Cost of coffee lores by Dave Richards

credits devised, written and designed by Dave Richards thanks to Baby Milk Action, Peter Burt, Finbarr Carter, Fairtrade Foundation, Paul Harper, International Coffee Organisation, Oxfam, RISC colleagues & Phil Wells © RISC, 2005 Users may copy pages from this pack for educational use, but no part may be reproduced for commercial use without prior permission from RISC.

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Reading International Solidarity Centre

what does RISC do? Our activities include: • developing an urban roof garden for local & global education • organising a programme of events & exhibitions on global issues & speakers from the ‘South’ (poor countries in Africa, Asia, the Caribbean and Latin America) • providing training for teachers & youth workers on development education resources • producing resources such as teaching packs, AV aids & exhibitions for use by schools, &/or youth & community groups • selling books & development education resources; fiction & non-fiction for children & adults on global issues • promoting campaigns on local & international issues • providing a loan service of artefacts & education packs for schools & youth workers • selling fair trade, organic & environmentally friendly products, and world music CDs • giving work experience opportunities for volunteers.

RISC • 35-39 London Street • Reading RG1 4PS t: 0118 958 6692 • e : admin@risc.org.uk cover illustration: Sally Castle www.sallycastle.co.uk

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contents introduction aims using the pack curriculum links glossary coffee file background – history, production, the coffee distribution chain mugged role play exploring strategies to deal with the coffee crisis crisis, what crisis? detailed analysis of the causes, consequences & solutions of the crisis a fair price? critique of nestlé’s booklet the coffee cycle how fair’s fair looking at the pros & cons of fair trade marketing ethics analysis of fair trade marketing strategies appendix 1: the coffee crisis: summary of the crisis by the International Coffee Organisation appendix 2: sustainable coffee: certification system which protects rain forests appendix 3: sustainable development: Kenco’s sustainable coffee brand appendix 4: co-op’s fairtrade coffee: background to the co-op’s move to fairtrade appendix 5: mugged: assessment of the performance of the ‘Big Four’ coffee companies appendix 6: rescue plan: Oxfam’s proposals to overcome the crisis appendix 7: partners’ blend: responses to Nestlé’s move into fair trade coffee appendix 8: robbing coffee’s cradle: how GM coffee will further undermine coffee growers appendix 9: behind the mask: critique of CSR by Christian Aid teaching resources background reading useful contacts web links feedback form

1 1 1 2 4 6 15 19 24 32 40 47 50 52 53 55 59 62 67 69 72 75 77 78 80

A “

The world economy is the most efficient expression of organized crime. The international bodies that control currency, trade, and credit practice international terrorism against poor countries, and against the poor of all countries, with a cold-blooded professionalism that would make the best of the bomb throwers blush. Eduardo Galeano Upside Down: a primer for the looking-glass world

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A company that adopts and implements an effective corporate responsibility policy is better positioned to avoid any environmental and social crises that could lead to some of the following outcomes: reputation damage, reduced access to human capital, employee unrest, litigation, critical shareholder resolutions, critical stakeholder action, extortion, higher production costs, lost production, higher security costs, increased insurance premiums, reduced access to capital, media harassment. www.ftse4good.com/ftse4good/csr.jsp

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In recent years multinational corporations have faced criticism from consumers, community groups, non-governmental organisations and even the United Nations, for not paying sufficient attention to the side effects of their business activities. In their pursuit of profit, companies have been accused of everything from violating labour rights, to destruction of the environment, to cooperating with oppressive regimes. As a result, there has been increasing awareness amongst company executives and employees that, in a globalised world, decisions and actions can have unforeseen consequences in many different locations. As this awareness has grown, so has the idea that corporations must ensure that, as a minimum, their business activities do not have an adverse impact on the various ‘stakeholders’ they affect – including workers, consumers, local communities and the environment. After years of investment deregulation and trade liberalisation, companies are realising that, with rights, come responsibilities. A number of firms have taken steps to identify and address areas where their activities pose a risk to the well-being of people and the environment. Others have voluntarily signed up to codes of conduct that set standards for good corporate ‘citizenship’, and/or have entered into partnerships with state or non-governmental organisations to support community and environmental projects. Change, however, has been slow and in many cases only superficial steps have been taken. A mismatched patchwork of voluntary bestpractice standards and codes of conduct has materialised, obscuring the main priorities and encouraging companies to undertake a ‘pick-and-mix’ approach to corporate social responsibility (CSR). For clear and consistent practices of CSR to emerge, companies need a common set of enforceable rules. This is where the Government must play a role. The current laws governing corporate conduct, set out nearly 150 years ago, no longer equates with the way businesses conduct their affairs in an age of increased globalisation. New company law legislation is now needed to level the playing field and ensure that corporations based in Britain are not only more responsible to their wider stakeholders, but are also legally accountable for their actions both here and overseas. Behind the mask: the real face of corporate social responsibility Christian Aid 2001

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introduction This pack began as an appendix to a previous publication, Seeing Through the Spin, a teaching pack which explores corporate public relations in a globalised economy (downloadable from: www.babymilkaction.org/spin). The intention was to present a critical response to Nestlé’s The Coffee Cycle, a booklet which tells “the story of how coffee is grown, harvested, bought and sold and converted into Nescafé around the world”. We wanted to challenge its assertion that “it should not be assumed that coffees which do not carry a fair trade mark are in any way unfair”. However, it soon became clear that, as coffee prices plumetted, we should attempt to produce a more ambitious resource which explored the roots of the problem, possible solutions and how the major coffee roasters have responded to the crisis. There is a stark contrast between the lives of the 25 million coffee farmers who face poverty and hunger, and the fashionable coffee bar urban lifestyle which generates robust profits for the roasters. The Cost of Coffee puts the coffee industry under the spotlight and questions its claims of corporate social responsibility. It also examines the role of fair trade in working towards trade justice.

aims This pack provides the teacher or facilitator with background information and activities which: • outline coffee production processes • examine who are the winners and losers in the coffee chain from bean to cup • describe the extent of the crisis facing coffee farmers • analyse the response of the large coffee roasters to the crisis against the wider issue of ‘corporate citizenship’ • look at the sustainable coffee trade, including organic and fair trade.

using the pack

illustration: Pip Hall, from the fair trade board game Coffee culture – www.risc.org.uk

This pack is intended for secondary school teachers (KS4 and above) and facilitators working in Further Education – GNVQ and a range of youth, community or trade union groups. For teachers, it covers several curriculum areas, especially the Global Citizenship curriculum, General Studies/Personal and Social Education, Business Studies, Geography, Media Studies, and Key Skills. It is a resource which should be used selectively, rather than from cover to cover. Activities can be chosen and adapted according to the abilities, knowledge and interests of the group. The appendices also provide a good starting point for project work.

the instructions What you need – generally you will need flip chart paper, marker pens and blu-tack; most activities require photocopies of Actionpages, which have instructions for participants, and handouts which give background information. Several activities are based on research using the web – if access to computers is limited this element could be done as preparatory homework. What you do – gives basic instructions on how to run the activity – these do not need to be followed slavishly, the materials can be adapted to suit the group you are working with and the specific requirements of the curriculum. Whole group discussion – provides suggestions for discussion points – other ideas will emerge during the discussion. Key ideas – provides summary points to round off activities, as well as background information for the facilitator. Follow-up – gives ideas for ways to reinforce understanding and knowledge of the issues raised in the activity – involving further research on the net, producing media texts such as posters or radio programmes, or reading background information from the Appendices. The RISC online reading room has a colour version of this pack with hyperlinks to websites, as well as downloadable background documents which are constantly updated (www.risc.org.uk/ readingroom/coffee.html).

curriculum links citizenship (KS4 & A level) social justice & equity: KS4 causes of poverty, role as global citizen; KS4+ understanding of global debates globalisation & interdependence: KS4 power relationships N/S, world economic & political systems; ethical consumerism; KS4+ complexity of global issues sustainable development: KS4 lifestyles for a sustainable world, global imperative of sustainable development; KS4+ lifestyles for a sustainable world critical thinking: KS4 critically analysing information, making ethical judgements; KS4+ handling contentious & complex issues ability to argue effectively: KS4 arguing rationally & persuasively from an informed position; KS4+ political literacy, participating in relevant political processes ability to challenge injustice & inequalities: KS4 selecting appropriate action to take against inequality; KS4+ campaigning for a more just & equitable world respect for people & things: KS4 & KS4+ following a personal lifestyle for a sustainable world sense of identity & self-esteem: KS4 & KS4+ open-mindedness empathy & sense of common humanity: KS4 sense of common humanity & common needs; KS4+ sense of individual & collective responsibility commitment to social justice & equity: KS4 commitment to social justice & equity; KS4+ commitment to the eradication of poverty concern for the environment & commitment to sustainable development: KS4 concern for the future of the planet & future generations; KS4+ commitment to sustainable development belief that people can make a difference: KS4 & KS4+ willingness to work towards a more equitable future

A level media studies textual analysis: understanding methods used to construct meaning; representation of social groups audiences & institutions: develop understanding of media institutions, production processes, technologies and audiences media issues & debates: role of mass media in society; communicating ideas & values; politics & the media production: produce & evaluate own media texts; create and follow briefs

business studies business objectives & environment: needs of stakeholders; accountability; environmental & ethical constraints; understanding of co-operation & inter-dependence in society business decisions & behaviour: marketing objectives, strategy & tactics; ethical & international issues; social costs people in organisations: labour relations & trade unions operations management: environmental protection; ethical considerations of production spiritual, moral, ethical & social dimensions: strengths & weaknesses of the market economy; quality of life & distribution of well-being between & within economies; government intervention

geography human systems & their management: growth of TNCs & impact of globalisation; change in economic activities; international trade & global patterns of production

general studies debates about social, cultural, political & economic issues: beliefs, ideology, values & moral reasoning; media & communication; moral responsibility; human behaviour & social, political & economic life

key skills communication: make a presentation about a complex subject, adapting style to suit purpose and audience, using range of techniques to engage them, including images; read and synthesise information from two extended documents; write two different types of document using style appropriate to purpose and audience application of number: plan and interpret information from two different sources, including a large data set; carry out multi-stage calculations, interpret results, and present findings information technology: plan how to obtain and use information required for two different purposes, make selections based on judgement of relevance and quality; present information from different sources for different purposes and audiences working with others: working in one-to-one and group situations; plan complex work, agree objectives, responsibilities and working arrangements; maintain co-operative working relationships over an extended period of time, overcome difficulties, exchange information; assess outcomes learning performance: agree targets and plan how these will be achieved, manage time and overcome difficulties; take responsibility for learning through studying a complex subject and learn through a complex practical activity; evaluate performance of tasks problem solving: explore a complex problem and devise options for solving it, evaluate possible outcomes

glossary bluewash The ploy used by many TNCs with poor records on labour relations and environmental protection to try to improve their image through association with the United Nations. This UNbusiness Global Compact partnership, launched by UN Secretary General Kofi Annan in 1999, includes a commitment from participating companies to advance UN goals by promoting human rights, sustainable development etc, and establish partnerships, including donations, with UN agencies. www.unglobalcompact.org; www.corpwatch.org branding The identity of an organisation is summed up by its brand image – a combination of its name and reputation, often built up over many years, and the external appearance, eg logo, design of shops/product. A brand is a major asset – many resources are used to build and maintain a positive brand image through marketing and public relations. www.interbrand.com cause-related marketing The business practice of enhancing image through links with good causes, including sponsorship of arts and sport, and vouchers for school books and computers. codes of conduct and ethical sourcing A Code of Conduct is a statement about the ethical standards that a company claims to uphold, particularly regarding workers’ rights and environmental protection. These Codes are voluntary and are usually drawn up by the company itself. Supply chains are often very complex because of sub-contracting, so verification is difficult. Campaigners are trying to establish agreed international codes which include independent monitoring. www.labourbehindthelabel.org corporate social responsibility According to Business for Social Responsibility, CSR is “a comprehensive set of policies, practices and programs that are integrated into business operations, supply chains, and decision-making processes throughout the company – wherever the company does business – and includes responsibility for current and past actions as well as future impacts… CSR typically includes issues related to: business ethics, community investment, environment, governance, human rights, marketplace and workplace.” www.bsr.org; www.core.org fair trade An alternative to conventional world trade. It is a partnership between producers and consumers, based on reciprocal benefit and mutual respect. Fair trade ensures producers in the South receive a fair price for the work they do, and gain better access to markets in the North. It aims to tackle the long-term problems of the South through sustainable development for excluded and disadvantaged producers. globalisation (economic) Process where barriers to international trade, eg taxes on foreign imports, subsidies for local producers, restrictions on foreign investment, have been progressively reduced, ie trade liberalisation. This has resulted in a more open global marketplace for commodities, manufactured goods, capital, labour and services. As a result, the volume of world trade has increased considerably, along with the number of transnational corporations (TNCs), who now have easier access to world markets – to buy and sell – and can increase profit margins by moving their manufacturing operations to lower-cost countries. greenwash The phenomenon of socially and environmentally destructive corporations attempting to preserve and expand their markets by posing as friends of the environment and leaders in the struggle to eradicate poverty. The advantages of an ethical image are well known, and public relations (PR) companies openly advise businesses facing criticism to aggressively advertise their links with good causes, in order to counteract bad publicity. www.corpwatch.org

lobbying The practice used by organisations trying to persuade policy makers to favour their interests. Both NGOs and TNCs lobby politicians and policy makers, but business has more resources at its disposal. Methods include making donations to political parties, setting up Business Interest NGOs (BINGOs), and employing professional lobbying consultants who have direct access to the corridors of power. Influential BINGOs include the International Chamber of Commerce (ICC) and the Business Council for Sustainable Development (BCSD). north, also known as developed countries Shorthand for the industrialised countries of Europe, North America and Japan. First used by the 1980 ‘Brandt Report’, which described the under-development of the poor countries (most found south of a line drawn across the globe) by the rich nations of the ‘North’. A new alliance of rapidly growing large economies is emerging, BRICS (Brazil, Russia, India, China, South Africa), which will be of increasing significance in the 21st century. public relations According to the British Institute of Public Relations, PR is: “… the planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics” – customers, employees, investors, government etc. Methods include sponsorship of education, sports and the arts, contribution to charities, community organisations and other good causes. south, also known as third world, developing or underdeveloped countries Shorthand for the poorer countries of Africa, Asia, the Caribbean and Latin America. However, each collective term has its inadequacies – ‘South’ infers there is a geographical explanation for inequality, ‘Third World’ implies inferiority, ‘majority world’ is factually true, but not in widespread use, ‘developing’ assumes there is a natural path towards a western model of development, ‘underdeveloped’ suggests poverty is the result of a process. There are also differences between countries, so more specific terms are being used – emerging and transition economies, newly industrialising countries (NICs), least economically developed countries (LEDCs), highly indebted poor countries (HIPCs)… spin Putting a bias or slant on information, in order to create a favourable impression. First used in the US in late 1970s to describe the work of political press agents, but now used widely to describe ‘news management’ and PR generally. transnational corporation (TNC), also known as multinational corporation (MNC) Big businesses which have subsidiaries, investments or operations in more than one country. Annual turnover of some TNCs exceeds £60bn – their size and wealth gives them great power. In 2004 51 of the world’s 100 largest economies – including nations – were TNCs. triple bottom line Term used to describe how businesses attempt to expand the traditional company reporting framework to take into account environmental and social performance as well as financial outcomes. www.sustainability.com world bank (WB) & international monetary fund (IMF) Set up in 1944, these specialised financial agencies of the United Nations are part of a system which aimed to stabilise the world economy. The IMF promotes international monetary cooperation and the growth of world trade, and stabilises foreign exchange rates. The WB provides loans to countries for development projects. Since the 1970s, both organisations have enforced the move towards a more open, liberalised global economy. www.worldbank.org; www.imf.org world trade organisation (WTO) Set up in January 1995, the WTO took over from the General Agreement on Tariffs and Trade (GATT) as the forum where the universal rules governing a single, liberalised, global economy are written. Unlike the GATT, trade rules agreed in WTO negotiations, are legally binding and can be enforced by the threat of sanctions and compensation payments. www.wto.org

coffee file Coffee: adaptation of Arabic qahwah, in Turkish pronounced kahveh, the name of the infusion or beverage, said by Arab lexicographers to have originally meant ‘wine’... and said to be a derivation of a verb root qahiya ‘to have no appetite’... The European languages generally appear to have got the name from Turkish kahveh about 1600 Oxford English Dictionary

