Starbucked

by Taylor Clark

  But these weren’t high-quality arabica trees; they were robusta trees, the hardier, harsher tasting strain that yields more berries and costs far less to maintain. It’s filler coffee, used in supermarket blends to keep costs low. (The conglomerates first have to steam the robusta beans to remove the flavor, which coffee tasters compare to “burnt rubber” and “compost,” then layer on artificial flavors to compensate. This is why we see so many instant coffees with names like Hazelnut Royale Cappuccino and Caramel Mocha Frothé.) The Viet-nam-ese beans were so bad that locals had to load their daily brew with milk, sugar, butter, and fish sauce just to make it palatable.

  Vietnam overwhelmed the market with bad coffee, which the conglomerates were only too happy to buy cheap. Within a decade, it had upped its annual coffee production by a factor of eleven, from 84,000 tons to a whopping 950,000 tons, suddenly making it the world’s number two coffee producer, behind Brazil. “They did in ten years what Colombia did in a hundred years!” exclaimed Osorio. “It’s no wonder they weren’t prepared to handle it. The coffee has . . . defects.” Without the safety net of the ICA, this influx of coffee sent prices into a nosedive across the board; the bad bean glut even devalued the good beans. This is when farmers started discovering that it was cheaper to burn their crops than it was to harvest and sell them. The British humanitarian agency Oxfam estimates that, because of the global oversupply, five billion pounds of coffee go to waste every year — almost a pound for each person on the planet.

  With free trade as the industrialized world’s current mantra, Osorio sees no hope that the quota system will make a comeback soon. He’s tried to advocate for it, but with no success; the coffee growers are fundamentally on their own. “In the free market period, there have been five critical years, five okay years, then five critical years again,” Osorio said, exasperation showing in his face. “The quota system was a system of protection for farmers. It guaranteed a minimum price. Now, the market is regulated by a frost in Brazil, a drought in Vietnam — it’s a free-for-all.”

  The ICO, other concerned nonprofits, and government leaders in producing countries have proposed a number of schemes to fix things without quotas, to little avail. All of them revolve around reducing the amount of coffee on the market. Pemex, Mexico’s state-run petrochemical company, suggested using surplus coffee to soak up oil spills. Others devised ways to use it as fuel (Brazil’s trains reportedly once ran on coffee beans) and even as animal feed, which would boost the low energy levels of the world’s cows dramatically. Oxfam wanted the multinationals to burn 660 million pounds of beans to reduce the glut, a suggestion met with icy silence. (“It’s a business,” Osorio pointed out. “Who was going to propose to the board that they burn money?”) The nature of the coffee market is so skewed that Hurricane Katrina actually helped farmers when it trashed two hundred million pounds of coffee in New Orleans ware-houses. In what other industry do producers cheer when the fruit of their labors is violently destroyed? *

  Fixing the problem for good without quotas is an almost impossible task, because there’s no other easy way to control the coffee supply. Coffee beans are produced in more than one hundred countries around the globe, with small farms in extremely remote areas doing most of the work. How could you possibly coordinate the number of coffee trees these people cultivate? “Everywhere I go, I try to explain to farmers and representatives why they shouldn’t plant more coffee,” said Osorio. “But it’s a matter of convincing tens of thousands of individual small farmers to do the same thing.” Adding to the degree of difficulty, bear in mind that growers must decide how many coffee trees they should plant three to five years in advance, since that’s how long the trees take to mature — and this is in a market where the weather can radically change prices overnight. Where do they even begin? Anything could happen between now and then.

  Faced with this uncertainty and upheaval, some farmers have given up on coffee, taking out their arabica trees and replacing them with drug crops. Between 2000 and 2001, cocaine production in Colombia more than doubled, since uprooted coffee plantations cleared up extra acreage for coca plants. In Ethiopia, a country where a man offering a woman a handful of coffee beans is the equivalent of getting down on bended knee and proposing, qat production doubled after coffee export revenues fell from $830 million all the way to $165 million between 1998 and 2003.

