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Saturday, September 09, 2006

Fairtrade and Fraudtrade in ethical coffee production

According to food group Nestlé, it is known that coffee was being cultivated in the Yemen in the 6th Century AD, though some say it was drunk as early as 900BC. One legend has it that an Ethiopian goat herder named Kaldi was curious to see his goats leaping around after eating a certain type of red cherry. Kaldi tried the berries, and found himself strangely energised. Before long, Muslims were brewing a beverage from the dried berries, which they found gave them further energy in their long hours of prayer. This beverage became known as 'kahweh' from the Arabic for 'invigorating' and the Turkish derivative kahveh (that gives strength) - all forms are phonetic forms of this with 'coffee' now accepted widely throughout the world.

In the Middle East today, Arabic coffee is made from boiling green coffee beans and adding cardamom spice.


Insomnia Coffee Company announced earlier in the week that all coffees served from its outlets are now 100% Fairtrade certified. It said that this was the first time that an Irish coffee company had taken the decision to source all its coffee through Fairtrade. The deal is the biggest ever completed by Fairtrade Mark Ireland representing 20% of its total Fairtrade coffee business in 2005.

It is however a story that is not all sweetness and light.

The Financial Times says in its Weekend edition that “ethical” coffee is being produced in Peru, the world’s top exporter of Fairtrade coffee, by labourers paid less than the legal minimum wage. Industry insiders have also told the FT of non-certified coffee being marked and exported as Fairtrade, and of certified coffee being illegally planted in protected rainforest.

The FT says that the development casts doubt on the certification process used by Fairtrade and similar marks that require producers to pay the minimum wage. It also raises questions about the assurances certifiers give consumers about how premium-priced fair trade coffee is produced.

As the board member of one Peruvian Fairtrade-certified coffee producer told the FT: “No certifier can guarantee they will purchase 100 per cent of a co-operative’s production, so how can they guarantee that every bag will be produced according to their standards?”

Though certified coffee makes up less than 2 per cent of the global coffee trade it has become increasingly mainstream as large retailers such as Starbucks and McDonald’s adopt it.

The FT visited five Peruvian smallholdings, all of which have Fairtrade certification.

Each farm hires 12-20 casual coffee pickers during the harvest season. All house and feed their workers, which allows them to deduct 30 per cent from their wages.
After that reduction from the legal daily minimum wage for casual agricultural workers of 16 soles ($5), farm owners are still obliged to pay at least 11.20 soles a day. In four of the five farms visited by the FT, pickers received 10 soles a day, while the other farm paid workers 12 soles a day.

Luuk Zonneveld, managing director of Fairtrade Labelling Organizations International, the Bonn-based body that sets fair trade standards, told the FT that the certification system “is not fool- and leak-proof” but said the problem should be put in context.

“Poor farmers often struggle to pay their workers fairly,” he said. “Why are casual labourers there at all? There are wider issues here. We need to ask why this goes on and what we can do to help.”

The FT said that a number of industry insiders had told it that they had also witnessed fraud within the certification system which resulted in coffee from uncertified sources being exported as Fairtrade.

The FT has also been told of Fairtrade coffee being planted in protected national forest land in the northern Peruvian jungle. Using global satellite mapping, a Canadian NGO found that about one-fifth of all coffee production in one Fairtrade-certified association was illegally planted in protected virgin rainforest.

Finfacts reported last June that global sales of Fairtrade certified products have reached €1.1 billion mark in 2005. This represents an increase of 37% over 2004.

All product lines expanded their markets, especially Fairtrade coffee in the U.S. (+ 70,9%) and the U.K. (+ 34%), bananas in Austria (46%) and sugar in France (125%). Non-food products did well too: sales of Fairtrade flowers, newly introduced last year in Canada, Germany and Belgium surpassed even the most optimistic expectations. Thanks to continued strong sales in Switzerland and the U.K., a total of 113 million stems of Fairtrade flowers were sold in 2005.

The value of goods sold under the label in Ireland increased by 30% to €6.5m.

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