The Taste of Many Mountains

by Bruce Wydick

  “Sofia, would you present the results we have obtained?” asked her advisor.

  “We obtained the most recent thirteen years of coffee-grower data from a large fair trade association in Guatemala. We have reason to believe that it may closely represent the industry as a whole.”

  Everyone studied the projector screen. “As you can see, the data from our research show that in the years the benefits to being a fair trade grower increased during this thirteen-year period, the fraction of growers’ crops actually marketed as fair trade coffee became smaller. For example, during the worst year of the coffee crisis in 2002, the fraction of the crop able to be marketed as fair trade fell to 15 percent. Even when the price of coffee marketed as fair trade was sixty-two cents higher than the market price of sixty-three cents during these years, the average grower who was fair trade certified never received more than a twelve-cent premium per pound.”

  Sofia continued. “As coffee prices have risen, the share of fair trade–certified grower’s crop marketed as fair trade has gone up again. This is consistent with what we would expect with free entry and exit into any industry where there are extra profits to be made. Free entry into the fair trade coffee marketing channel has essentially driven out all of the surplus benefits to coffee growers accruing from fair trade. In years of low coffee prices, the growers gain a little bit from being in the network, but when coffee prices are higher, they lose from the cost of certification.”

  Sofia looked around the room and gave the final word. “Our conclusion after examining the data carefully is that on average over the last thirteen years, the monetary premium to growers from participating in the fair trade network has been essentially zero.”

  “Zero?” asked several of the students together, incredulously.

  “Yes, unfortunately. Zero.”

  The veins running down Blowner’s temples looked as if they would imminently explode. “You have data from one cooperative and you claim that this pitiful result generalizes to the entire fair trade coffee industry?” he argued loudly.

  “Mr. Blowner,” replied Sofia, smiling, “do you think that coffee farmers in Africa or Asia would be less rational, less eager to improve the lives of their families than those in Guatemala?”

  Blowner had no answer to this. He looked to Goldhard for support, who also came up empty.

  The students looked at the Berkeley professors, who slowly and sullenly nodded their heads in agreement with the results. The findings merely reflected a fundamental law of microeconomics: free entry drives out surpluses in markets. They were satisfied with having discovered something important and not obvious, but disappointed with the finding itself. These were people who did not want to see well-intentioned efforts fail. A morose silence hung over the room.

  Josefina Reyes quickly broke it. “But what about the social premium? What about all those schools and projects that have been built as a result of fair trade? You can’t say that people haven’t benefited from the fair trade program. In my view one of the best things about fair trade is not necessarily the higher income but the work in the villages.”

  The professor from UC San Diego responded to her. “The schools are a good thing. It’s like all the money the rich man gave away. You could point to all the wonderful things people bought with it. However, you would be ignoring opportunity costs. The growers not directly, but indirectly, paid for those schools with the cost of their certification. You raise a good point though. To the extent that the fair trade program can channel money from growers that might have been spent on things less valuable than schools, it has been helpful. However, I don’t think the main point of fair trade coffee has been to redirect how the growers spend their money. But you are probably right that one of the best things about fair trade is the social work in the villages—because there doesn’t seem to be any long-term benefit from better coffee prices.”

  “Obviously the problem is that the market for fair trade coffee is too small,” interjected Goldhard. “If people just became more conscious of the issue and bought more fair trade coffee, the market would be bigger, and growers would prosper.”

  Angela and Alex’s advisor from San Francisco responded. “But, Rudolph, it’s just like the parable when the man increases his giving to ten pesos. Even if the market for fair trade coffee grew, or the fair trade premium increased, more coffee growers would direct their crop into fair trade until eventually the benefits of it dissipated.”

  The professor from San Diego spoke again. “Yes, that is correct. Even if all the beans in the world were miraculously purchased as fair trade, the higher return to coffee would lure new production into the market, starting the process all over, and the benefit would again dissipate unless the consumer market for coffee were to keep infinitely increasing, which is a silly proposition.”

  “It would seem that the only way to create surplus benefits to coffee growers would be to limit access to fair trade certification,” said Sofia. “You could create sustainable artificial surpluses to a limited number of growers by preventing new growers from becoming fair trade certified—just like the man giving the money could limit the length of the line.”

  Alex jumped in. “You shouldn’t have a group of coffee growers who are arbitrarily privileged over others. That would be unfair.”

  “This is the rotten apple in this whole approach to helping coffee growers,” Rich interjected. “The last thing we should be doing is giving incentives for people to produce more coffee.”

  Sofia recalled to her advisor, “While we were in Huehuetenango, we visited Jennifer evaluating the microfinance program making loans to coffee growers. She said some borrowers had expanded their other businesses enough that they were backing off coffee production. Rich’s comment reminded me that if we’re going to intervene in the market, we should be giving people incentives to grow less coffee, to raise prices for all the remaining growers.”

  Angela glanced at Blowner and Reyes and was happy to see that they were beginning to take some notes.

