growers, but it is not Fairtrade. Instead roasters have put forward a range of arguments against Fairtrade. Roaster response #1 The first argument is pragmatic. The roasters are global businesses who each need an average 10 million bags of beans a year, so they rely on a high volume supply chain that is most easily sourced through wholesalers, rather than bought direct from farmers.

Nestlé (Nescafé) is unusual in that it sources a relatively high proportion of its coffee direct from its growers: this is still just 13 per cent of its total requirement.

Kraft (Kenco, Maxwell House, Carte Noir, Mellow Bird’s) and Sara Lee (Douwe Egberts) buy through middlemen. In its response to Oxfam, Kraft argued it would be impractical for it to buy direct: “Directly dealing with each individual coffee farmer would lead to significant practical problems for a producer operating on our scale.”3 This argument fails to recognise how Fairtrade works. Supply agreements are not with individual growers, but with co-operatives that represent up to 150,000 growers and so can provide the necessary volumes. Roasters can use the services of exporters and brokers provided there is an auditable and transparent supply chain.


Roaster response #2 The second argument is economic. Nestlé argued that paying a higher Fairtrade price for coffee would only serve to worsen the over-supply problem: "While ‘Fair Trade’ coffee is useful in benefiting a relatively small percentage of farmers and allowing some consumers to express their views, if (the higher) Fair Trade prices were to be applied on a broad level, it would motivate farmers to grow more coffee, ultimately lowering the price of coffee beans even further.”4 This argument fails to take account of the terms of the Fairtrade agreement, under which growers are not paid the market price, but an above-the-market price that gives them a decent return and, through the social premium, enables them to develop their communities.

It’s true that converting all the coffee currently grown in the world to Fairtrade would not solve the over-supply problem, unless demand rose to meet it. But the free market alternative that is effectively in place – starving the least powerful growers out of business – is scarcely acceptable. Roaster response #3 The third argument is that just because a product does not carry the FAIRTRADE Mark doesn’t mean it has been unfairly traded. Kraft again: “The use of the … Mark is only one way in which an extremely small number of coffee brands seek to secure a fair price for the coffee grower.

It is completely misleading, however, to assume or imply that manufacturers who choose not to market their brands in this way are somehow trading ‘unfairly’ .”5 They have a point. No-one can claim a monopoly on dealing decently with people. Yet 25 million people have somehow found themselves without sufficient income to sustain even the most basic standard of living. The threat of good example The Co-op suspects these and other arguments against adopting Fairtrade, however rational they may seem on the surface, are driven primarily by fear. • Fear of the financial impact: roasters would have to pay more for their beans.

They would either have to absorb the cost and lose profit, or pass the cost on to the consumer.

• Fear of loss of control in their relationships with suppliers: the roasters would have to conform to externally-monitored standards that would bring a level of transparency into their supplier relationships to which they are unaccustomed. • Fear of the impact on their reputation and brands: if a roaster adopted Fairtrade on one line but not others, consumers might infer that the other lines were ‘unfairly traded’ and expect them to convert all their lines to Fairtrade. As Oxfam has pointed out, Fairtrade provides the ‘threat of good example’ – a threat against the roasters’ reputations and the brands in which they have invested millions: 10

“By indirectly highlighting the fact that farmers supplying the mainstream market are paid prices that do not even cover production costs, the very existence of the Fair Trade movement has posed a serious reputation risk to companies whose products are very susceptible to consumer sensibilities.”6 Small wonder, then, that roasters are reluctant to follow the Fairtrade route. But if the companies that control half the world’s coffee are to take no action, then it falls to others to take a lead, because the situation has now become too urgent to ignore. What a difference a penny makes The Co-op recognises that Fairtrade cannot be the total solution to a problem that requires joined-up thinking and action by all involved in the production of coffee around the world.

But if retailers increased their commitment to sourcing Fairtrade, it would simultaneously help alleviate the grinding poverty of the growers and provide a spur to the roasters to improve conditions for their own suppliers. Indeed, without this spur, there can be little incentive for the roasters to do so. Importantly, the Fairtrade alternative provides a simple means for all coffee drinkers to make a real and immediate difference: perhaps the only means available. Most people do not think they have the power to influence global debates, industry practices, trading agreements and board decisions taken by multinationals.

Even those who do feel they have the power to do so are understandably more pre-occupied with getting on with their own lives than by trying to change what happens in far away places.