D plant family: Rubiaceae (madder family); genus: Coffea; two main economic species: arabica (Coffea arabica) and robusta (Coffea canephora)

D arabica (Coffea arabica): 80% world supply but only 10% of this meets speciality coffee standards; considered higher quality with good, milder flavour and aroma; used in speciality roast and ground coffee and adds flavour to instant blends; grows best in shade above 1000m (3000 ft), mainly in Central and South America, East Africa and Papua New Guinea; harder to grow than robusta and more susceptible to disease, but fetches higher price D robusta (Coffea canephora): 20% world supply, with more woody, full-bodied taste and twice caffeine content of arabica, used widely in instant coffee and stronger roasts; grown at lower altitudes mainly in Brazil, Indonesia, Africa, India, Viet Nam, the Philippines and Thailand D evergreen shrub or small tree that can grow to 10m but usually pruned to 2-4m D requirements: tropical climate – temperature: 23-28°C (73-82°F), frost-free; 15002000mm (60-80 inches) annual rainfall; no wind; comparatively high humidity

D tree takes 5-6 years to reach full yield, and then has a productive life of 15-30 years D fragrant flowers produced at various times of year, similar to jasmine; in nine months ripen into red berries (cherries) with sweet pulp and two seeds (beans), each covered in a parchment-like membrane

4+ million bags

1-4 million bags

less than 1 million bags

World coffee production 2005 (60kg bags) Source: ICO 13,350,855 10,871,334 6,081,970 3,459,554 2,742,952 2,686,240

2 Vietnam 3 Colombia 4 Indonesia 5 Guatemala 6 India 7 Peru

25,959,491

1 Brazil

World exports 2005 (60kg bags)

14 El Salvador

13 Costa Rica

12 Cote dâ&#x20AC;&#x2122;Ivoire

11 Mexico

10 Uganda

9 Honduras

8 Ethiopia

1,272,721

1,539,395

1,901,488

1,984,804

2,369,140

2,391,910

2,422,966

2005 2004 2003 2002 2001 2000 1990 1980

704,395 694,350 649,040 467,734

19 Tanzania 20 Kenya 21 Burundi

17 Ecuador 18 Cameroon

996,702 981,210

16 Nicaragua

15 Papua New Guinea 1,198,917

86.4m 90.7m 85.9m 88.5m 90.4m 89.2m 80.6m 60.2m

World exports (60kg bags)

the story of coffee D the coffee shrub/tree probably originated in Ethiopia, in the province of Kaffa D the sweet outer cherry flesh was eaten by slaves taken from present day Sudan to Yemen and Arabia, through the great port of its day, Mocha, and the beans were chewed as a stimulant D coffee was being cultivated in Yemen by the 15th century and probably much earlier D the first coffee houses were opened in Mecca and quickly spread throughout the Arab world, becoming luxuriously decorated places where chess was played, gossip exchanged, and singing, dancing and music enjoyed D the Arabian coffee houses soon became centres of political activity and were suppressed, but they kept reappearing so rulers had to be content with taxing coffee D the Arabs tried to prevent the export of fertile beans, but in 1616 the Dutch smuggled some back to Holland where they were grown in greenhouses D the Dutch grew coffee at Malabar in India, and in 1699 took some to Java (Indonesia) – soon the Dutch colonies had become the main suppliers of coffee to Europe D Venetian traders first brought coffee to Europe in 1615, following in the footsteps of hot chocolate, brought by the Spanish from the Americas to Spain in 1528; and tea, which was first sold in Europe in 1610; at first coffee was mainly sold by lemonade vendors and was believed to have medicinal qualities D Charles II tried to close British coffee houses down in 1675, but public outcry quickly caused him to revoke his proclamation D Lloyd’s of London, the largest insurance market in the world, was started as a coffee house in 1688 by Edward Lloyd, who prepared lists of the ships that his customers had insured D both the New York Stock Exchange and the Bank of New York also started in coffee houses, in what became the financial district of Wall Street D the Dutch began the spread of the coffee plant in Central and South America, where it reigns supreme as the main cash crop, introducing it to the Dutch colony of Surinam in 1718, followed by plantations in French Guyana and Brazil D in 1730 the British introduced coffee to Jamaica, where today the most famous and expensive coffee in the world is grown in the Blue Mountains – about £60/kg D in the 1970s the US city of Seattle (home of Starbucks) began a café or ‘Latte’ culture which swept the country and has spread to the rest of the world – in fiscal year 2004, Starbucks’ revenues increased by 30% to $5.3bn, pre-tax profits were $391 million D coffee is one of the most valuable primary products in world trade – in many years second in value to oil as a source of foreign exchange to developing countries D 80% of the world’s coffee growers farm less than three hectares (300x100m) – the average coffee farmer produces less than 15 x 60kg bags of coffee a year D 25 million families, about 100 million people, are dependent on coffee for their cash income D world prices for arabica fell from above $2.50/lb in 1997 to around 45¢/lb in October 2001 (100-year low in real terms, adjusted for inflation); they have since risen to $1.20/lb (2006) D many of the world’s Least Developed Countries are dependent on exports of coffee for a substantial part of their foreign exchange earnings, eg Burundi 79% of total exports (2000), Ethiopia 54%, Honduras 24% D since the early 1990s, coffee growing countries’ earnings from coffee exports have fallen from $12 billion to $5.5 billion (2002); in the same time the retail value of coffee sold in rich countries at supermarkets and coffee bars rose from $30 billion to $78 billion D in the UK on average we drink 421 cups of coffee a year putting us 22nd internationally (Finland top with 1459 cups!) D in 2004 fair trade accounted for 18.8% of the UK ground coffee market D farmers receive only 11p (5%) of price you pay for non-Fairtrade 100gm jar of instant coffee (RRP £2.14) compared with 52p (20%) for a Fairtrade jar (RRP £2.59) source: Cafédirect

processing D because berries on each stem ripen at different times, only ripe red cherries are selectively picked by hand every 8-10 days for best quality – this is more time consuming and expensive because each tree must be visited several times; one picker gathers an average of 75kg per day; stems can be stripped of both ripe and unripe fruit at the same time by hand or machine – this reduces quality but modern processing can mask the unwanted bitterness D cherries processed to remove beans from pulp using two alternative methods – dry and wet

dry ‘natural’ method D this is the oldest, simplest method and requires little machinery but is not suitable in very wet regions where it rains frequently during harvesting D involves drying the whole cherry; three basic steps – cleaning, drying and hulling; variations on how the process may be carried out, depending on the size of the plantation, the facilities available and the final quality desired D harvested cherries are sorted and cleaned, to separate the unripe, overripe and damaged cherries and to remove dirt, soil, twigs and leaves; can be done by winnowing by hand, using a large sieve and picking out remaining waste; ripe cherries can also be separated by flotation in washing channels close to the drying areas D cherries are spread out in the sun to dry, either on large concrete or brick patios or on raised trestles which increase air flow, reducing drying times D cherries are turned by hand to ensure even drying; up to 4 weeks before the cherries are dried to the optimum 12.5% moisture content, depending on the weather conditions D on larger plantations, with higher production, machine-drying can be used reduce the process to 3-4 days

D drying is the most important stage of processing, since it affects the final quality of the green coffee – overdried coffee is brittle and produces too many broken beans during hulling (broken beans are considered defective beans); poorly dried cherries can spoil by fermentation D dried cherries are stored in bulk in special silos until they are sent to the mill where all the outer layers of the dried cherry, including the parchment, are removed in one step by the hulling machine to produce green coffee beans D the beans are sorted by hand or machine to remove stones, damaged beans or bits of pulp which reduce the price; they are graded into different sizes – larger beans fetching higher prices – and bagged D the dry method is used for about 95% of the arabica coffee produced in Brazil, most of the coffees produced in Ethiopia, Haiti and Paraguay, as well as for some arabicas produced in India and Ecuador; almost all robustas are processed by this method

wet method D requires the use of relatively expensive equipment and lots of water, but when done properly the intrinsic qualities of the coffee beans are better preserved, producing a better quality green coffee which fetches higher prices D cherries are sorted and washed in tanks filled with flowing water which carries them into depulping machines which squeeze the cherries between abrasive discs or cylinders, removing most of the flesh; the beans are cleaned on vibrating screens and water-washing channels D beans tipped into large fermentation tanks where remaining sticky flesh is broken down by natural enzymes and can be washed away after 24-36 hours; fermentation must be carefully monitored to prevent the coffee absorbing undesirable, sour flavours D often the pulp pollutes local rivers but on organic farms it is used to mulch around plants D the wet parchment coffee contains about 60% moisture and is dried either in the sun (8-10 days), in a mechanical dryer, or a combination of the two D after drying the coffee is hulled, to remove the parchment, then sorted, graded and bagged D the wet method is generally used for all the arabica coffees, with the exception of those produced in Brazil and the arabica-producing countries mentioned above D it takes about 2000 arabica beans to make one pound of roasted coffee

the coffee market D Coffee passes through many hands on its way from the tree to the cup. This chain varies depending on whether dry or wet processing is used, how far ‘middlemen’ are involved in processing, tranporting and dealing. D Until the 1989 the world coffee market was highly regulated. The International Coffee Agreement, agreed by producing and consuming countries, set quotas for producer countries which helped to balance supply and demand, and maintain prices within a band of $1.201.40/lb. D Coffee prices have always been volatile because world production can be affected by weather, eg frosts in Brazil, or disease. When prices are high, growers plant more bushes or increase their use of fertiliser, which can lead to overproduction and falling prices. D Coffee was bought, sold and exported through government marketing boards which set prices throughout the season. In some countries the boards protected farmers from low international prices by fixing a much higher internal price, and provided technical advice and credit. However, producers had to pay high export taxes to provide government revenue and cover the costs of the boards which were often corrupt and inefficient. D The quota system collapsed in 1989 and prices are now set on the two big futures markets – the London International Financial Futures and Options Exchange (LIFFE) which provides the benchmark for robusta, and the New York Board of Trade for arabica. D The development of commodity exchange markets has increased speculation by financial institutions, such as banks and pension funds, which are only interested in making profits from buying and selling their ‘option’ to buy coffee in the future – they do not intend to purchase real coffee! These ‘paper’ deals make up about 80% of the coffee trade. The ‘futures’ system protects traders and roasters from price fluctuations but can also contribute to volatility. D Under pressure from the World Bank and International Monetary Fund (IMF) most producing countries have deregulated their marketing system, replacing government boards with private traders and exporters. However, Ethiopia, Kenya and Tanzania, continue with a public auction system and Colombia has not de-regulated at all.

US cents/lb

July 1994

1989 collapse of International Coffee Agreement

速

May 1997

1994 frost damage in Brazil

Jan 2001

Dec 2005

October 2001 30-year low of 45 cents/lb

1999 drought in Brazil

1997 drought in Brazil

source: Fairtrade Foundation Fairtrade minimum price = 121 cents/lb + 5 cents/lb premium when New York price is 121 cents or higher, the Fairtrade price = New York price + 5 cents

0 Jan 1989

120

160

200

240

280

320

Arabica coffee market 1989-2005: comparison of fairtrade price & New York Exchange prices

US cents/lb

1997 drought in Brazil

Sept 1994 frost damage in Brazil

Jan 1999

source: Fairtrade Foundation Fairtrade minimum price = 101 cents/lb + 5 cents/lb premium when LIFFE price is 101 cents or higher, the Fairtrade price = LIFFE price + 5 cents

Sept 1994

November 2001 30-year low of 17.37 cents/lb

速

June 1992

1989 collapse of International Coffee Agreement

0 Jan 1986

100

150

200

Robusta coffee market 1986-2005: comparison of fairtrade price & London LIFFE prices

Dec 2005

links in the chain farmers D 80% of coffee is grown on small farms of less than 3 hectares (300x100m – about 3 fullsize football pitches) D 25 million families are dependent on coffee for their cash income

middlemen D growers receive more if they do more processing but farmers may sell beans to ‘middlemen’ – local traders or exporters – at any stage, because their harvest is too small to hire a pickup to transport beans to the mill or they are too remote to cycle or walk D farmers can be exploited by these traders who offer low prices because there are few alternative buyers – small producers often need immediate cash to pay off debts and do not have access to information on international prices nor storage facilities to wait for higher prices D many farmers get a better deal from cooperatives which provide support to members – buying and/or processing beans, improving quality through training or laboratory facilities to test acidity and moisture; some cooperatives supply fair trade roasters directly or sell on to local exporters local exporter D buys, cleans, grades and bags green coffee from producers and transports to coast for shipping; provides warehousing and ‘bulking’ into 60kg bags for export according to contracts from dealers international traders/dealers D manage the flow of coffee to roasters at required quantities, type and grade; important because coffee is harvested seasonally but demand is steady throughout the year D six largest traders account for 50% of world’s coffee and increasingly involved throughout the supply chain to increase their profit margins, with local subsidiaries growing or buying beans, and processing, grading, transporting and bulking them for export (www.nkg.net, www.ecomtrading.com, www.volcafe.com) shipper/importer D organises and pays for freight costs, insurance, landing charges, import duty, transport to roaster roaster D secure supplies from international traders – no need to hold large stocks because contracts guarantee supplies of different types at short notice – the ‘futures’ markets enables them to maintain stability in the price they pay for coffee D roast, blend, grind and package beans; transport to supermarket/coffee bar; advertise to maintain brand image, market share and profits D import duties imposed by ‘developed’ countries on unprocessed coffee are low, but much higher for processed coffee – this discourages poor countries from developing their own processing plants and benefitting from higher value-added elements in the coffee chain supermarket/coffee bar D retain a high share of the price charged to consumers with few major costs or risks – supermarkets capture about 15% of the shelf price source: Economist Intelligence Unit 2000

CONSUMING NATION

drinker

roasted, ground, instant

restaurant/cafĂŠ restaurant/cafĂŠ

retail outlet

distributor trader/broker green coffee

roaster

importer/broker

PRODUCING NATION

marketing board

private exporter

mill

green coffee

parchment coffee

intermediary

co-op/trader/agent

large plantation/ mill small farmer

coffee cherries

fair trade relationship removes many unnecessary linkages source: Gregory Dicum & Nina Luttinger The Coffee Book: anatomy of an industry from crop to the last drop

illustrations: Pip Hall

mugged: profits & poverty aim ◆

To examine the causes of the present coffee crisis and how the transnational roasting companies have responded.

outcome ◆

Participants will have a better understanding of the coffee trade, crisis management and PR.

what you need ◆

Photocopies of The coffee file, p6-14, Actionpage: Mugged, p17.