  The market, ever volatile, has recovered somewhat since the depths of the early 2000s, but Osorio knows it’s only a matter of time before another crisis hits. (The ICO got the United States to sign on for another International Coffee Agreement in 2005, but the document contains no real reforms.) When we met, Osorio was nervous-ly awaiting new crop statistics from Brazil, which, if they turned out too high, could wreck everything once again, no matter how much a pound of gourmet coffee is selling for at the supermarket. Which brings us back to that guilty feeling. With the future looking so bleak for growers, conscience-plagued coffee drinkers have devised a system of their own for buying beans — a system focused on fairness.

  Just Java

  If you ever feel inclined to look at modern American affluence from a new and jarring perspective, here’s a method that never fails: ask some Latin American coffee farmers out on a shopping trip. Sure, this can be difficult to arrange, as you’ll rarely get the chance to extend an invitation at, say, yoga class. But seeing the contrast firsthand makes the effort worthwhile.

  I speak from experience. Early one June morning, I found myself standing in the parking lot of a Wild Oats grocery store in Vancouver, Washington, next to two visiting coffee growers, Daniel Balux and Reynaldo Vaszquez. I had met them the eve-ning before at a reception hosted by the Portland-based company Sustainable Harvest, a top Fair Trade coffee importer that advocates for direct relationships between roasters and growers. (Farmers typically have no idea where their coffee goes when it leaves their farms.) Daniel and Reynaldo had flown up to Portland for the week to meet with representatives from companies that buy their beans, like Green Mountain and Whole Foods. As the reception attendees ate smoked salmon hors d’oeuvres and sipped microbrews in a rooftop garden that eve-ning, the twenty-two-year-old Daniel — who works twelve-hour days on his farm in Guatemala and had set foot on a plane for the first time just days before — thanked the envoys for embracing Fair Trade. “I feel there’s not a lot we can do for you,” he said through a translator, “but you do so much for us by promoting our coffee.” The next morning, the two would be visiting Wild Oats (an upscale natural foods chain) with a Sustainable Harvest cameraman in tow, to see their coffee on the American retail shelf. I accepted an invitation to tag along.

  Even in the parking lot, it quickly became apparent that this would be a surreal experience. While waiting for the cameraman to get his equipment ready, Daniel, Reynaldo, and I watched in varying states of awe as a tanned and taut woman wearing enormous sunglasses parked her sports car and strode into the store, bracelets loudly jingling, never for a second breaking concentration from the mobile phone call she was conducting at a mild yell. Daniel, who does not typically perform his farmwork while gossiping on a cell phone, seemed impressed; Reynaldo, a fifty-year-old Nicaraguan grower and polished Fair Trade spokesman, less so.

  You might be expecting me to report that Daniel and Reynaldo recoiled with disgust at the posh, climate-controlled store, where shoppers fussed over exorbitantly priced organic bananas and hormone-free, omega-3-enhanced, Grade AA brown eggs. Actually, they found the whole thing riotously funny. They laughed at the display of pink flip-flops, pointing out the comical frills. They rolled their eyes at the plastic coffee cup lids, space-age thermoses, disposable stir sticks, thermal cup sleeves, and individualized sweetener packets we use. (Daniel told me that where he lives, people generally just strain their coffee through a cotton shirt and drink up.) As Reynaldo was perusing a Fair Trade brochure in the store’s coffee aisle, he noticed with a chuckle that one of the contented farmers pictured therein was a friend of his. Daniel was particularl
y amused by the bulk Green Mountain coffee dispensers; he assumed that people had to let the coffee fall into their cupped hands, until someone pointed out the paper bags that fit snugly over the plastic chute.

  These bulk beans, for which farmers received the Fair Trade price of $1.26 per pound (or $1.31 if organic), were selling for $11.99 a pound — a markup of over 900 percent for those who roast and sell the product. Many farmers find this discrepancy infuriating, even when they received a price deemed “fair” from companies that like to boast about their support of progressive causes. As one frustrated plantation owner put it in the journal World Coffee and Tea, “From the producer’s point of view, it seems truly ironic that a product that takes a year to grow, and that requires thousands of worker hours of difficult, delicate, and often dangerous work, should be so remarkably inflated by someone who simply cooks and displays the coffee.” It’s a good thing for roasters, then, that most coffee farmers have no idea about the markups charged for roasted beans. “They only know how much they get paid for the coffee,” Daniel said. “They would be shocked if they knew how much it sells for here.”