  Sofia looked over at them across the table. “I don’t think any of us regards fair trade coffee as a scam, but it clearly represents a missed opportunity, and a very unfortunate one. Here are a huge number of comparatively wealthy coffee drinkers who on average appear willing to transfer fifty cents a cup to a coffee grower in a poor country. But over the last ten years they’ve been transferring less than a tenth of a cent. Think of the benefits that could have come from all of this willingness to transfer income to the poor.”

  “Better just to put a kitty on the coffee counter,” added Rich. “Have people contribute directly to a school fund in a coffee country. Work better if even half the spare change ever made it down there.”

  “Yes,” said Angela, “one could do a lot to harness this willingness to help coffee growers. Cafés could sponsor coffee-growing villages, using money to build fresh-water wells, vaccinate kids, pay for school tuition. Educating kids would increase their opportunity cost of being coffee growers and then reduce the coffee supply so prices would naturally trend upward in the long run.”

  “Yes, and other mechanisms could be designed that mitigate the effects of coffee price volatility on the growers,” commented another professor.

  After others contributed their own ideas, the meeting was adjourned for lunch. Angela stood up from the table and her eyes met Sofia’s across the room. She knew Sofia was proud of her; this meant a lot.

  Before she could leave the room, the hand of Josefina Reyes touched her shoulder. “May I have a word with you, Angela?”

  “Of course.”

  “We’re looking for some bright young minds to work with us on . . . er . . . some of these issues. Do you think you might be interested in perhaps . . . talking with us?”

  Angela smiled.

  Angela, Sofia, Rich, and Alex walked together from Giannini Hall to a café called Brewed Awakening on Euclid Street north of campus. Angela and Sofia ordered mochas, Alex a tall latte, and Rich his standar
d double espresso. Roaming through the room filled with coffee-fueled academic discussion groups and graduate students cramming for examinations, they found an empty table and sat down.

  “So how do you like advanced econometrics?” Sofia asked the two master’s students as they blew on their beverages. The class was one of the last they had to take before graduation in May.

  “It gives me a sore head,” replied Alex. “But I am liking it mostly.” Angela studied Alex for a moment as he talked about what techniques they were studying. As he raised up his latte, his shirtsleeves slid toward his elbows, exposing the wounds on his wrist. They had healed, but left behind a series of jagged scars.

  “Ditto,” Angela added to Alex’s thought. “Discontinuity designs, nonparametric estimation, maximum likelihood estimation—all important, but not the friendliest beasts to tame.”

  Angela looked at Rich and Sofia. “I had a question for you guys.”

  “Sure. What’s up?” said Sofia.

  “I’ve been thinking about today. Do you think all the money and effort that is spent to aid people in poor countries does any good?”

  “Part of it does,” Sofia answered. Rich seemed to at least grudgingly agree to the statement.

  “Which part?” asked Angela.

  “We’ve got our best people working on that one,” said Sofia, trying to discreetly wipe off a mustache left by her mocha.

  “I don’t understand how so much money can be wasted on poverty programs that don’t work,” said Angela.

  “Because the reasons people give to the poor are mostly unrelated to what actually helps,” said Rich.

  “That is a depressing thought.”

  Sofia responded, “Yes, but you have to understand that a lot of it has been our fault, economists I mean. We wasted decades developing elaborate theoretical models that helped us to explore a fantasy world of perfect markets that had little practical use in solving the world’s most pressing problems. Now the profession has woken up and is doing much more applied work that tries to answer practical questions like what kinds of programs actually help people.”

  Rich added, “You know, economics is probably at the caveman stage physics was at before Sir Isaac came along. And social behavior is more complicated than apples falling out of trees, maybe more complicated than the movement of light and particles. Matter can’t reason; light can’t strategize. Got a long road ahead before important breakthroughs filter down to the folks who are doing the giving.”

  “But we must know that some things work,” reasoned Angela.

  “Yes,” said Sofia. “Last week I was at a seminar that documented the big impact of clean water in villages. They presented some convincing evidence that providing fresh water to villages reduces infant mortality by up to half for something like ten dollars a person per year. There are other efforts that have similarly big impacts relative to the cost, like providing mosquito nets to families in areas with malaria, and annually administering a fifty-cent dose of deworming medicine to children. Many programs that focus on children—supporting their education, their health, their goals and aspirations—have also demonstrated big impacts—the younger the children, the better. These are things that governments and people can support, knowing that it’s probably making a difference.”

  Rich added, “And sometimes it’s just better to give ’em cash. Let people themselves decide how to use it best instead of giving them cows and pigs, or having them participate in some fair trade system that doesn’t work anyway. Bucketloads of funding going down that road now; finding big impacts in randomized trials.”

  In reflecting on all of this, Angela almost forgot to ask Sofia an important question. “I heard about your offer to be an assistant professor at MIT. Have you accepted it?”

  “Yes, I did, actually. Just last week,” she said.

  “Nerd alert!” shouted Angela playfully, rocking back in her chair. “That’s so cool.”

  Sofia smiled. “How about your doctoral applications?”

  “I wanted to tell you guys. I’ve been admitted to a few programs in California, but I just found out a few days ago—I made the wait list for MIT,” she announced proudly. She had been waiting to tell Sofia. “I was hoping you were going to be there!”