what you do s s

s s

Discuss the importance of coffee in their lives: Who drinks coffee your household? How much, what kind (instant, decaffeinated, percolated etc), when, where, why? Brainstorm: Who are the people involved in the coffee business – from seed to sip? Write down and fill in the gaps: farmers, middlemen (may process, transport, sell on to exporters), exporters, dealers, transporters, roasters, supermarket/coffee shop, consumer. How profitable is the coffee business? Who are the winners and losers in the coffee trade? Hand out Actionpages: The coffee file, and allow time for group to read. Ask for comments. Explain that the world coffee trade is in crisis – since 2001 the world price has fallen by almost 50% to a 30-year low. Although coffee brands such as Nestlé or Starbucks are highly profitable, farmers are forced to sell coffee at below the cost of production – destroying the livelihoods of 25 million small scale coffee producers around the world. In 2002 Oxfam published a report, Mugged: poverty in your coffee cup, outlining the causes of the crisis and proposing a rescue plan which called on the big coffee companies to play a key part in a fairer, more sustainable trade in coffee. This Trade Fair campaign continues. Divide participants into small groups and distribute Actionpage: Mugged. Explain that they have to take on the role of executives from a big coffee company who have to develop a strategy to overcome the crisis and counter criticism. They have to prepare strategies for the short, medium and long term and present their plan to a meeting of the Board. Allow 15-20 mins for groups to prepare their proposals. Ask one group to make their presentation, while the rest of the group act as the board and ask searching questions. After the groups have made their presentations, broaden discussion to cover issues raised.

whole group discussion ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆

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What do you think are the most important causes of the crisis facing the coffee trade? How far do you agree with Oxfam’s criticism of the big coffee companies? How effective would your strategies be in tackling the root causes of the coffee crisis? Would they be effective in answering criticism from NGOs such as Oxfam? Would they help to develop a long term positive corporate identity for your company? Would they affect your profits or shareholder value? Where did you get your ideas? Where does responsibility lie for ensuring that producers make a reasonable living? Is it possible to create a coffee trade which is sustainable (socially and environmentally) for all stakeholders? Does trade justice have a place in the highly competitive globalised world economy? Should the market place be regulated to ensure trade justice, eg production quotas, guaranteed prices? What are the alternatives? Can you think of real life examples of companies with a good corporate identity? How has this been achieved? Is it deserved?

key ideas ◆

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Corporate social responsibility (CSR) is now a key element in business. It includes many of the traditional PR techniques companies use to create a positive image. These include funding community projects and other good causes, eg cancer research, sponsorship of sports, arts, education. As a result of consumer pressure and campaigns against the human rights or environmental record of TNCs, many now have of codes of practice on workers’ rights and the environment. Critics of CSR argue that these voluntary codes do not provide adequate protection and in many cases are a form of PR which counter criticism while preserving most exisiting business practices, and profit margins. They point out that modern CSR was born during the 1992 Earth Summit in Rio de Janeiro, when UN-sponsored recommendations on international laws to regulate corporate behaviour were rejected in favour of a manifesto for voluntary self-regulation put forward by the World Business Council for Sustainable Development, a lobby group funded by TNCs. Responses to the coffee crisis by the big coffee companies include: introducing certified fair trade or environment friendly brands, buying direct from farmers, sponsoring development projects in coffee growing areas, providing training to improve coffee quality and grow alternatives to coffee, stimulating demand by developing and promoting new coffee-based products, supporting research which counters the perception that coffee is bad for health, supporting sustainable agriculture initiatives, lobbying for an end to subsidies for US and EU farmers which restrict agricultural exports from developing countries. In 2004 Oxfam produced a follow-up report which analysed and scored the ‘Big Four’ coffee companies on their actions to help solve the crisis. Although some progress had been made, none scored higher than 50% and Oxfam continues its call for consumers to maintain pressure on the companies. See Appendix 5: Mugged, p55. In November 2003 the Co-op converted all its own brand coffee to Fairtrade. See Appendix 4: Co-op’s fairtrade coffee, p53. In August 2005 Kenco launched a new instant coffee brand, Sustainable Development, which uses Rainforest Alliance Certified coffee which pays farmers a premium for using environment-friendly methods. See Appendix 3: Sustainable development, p52. In October 2005 Nestlé launched a new Fairtrade instant coffee. The Fairtrade Foundation was heavily criticised for giving the Fairtrade Mark to a company associated with inappropriate marketing of breast milk substitutes in developing countries.

follow-up ◆

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Analyse both sides of the coffee crisis debate outlined in the materials included in the Appendices, as well as documents which can be downloaded from the RISC online reading room www.risc.org.uk/readingroom/coffee.html, and websites, see Weblinks, p78. In light of the seriousness of the crisis, how responsible do you think the companies are being? Follow the debate over Nestlé’s Fairtrade coffee: Appendix 7: Partners’ Blend, p62; www.babymilkaction.org/press/press7dec05.html; www.growmorethancoffee.co.uk. Produce a radio programme on the coffee crisis or a poster/story board for a TV ad to publicise the initiatives devised in the activity. Visit the Corporate Social Responsibility Forum website to get an insight into the values being promoted by CSR professionals: www.csrforum.com. Read Appendix 9: Behind the mask, p69, a critique of CSR based on case studies of Shell, Coca Cola and British American Tobacco. Write to coffee producers asking them to switch more of their brands to Fairtrade. The teaching pack Seeing Through the Spin: corporate PR in a globalised economy gives background information on PR techniques. Free download: www.babymilkaction.org/spin. Prepare a dossier of PR material disseminated by well known TNCs that have been criticised, to illustrate the range of PR techniques which can be used to counter opponents’ claims, eg adverts in media, website, newspaper articles. Nestlé, Shell, RioTinto, BP, GAP, Monsanto, McDonald’s, British American Tobacco all provide interesting case studies.

actionpage: mugged You are a team of senior executives from a leading coffee company. You are devising a strategy to: • deal with the crisis in the world coffee market • respond to well-publicised criticism from campaign organisations, eg Oxfam, Fairtrade Foundation, and particularly an Oxfam report, Mugged: poverty in your coffee cup (see summary below). Your proposals should include: • how far the company should implement Oxfam’s Coffee Rescue Plan, taking into account your need to maintain market share, profits and shareholder value • a public relations (PR) campaign to counter accusations of increasing profits at the expense of poor farmers, including: - a breakdown of the groups of people you should try to reach with your message - ideas of how you can maintain positive corporate image in the long term • how you propose to monitor the success or failure of your strategy. s

Prepare a five minute presentation for your board of directors, producing visual aids that will help you make your case.

Mugged – poverty in your coffee cup* There is a crisis destroying the livelihoods of 25 million coffee producers around the world. The price of coffee has fallen by almost 50 per cent in the past three years to a 30-year low. The coffee crisis has become a development disaster whose impacts will be felt for a long time. Families dependent on the money generated by coffee are pulling their children, especially girls, out of school. They can no longer afford basic medicines, and are cutting back on food. Some have turned to the production of lucrative drugs such as cocaine, chat or marijuana. Beyond farming families, local coffee traders are going out of business. National economies are suffering and some banks are collapsing. Government funds are being squeezed dry, putting pressure on health and education and forcing governments further into debt. The low coffee price creates a buyers’ market, leaving some of the poorest and most powerless people in the world to negotiate in an open market with some of the richest and most powerful. The result, unsurprisingly, is that the rich get richer and the poor get poorer. Ten years ago producer-country exports captured one-third of the value of the coffee market. Today, they capture less than ten per cent. Over the last five years the value of coffee exports has fallen by US$4bn. The big four coffee roasters, Kraft, Nestlé, Procter & Gamble, and Sara Lee, each have coffee brands worth US$1bn or more in annual sales. Together with German giant Tchibo, they buy almost half the world’s coffee beans each year. * this is an edited summary of the report – Oxfam International 2002 www.maketradefair.com

Profit margins are high – Nestlé has made an estimated 26 per cent profit margin on instant coffee. If everyone in the supply chain were benefiting this would not matter. But with farmers getting a price that is below the costs of production, the companies’ booming business is being paid for by some of the poorest people in the world. In recent years the coffee industry has been transformed from a managed market, in which governments played an active role both nationally and internationally, to a free-market system which sets the coffee price. At the same time, Viet Nam has entered the market and Brazil has increased its already substantial production. The result is that more lower quality coffee is being produced, leading to a cataclysmic price fall for farmers. Eight per cent more coffee is currently being produced than consumed. Despite the stagnant consumer market, the coffee companies are laughing all the way to the bank. In the free market their global reach gives them unprecedented options. Today’s standardised coffee blends may be a mix of coffees from as many as 20 different coffee types. Playing the market allows the companies to buy from the lowest-cost producer to mix these blends. At the other end of the value chain the market does not feel so free. Without roads or transport to local markets, technical backup, credit, or information about prices, the vast majority of farmers are at the mercy of itinerant traders offering a ‘take it or leave it’ price. Moving out of coffee and into something else is difficult – there are few alternative cash crops that offer better prospects. For a farmer to turn her back on the four years spent waiting for coffee trees to start bearing fruit is a highly risky strategy. Fair trade and the development of speciality coffees are important. They can help poverty reduction and the environment, but only for some farmers. Radical change of the whole system is needed. Oxfam is calling for a Coffee Rescue Plan to make the coffee market work for the poor as well as the rich. The plan needs to bring together the major players in coffee to overcome the current crisis and create a more stable market. Under the auspices of the International Coffee Organisation, within one year the Rescue Plan should result in: 1 Roaster companies paying farmers a decent price (above their costs of production) so that they can send their children to school, afford medicines, and have enough food. 2 Increasing the price to farmers by reducing supply and stocks of coffee on the market through: • roaster companies trading only in coffee that meets basic quality standards as proposed by the International Coffee Organisation (ICO) • the destruction of at least five million bags of coffee stocks, funded by rich-country governments and roaster companies. 3 The creation of a fund to help poor farmers shift to alternative livelihoods, making them less reliant on coffee. 4 Roaster companies committing to increase the amount of coffee they buy under Fair Trade conditions to two per cent of their volumes.

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The advantages of an ethical image are well known and PR companies openly advise companies who face criticism to adopt ‘cause-related marketing’ strategies – to aggressively advertise their links with charities and good causes in order to counter-balance bad publicity. The benefits of cause-related marketing are long term… You are building a surplus account for the times when you have a crisis. Marjorie Thompson, Saatchi & Saatchi, in Marketing Week February 1999

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crisis, what crisis? aim ◆

To examine the causes and consequences of the coffee crisis.

outcome ◆

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Participants will have a better understanding of the coffee crisis and different perspectives on its causes and solutions. This activity is a research project which requires well developed analytical skills to analyse documents and understand and evaluate conflicting arguments. It could be used to explore issues raised in other activities in greater depth.

what you need ◆

Photocopies of Actionpages: Coffee file, p6-14; grid, p20-21 (cut up the grid and place in envelope, one set per pair); spider diagram, Causes of low world coffee prices; Weblinks, p78; internet access; background documents from Appendices or downloaded from RISC’s online reading room www.risc.org.uk/readingroom/coffee.html.

what you do s s

s s s s

Discuss how far the group are aware of a crisis facing 25 million coffee growers? What are its causes and effects? Where did you get your information? Explain that the world coffee trade is in crisis – since 2001 the world price has fallen by almost 50% to a 30-year low. Although coffee brands such as Nestlé or Starbucks are highly profitable, farmers are forced to sell coffee at below the cost of production – threateninging the livelihoods of 25 million small scale coffee producers around the world. In 2002 Oxfam published a report, Mugged: poverty in your coffee cup, outlining the causes of the crisis and proposing a rescue plan which called on the big coffee companies to play a key part in a fairer, more sustainable trade in coffee. The companies have responded with a variety of initiatives ranging from introducing fair trade brands to supporting rural development programmes. Divide the group into pairs. Hand out envelopes, Coffee file, background documents etc. Explain that they need to review the documents and weblinks to find out different perspectives on the causes, consequences and solutions of the coffee crisis. When they have a clear idea of the nature of the crisis they should try to reconstruct the spider diagram. You may need to explain the basic structure, ie price volatility, higher yields, sluggish demand…

whole group discussion ◆ ◆ ◆ ◆

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What do you think are the most important causes of the crisis facing the coffee trade? What differences are there in the analysis of the companies and campaigning groups? Who has responsibility for trying to solve the crisis? Which have greatest power/influence? Do you agree with Kenco: “the consume will ultimately determine the future of sustainable coffee… building consumer demand is one of our most fundamental contributions.” To what extent do you agree with Oxfam’s continued criticism of the big coffee companies? Which of the company initiatives will tackle the root causes of the crisis? Are these initiatives a serious attempt to address the problem or a public relations exercise? What place does trade justice have in the highly competitive globalised world economy? How far are companies responsible for ensuring that producers make a reasonable living? Should the market place be regulated to ensure trade justice, eg production quotas, guaranteed prices, legally binding penalties if labour or environmental standards are not met? What are the alternatives?

key ideas ◆

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In response to the coffee crisis, initiatives from the big coffee companies include: introducing certified fair trade or environment friendly brands, buying direct from farmers, sponsoring development projects in coffee growing areas, providing training to improve coffee quality and grow alternatives to coffee, stimulating demand by developing and promoting new coffee-based products, supporting sustainable agriculture initiatives, lobbying for an end to subsidies to US and EU farmers which prevents farmers in developing countries from exporting their produce. However, Oxfam produced a follow-up report in 2004 which analysed and scored the ‘Big Four’ coffee companies on their actions to help solve the crisis. Although some progress had been made, none scored higher than 50% and Oxfam continues its call for consumers to maintain pressure on the companies. Critics of the coffee companies welcome their initiatives but argue that they do not go far enough. They give the impression of corporate responsibility and concern about the ‘coffee community’ with well publicised new ethical brands aimed at niche markets, but do not change core business practices. Some are setting up subsidiaries along the supply chain (vertical integration) to increase their control and profits. Others are exploring GM coffee varieties which will enable ripening to be ‘switched on’ so harvesting can be mechanised. This will increase production even more and undermine small producers. Critics argue that if new sustainable/fairtrade coffee brands are as good for the future of farming communities as their publicity claims, why are these beans not used in more products?

follow-up ◆ ◆

Hand out the spider diagram and allow participants time to compare with their own. Produce a radio programme, poster or leaflet on the coffee crisis from the point of view of the coffee companies or their critics.

causes of low world coffee prices

sluggish demand

higher yields

control of supply chain

price volatility

farmers continue to grow coffee

solutions

consequences

• reduced foreign exchange earnings for coffee exporting countries to repay debt

• environmental degradation from intensive farming • deforestation from cutting shade trees – soil erosion & loss of habitat for birds etc • increased application of chemical fertliser, herbicides & pesticides – runoff into water system

• rural poverty • unemployment on plantations; lower wages & poorer conditions • increased debt; farmers sell animals & food crops intended for own consumption; suicide among farmers • fall in health and education indicators, especially girls • migration to urban slums

• farmers turn to lucrative drugs trade, eg chat, coca, marijuana

• reduced government spending on health, education, agriculuture, development programmes

• large stock piles amassed by speculators when prices are low & released onto market when prices rise – stocks equivalent to 6 months production

• large, high-tech plantations in Brazil – high input of fertilisers, mechanised pruning & harvesting reduce production costs so profitable even with low world prices

• new planting, eg Viet Nam encouraged by World Bank

• new processing technology to mask bitterness of low quality beans

• higher yielding & more pest resistant coffee plants

• slow increase in world consumption • competition from soft drinks

• lack of alternative cash crops • low world price for many commodities, eg cotton, sugar • trade barriers in US & EU against nontropical food crops, eg soya, sugar • cheap food imports from subsidised US & EU farmers depress domestic market, eg maize, rice

• land often unsuitable for other crops, eg too steep • farmers lack expertise to grow other crops • decline in support for rural development among aid donors • lack of support from World Bank & IMF to develop new industries

• because of past price fluctuations farmers hope for better prices • once bushes are planted, costs are relatively low so farmers reluctant to grub up

• international roasters & dealers control increasing proportion of processing, marketing & retailing – small producers have little bargaining power

• liberalisation of marketing encouraged by World Bank & IMF leads to price volatility • most producing countries scrap government marketing boards which provided a safety net of subsidies to growers when world prices were low • end of International Coffee Agreement quota system to regulate production • development of futures commodity markets – increase in speculation

improve quality & productivity • training for small farmers to improve processing & marketing • support for producer co-operatives & associations • increase productivity of small farmers, eg new hybrids, to free land for other crops • roasters only purchase ICO quality standard beans • roasters develop market for higher quality coffee & reward with premium prices