  But Daniel and Reynaldo weren’t at all troubled by the price gap; Reynaldo even good-naturedly ribbed Daniel because bulk Guatemalan coffee was selling for a dollar less than the other varieties (which was just a labeling error). They considered themselves lucky to be selling their coffee in such a prosperous place; Fair Trade contracts are scarce, and those fortunate enough to secure one seldom complain. “I feel happy that our coffee is bought and enjoyed here,” said Reynaldo as he sipped a cup of coffee that, at $1.29, cost more than an entire pound of Fair Trade–certified raw beans. “It gives us all a feeling of security to be able to bring information back to our families and our children and share an experience that was very wonderful.”

  This $1.29 cup of plain drip coffee brings us back to an obvious question: if raw coffee is hovering around its all-time low price right now, why isn’t the slump making a dent in those big numbers on the coffee-house menu board? Well, because what you’re paying for at a Starbucks or a local café isn’t the coffee. Take the oft-mentioned $4 cappuccino, for example. According to statistics from the SCAA, only 5 percent of that price ($0.20) is the cost of the coffee itself, and that’s for roasted coffee, which the coffee-house has already paid to cook, package, and ship. In reality, a nickel more than covers the farmer’s take for that cappuccino; that’s less than the cost of the cup, sleeve, and lid ($0.07). So even radical coffee-market swings would scarcely affect the drink’s price. At a coffee-house like Starbucks, you’re paying for dairy products (10 percent, or $0.40), labor and overhead (71 percent, or $2.84), and, of course, profit (11 percent, or $0.44). With raw beans composing such a tiny portion of the price of coffee drinks, upping farmers’ rates significantly would cost the consumer virtually nothing — literally a few pennies per drink to double the grower’s take. But since that’s not how the free market works, farmers are stuck struggling.

  The Fair Trade movement represents an attempt to change this by voluntarily giving growers a higher price, and Daniel and Reynaldo are proof that this approach can change the lives of those lucky enough to get their coffee certified. Their children can go to school, they have access to credit for farm improvements and training, and they see their futures as reasonably secure. The middlemen who sliced off excessive portions of their coffee’s price have mostly been weeded out of the Fair Trade system, leaving the farmers with a much better share of the spoils. The system seems ideal, a utopian vision come to life.

  That’s how many consumers have treated Fair Trade, at least. By paying a dollar or two more for their coffee beans, shoppers with hyperactive guilt complexes get to feel that they’re actually serving some greater purpose with a French roast purchase; this feeling is so addictive that TransFair USA, which administers the Fair Trade seal in America, has had to almost double the quantity of coffee it certifies every year. Some like the Fair Trade model so much, in fact, that they want to make drinking any other kind of coffee illegal. In 2002, the citizens of Berkeley, California (surprise, surprise), voted on a measure to ban the sale of beans that were not Fair Trade, organic, or shade grown. The proposition was headed toward victory, until someone noticed that the penalty for violating the law would be six months in jail, which, even in Berkeley, seemed a tad extreme. The measure’s opponents (including Starbucks and Peet’s) immediately sent out leaflets showing police officers leading a coffee-house owner away in handcuffs, killing its chances of passing. (Apparently, many people had no problem with this image, though; the measure still won 30 percent of the vote.) Despite this setback in Fair Trade’s forward march, the crusade has won many significant victories, with giants like Wal-Mart, McDonald’s, Nestlé, and Starbucks now offering Fair Trade beans. (Starbucks, by virtue of its size, sells more Fair Trade coffee than anyone — eighteen million pounds in 2006 — though its commitment to the cause is relatively small.) The movement, by all outward indicators, has charmed growers and consumers alike.