Yet simply by switching from their current coffee brand to one that carries the FAIRTRADE Mark, they can use their purchasing power as economic muscle, secure in the knowledge that at least the coffee they drink is not being brought to them at such a tremendous cost to the people who grow it. Under Fairtrade, growers get a much higher price for their coffee than they do under standard supply contracts. Yet the extra cost to the consumer is well under a penny a cup. The Co-op believes the Fairtrade alternative is the most practical way coffee drinkers can make a difference: the benefit for growers is real and the switch from one brand to another is immediate.

With 30 billion cups of coffee drunk every year in the UK alone, that’s quite a difference for the growers. 11 “Prior to Fairtrade we did not have any chance to survive. Now we see light at the end of the tunnel. ” MARCOS M PEREZ Member, Fedecocagua, Guatemala

The Co-op’s Fairtrade coffee initiative Fairtrade coffee market The market for Fairtrade coffee may still be small in comparison to the mainstream, but it’s a growing one. The retail value of Fairtrade coffee has grown by nearly 70 per cent over four years: from £13.7 million in 1998 to £23.1 million in 2002 and the trend continues.

Fairtrade in 2002 accounted for 14 per cent of the total UK ground coffee market and two per cent of instant. This is the national picture. The picture at the Co-op, which has long supported Fairtrade, is different. In 2002, 36 per cent of all ground and four per cent of all instant coffee sold in our stores, whether Co-op or other brand, was Fairtrade.

Co-op shoppers now buy more than double the national average of Fairtrade coffee. In other words, they are twice as likely to choose Fairtrade. This, with the pioneering heritage of the Co-op and our commitment to co-operative values and principles as a responsible retailer, gives us a tremendous advantage in taking the next big step in support of Fairtrade across the range. Switch to 100 per cent Fairtrade Up to now the Co-op has sold four product categories of coffee, whether instant or ground: 1 Co-op brand, non-Fairtrade 2 Co-op brand, Fairtrade 3 Other Fairtrade brands (eg Cafédirect, Percol) 4 Conventional non-Fairtrade (roaster brands) “Buy our coffee because it is the best quality, not because we are poor farmers.

” BLANCA ROSA MOLINA Cecocafen, Nicaragua From November 2003, we will be switching Co-op brand coffee in all our stores to Fairtrade. We will still offer conventional brands and continue to support other Fairtrade brands such as Cafédirect and Percol, which have helped to build the success of Fairtrade coffee in the UK.

Predicted impact Assuming no change to overall sales, this move will triple the total value of Fairtrade coffee sold in Co-op stores to almost £6.5 million. Sales of Fairtrade instant coffee will quadruple and almost 90 per cent of all the ground we sell will be Fairtrade. Effectively, the Co-op initiative offers a greater Fairtrade choice to coffee drinkers and brings Fairtrade firmly into the mainstream, without sacrificing taste and quality for the consumer. At the national level, the Co-op initiative will increase all Fairtrade coffee sold in the UK by 15 per cent overnight, again assuming no change to overall sales.

These figures are conservative estimates: they assume no increase or decrease in consumption of Co-op brand coffee as a result of the conversion to Fairtrade. But we believe the initiative will encourage drinkers of conventional brands to switch to Fairtrade, further increasing Fairtrade’s share of the overall coffee category. 12

The chocolate experience This optimism is based on our experience with chocolate, in which consumers have embraced the Fairtrade alternative. In November 2002, the Co-op switched all its own-brand block chocolate to Fairtrade, sourced through a single cocoa grower co-operative in Ghana called Kuapa Kokoo. The products are different, but the initiative was a similar one, in that we converted an entire Co-op brand line to Fairtrade. Shoppers have welcomed the switch. Within six months of launch, Co-op brand chocolate, all Fairtrade, was up by 21 per cent, while conventional, non-Fairtrade brands grew by just three per cent, despite heavyweight advertising and promotional campaigns by the chocolate manufacturers.

Shoppers have switched allegiance to the extent that Fairtrade growth has out-performed non-Fairtrade growth by a factor of seven. If the same happens in coffee as is happening in chocolate, the roasters will have to sit up and take notice. 13 Roasting the roasters As well as bringing grower and consumer benefits, the result of the Co-op initiative will be to draw a sharp distinction on supermarket shelves between the Fairtrade brands (ours and others) and the non- Fairtrade brands (those of the roasters). This distinction will at first be most obvious on Co-op shelves, where one in four coffee products will be Fairtrade, but we hope other retailers will follow our lead, because together we can make a greater impact where it matters – at the point of consumer choice.

Advertising, in-store signage, merchandising and labelling will all draw shoppers’ attention to the range of Fairtrade coffee on offer and the crisis affecting growers.