• volatile prices because crop vulnerable to weather & disease • long lag between investment (ie planting) & harvest

restore balance of supply & demand • increase demand in new markets, eg Eastern Europe • destroy surplus stocks

raise prices & revive livelihoods • roasters pay price that covers costs & provides a decent income • increase volume of fair trade coffee • schemes to protect farmers from price volatility, eg insurance

tackle world problem of low commodity prices • support from IMF & World Bank for countries affected by low commodity prices • open up US & EU markets for agricultural commodities especially processed products, eg remove tariff barriers & subsidies to farmers

• high cost of replacing coffee trees – no savings while waiting for new crops to mature & indebted farmers have to meet repayments

retain & build value-adding capacity • make alternative processing technology available to producers to improve quality & add value establish alternatives for rural development • support & training for diversification, eg fish farming, fruit

farmers continue to grow coffee

• because of past price fluctuations farmers hope for better prices • once coffee bushes are planted, costs are relatively low so farmers reluctant to grub up • high cost of replacing coffee trees – no savings while waiting for new crops to mature & indebted farmers have to meet repayments • lack of alternative cash crops: • lack of infrastructure & credit • low world price for many commodities, eg cotton, sugar • trade barriers in US & EU against non-tropical food crops, eg soya, sugar • cheap food imports from subsidised US & EU farmers depress domestic market, eg maize, rice • soil, waether & terrain often unsuitable for other crops, eg too steep • decline in support for rural development among aid donors • farmers lack expertise to grow other crops & limited funds for training • lack of support from World Bank & IMF to develop new industries

control of supply chain

price volatility

sluggish demand

• slow increase in world consumption • competition from soft drinks

higher yields

• international roasters & dealers control increasing proportion of processing, marketing & retailing – small producers have little bargaining power

causes of low world prices

• higher yielding & more pest resistant coffee plants • large, high-tech plantations in Brazil – high input of fertilisers, mechanised pruning & harvesting reduce production costs so profitable even with low world prices • new planting, eg Viet Nam encouraged by World Bank • new processing technology to mask bitterness of low quality beans • large stock piles amassed by speculators when prices are low & released onto market when prices rise – stocks equivalent to 6 months production

• harvest vulnerable to weather & disease • long lag between investment (ie planting) & harvest • liberalisation of marketing encouraged by World Bank & IMF • most producing countries scrap government marketing boards which provided a safety net of subsidies to growers when world prices were low • end of International Coffee Agreement quota system to regulate production • development of futures commodity markets – increase in speculation

restore balance of supply & demand • increase demand in new markets, eg Eastern Europe • destroy surplus stocks improve quality & productivity • training for small farmers to improve processing & marketing • support for producer co-operatives & associations • increase productivity of small farmers, eg new hybrids, to free land for other crops • roasters only purchase ICO quality standard beans • roasters develop market for higher quality coffee & reward with premium prices raise prices & revive livelihoods • roasters pay price that covers costs & provides a decent income • increase volume of fair trade coffee • schemes to protect farmers from price volatility, eg insurance retain & build value-adding capacity • make alternative processing technology available to producers to improve quality & add value establish alternatives for rural development • support & training for diversification, eg fish farming, fruit tackle world problem of low commodity prices • support from IMF & World Bank for countries affected by low commodity prices • open up US & EU markets for agricultural commodities, especially processed products, eg remove tariff barriers & subsidies to farmers

solutions

• reduced foreign exchange earnings for coffee exporting countries to repay debt • reduced government spending on health, education, agriculture, development programmes • farmers turn to lucrative drugs trade, eg chat, coca, marijuana • rural poverty • unemployment on plantations; lower wages & poorer conditions • increased debt; farmers sell animals & food crops intended for own consumption; suicide among farmers • fall in health and education indicators, especially girls • migration to urban slums • environmental degradation from intensive farming: • deforestation from cutting shade trees – soil erosion & loss of habitat for birds etc • increased application of chemical fertliser, herbicides & pesticides – runoff into water system

consequences

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In the morning we drink coffee provided for us by a South American, or tea by a Chinese, or cocoa by a West African. Before we leave for our jobs we’re already indebted to more than half the world.. Martin Luther King

photo: Rupert Elvin

a fair price? aim ◆

To analyse the PR strategies used in the booklet The Coffee Cycle.

outcome ◆

An understanding of how businesses try to protect their reputation from criticism.

what you need Send off for the booklet The Coffee Cycle from: The Corporate Affairs Manager, Nestlé UK Ltd, St George’s House, Croydon CR9 1NR Tel: 020 8686 3333. The Coffee Cycle is a very well produced example of corporate PR. It communicates many messages about Nestlé and its operations and would make an ideal subject for detailed project work. Decide whether groups of participants will analyse the whole booklet or just a section, eg the supply chain or price, and make appropriate sets of single-sided photocopies. Photocopies of Actionpages: A fair price?, p27, A good deal for growers?, p29; flip chart paper; highlighter pens; glue. If you need to see detailed examples of deconstructing text and images look at the activities Every picture… and Between the lines from the Seeing through the spin teaching pack. These can be downloaded from: www.babymilkaction.org/spin.

what you do s s

s s

Brainstorm: Can you name any products made by Nestlé? What is your attitude to Nestlé? Why? Explain that all organisations produce publicity materials to communicate their values or raise awareness of their activities to their various audiences. The group will be analysing a booklet produced by Nestlé on “how coffee is grown, harvested, bought and sold and converted into Nescafé around the world”. Hand out Actionpage: A fair price? They will use the Actionpage to analyse the booklet, focusing on the messages communicated through its text, images and design. Divide into small groups and distribute sets of photocopies. Each page should be mounted on a sheet on flip chart paper. This provides space for comments and analysis in the margins. At some point all participants should get an opportunity to study the original booklet to get a better appreciation of its overall message and production values.

whole group discussion s ◆ ◆

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Display the analyses and allow time to look at other groups’ work. Ask one or two groups to explain the main points of their analysis. Bring out more general issues. What is the overall message of the booklet? How well do text, photos and design (use of colour, layout, fonts) work together to communicate this message? Why has Nestlé devoted resources to publishing this booklet? Who is the main audience? Does the booklet make a difference to your attitudes towards Nestlé? Are you more likely to buy Nestlé products? On the information provided in the booklet would you consider that Nestlé’s “buying policies offer coffee producers a fair deal”? Why/why not? What issues are not addressed in the leaflet? How can you judge whether Nestlé’s description of the world coffee market is an accurate picture of the situation of coffee producers?

what you do Distribute Actionpage: A good deal for growers?, which provides detailed analysis of the claims made by Nestlé in the booklet and case studies of the difficulties faced by growers. s Ask the groups to look at the booklet in the light of the comments made in the Actionpage. s

whole group discussion ◆

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Which comments made in the Actionpage match with points raised in the groups’ initial analysis? Which of the comments are a fair criticism of Nestlé’s role in the world coffee market? How far do the comments change your reaction to The Coffee Cycle? In the light of the comments do you think Nestlé gives a “good deal to coffee growers”?

key ideas ◆

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Businesses are very concerned about safeguarding their reputation, and employ public relations (PR) consultants to devise strategies to create and maintain a positive image. A brand with positive associations will be able to command better prices and profits, maintain shareholder confidence, introduce new products and recover from a crisis. ‘Reputation Mangement’ brings an integrated approach to creating a positive corporate image among all ‘stakeholders’ – customers, employees, investors, etc. This includes: community involvement, eg sponsorship of sports, arts or education and lobbying politicians. Businesses which have been criticised about their operations because of their impact on the environment, abuse of human rights etc, respond with well-publicised PR initiatives which target public opinion, policy makers and the media. ‘Ethical consumerism’ is a growing market, eg ethical pension funds, eco-tourism, ethical sourcing. By December 2004, ground coffee sold under the Fairtrade Mark accounted for 18.8% of the UK market volume, compared with 14% in 2002. The Coffee Cycle (published in 1999) is a response to the implication “that coffees which do not carry a fair trade mark are in any way unfair”. By explaining the whole production and marketing process and describing the ‘partnership’ Nestlé has with producers it provides a very reasonable and convincing case for its claim to give “a good deal to coffee growers.” The images reinforce the picture of a well ordered mechanism producing our cup of coffee. Although it is very well produced and informative, the booklet gives a very onesided picture of the world coffee trade. It ignores the real hardship and insecurity faced by many small producers. While farmers take the risks, manufacturers like Nestlé always make a healthy profit from the final product, whatever the fluctuations in world prices. It suggests that buying direct from growers is automatically ‘fair’. Although the booklet claims that Nestlé does “usually pay a premium over the market price”, the fact is it does not meet the Fairtrade standard which gives small producers a guaranteed price which covers production costs, a living wage and a premium to support community development. Under the certified Fairtrade Mark scheme, advance payments ensure that farmers have the security to keep out of debt and free from unscrupulous middlemen. The production chain is independently monitored to ensure that ethical standards are maintained. Coffee is bought direct from the farmers’ own democratic organisations which are regularly consulted over what constitutes a fair price. Farmers do not have to pay to join a fairtrade scheme – costs are borne by the companies who retail Fairtrade Mark coffee. Nestlé does not subscribe to this system of safeguards. It does not even have a fairtrade brand for the growing ethical consumer market. Nestlé still sources 85% of its coffee on the world market and buys about 12% of the world’s crop. The market price can drop to less than half the cost of production. When world prices are low, thousands of small coffee farmers lose their land. Although Nestlé is not directly to blame, it is the major player in a system where power lies with middlemen, processors, exporters, dealers and roasters, and where small growers and plantation workers struggle to make a living. Much of the world’s coffee is grown on plantations where working conditions are poor and pesticide use is abused.

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Although in The coffee cycle Nestlé denies that its purchasing is in any way unfair, in October 2005 it launched Partners’ Blend, an instant coffee accredited by the Fairtrade Foundation. The accompanying press release provides an interesting contrast to the booklet: “Nestlé recognises that Fairtrade has a useful role to play in helping smallholder producers cope in today’s global economy”. Nestlé has also been the subject of a high profile international boycott because of its violations of the International Code of Marketing of Breast-milk Substitutes. It has responded with a well-orchestrated PR offensive – ‘evidence’ that it complies with the Code, support for ‘good causes’, promotion of its ‘sustainable development’ credentials etc. Although Nestlé retains a high brand value – Nescafé is 24th on Interbrand’s The World’s Most Valuable Brands, 2005 – it was refused membership of the Ethical Trading Initiative and is not included in the FTSE4Good Europe Index of socially responsible investments (www.ethicaltrade.org and www.ftse4good.com/ftse4good/index.jsp).

follow-up ◆

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Play the Coffee Chain Game, a role play which asks participants to negotiate the share of income from the sale of coffee – available from admin@risc.org.uk, £4.50+p&p. Watch the video For a few pesos more, a lively animated rap on the problems faced by small farmers. Comes with teachers’ notes – available from www.bafts.org.uk. Investigate the impact of the international coffee market on the lives of small farmers across the developing world – download documents from www.risc.org.uk/readingroom/coffee. html and explore websites from Weblinks, p78. Download PR in the community from www.risc.org.uk/readingroom/coffee.html. This activity analyses two Nestlé in the community brochures, one of which publicises the company’s involvement in “the life of the whole community” in the UK, the other on its charitable activities around the world. Analyse Doing Better by the Environment, Nestlé’s entry in The Times 100, a website for Business Studies teachers and students which showcases “companies’ responses towards environmental concerns and ethics” (www.risc.org.uk/readingroom/coffee.html ). Seeing through the spin has further information about PR – Appendix 1: PR for beginners examines PR in greater detail; Appendix 9: Co-op fairtrade, Appendix 10: Fair & ethical trade and Appendix 11: Triple bottom line tackle issues of ethical sourcing and corporate responsibility; Appendix 13: Greenwash guide and Appendix 14: Bluewash take a more sceptical view of claims of corporate citizenship.

Detail from cover of The Coffee Cycle

actionpage: a fair price? s

Fill in this questionnaire to help you analyse the public relations impact of the booklet The Coffee Cycle. Some questions may not be relevant to your page. You may need to use another sheet.

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How would you describe Nestlé’s reputation and public image.

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What is the immediate message you get from the booklet before you open it?

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Who is the audience (eg general public, young people)?

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Glue your photocopies onto a sheet of flip chart paper and analyse the text. Highlight key points made in the text. How does Nestlé ensure that “the people who grow and produce coffee in the Developing World… receive a fair price for their produce”.

Highlight claims that you would question or like to know more about – write your points in the margin of the flipchart paper.

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Analyse the photos used and the overall design (make notes in the margin): Look at the photos: • who is shown? • what are they doing? • what words come into mind when you look at the photo? • why have these photos been chosen?

Does the design and layout of the booklet (fonts, arrangement of photos, use of space) help to communicate its message? Why?

Why has Nestlé produced this booklet?

How effective is the booklet in: • gaining your interest – why?

• providing information – why?

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How does this information affect your attitude towards Nestlé and its products?

Does the leaflet convince you that Nestlé is “committed to giving a good deal to coffee growers”? Why?

actionpage: a good deal for growers?* page 14/15 As in any market, the price of green coffee is ultimately governed by the relationship between the amount of coffee available to be sold (the supply) and the amount which people want to consume and hence the amount roasters need to buy. The day-to-day price of coffee… reflects the changing international relationship between supply and demand. The amount a farmer receives is ultimately determined by this free market mechanism. Although coffee-growing is usually a small-scale enterprise, often carried out in remote and somewhat inaccessible areas, it would be wrong to think that farmers are ignorant of the market price of coffee. Because of this widespread knowledge, farmers are well aware of what prices they can attain for their coffee, and so will ensure that they receive what they consider to be a fair price… However … there are some intermediaries who behave badly and they may take advantage of farmers who need cash immediately… As the booklet says, supply and demand will ultimately determine the price in a free market. In such a market, when the price drops, producers will no longer find it profitable to produce the crop, so ‘supply’ drops and the price rises to a ‘fair’ level again. In an ideal market this should result in a stable equilibrium around a fair price. However, what we see is very different: the price swings wildly in a way unrelated to demand and supply and the price is in a real long term decline, far below the cost of production for long periods – as is true of many commodities. There are several missing pieces of the jigsaw: ◆

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It is not a free market There are several ways in which the coffee market does not operate freely: • There is an assumption that there should be ‘perfect knowledge’ of the market place. Many small farmers will not have the information that the buyers have access to. The most obvious is knowledge of how prices are likely to change. If prices are set to rise, farmers could choose to keep their crop, but the traders will say prices are dropping to push for a quick sale at harvest time when prices are low. Knowing the price of coffee in the local market is not the same as understanding the world market. • Farmers are poor and have little access to capital or loans at a fair rate. This means they incur debts to care for and harvest the crop. They need to clear these as soon as possible. Traders, who have access to capital, can afford to buy the crop and ‘play the market’. • There are normally many small farmers and a much smaller number of traders; in such a market it is normal for the buyers to be more powerful – they can pick and choose from many farmers and can threaten not to buy in order to force the price down. Producer prices Because it is not a free market, the prices received by farmers are often well below the ‘market price’. Obviously, there is a fair margin to be made by traders, but the margin can be as much as half the world price. While you can argue that the world price does, to some degree, reflect supply and demand, this is by no means the case for the producer prices. Lags in the system Coffee bushes take four or five years from planting to the first coffee harvest: a major investment for a small farmer. So, if prices drop, she is unlikely to give up straight away. To dig up the bushes and plant something else is a big risk – especially when there is a secure coffee market (even though at a low price) and no clear market for other crops. Diversification, which is necessary to make the ‘free market’ more than a theory, is very difficult and risky.