  But it hasn’t won over everyone. Specialty-coffee roasters detest Fair Trade coffee almost universally; one even went so far as to tell me, “It’s unfair trade.” Strangely, many of the program’s most unwavering critics are the same people who prominently feature Fair Trade beans in their coffee-houses. You’ll seldom hear them condemning Fair Trade in public, whether from a reluctance to denounce their own product or from anxiety about attacking what’s become a left-wing sacred cow. (There’s also a legal problem: roasters who use the Fair Trade logo are contractually forbidden to criticize either TransFair USA or anyone with whom it does business.) But as the coffee writer and past SCAA president Tim Castle explained, they have few kind words for Fair Trade in private. “When they’re honest about it, almost all of the roasters hate Fair Trade,” he said.

  Their inventory of grievances is extensive. The first sticking point concerns the restrictions on which farms are eligible for Fair Trade certification. In order to participate in the system, applicants must obey a set of rules that often seems more like a socialist wish list than a structure designed to help growers. All aspiring farms must be small, family-run plots that are part of demo-cratic, worker-owned cooperatives. Private ownership and capitalist practices are completely off limits — even hiring day laborers can take your farm out of the running. Many say this restriction unfairly disqualifies good private farms, and some also call it culturally insensitive. The coffee world is full of families who have cultivated the same land for generations, beholden to no one; the idea of having others make their decisions goes against years of tradition.

  Then there are the structural problems. Fair Trade certifiers refuse to interfere with merchants’ market practices, which gives greedy retailers a free pass to take advantage of well-meaning consumers by charging ridiculous margins. In June 2004, for instance, the Wall Street Journal revealed that the British grocery chain Tesco was tacking on an extra $3.46 per pound to its Fair Trade coffee, even though the growers were only receiving $0.44 above the open-market price. (Consumer ire forced Tesco to revise its prices.) Here’s a vexing question: what happens to Fair Trade farmers when the market price exceeds $1.26 per pound? “The whole Fair Trade thing is a mess,” Dan Cox, the coffee consultant, told me. “The market price going above the Fair Trade price is where things really fall apart. Farmers ask, ‘Hey, why should I deliver my coffee when I can get more money by breaking our contract?’ ” Fair Trade took flight in response to a crisis, and thus problems arise when the crisis wanes; the moment another massive frost strikes and coffee soars to $4.00 a pound, don’t expect growers to happily take their $1.26. Besides, under Fair Trade, the farmers aren’t even the ones who get the money — the cooperative does. Yet a corrupt co-op can be every bit as thieving as middlemen.

  But the biggest division between Fair Trade advocates and specialty-coffee roasters is a philosophical one: the latter are focused on roasting the best-tasting beans possible, while the former care only th
at farmers receive a good price. These ideologies can clash spectacularly. Within the industry, it’s an open secret that Fair Trade beans have historically been much lower in quality than their unsanctified cousins, and one doesn’t have to be a coffee snob to pick up on the difference. Said Castle, “Fair Trade, I believe, keeps low-quality farmers in business at the expense of high-quality farmers. It may be ugly, but it’s true.” If a farmer is guaranteed his $1.26 no matter what, why should he worry about quality? Despite these shortcomings in taste, however, specialty roasters feel obligated to buy it anyway, to stave off the impression that their coffee might be exploitative. (There’s a bit of a catch-22 here as well: if you buy some Fair Trade beans, are you then admitting the rest of your coffee is evil?) For high-quality roasters, the most frustrating part of all is that they often pay far more than the Fair Trade rate to secure the best beans, yet without the Fair Trade insignia, conscientious consumers tend to assume the worst.

  Perhaps the most important objection to Fair Trade as a lasting solution for coffee farmers, though, is the reality that the movement can only go so far. As any economist will tell you, consumers buy food products based on two main criteria: taste and price. If Fair Trade coffee tastes worse and costs more than its competitors, then even major ethical considerations won’t induce mainstream America to buy into the crusade. TransFair USA says its research shows that eight in ten consumers are willing to pay a premium for ethically produced goods, but what people say and what they actually do are two different things; it’s tough to imagine the average coffee drinker in Nebraska voluntarily forgoing his preferred blend in favor of Fair Trade. As Osorio explained, the movement’s growth has been impressive, yet its overall effect is limited. “How important is Fair Trade’s contribution to coffee?” he asked. “I’d say it’s important in terms of awareness — it gets people talking about the needs of farmers. But in terms of impact on the market, it’s nothing. Zero-point-four percent of the world market is Fair Trade.”