If enough consumers switch to Fairtrade, the roasters will no longer be able to ignore it and hope it will go away. With one in four coffee products sold in the Co-op sourced under Fairtrade, the roasters will no longer be able to dismiss Fairtrade as ‘niche’ . Instead they will be obliged to take their heads out of the sand and confront it. Providing coffee with the independent guarantee of the FAIRTRADE Mark will show that they really do care about the lot of their suppliers.

Where does our coffee come from? The Co-op is working primarily with five grower co- operatives as suppliers of the beans that make up Co-op brand coffee under the Fairtrade scheme.

Four of these are in Central and South America: Colombia, Costa Rica, Nicaragua and Guatemala. One is in Tanzania, East Africa. Colombia Colombia has significant natural resources, and a diverse culture reflecting its people’s Indian, Spanish and African origins. The Cooperativa de Caficultores de Aguadas brings together 750 coffee producers and 120 other members from 30 villages. Founded in 1966 to help growers market their coffee collectively, it is one of the few grower co-operatives that organises small growers exclusively.

Aguadas joined Fairtrade in 1996 to ensure stability of volume and export price and to use the social premium for social projects, development of organic agriculture and diversification. Aguadas is a strong social organisation, committed to co-operative ideals, with a coherent development policy that goes far beyond coffee production. A growing source of income is in livestock, bananas and other fruit; also in hat-making, in which it has a 200-year tradition. Guatemala Guatemala is one of the most beautiful countries in Central America. Its indigenous people, the Maya, make up about half of the population.

Established in 1969, Fedecocagua is a co-operative organisation with 20,000 members from different regions of Guatemala. Badly hit by Hurricane Mitch in 1998, the co-operative channelled international donations into the reconstruction of its school, farms, processing plants, roads and bridges that had been seriously damaged. Fedecocagua has used the Fairtrade premium to buy trucks to reduce the transportation costs involved in coffee production, and to set up badly-needed healthcare centres and pharmacies.

Their coffee is shade-grown under a wide variety of trees, including cocoa, banana, mango and plantain. Costa Rica Costa Rica is a land of tropical forests with abundant flora and fauna, including orchids, macaws and toucans. It was stable and relatively prosperous until rising oil prices, falling commodity prices and high inflation took their toll on its economy. Established in 1988, Coocafe is an association of nine coffee co-operatives bringing together 4,000 members with a mission to improve social conditions and environmental sustainability.

Coocafe has set up an education scholarship fund for students in rural areas to improve access to education.

On the environment front, Coocafe has undertaken “Only the best quality goes into Cecocafen coffee. The emphasis on quality starts right at the point of selection of the seeds. Right through to the dry- processing in the mill, there is very thorough selection, picking out anything which does not meet our high standards. ” BLANCA ROSA MOLINA Cecocafen, Nicaragua 14

reforestation projects and is engaged in the gradual conversion of coffee plantations from conventional to organic production. Their Fairtrade grade coffee is shade-grown in the Monteverde Cloudforest area using reduced inputs. Nicaragua Nicaragua has long relied on agriculture to sustain its economy but is now one of the poorest countries in the West after a history of civil war, dictatorships and natural disasters. When Hurricane Mitch struck in 1998, thousands of people died, 20 per cent of the population were homeless and severe damage was caused to plantations.

It was here that up to 5,000 people, including women, children and the elderly, mainly from coffee-growing families, set out on foot from Matagalpa towards the capital Managua on 29 July 2003 in the ‘March of the Hungry’.

They were protesting against the government’s failure to honour a resettlement agreement, made when they faced destitution following the collapse of the coffee price on the international market. 14 participants in the ‘March of the Hungry’ died, mostly from malnutrition and lack of medical attention dating from before the march.

Conditions are better for the 1200 members of Cecocafen, which was set up and registered with Fairtrade in 1997. Around 30 per cent of their coffee is sold to the Fairtrade market. The Fairtrade premium has boosted the drive to improve quality, allowing investment in processing facilities and a quality control laboratory. This has helped Cecocafen develop its own coffee brands, now sought after by discerning coffee buyers, and has created new income sources for its members. The co-operative hires out its processing facilities and laboratory and offers technical assistance for organic coffee production.