* analysis by Phil Wells

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Real costs A supply and demand equation ignores the social costs of production. It is true that prices will go down if there is over-supply (or the threat of over-supply), but for many farmers there is no easy choice to stop production. They will often accept lower prices and continue to harvest so they can clear their debts. They will cut back on education costs, medical care, investment in house repairs and so-on. In effect the coffee market is subsidised by the farmers. Of course they will give up eventually – or be forced to sell their land to pay their debts – and the coffee supply may go down as a result. But at the same time, cheaper producers (for example plantations in Indonesia and Viet Nam) will continue to expand since they can still be profitable at low prices. This is because they can pay very low wages to labourers. So we can see a kind of ratchet at work; each price drop forces some small farmers out and allows plantations to move in. The net effect is for farmers to become poor landless workers and for low paid plantation workers to replace them Speculation The big price swings in the coffee market often owe more to speculators’ worries about a glut or under-supply in the future than any real movements. Now that trading is a 24 hour a day business (with markets all around the world linked via computers) a panic can spread quickly without much real consideration. So, while the long terms prices, year on year, are influenced by demand and supply, the shorter term movements are not nearly so sensible!

page 16/17 If crop disease, drought, or a heavy frost damages the harvest, the price goes up. This encourages more farmers to grow more coffee, until supply exceeds demand. When that happens, the price falls and so too does quality, as farmers cut back spending on equipment, fertilisers or the time they spend tending or processing the crop. This does not mention several factors. Farmers cutting back on expenditure will normally have to cut back on what they can spend of their family welfare – this is not just a business we are talking about. With the time lag between price movements and shifts in production being several years, the swings between low and high prices are huge – new production cannot start for a few years after prices go up, and farmers are locked into coffee for several years after prices go down. The reality is that coffee is grown, but farmers cannot afford to harvest it. If they don’t have enough land to grow other crops, they will need to look for work on other farms, or in the worst case, sell their land and move to the cities to look for work. Nestlé has always supported viable international agreements to establish the stability that is in everybody’s interests… An example of such an agreement and how Nestle has supported it would be instructive!

page 18/19 The futures market was established to enable coffee dealers and manufacturers to protect themselves against changes in the price of coffee. A key concept here. The two most important players in the market – the consumers and the producers – cannot protect themselves. Consumers have little to worry about, as the price of coffee in the shops has little to do with the world market price, but producers, for whom coffee represents up to 100% of their cash income, are by far the most vulnerable group. In some ways the futures market makes the market less predictable for them. [Dealers] can also resolve the fact that suppliers like to do business at the peak of the market while buyers prefer to wait until prices have fallen. The futures market enables them to trade at different times and to separate supply from price. For example, the producer can sell coffee to the dealer before harvest time when the market price tends to be higher, and deliver the coffee at a later stage. This makes it sound as if a farmer can sell when the price is high (before harvest) and actually deliver later (when the price is lower). The dealer would have to be very rich and generous! In fact, the dealer will offer a price based on the market at the time of delivery. Local traders

offering advance orders will pay less than the market price – or pay using a credit note so the farmer still has no cash.

page 20/21 Most of the world’s coffee is bought from coffee dealers, by roasters such as Nestlé. This perhaps contrasts with the picture sometimes painted of commodity dealers making profits at the expense of coffee farmers in the developing world. This is an ‘Aunt Sally’. There is a true picture of coffee traders negotiating unfair deals with coffee farmers; the issue of commodity dealers on the international markets is a reflection of the fact that these people win (or lose) huge sums while influencing the world price of a commodity on which millions of small farmers depend.

page 22/23 [It should not] be assumed that coffees which do not carry a fair trade mark are in any way unfair. … it is simply not practical to buy the enormous amounts of coffee required directly from the hundreds of thousands of individual growers... … we buy seven times more coffee direct from growers than all of the European fair trade brands combined. The fact is that coffees not carrying a fair trade mark are almost certainly bought at around the world market price, and the farmer herself will have received much less than this. Some manufacturers claim to pay ‘fair prices’ but there is no clear definition given and without a fair trade mark, there is no independent check. Nobody has suggested that any company buys direct from individual small farmers. In fact the only way for farmers to get a better share is to work together in co-operatives that can negotiate from strength, learn about the coffee market, provide support for quality improvement and soon. Some co-operatives are now very large and professional and can do business with even the biggest companies. Even the biggest company could be buying some of its coffee direct from farmer co-operatives, and paying a fair price so that consumers can make the choice between fair trade and conventional coffee from the same brands.

page 26/27 Nestlé provided [Thailand] with 20 different types of robusta coffee plants, from various countries… We have worked in a similar way with the authorities in China, the Philippines and Mexico.

illustration: Maurizio Forestieri, from For a few pesos more video – www.bafts.org.uk

The increasing production (usually on plantations) in Asia is undermining the market for African producers, nearly all of whom are small farmers. It may be in the interests of consumers to encourage low cost producers, but it certainly does not help the poorest continent to develop.

how fair’s fair? aim ◆

To explore the fair trade production chain using coffee as a case study.

outcome ◆

A greater understanding of the benefits of fair trade to producers and its role in changing the existing unfair system of world trade.

what you need Photocopies of Actionpages: How fair’s fair?, A brief history and Pros & cons – A brief history can be distributed before the session to ensure participants are familiar with the principles of fair trade; flip chart paper; glue.

what you do Ask how many people regularly buy fair trade products. Why? Which products? How do you imagine most fair trade coffee is produced? s Divide into small groups. Hand out the Actionpage: How fair’s fair? Explain that different kinds of production process can meet fair trade criteria, ranging from small scale family farms to large commercial plantations. The Actionpage includes four scenarios for the production of coffee. Three qualify for the Fairtrade Mark, the fourth does not. The groups will discuss the questions to decide which scenario most closely matches their ideal of fair trade, and sustainable development. s

whole group discussion s ◆ ◆

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Choose two or three groups to show their material and explain the main points of their analysis. Bring out more general points. Which of the scenarios meets your expectations of fair trade production? What further information would you like in order to judge the ‘ethical’ credentials of the production? Which of the scenarios offers the possibility of sustainable development? What was your reaction to the use of children in the small scale family producers? Would child labour be acceptable in co-operatives or plantations? Who takes the most/least financial risks in the different ‘coffee chains’ between farmers and consumer? Who benefits most/least? How important is it to bring fair trade into the mainstream? How far does fair trade challenge or change the unequalities of the existing world trading system? What changes in the world trading system would improve the lives of poor farmers dependent on the volatile price of commodities such as coffee? If Nestlé decided to introduce a fair trade brand do you think it should be given a license to use the Fairtrade Mark (given its continued flouting of the International Code of Marketing of Breastmilk Substitutes)? What are the pros and cons of an initiative such as Coffee Kids?

key ideas ◆

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Fair trade aims to create equal partnership and respect between Southern producers and Northern importers, fair trade shops, labelling organisations and consumers. It makes the producer-consumer chain as short as possible so that consumers become aware of the culture, identity and conditions in which producers live. Fair trade producer groups vary greatly between products and regions. They include

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federations of producers, co-operatives, family units, workshops for disabled people, state organisations, private companies, and range in size from 20 to 200,000. A lot of the marketing and campaign materials produced by fair trade organisations focus on the benefits of fair trade for family-sized producers. In fact, a large proportion of fairly traded agricultural products are grown on commercial plantations by waged labourers. So long as these enterprises respect basic International Labour Organisation (ILO) standards and local government-set minimum wages, they qualify for fair trade status. These wage rates are often only sufficient to meet the most basic needs. For many fair trade producers, including family units, life remains extremely hard. Although their income levels are higher and more stable, their life choices are still limited, with difficult decisions to be made between spending on health, education, housing etc. The edge may have been taken off poverty, but their hard work does not earn a lifestyle remotely comparable to that of consumers. Children often play an active economic role in farming communities and they make a vital contribution at key stages such as harvesting. On a family farm this need not be detrimental to children’s well being, if their health and education is not impaired. However, on commercial plantations there is much greater danger of exploitation as children are treated as a cheaper form of labour. Fair trade is dominated by North. Despite the involvement of producers’ representatives in decision making, labelling organisations dominate process of setting criteria, monitoring, marketing etc – they have more power because they are closer to the consumer and can choose which producers to work with. Farmers still take most of the risks – the price of crop failure due to weather or pests, is not shared by consumers or processors. Under current arrangments no additional premium is given to cover extra time and cost involved in more sustainable production, eg environmental protection or organic methods. In itself fair trade is not sufficient to create a more equitable world trading system because power is held by transnational corporations (TNCs) in the North, supported by their governments and international bodies such as the World Trade Organisation (WTO). TNCs are commited to increasing profits and maintaining shareholder value – sometimes, as in case of Enron, resorting to false accounting to inflate their share price. This is reinforced by the system of rewarding senior executives with stock options which means their personal wealth is tied to share price. Some TNCs now embrace the idea of ‘corporate citizenship’ and include social and ethical auditing, and environmental impact, in their mission statements. However, critics accuse many TNCs of ‘greenwash’ – hyping their involvement in social and environmental projects as a public relations exercise which masks their continued drive for the ‘bottom line’. A truly just trading system can only develop when there is a radical shift in the balance of power so Southern countries can develop their economies to suit the needs of their own people rather than the interests of Northern banks, TNCs and consumers. The current system of fair trade is a stage in the process of forcing such a shift. It is an example of trading where profit is not the only ‘bottom line’, and the desire of consumers for ‘value for money’ is balanced with the wish of producers to be free of poverty. It also provides a means of increasing consumer awareness and creating a climate of opinion in favour of change.

follow-up ◆

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Hand out Actionpage: Pros & cons which summarises the benefits and limitations of fair trade. Play the board game Coffee Culture. This explores some of the trading issues that effect coffee producers in Nicaragua and illustrates the benefits of fair trade. It has been silk screen printed onto a wipeable tablecloth and is designed as both an educational and promotional tool for schools and youth groups, as well as café and restaurants that support fair trade. It is entirely self-explanatory and comes with counters and dice, contained in an attractive cloth bag. Available from RISC: admin@risc.org.uk.

actionpage: how fair’s fair? s

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Read the four scenarios for the production of coffee and consider the following questions: What is the power relationship between producers and coffee companies in the various scenarios? To what extent do the different scenarios benefit producers and their communities? How sustainable are the different production scenarios? How far do the different scenarios bring fair trade into the mainstream?

small-scale family farmers Small-scale family farmers grow subsistence crops for their staple diet between the coffee bushes produce organic coffee. Labour is primarily from within the family including children, but hired labour is also often used on a small-scale seasonal basis. The dried coffee beans are purchased directly from a local community group of small farmers by an Alternative Trading Organisation (eg Traidcraft) which operates outside of the mainstream trading and marketing structures – selling mainly through small outlets such as FT shops, churches or by mail order. The families need cash to pay for expenses such as school fees, medicines etc. The Alternative Trading Organisation maintains regular contact with the farmers to discuss issues such as supply, credit and pricing. The use of the social premium is determined collectively by the community of farmers.

producers co-operative Coffee is produced in accordance with fair trade criteria by small and medium sized producers organised into several co-operative organisations; each owned by its members. A large-scale umbrella co-operative ultimately purchases and processes the dried beans (which adds around 50% to the value) produced by the several thousand farmers belonging to the Coops. The umbrella Co-operative sells the processed beans to a dedicated fair trade company for processing and marketing, eg Café Direct, which supplies mainly commercial outlets, eg supermarkets and cafés. Producers are likely to employ waged labour as well as using that of family members. The social premium is disbursed by the umbrella Co-op for use in local community development projects.

commercial plantation Coffee is grown on a large-scale plantation owned by a commercial company in the South in which there is significant foreign investment. The company employs local wage labour in its production, many of whom are resident migrant workers. The company’s employment practices comply with fair trade labelling requirements – roughly equating with International Labour Organisation minimum standards – local minimum wage, freedom to organise trade unions etc, and with minimum environmental requirements. The crop is purchased on fair trade terms – at the guaranteed price level from the production company – and marketed under the FT Mark by a transnational corporation, alongside its mainstream coffee brands.

non-fair trade KNP & S is a transnational corporation involved in food processing. Hot beverages are an important part of its business, especially coffee. It purchases beans on the international market at prevailing prices and processes the beans into a range of products. It does not offer a fair trade brand but contributes 5p from every jar or packet of coffee to Coffee Kids, an international non-profit organization working with coffee-farmers and their families in Mexico and Central America on sustainable community development projects. It helps small-scale coffee farmers address their own communities’ problems with health-care, education and micro enterprise projects that help coffee farmers establish alternative incomes so they are no longer totally dependent on coffee as a sole source of income.

actionpage: a brief history [Fair trade is concerned with] change in international relations in such a way that disadvantaged producers can increase their control over their own future, have a fair and just return for their work, continuity of income and decent working conditions through sustainable development. Fairtrade Foundation, Operating Manual 1964 oxfam set up bridge trading In the late 1950s Oxfam shops sold pin cushions made by Chinese refugees in Hong Kong. Bridge Trading grew out of solidarity with the countries surrounding South Africa during the apartheid years, and reflected a general shift from aid to ‘development’ projects. Through buying crafts and foodstuffs from trading partners committed to economic and social justice, Bridge aims to help poor people in developing countries improve their standard of living. Bridge Trading Policy Document, 1985 1969 first fair trade shop opened in the netherlands During the 1970s fair trade shops sprung up all over Europe. There are now over 3000 in 18 European countries. Many Alternative Trading Organisations (ATOs) were also formed to source, process and market fair trade products. ATOs such as Oxfam Trading (formerly Bridge), TWIN Trading, Equal Exchange and Traidcraft were the foundation for present day fair trade. They developed their operations outside mainstream production and marketing systems, with products largely sold through own shops, mail order, churches etc. Limited access to markets limited the scale of such alternative trading. 1988 max havelaar set up in the netherlands First Fair Trade Mark, Max Havelaar, set up as a licensing organisation following the successful introduction of ‘solidarity coffee’ imported from Mexico. The label has spread to 17 countries. 1988 conference A major conference of British ATOs agreed that the limitations of operating outside mainstream markets should be addressed if fair trade was to become more than a marginal activity. To help move fair trade into the mainstream it was agreed to set up a fair trade labelling organisation and a new company, Cafédirect. Earlier labelling initiatives, eg environment friendly, had shown that consumers will pay more for a product when a certain set of standards is guaranteed. 1989 fairtrade foundation set up 14 ATOs agreed to establish the Fairtrade Foundation as the British licensing organisation for a fair trade label – the Fairtrade Mark. It assesses suppliers for production standards and trading relationships, and licenses the distributor to use the Mark. Any product meeting the criteria, marketed by any company can be licensed – to provide a “development friendly consumer guarantee in the economic mainstream”. www.fairtrade.org.uk 1989 international association for alternative trade (ifat) formed An information network of Southern producers and 30 Northern ATOs was transformed into a trading network. IFAT is a partnership organisation that promotes and facilitates co-operation in areas such as marketing, product development, importing and financing. www.ifat.org Most of the world's poor people live in the South – in Third World, or developing, countries – and are frequently exploited by the wealthy, powerful trading nations of the North. As a representative body of the worldwide alternative trade movement, IFAT works to correct this imbalance. Through IFAT, handicraft and agricultural producer organizations in developing countries and alternative trading organizations from both the North and the South unite to offer a just alternative to unfair trade structures and practices. The people of IFAT educate consumers about how their choices can help world neighbours build a better future. IFAT

1990 european fair trade association (efta) set up EFTA is a network of 12 fair trade organisations in nine European countries which import fair trade products from some 575 economically disadvantaged producer groups in developing countries. It aims to make fair trade importing more efficient and effective by harmonising and coordinating fair trade activities in an international context. www.eftafairtrade.org

1991 cafĂŠdirect established Oxfam, Twin Trading, Traidcraft and Equal Exchange set up CafĂŠdirect, modelled on the arrangements Max Havelaar made with Mexican coffee producers after the 1989 coffee price crash. It engaged directly with coffee producers in long-term production and supply arrangements at guaranteed prices. The products were marketed nationally and distributed through mainstream channels, including supermarkets. www.cafedirect.co.uk

1994 first license to use the uk fairtrade mark The Fairtrade Foundation awards the Mark to Green & Blacks for Maya Gold chocolate. There are now over 1000 products licensed to use the Fairtrade Mark in the UK (www.fairtrade.org.uk for an up-to-date list)

1994 network of european world shops (news!) set up NEWS! was established to reflect the reduction of trade barriers within the European Union and co-ordinate co-operation between World Shops all over Western Europe. The Network consists of 15 national World Shop associations in 13 different countries representing about 2,500 World Shops across Europe. It promotes fair trade in general and World Shops in particular. www.worldshops.org Fair trade puts people before profit. It is a partnership between producers, traders and consumers who are working to remove the disadvantages suffered by producers, to increase producers' access to markets and promote the sustainable development process. Fair trade works to create means and opportunities for producers, especially disadvantaged, small-scale producers, to improve their living and working conditions. Its mission is to promote social equity, environmental protection and economic security through trade, awareness-raising and campaigning. NEWS!