  “Angela, that is very awesome,” said Alex, congratulating her. “The top economics program in the world. Will you let me come and be your apartment cleaner?” he teased.

  “I’ll be looking for a research assistant next year,” Sofia said to Angela. “Any interest?”

  “Are you kidding?” said Angela. “I’ll do it for free if you can just kick their butts a little to let me in.”

  “Obviously I’m a rookie and don’t have much clout, but I’ll try to identify the right butts and do my best to kick them in just the right way,” Sofia promised. Angela smiled, grateful.

  “Well, I have also to report some good news,” said Alex, blushing a little. “I found out yesterday I am beginning an internship with the World Bank in July—their Latin America division.”

  “The World Bank—” responded Angela. “You got it? I can’t believe it. You?”

  “The Bank has become more interested in working with faith-based development organizations, did you know? And they like my experimental study. They said it was ‘original,’ whatever means that.”

  “Oh my gosh, the sympathy I’m feeling for the World Bank now,” exclaimed Angela.

  There was only one left. “And what about the Mr. Rich?” inquired Alex.

  “Still weighing my options, Lefty.”

  Sofia looked at him and shook her head. “Rich just accepted a job doing health program evaluation with a small nonprofit based in Bolivia.”

  Rich glared at Sofia.

  “What are you ashamed of?” she asked him.

  “I thought you might end up staying at the Bank,” Alex said. He looked as surprised as Angela felt.

  “Well, let’s just say I find business suits a little itchy around the neck area.”

  Alex looked down at his latte and shook his head, saying nothing, smiling to himself.

  Angela looked at him. “I think that’s awesome, Rich.”

  CHAPTER 31

  Sofia

  January 17, 2014

  THE TELEPHONE ON SOFIA’S DESK RANG, INTERRUPTING HER thoughts as she was editing an article for the MIT Press that someone had submitted to the Review of Economics and Statistics. She fumbled for the receiver, barely taking her eyes off a puzzling sequence of equations she was trying to reconcile.

  “This is Sofia.” As she listened attentively, she continued to ponder how the author’s proof satisfied equations 17(b) through 21(c).

  A voice with a European accent on the end of the line introduced himself politely. He was hoping to contact Ms. Lopez-Williams, who had failed to reply to several e-mails.

  “I’m afraid Angela isn’t at the university anymore. She filed her dissertation last May. Actually, you can congratulate her. She is now Dr. Lopez-Williams.”

  More talking and explaining followed on the other end. He was a faculty member at the University of Bonn and hoped that Angela would present a paper from her dissertation at a conference there that month. Naturally, travel and per diem would be provided.

  “She is on leave, deferring her new faculty position until the following fall.”

  More talking.

  “That’s wonderful that her article has won the award, but I’m almost sure it will be impossible for her to come present her findings at the institute in Bonn anytime within the next few weeks.”

  The voice persisted.

  “You see, Angela and her husband have been living in Central America since September. They have been expecting a baby, and she thought it important that her baby be born in Guatemala.”

  How interesting. Why was that?

  “Perhaps it would be best if I let her explain the story to you.”

  Angela’s fingers flowed smoothly over the coffee plant as the morning sun made
its way through the shimmering green leaves, creating a dancing pattern of light on her face. The coffee cherries were nestled together close to the branch in little clusters of about eight to twelve. Their hard, smooth exteriors felt cool against her palm as she dropped them into the burlap sack that was hanging in front of her colorful traje. Carefully but methodically, she worked her way around one coffee plant, moving to the next. She had been a good student of coffee picking; Juana had taught her well. The sack was filling quickly with fire-engine-red coffee cherries. It would be a good harvest this year.

  Angela felt one of the little fruits bounce off her shoulder. From two plants away she heard a repressed giggle, which of course was teenage Ema. Having the baby wrapped around her back made it impossible for Angela to give chase, making her an even more appealing target than usual for Ema’s little pranks.

  “Ven aca, mi pequena bromista,” she called to Ema, who emerged from behind a neighboring plant. The Spanish had become easy now; it flowed effortlessly through her mind, to her tongue, and over her lips with the easy, stiletto-like precision of a native speaker. Ema scurried over to Angela and hugged her, putting her bronzed arms around Angela’s huipil. Then she pulled back the mantel wrapped around the sleeping infant on Angela’s back and peeked down into her face.

  “Se parece su papa, no a ti!” She looked like her dad, and less like Angela.

  “Solo porque es guera,” replied Angela casually. Ema laughed. It was only the blond hair, because the rest of her looked exactly like her, in her own modest opinion.

  Angela responded, “Mira la piel, la negrita es la mia, por cierto.” There was no doubt that baby Mariela had her own rich amber skin, not the fairer skin of her father.

  She and Ema picked side by side for a while, Ema using the ladder to help her with the cherries located in the high spots. They shared stories and laughed together in the cool morning dew. Angela looked at her and in a flashing moment saw Lourdes in her face, Lourdes who would miss so many of life’s opportunities in a young life unnecessarily cut short. She would make sure that Ema had those opportunities; yes, she would make sure of it, personally, and would soon have the means to do so.