Tanzania The Kagera Co-operative Union (KCU) is based at Bukoba, on the western shores of Lake Victoria, in the far north of Tanzania near the borders with Rwanda and Uganda. KCU was established in 1950 but only started exporting coffee when it agreed its first Fairtrade contract in 1990. Currently it sells only five per cent of its coffee through Fairtrade, but this percentage is crucial because it raises the co-operative’s average income, compensating in some way for lower-price conventional sales. 15

Join the campaign Here are three simple ways you can help make conditions better for the world’s coffee growers: 1 Drink Fairtrade coffee Switch to Fairtrade at home, ask for Fairtrade in coffee shops, convert to Fairtrade at work.

Gone are the days when there were only one or two lines to choose from. Now you have a wide selection of ground and instant, so the quality is every bit as good as the conventional lines. It costs well under a penny a cup more, but because growers get a much higher price for their coffee, it makes a big difference to them.

2 Join The Big Noise The Big Noise is Oxfam’s ‘Make Trade Fair’ campaign at As well as getting regularly updated information about what is happening on the world stage, you can add your name and your voice to the growing list of people who are putting pressure on governments and the industry to improve the lot of coffee growers. The site also contains information about local events and a campaigning toolkit. “When you buy our coffee you are not just buying our coffee but supporting our democracy.

” GUILLERMO VARGAS LEITON Coocafe, Costa Rica 3 Give your roaster a roasting If you’re attached to a particular brand of coffee and it’s not Fairtrade, why not e-mail or write to the manufacturer - the address will be on the label - and ask them to switch to Fairtrade? After all, converting to Fairtrade will have no effect on taste or aroma: it will simply mean the growers will be paid more and with greater responsibility for their communities and environments.

You will find a template letter on our website at, where you will also find a way to register your support for the campaign. You could also ask other retailers to follow our lead with their own-label coffee.


The Co-op's responsible retailing campaign has been running for the past eight years, after the biggest ever survey of consumer views in 1995. More than 30,000 people responded and the message was clear: shoppers want to make informed purchasing decisions based on concerns about the environment, human rights and animal welfare. In response, we pledged to give consumers the full facts on products, including details of who makes Co-op brand products. A Right to Know policy was implemented to provide consumers with the facts they need to make informed purchasing decisions.

The Co-op has a democratic base of individual members. Each member has an individual vote, no matter how much money they have invested in the Co-op. They belong to the Co-operative Movement because they believe in a wide range of consumer and social issues. As a unique consumer-owned business, the Co-op has a duty to serve consumers, not industry or the City. The Co-op has always been at the forefront of retailing issues, leading industry and interpreting the law in the best interests of the consumer. Among our campaigns are: CHOCOLATE (2002) The conversion of all Co-op brand block chocolate to Fairtrade LIE OF THE LABEL II (2002) Re-visiting food labelling since the Co-op’s call for more honest labelling in 1997, the report found an alarming lack of progress, specifically on nutrition labelling GREEN AND PLEASANT LAND (2001) A strategy for sustainable food production, including a reduction in pesticide use and more support for home-grown organics BLACKMAIL (2000) A report on parental concerns about the advertising of salty, fatty and sugary food products to children FOOD CRIMES (2000) Launching a series of inquiries into the ethics of modern food production BREAKING THE BARRIERS (1999) Co-operating for social inclusion JURY’S VERDICT (1998) Reporting on complaints and adjudications under the Co-op’s code of labelling practice LIE OF THE LABEL (1997) A report calling for honest labelling ENDING THE PAIN (1996) Finding a solution to stop animal testing THE PLATE OF THE NATION (1995) A report on the national diet RESPONSIBLE RETAILING (1995) A report based on the UK’s largest ever survey of ethical concerns “Buy from co-operatives, not private companies.

The private companies have an owner – they’re out for themselves. They try not to pay the full value of a crop. But the owners of a co-operative are the producers.

” SERGIO PEREZ Coocafe, Costa Rica About the Co-op 17

Acknowledgements The Co-op would like to thank the organisations below for their support in researching and producing this report: The Fairtrade Foundation Oxfam and For further information Please write to the Co-operative Group Freepost MR9 473 Manchester M4 8BA or visit our website at or call us free on 0800 068 6727 or email us at This publication is available on request in large print, Braille and on cassette.

Published November 2003.

Printed on recycled paper. Sources 1 Premier Brands, quoted in Spilling the Beans, Fairtrade Foundation; 2 Oxfam, Mugged: poverty in your coffee cup, p29; 3 Kraft response to Oxfam,; 4 Nestlé response to Oxfam,; 5 Kraft response to Oxfam,; 6 Oxfam, Mugged: poverty in your coffee cup, p41. Picture credit: p15 image copyright Caroline Penn/Panos Pictures

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