1995 british association for fair trade shops (bafts) set up BAFTS is a network of over 60 independent Fair Trade or World Shops. It promotes fair trade retailing, including products not covered by the Fairtrade Mark. It supervises a list of approved fair trade importers particularly of handicrafts. www.bafts.org.uk

1997 fair trade labelling organizations international (flo) established FLO brings together consumer labelling initiatives from 17 different Northern countries, harmonising criteria and auditing approved producers and suppliers. FLO is the dominant force in the Fair Trade sector, controlling licenses for all Fair Traded commodities through the new unified scheme which uses a common Fairtrade mark. FLO sets the production criteria and has approved over 350 producers (many being umbrella organisations such as co-operatives) in 36 producer countries. www.fairtrade.net

F L O Fairtrade Labelling Organizations International 1999 ethical trading initiative set up Coalition of UK trades unions, businesses and non-governmental organisations (NGOs) working together to identify and promote good practice in the implementation of codes of good labour practice. www.ethicaltrade.org

2002 international fair trade logo launched A common logo and criteria for licensing fair trade products established by FLO. ®

2003 move to increase organic fair trade products Fairtrade Foundation and Soil Association collaborate toincrease the number of products from developing countries that are both organic and fair trade. Higher prices for organic produce will create greater benefits for farmers. The two organisations also set up a pilot project to apply ‘fair trade’ criteria to British farmers to help address some of the problems faced by the industry in the UK. They are considering whether different criteria for fairly-traded goods for the UK and across Europe are needed, and another term, ie not ‘fair trade’. 2005 launch of nestlé’s first fairtrade coffee Partners’ Blend, launched amid accusations of cynical PR and criticism of the Fairtrade Foundation for giving the Mark to a company involved in the illegal marketing of breast milk substitutes. www.growmorethancoffee.co.uk

Actionpage: Pros & cons PROS

CONS (limitations)

Guaranteed minimum price for producers • covers production costs • can make a real difference to small farmers – provides cash necessary for medical costs, education etc • if prices collapse the guaranteed price ensures farmers can survive

Equal opportunities promoted • income generation & economic independence for marginalised groups – women, people with disabilities, landless etc • women may have access to credit, also improving children’s lives

Fair trade located in an unfair trade system • world trade controlled by rich ‘Northern’ countries (G8) which dominate international organisations, eg International Monetary Fund (IMF) & World Trade Organisation (WTO) • tariffs against imports of processed goods into ‘Northern’ countries, so concentration on agricultural commodities – coffee, tea, cocoa, honey (the main fair trade products) – which fetch low prices on volatile world markets • prices paid to fair trade producers are still low and, at best, only allow small farmers or wage labourers to address some of the worst symptoms of poverty – development indicators, eg infant mortality, access to clean drinking water, literacy levels, remain poor • fair trade still subject to rules set by the WTO – TNCs (Trans-national Corporations) have objected to ‘ethical’ labelling on the ground of ‘unfair’ trading practices, eg GM-free crops & dolphin-safe tuna • by itself, fair trade does not change the existing system – it may just exist as a marginal ‘ethical’ niche market

Democratic processes promoted • many small scale producers form cooperatives, which are often members of larger associations – these are able to support producers during crises, eg crop failure or hurricane damage

Maintains dependance on export markets • vulnerable to unpredictable Western fashions & style • best land used for cash crops rather than local food production which would provide increased food security

Better conditions for wage labourers • International Labour Organisation standards for large plantations, eg national minimum wage, right to form & join trade unions, minimum health & safety standards, child labour prohibited Social premium benefits the wider community • funding for development projects – health, education etc • long term impact of improved education

No absolute guarantee on child rights • children involved in family production may be prevented from going to school Commitment to long term trading relationship • producers can plan for personal spending & invest in farm improvements Fewer links in production chain • less opportunity for unscruplous dealers • production processes more transparent – greater accountability, eg rights for farmers to check weight & quality control • direct traceability of some products • brings producers & consumers closer Gives a voice to Southern producers • producers involved in negotiations over prices with fair trade suppliers

Fair trade dominated by the ‘North’ • despite the involvement of producers’ representatives in decision making, labelling organisations dominate process of setting criteria, monitoring, marketing etc – they have more power because they are closer to the consumer and can choose which producers to work with Other important ‘ethical’ criteria ignored • existing Fair Trade Marks do not rate products in terms of contribution to more sustainable development, eg GM-free, organic, locallyowned production, small scale farmers • no additional premium to cover extra time involved in environmental protection or organic production, so may not cover full costs

Farmers still take most of the risks • risks, eg crop failure due to weather or pests, is not shared by consumers and processors Minimum environmental standards • increasing organic production • reduction in pesticide use • intercropping for small scale farmers encouraged – combining food & cash crops and increasing food self sufficiency

Contributes to food/craft miles • environmental impact of transporting products – fuel emissions destroy ozone layer & increase greenhouse gases Fair Trade contributes to our high consumption society • Fair Trade does not question whether our high consumption society is sustainable or desirable Marketing perpetuates stereotypes • advertising often uses same exotic ‘ethnic’ stereotypes as popular media

Raise public awareness of development issues • campaigning & educational work can create a climate for fundamental change to the unfair international trading system • fair trade campaign & marketing materials often include information about living conditions, culture etc

Feel-good factor prevents further action • consumers may not feel that they need to act to change the unjust trading system which continues to exploit most producers

illustration: Maurizio Forestieri

Revitalise indigenous skills • new markets provide opportunities for declining traditional crafts

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The dishonesty of Nestle’s approach is all too familiar. Nestlé’s advertisement [Bridging the generations, Radio Times, 3-9 December] and website for its Fairtrade product imply it will have a significant impact on farmers in El Salvador and that the company’s activities in the coffee industry are ethical. The truth is only about 200 farmers in El Salvador supply coffee for Partners’ Blend and over 3 million farmers globally who are dependent on Nestlé remain outside the Fairtrade system. Nestlé is held partly responsible for forcing down prices paid to suppliers, driving many into poverty, while its own profits have soared. Recently I interviewed a researcher from Colombia who told me 150,000 coffee farming families have lost their livelihoods due to Nestlé policies. Baby Milk Action press release, 7 December 2005

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fair marketing aim ◆

To analyse the strategies, designs and images used in promoting and marketing Fair Trade products.

outcome ◆

A greater understanding of marketing strategies and the influence of media stereotypes.

what you need Participants should be familiar with the principles of fair trade; examples of fair trade packaging and promotional materials (see Useful contacts, p77 and Weblinks, p78 for contact details of fair trade organisations); include Partners’ Blend, Nestlé’s Fairtrade coffee, and download an advert, Bridging the generations, from www.risc.org.uk/readingroom/ coffee.html; Actionpages: Logo, Fair marketing and Press release; flip chart paper; glue. Ideally participants should be familiar with the analysis of images. If you need to see detailed examples of deconstructing text and images look at the activities Every picture… and Between the lines from the Seeing through the spin teaching pack. These can be downloaded from: www.babymilkaction.org/spin.

what you do Explain that fair trade organisations – producers, suppliers, shops, campaigners – produce produce a wide range of materials to sell their products and raise awareness of fair trade, ranging from posters and leaflets to the packaging itself. s Hand out Actionpage: Logo. Explain that these are either logos of organisations involved in fair trade or Fairtrade Marks which certify that a product conforms to fair trade criteria. s Taking each logo in turn, ask the group what words and messages the image communicates. Which are the most/least effective? Why? s Divide participants into small groups and hand out Actionpage: Fair marketing. Display selection of packaging and promotional materials. Ask groups to choose one and use the Actionpage to analyse its use of words and images. s

whole group discussion s ◆ ◆

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Choose two or three groups to show their material and explain the main points of their analysis. Bring out more general points. Which audiences are the materials aimed at? What strategies have the PR or advertising agencies used to gain your interest, eg humour, guilt, striking image, human interest? How well do text, images (photos, illustrations) and design (use of colour, layout, fonts) work together to communicate the message? How do the materials give authority to their views? How can you find out if the information provided is accurate? Will material like this make a difference to your attitudes or the products you consume? Why/why not? What would be the most effective way of reaching a group like you?

key ideas ◆

The fair trade movement grew out of Alternative Trading Organisations (ATOs) set up in the 1970s. Through buying crafts and foodstuffs from trading partners committed to economic and social justice, they aimed to help poor people in developing countries improve their standard of living. Products were largely sold through their own shops, eg Oxfam, mail order, churches, solidarity groups etc.

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In 1988 a conference of ATOs agreed that if fair trade was to become more than a marginal activity, it needed to become part of the mainstream, with products marketed more widely through outlets such as supermarkets. The Fairtrade Foundation was set up to license fair trade products (mainly food) in Britain. Its Fairtrade Mark guaranteed that producers enjoyed minimum employment and social standards. To compete in the market place ATOs had to improve their marketing strategies, including packaging and advertising. The first product to receive widespread promotion was Cafédirect, launched in 1988 with a national poster campaign focussing on the improved education and health enjoyed by the families of fair trade producers. There are now over 1000 products which have the Fairtrade Mark (2006). Packaging has become very important in the competition for shelf space with brands sold by TNCs. ATOs want to increase market share in order to benefit producers but also to make profits to sustain their activities. Many supermarkets also offer own-label Fairtrade products. In the UK all fair trade foodstuffs carry a Fairtrade Mark which has gained consumer recognition. A new international Mark was launched in 2002. Most packaging has some additional information about fair trade. Larger packets often have case studies to show how producers will benefit, with photos of smiling farmers or children. There is also often an ‘ethnic’ flavour to the design – illustrations, fonts, colours etc. There is a marked similarity with the stereotyped images used in tourist brochures! The implication from this kind of marketing is that producers are small farmers. The consumer is encouraged to empathise – the feel-good factor of buying fair trade is reinforced. However, athough a proportion of fair trade tea, coffee, cocoa etc is sourced from such family-run farms, much production is from commercial plantations which qualify for fair trade status if they meet basic employment standards on pay and conditions for their labourers. The danger of this kind of marketing is that it gives the impression that fair trade alone is enough to give poor farmers in developing countries a sustainable income that will meet basic needs. The reality is that most fair trade producers, both wage labourers and smallscale farmers, still live in poverty with low incomes and limited resources. The global trading system needs to be changed if poor people in developing countries are to have a chance of sustainable livelihoods. Fair trade has an important role in educating people about the unequal nature of the system and how changing our patterns of consumption are a first step towards more fundamental reform, eg WTO, World Bank, IMF. The launch of Partners’ Blend, Nestlé’s first Fairtrade coffee, after the company had spent many years denying the relevance of Fairtrade in the coffee market, prompted much debate. Some argued that it was PR exercise to raise the company’s ethical profile in the light of a long international boycott because of its illegal marketing of breast milk substitutes in developing countries. Others welcomed the move as a step in the right direction but pointed out that only 200 farmers in El Salvador would benefit, while another 3 million worldwide depended on Nestlé but remained outside the Fairtrade supply chain. Marketing is a challenge to fair trade producers. The products are usually slightly more expensive, because of the fair trade premium paid to producers, yet they must compete with their mainstream rivals. Packing needs to give the impression of high quality – its not only for a good cause, but also tastes excellent – as well as raise awareness of fair trade.

follow-up ◆

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Hand out Actionpage: Press release, a joint statement from Cafédirect and Costa Coffee which warns of the dangers of cause-related marketing – creating the (false) impression of corporate responsibility through association with good causes. Read Appendix 3: Sustainable Development, p52 and Appendix 4: Co-op’s fairtrade coffee, p53 on the launch of more sustainable coffee brands. Follow the debate over Nestlé’s Fairtrade coffee: Appendix 7: Partners’ Blend, p60. www.babymilkaction.org/press/press7dec05.html and www.growmorethancoffee.co.uk. Draw up guidelines for the marketing of Fair Trade products which address issues of stereotyping and produce designs for attractive and/or informative packaging.

Actionpage: Logo

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actionpage: fair marketing s

Fill in this questionnaire to help you analyse the strategies used in the marketing and/or promotion of Fair trade products. Some questions may not be relevant to your material. You may need to use another sheet.

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Name of organisation/brand

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Who are the audiences (eg young people, high income)

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What slogans or headlines are used?

Mount the material on flip chart paper and: • highlight key words in the text (eg community, environment) • highlight (in another colour) key facts or information in text • highlight (in another colour) opinions expressed in text.

Write down points raised by the text, eg: • relevant issues or facts that the material ignores • facts or information that you would question • opinions that you disagree with.

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What images (graphics, photos etc) are used – who is shown, what are they doing, what is the impact on you?

How has the designer used colour, images, layout of text to make an impact?

How effective is the material in: • gaining your interest – why? • providing information – why? • changing your attitudes – why?

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What action does this organisation want you to take?

actionpage: press release Statement by Cafédirect and Costa – 26 February 2002

cafedirect welcomes starbucks to ethical business world Following the announcement by Starbucks today (Tuesday 26 February 2002) to provide Fairtrade coffee in its UK stores, Cafédirect – the pioneer of the Fairtrade movement – believes the move to be “a positive step forward for ethical business”. Penny Newman, Cafédirect’s managing director, says: “This will hopefully be good news for the Starbuck coffee growers who, until now, have not had a firm guarantee of a fair deal. “We hope this is the start of a wave of initiatives, particularly in the UK, by other major multinational coffee companies, who dominate the coffee market, in giving something significant back to farming communities in developing countries. It is a question of magnitude and scale. While these companies may conduct some cause related marketing, they rarely commit to real action which is relative to their earnings and their market size and while this announcement is a starting point, it is not a significant offering relative to the resources and earnings enjoyed by Starbucks.” Newman cautioned consumers to be vigilant against coffee companies, which may pose as new recruits to the Fairtrade movement, with the sole intention of piggy-backing on its burgeoning success and appeal. “Some companies may be paying lip-service by offering Fairtrade prices but have little or no intention of providing continuous, long-term sustainable support and development to poverty-stricken coffee growing communities across the globe,” says Newman. To put things into context, Starbucks announced at the end of last year that it is committed to buy more than 454 metric tonnes of Fairtrade coffee for all its US-owned stores for the next 12 to18 months. If all this coffee was Arabica, this would represent 1.5% at most of their annual purchases of green coffee (Source: Starbucks Annual Report Fiscal 2000). However, compare this to Cafédirect, the 100% Fairtrade organisation, where purchases of Fairtrade coffee for the year ending 31 March 2001 amounted to 300% more (ie 1,374 metric tonnes). Furthermore, Cafédirect operates a ‘Gold Standard’ model, whereby growers always receive ‘above market’ prices for their produce and, equally importantly, continuous support to develop and build businesses and communities in developing countries. “It’s a stark reality but some use Fairtrade as an opportunistic, short-term marketing stunt to sell more coffee in the light of increasing pressure. The fact is that it begs a far wider question of ethical practices and corporate responsibility and, to date, few companies have taken measurable actions, which would deeply affect their corporate policy or bottom line profits. Nevertheless, we hope that Starbucks will prove to honour the principals of Fairtrade and to commit to their coffee growers by offering a sustainable and fair deal over the long-term,” she continues. Until now, Costa was the only UK coffee chain to serve Fairtrade coffees and teas (supplied by Cafédirect). Costa’s commitment to support small-scale producers was demonstrated two years ago with the launch of Fairtrade products in the 272 Costa stores in the UK. By working in partnership with Cafédirect, Costa offers its consumers a Fairtrade coffee option, which can be used for any of its espresso-based coffees (lattes, cappuccinos, etc). Teadirect is also the exclusive choice for consumers who order tea at Costa. Since November 2000, Costa has served more than a total of 4.5 million cups of Fairtrade espresso-based coffees and teas. This is equal to an average of 75,000 cups of Cafédirect Fairtrade drinks every single week. As a response of the increasing interest in Fairtrade, Cafédirect is calling for the leading universities and key business organisations to come up with a more precise definition of the term ‘corporate responsibility’ so that less accountable companies will be weeded out. As one of the best known and most successful ethical companies and in response to the growing demand, Cafédirect plans to establish stronger links with business schools and universities to promote the Fairtrade business model and offer the next generation of business leaders the

benefit of its ten years’ experience within the ethical trading and business market. “We consider it to be a serious top-down, ground-up corporate commitment to behave in a considerate way which, while running a business for profit, sees further than finance,” argues Newman. “It’s not about knee-jerk reactions to public outcries or bad media reviews merely to save face. It’s about being morally accountable for one’s actions ensuring that every aspect of one’s business – from suppliers and staff, to shareholders, customers and beyond – is of good credit, repute or position. “Companies which can devise methodologies and strategies to put the needs of communities, staff, environment and customers on an equal footing with those of shareholders is what we’re aiming for,” she continues. “These are still early days but things are progressing and Starbucks’ announcement, together with the news that Sainsbury has launched its own-label Fairtrade coffee will, we hope, open the doors for a mass market business. This will ultimately mean the message and the products reach further into the mainstream and attract new customers while empowering and enhancing the lives of millions of growers currently in crisis around the world,” she concludes.

notes to editors ◆

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‘Fairtrade Fortnight’ takes place… [in March]. The two-week campaign is to raise the awareness of the benefits of Fairtrade and the availability and quality of Fairtrade products in the UK. To celebrate the Fortnight, Costa will be sampling Cafédirect products at 100 Costa stores across the country so everyone who wants to try Fairtrade coffee can do so for free! Vouchers for a free ‘upgrade’ will also be offered. Cafédirect has just launched a new premium instant coffee brand – 5065 – aimed at younger consumers unfamiliar with Fairtrade. Publishing its annual results for the financial year ending September 2001, Cafédirect reports an annual growth at 15.5%. Cafédirect has also risen to be the sixth largest coffee brand in the UK, beating nonFairtrade brands such as Lavazza, Taylor’s and Red Mountain.

prices paid by Cafédirect Coffee (price as at 14/2/2002) world market price

Cafédirect pay

% more paid by Cafédirect

(US cents/lb)

Arabica

43.75

126

188.00

Robusta

17.60

106

502.29

increasing awareness of fair trade ◆

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In a survey carried out by MORI for the Fairtrade Foundation, 20% of the general public recognised the Fairtrade mark in 2001, an increase from 12% in 2000 and 11% in 1999. 19% of the public correctly associate the Fairtrade Mark with a better deal for ‘Third World’ producers, compared with 16% in 2000 and 12% in 1999 – equivalent to an increase in understanding of around two million people a year. The value of ethical consumer purchases in selected sectors (where there is an ethical alternative) grew 18.2% between 1999-2000 from £4.8 billion to £5.7 billion. (source: The Co-operative Bank’s Ethical Purchasing Index 2001) The Co-operative Bank’s 2001 research also demonstrated that it is possible for ethical products in mainstream markets to breakthrough the 1% ‘green ceiling’ representing a tiny niche role for many such initiatives. The food basket grew to 1.8% in 2000 and continued growth at the same rate would give it a market share of more than 2%.

appendix 1: the coffee crisis The International Coffee Organization (ICO) is the main intergovernmental organisation for coffee, bringing together producing and consuming countries to tackle the challenges facing the world coffee sector through international cooperation. Includes representatives of the global coffee industry from producing and consuming countries. This summary of the crisis facing the coffee industry is taken from their website. 1 The coffee industry in developed countries is generally perceived as prosperous and uncontroversial. But, although the coffee business is booming in consuming developed countries, current rock bottom prices are causing immense hardship to countries where coffee is a key economic activity, as well as to the farmers who produce it. 2 In the early 1990s earnings by coffee producing countries (exports Freight On Board â&#x20AC;&#x201C; FOB) were some US$10-12 billion and the value of retail sales of coffee, largely in industrialised countries, about US$30 billion. Now the value of retail sales exceeds US$70 billion but coffee producing countries only receive US$5.5 billion. Prices on world markets, which averaged around 120 US cents/lb in the 1980s, are now around 50 cents, the lowest in real terms for 100 years. The fall in prices over the last five years has been dramatic. The drop in earnings is particularly severe for those countries such as Uganda where coffee provides a large portion (over half in this case) of export revenues. 3 This situation is caused by the current imbalance between supply and demand for coffee. Total production in coffee year 2001/02 (October-September) is estimated at around 113 million bags (60-kg bags) while world consumption is just over 106 million bags. On top of that, world stocks amount to some 40 million bags. Coffee production has been rising at an average annual rate of 3.6%, but demand has been increasing by only 1.5%. At the origin of this coffee glut lies the rapid expansion of production in Vietnam and new plantations in Brazil, which is harvesting a record crop in the current season. consequences for producers 4 It is estimated that coffee provides a livelihood for some 25 million coffee farming families around the world. But since it is a perennial crop it is not easy to switch to an alternative when prices are at todayâ&#x20AC;&#x2122;s levels. The consequences of the current situation vary but in many cases prices do not even cover the costs of production. The consequences can be summed up in three categories:

Harvesting and drying beans destined for the fair trade market, Coop Monte de Oro, Costa Rica photo: Fairtrade Foundation

a Where costs of production are low, technologies are well developed and exchange rate movements have favoured exports, coffee farmers can still make a living. This is the case in much of Brazil. Even here low returns have had an adverse effect on rural economies in terms of reduced farmer spending and rising unemployment. b Where coffee represents a cash crop element in a subsistence farm, substantially less money is available for expenditure on medicine, communications and education. This is the case in many African and some Asian countries. c Where farmers depend largely on coffee for income, including food purchase and where indebtedness has been incurred, farmers are either more heavily in debt or have been forced to abandon their farms or switch to alternative crops. Options for the latter may be reduced and may include proscribed drugs like coca. In Vietnam, there are reports of farmers selling their possessions to satisfy debt collectors. In Guatemala, for the 2001/02 crop, the harvest labour force has been reduced from 500,000 to 250,000. In Colombia, coca plantations can now be found in coffee areas. Coffee farmers from Mexico have died trying to enter the USA illegally after abandoning their farms, and indebted coffee growers have been committing suicide in India. In general the situation stimulates emigration to cities and to industrialised countries. a threat to sustainable development 5 The International Coffee Organization (ICO) exists to implement the International Coffee Agreement, one of whose objectives is to encourage its Members to develop a sustainable coffee economy. The ICO recognizes that sustainable development has an economic and social as well as environmental dimension. There is little doubt that the exodus from rural areas and increased poverty in coffee producing areas caused by the current price crisis poses a very real and wide-ranging threat to sustainable development. 6 At the United Nations Millennium Summit in September 2000, Member States adopted a series of Millennium Development Goals calling for the reduction of the proportion of people living on less than US$1 a day to half the 1990 level by 2015. 7 But according to Global Development Finance 2002, the World Bank’s yearly report on developing countries’ external finance, growth rates in many poor countries will still be too low for rapid poverty reduction. “Many poor countries have improved their policies, institutions and performance in the past decade. Because aid increasingly is channelled to these countries, aid is more effective today than ever before,” says World Bank Chief Economist Nicholas Stem. “But even successful poor countries are being hurt by lower global growth, adverse trends in commodity prices, and declining aid.” According to the report, the global economic slowdown is exceptionally deep and broad, and countries dependent on commodity exports such as coffee have been hit especially hard. consequences for consumers 8 Although consumers could be expected to benefit from low prices this is not the case in coffee. Firstly, the amount accruing to the farmer from the retail sales price of a cup of coffee in a coffee shop is probably less than 2%. Secondly, excessively low prices lead to lower quality. An example is the farmer who normally pays harvesters to go through the coffee trees three times during a harvesting season to pick the ripe cherries and now sends them through once only, picking unripe and overripe beans with the ripe ones. Another is the fact that the highly appreciated mild Arabica coffees are usually produced at a higher cost than natural Arabicas or Robustas so the percentage of the former is decreasing in blends as farmers find it increasingly hard to stay in business. what can be done? 9 The ICO is an intergovernmental organization established by the United Nations in 1962, including both producing and consuming Member countries. It exists specifically to address world coffee problems and issues in view of coffee’s exceptional economic importance and developmental implications. 10 Within the framework of the International Coffee Agreement 2001, which entered into force on 1 October 2001, the ICO has identified a number of ways both on the supply and the

demand sides in which the coffee crisis can be addressed through international cooperation to create a healthier balance between supply and demand without regulating the market itself. on the supply side these are: quality improvement 11 In February 2002 the ICO introduced a new global Coffee Quality-Improvement Programme (CQP) to take effect on 1 October 2002. This sets minimum grading standards and maximum moisture content for coffee exports. The consumer will benefit from higher overall quality standards in coffee blends and the producers from the reduction in the current surplus through elimination from the market of sub-standard coffee. Both Governments and the coffee trade can play their part in supporting and implementing this Programme, which must be in their own long-term interest. diversification 12 Where possible promoting action to diversify farmersâ&#x20AC;&#x2122; over-dependency on coffee through encouraging additional or alternative activities and greater coffee product segmentation. Such a programme needs support from Governments and other donors. production monitoring 13 The ICO will act as a centre for information on Member country production programmes so that such programmes would be discouraged if likely to lead to imbalances. In addition, the ICO will ensure that multilateral and bilateral donor institutions are informed of the coffee balance in order to avoid inappropriate projects. on the demand side they are: promotion 14 The ICO will seek to build on highly effective promotion activities in new markets, such as China and Russia, to promote consumption of coffee particularly in partnership with the private sector and in producing countries themselves as well as new and existing markets. barriers to trade 15 Within the framework of WTO negotiations to seek the elimination of tariff and other barriers to all forms of coffee, together with those affecting all agricultural products originating in developing countries. the international community 16 The International Coffee Agreement as a commodity agreement is still often associated with price regulation using export quotas or buffer stocks. However, such mechanisms have not been in force since July 1989 and the ICO today works to foster international cooperation on coffee issues in ways which do not intervene directly in the market. 17 One of the key objectives of the International Coffee Agreement, that of encouraging Members to develop a sustainable coffee economy, very much tallies with the goals of the World Summit on Sustainable Development of poverty eradication within a framework of sustainable development. In fact the objectives of the new 2001 Agreement are very much development-oriented and fuller recognition of this by other multilateral organizations would be very helpful. The special importance of the coffee sector to the economic development of producing countries should be more widely understood, with the corollary that the ICO should be regularly consulted with respect to projects and programmes addressing or affecting the coffee sector in such countries or globally. In coffee, which remains of key importance to a substantial number of developing countries including LDCs, the ICO should be recognized as constituting a fundamental instrument for cooperation and coordination in working towards sustainable development. source: www.ico.org

appendix 2: sustainable coffee Coffee is northern Latin America’s most important export crop, both in terms of the area in cultivation and its economic value. Not only has it transformed landscapes and economies throughout the region, coffee holds an allure for all those who enjoy a steaming hot cup every morning. Coffee is of special interest to conservationists because it covers so much of the region’s middle elevations – one of the richest ecological zones on Earth. Coffee farms cover more than 7 million acres of land in Northern Latin America! Coffee farms can serve as either a haven or a hazard to wildlife and local communities. Traditionally, coffee was grown under the shade of native rainforest trees, providing habitat for wildlife and reducing the need for heavy treatments of agrochemicals. Recently, many farmers have cleared the forests shading their coffee and switched to a new, open-field system. These intensely managed hedgerows produce more coffee, but require more agrochemicals and destroy wildlife habitat. These full sun farms are void of wildlife and have increased problems with soil erosion. The Sustainable Agriculture Network (SAN), developed the Sustainable Coffee Project to provide market incentives for the conservation of forested coffee farms. Farms that meet the strict set of comprehensive agricultural standards receive the ECO-OK seal of approval to distinguish their product in the marketplace. This gives farmers incentive to maintain their shade-grown coffee farms, thus preserving an important habitat and encouraging coffee farming that protects worker health and safety.

the scoop on shade-grown coffee Coffee, a shade-loving plant that evolved in the forests of Africa, has been a major economic, political and cultural force in the Americas since it was imported to the West Indies in the 1700s. At first, farmers simply thinned patches of rainforest and planted coffee bushes in the warm twilight under the forest canopy. In recent years, agronomists have promoted new ways to grow coffee, using only a few species of heavily pruned shade trees or even planting dense hedgerows of coffee in open fields. These “full-sun” farms produce more coffee beans, but at a terrible cost to the environment.

the dangerous trend toward sun-grown coffee A growing number of farmers are bulldozing their shaded plantations and switching to an open-field system devoid of trees or wildlife. This concerns conservationists, because coffee is the dominant crop throughout the highlands. Most of the region is already deforested. Mexico loses a million acres of forest every year. An equal amount is destroyed annually in Central America. Coffee plantations account for over seven million acres of land in this region and are an important alternative to native forests.

migratory songbirds and coffee farms Most American coffee drinkers have never had the opportunity to visit a coffee farm and only appreciate coffee in its ground and brewed form. But we all enjoy another benefit of coffee farms: migratory songbirds. Warblers, redstarts, tanagers, thrushes, orioles and their wayfaring allies are in trouble for many reasons, primarily habitat fragmentation in the north and deforestation in the tropics, where they spend the winter. Many of the birds on the Priority Species list of Partners In Flight, an international coalition of conservation organizations – including the Black-capped Vireo, Cerulean Warbler and Golden-winged Warbler – will spend the winter in ‘coffee forest’.

shade-grown coffee promotes biodiversity Traditional farms are home to dozens of tree species, some natural and others planted by farmers to provide wood, fruit, fiber and other products. There are often more tree species found in an acre of traditional coffee than in an acre of North American forest. The exuberant, multi-layered flora provides refuge for abundant wildlife, ranging from frogs in the leaf litter and ocelots hunting the partridge-like tinamous, to parrots squawking overhead. Biologists in Guatemala inventoried birds, bats, bugs and reptiles in coffee farms,

demonstrating that traditional shaded farms were rich in biodiversity. Luis Gaitan, one of the researchers, reports that, “full-sun coffee is a biological desert.” Scientists from the Smithsonian Migratory Bird Center and the US Forest Service have corroborated the dramatic differences in bird diversity between shaded and full-sun coffee farms. Ivette Perfecto, of the University of Michigan, sampled beetles, ants and other insects in Costa Rican coffee farms. She found, for example, 126 species of beetles in a traditional farm as compared to 29 species in a full-sun farm. In El Salvador, a country with less than 5 percent of its original forest cover, traditional shade-grown coffee farms acting as alternative forest habitat have maintained much of the avian diversity.

ECO-OK certification The ECO-OK certification program brings together our concerns for the environment and our desire to support farmers and communities that safeguard our natural resources. The ECO-OK seal of approval assures consumers that products were grown with little or no agrochemicals under a strict set of environmental standards and with protection for worker health and safety. In order to win ECO-OK certification, a farmer must maintain forest cover over his coffee plants and take prescribed measures to protect surrounding forests, streams and wildlife – and it doesn’t stop there. ECO-OK certified farms must implement plans to control erosion and severely reduce the use of agrochemicals. Workers must be paid according to the law, treated fairly and given environmental education and training. All solid, liquid and organic wastes must be properly managed. Coffee mills, a primary source of river pollution, must install appropriate water treatment technology. source: www.ra.org/coffee

appendix 3: sustainable development Kraft Foods launches ‘Kenco Sustainable Development’ coffee in retail market 30 August 2005, Cheltenham Kraft Foods has today announced the launch to consumers of a new soluble coffee, Kenco Sustainable Development, made entirely from beans from certified sustainable farming sources. Kenco Sustainable Development will be available in major UK retailers this autumn. The new coffee is independently certified as being grown under sustainable conditions by the Rainforest Alliance, an independent, not-for-profit organisation that is an international leader in sustainable farming. Rainforest Alliance standards help coffee farmers improve their farming practices – and so their incomes and quality of life – and protect the environment. On farms certified by the Rainforest Alliance, forests and wildlife are preserved, and farm workers are treated with respect and have access to clean water, medical care and education for them and their families. By meeting standards of sustainability set by the Rainforest Alliance and monitored by local not-for-profit organisations, farmers can command a higher price in the market. Kraft Foods pays a premium based on the market price for certified coffee based on availability, quality and an appreciation of the beneficial way the coffee is grown. Currently the premium paid by Kraft Foods is in the region of 8-12 US cents per pound. Through its partnership with the Rainforest Alliance, Kraft is committed to supporting sustainability in the coffee market in three important ways: by funding technical assistance and training to improve living and working conditions on coffee farms; by purchasing significant and increasing quantities of certified sustainable coffee to blend into its mainstream European brands; and by stimulating consumer demand through the introduction of 100% certified products under existing trademarks in key markets within Western Europe and the US. Thibaud de Saint-Quentin, vice president and area director, Kraft Foods UK & Ireland, said that the new launch marks an exciting step in Kraft’s commitment to grow a better future for coffee: “Kenco Sustainable Development is our first brand to be made with 100% Rainforest Alliance Certified coffee beans and brings high quality, sustainably produced coffee into the mainstream marketplace. “Kenco Sustainable Development has all the great coffee taste that our consumers expect from Kenco, combined with the benefits to farmers and their workers that spring from the Rainforest Alliance programme.” Tensie Whelan executive director of the Rainforest Alliance, said of the initiative, “Kraft’s commitment to purchasing sustainably grown coffee is making a positive impact on coffee growers throughout Latin America, in countries like Brazil, Colombia and El Salvador. The launch of Kenco Sustainable Development is a significant step in bringing sustainable choices within the reach of mainstream consumers.” In 2004, the first year of its partnership with the Rainforest Alliance, Kraft bought 2,400 tonnes of certified coffee. Most of this was blended directly into Kraft’s mainstream brands such as Maxwell House, Kenco and Carte Noire, in the UK and overseas. In 2005, this more than doubled to 6,400 tonnes, and has benefited more than 100,000 people in coffee growing areas and preserved more than 50,000 acres of forest in Central and South America. These certified coffees will continue to be blended into Kraft’s popular coffee brands in modest levels and also will be used for specialist 100% sustainable brands, such as Kenco Sustainable Development. source: www.kraftfoods.co.uk

appendix 4: co-op’s fairtrade coffee Buy our coffee because it is the best quality, not because we are poor farmers. Blanca Rosa Molina, Cecocafen, Nicaragua

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) 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.

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 outperformed 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.

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. source: www.co-op.co.uk

appendix 5: mugged introduction There is a crisis destroying the livelihoods of 25 million coffee producers around the world. The price of coffee has fallen by almost 50 per cent in the past three years to a 30-year low. Farmers sell at a heavy loss while branded coffee sells at a hefty profit. The coffee crisis has become a development disaster whose impact will be felt for a long time.

what people said about the coffee report... The coffee farmers of Latin America are suffering the worst crisis in a hundred years. I urge everyone concerned with this growing misery to read this report. I hope you will use it to promote action to stop the scandal of hard-working coffee farmers falling further into poverty because of the price which the transnationals pay. Raul del Aguila, Peruvian Coffee Farmers’ Organisation The urgency of the coffee crisis cannot be overstated. The International Coffee Organisation welcomes Oxfam’s campaign which makes an important contribution to this search for solutions. Nestor Osorio, Executive Director, International Coffee Organisation If a few companies were less greedy, the people at the bottom would have a lot more. We can do our bit by pressuring politicians to change this insanity, and by buying Fair Trade coffee. I hope people will back Oxfam’s campaign to Make Trade Fair. Chris Martin, UK rock band, Coldplay The world’s biggest coffee companies have not done nearly enough in the past year to help the 25 million coffee farmers who are struggling. Oxfam has analysed and scored each of the ‘Big Four’ coffee companies on their actions to help solve the global coffee crisis. Scores were based on the price companies paid to farmers (70% of score), support for policy alternatives (10%), financial contributions (10%) and leadership in industry-wide initiatives (10%). Oxfam scores none of them above “failure”.

procter & gamble Brands: Folgers Score: 49% Procter & Gamble has been the clear leader in paying coffee farmers a decent price because it agreed earlier this year to buy small amounts of Fair Trade Certified and Rainforest Alliance Certified coffee. Procter & Gamble also did good work in lobbying the US government to rejoin the International Coffee Organisation (ICO) and helping farmers diversify into other crops. However, Procter & Gamble has done little to work with the rest of the industry to address the coffee crisis and has few guidelines on buying coffee, which would ensure at least basic standards for farmers. To become the clear leader amongst the major roasters Procter & Gamble should work on developing sourcing guidelines and in expanding its offering of Fair Trade Certified coffee.

nestlé Brands: Nescafe Score:43% Although Nestlé performed reasonably well in a number of areas, it failed to grasp the depth of the crisis. On the positive side, it led the major roasters in participating in various international forums and supporting the efforts of the International Coffee Organisation, but all this talking has yet

to benefit any of the struggling farmers. It also leads the major roasters in buying directly from farmers, which means that more of the profits of the low priced coffee goes back to the people who grew it instead of the numerous middlemen. This direct purchasing is not independently verified and depends on the goodwill of Nestlé Coffee. But Nestlé still refuse to buy Fair Trade Certified coffee. Nestlé must focus more on implementation of such initiatives than mere rhetoric if it wants to improve in future – until then they will continue to fail poor coffee farmers and the coffee industry.

kraft Brands: Maxwell House, Carte Noire Score: 38% Kraft took some positive steps, but overall it failed coffee farmers and the industry by not addressing all aspects of the coffee crisis. Kraft failed to ensure a decent price was paid to farmers by buying Rainforest Alliance Certified coffee without also complementing it with buying Fair Trade Certified coffee. Kraft worked with others in the coffee industry to address the coffee crisis and contributed to social development programmes worldwide but this was undermined by its failure to buying coffee that meets international agreed quality standards such as the ICO. Being second to last is not good enough, especially when the overall score points to miserable failure in dealing with the coffee crisis.

sara lee Brands: Douwe Egberts, Chat Noir Score 27% Sara Lee has performed the worst of the major roasters and failed abysmally in almost every aspect of dealing with the coffee crisis. It buys some Fair Trade Certified coffee in the U.S., but has no plans to expand this offering into other countries. Although Sara Lee did work with the rest of the industry to address the coffee crisis, the company has not done enough to pay coffee farmers better prices, or establish guidelines for coffee that ensure farmers are paid a decent price, or help farmers diversify into other crops. Sara Lee is falling behind the other roasters. If Sara Lee is serious about coffee it should make a real contribution in the fight to end the crisis.

destruction of self-esteem The spiralling social and economic crisis in the global coffee industry is disproportionately affecting women. Oxfam’s Colombia office has been gathering their stories, of which Luz Marina Zuluaga’s is typical. Hidden deep within the global coffee crisis and trivialized by many politicians, business leaders and economists who can put no monetary value on it, millions of poor mainly women workers are suffering the “destruction of self-esteem”. The description is made by one who knows. Luz Marina Zuluaga, who’s family has for generations grown coffee on a few acres of land in Fresno, Colombia, says that the crops no longer meet the basic needs of local women and their children. “Our self-esteem is being destroyed,” she says. “Historically, women trade cacota (low-quality beans) to buy clothing, food and to send their children to school. The men’s income goes to pay debt and maintain the farms.” As the global coffee crisis has worsened, those at the bottom of the industry – the pickers, the sorters, the traders of the lower-quality bean who are all mainly women – suffer most. “Women say they can no longer buy sanitary towels or contraceptive pills. We have stopped celebrating birthdays because we can no longer afford them. We ask relatives in Bogota to send us second-hand clothes.” Domestic violence is increasing, “it’s the way the men let off steam,” she says. Women are less able to meet and talk and collaborate between themselves, having to work more at home and to find other jobs to make bits of money. A UNDP report issued last month said that Colombian

women earn less, work longer, have higher rates of unemployment, participate less in administrative positions and drop out of school more than men - because of the economic crisis. This is accentuated in rural areas, where some 300,000 farmers account for the coffee crop that captures almost half of Colombia’s foreign exchange. In 2001 a Colombian family could buy, on average, only half the amount of meat, fuel and fertilizer that it could have with the same weight of coffee sold in 1989. The daily minimum wage has effectively halved during this time. Coffee prices are not picking up. “Though we have tried to do our best, we have very little support. There is nothing from our own government or from those responsible for the coffee business in my own country,” Luz Marina says. “How am I going to respond to my children?”

on the brink of collapse Oxfam fears that the ‘coffee economies’ of entire countries are on the verge of entire collapse. Around 25 million families rely on coffee for their livelihoods and millions of them would be affected. Countries most at risk include Burundi, Ethiopia, Uganda and Rwanda in Africa and Colombia, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua in Latin America. Burundi, for example, gets almost 80% of its export revenue from coffee. In real terms, according to ICO president Néstor Osorio, the price that growers are getting for their coffee is at the lowest for 100 years. Niche markets such as Fair Trade are vitally important to encourage but, at only around 0.8% of the total market, are too small to save everyone. More must be done. There are reports of growing social unrest. The crisis is hitting the commerce, transport, storage and banking sectors. Tax revenues are down, public spending under pressure and foreign debt mounting. In ten years, coffee-growing countries have seen income fall from $12 billion to around $5.5 billion. Meanwhile the retail value of this same coffee in rich countries has jumped from $30 billion to $70 billion. Coffee growers in these countries might once have tried to swap to corn, cocoa, sugar or cotton. But these crops are blighted now too, protected by high tariffs in the rich northern countries who also subsidize their farmers to grow cheap produce that is dumped into southern markets. Poor coffee growers were given no help at the World Trade Organisation recently when its rich country members failed to agree on reforms that might have reduced these agricultural tariff barriers.

going bust Today in tiny El Salvador alone, more than 12,000 of the country’s 15,000 coffee farmers are facing the repossession and forced sale of their land and livelihood. Oxfam recently talked to an experienced Colombian farmer who is about to lose his. After 35 years in the business, Colombian coffee farmer Joaquín Elías Valencia Franco and his family are about to lose everything. Two local banks have seized Joaquin’s farm and are about to auction it off. Joaquín is desperate to fight; he doesn’t want to migrate to another country or quit farming or be forced to find a menial job in the city. He doesn’t want the risk of his family breaking up. At 51, with five sons from a 29-year marriage, Joaquín has dedicated 35 years of his life to growing coffee. He’s an expert. Coffee has enabled him to send his children to school and train them in agricultural related subjects. But over the past few years, coffee prices have slumped. The crop is now ruining its owners. Joaquín hoped that maybe this new season might be a bit better than the last, but it is not going to be. The world coffee price continues to hover at a 30year low of around 50 cents a pound. This is about half the cost of what many small farmers need just to break even. Hundreds of thousands of small coffee growers all over the world are now facing in the same crisis. They are giving in to the fact that they simply can’t sell their coffee beans for enough to pay their debts to local banks. In Central America, over 600,000 jobs in the industry have been lost in the past few years. In El Salvador alone, Fesacora (the national coffee growers’

association) estimate that there are more than 12,000 forced sales, repossessions and bank auctions now happening. The UN organization ECLAC says there are 15,000 coffee producers in El Salvador – meaning that more than 80% are now facing collapse. The coffee industry accounts for 10% of all the country’s exports and more than 160,000 people depend on it for their livelihoods. Several coffee-growing countries such as Honduras, El Salvador, Ethiopia and Haiti have tried introducing different rules and laws in the past year to protect their producers, but nothing is stopping the rash of failures and bankruptcies. This is a terrible, downward spiral of crisis and debt. “We don’t have even the minimum resources for food, schooling and health. How are we going to pay for the services of expensive lawyers?” asks Joaquín. Mario Segura, vice-president of the Honduran coffee association ANACAFE told Oxfam: “during the last four critical years, many producers have had to struggle between being poor and miserable just in order to keep their farms, in the hope that better times will come.”

illegal crops Many coffee farmers are now ripping up their failing crop to sow more lucrative, but illegal, produce – coca, marijuana, poppy and chat. Oxfam has been looking at the story. Small-holder coffee farmers with few alternatives are increasingly turning to coca, marijuana, poppy and the stimulant grown in Africa, chat, rather than persevere with their failing coffee crops. For Peruvian farmer Pedro Páramo, the argument is simple: “We have to survive. If we don’t find realistic substitutions to this coffee crisis and get at least the same level of income we had four years ago, then we will have to find other alternatives – be they legal or not.” Any chance that the world’s trading nations could have agreed of better ways to encourage coffee farmers to diversify into other legal crops were dashed last month, following the WTO’s failure in Cancún to agree on agricultural negotiations. Oxfam has recently heard in high-level industry meetings the ‘coffee to coca’ issue being voiced with concern. During the International Coffee Organisation (ICO) meeting this month in Cartagena, Colombia, the Angolan Ministry of Agriculture’s Josefa Correia Sacko – who is Secretary General of the Inter-African Coffee Organization (IACO), representing 25 African nations – confirmed a growing problem in Africa. More and more Ethiopian coffee farmers now growing chat, a mild stimulant illegal in the US, and last week in Colombia, the Global Alliance on Coffee and Commodities (GLACC) heard that growers in Peru and Colombia were increasingly replacing coffee with coca and poppy. “Poppies are sprouting in many areas where our farmers grow coffee,” Fernando Boza, who works with speciality farmers in Peru for Seattle’s Best Coffee Company, told the Panos news agency. “It is a disturbing trend but can be explained by market reality.” Coffee growers are not suddenly international ‘narco-traffickers’. In reality, the giant transnational companies that control the global coffee market have failed to solve its worst crisis in the last 100 years. The price of coffee is now hovering around its lowest point in 30 years, not even covering the cost of poor farmers’ production. “The coffee price is getting worse and worse, I used to buy coffee at 14 birr a kilo and sell it at 20. Now I am buying it for under 10 birr a kilo and I sell it for 12. This is not enough to cover the costs of my expenses and transport to Dire Dawa. The big merchants have undermined the coffee market and if this continues I will stop buying coffee altogether and just buy and sell chat” says Ethiopian coffee farmer Djibro. In Peru, the Junta Nacional del Café has proposed a $30m fund to help guarantee coffee as a sustainable crop, to stop farmers moving into coca. However, coffee remains at around 50 cents per pound,while coca is around $3 a pound and a litre of opium latex up to $1000. Without more political will to compensate for unsustainable low prices and solutions for the crisis, Oxfam fears that many more coffee farmers will begin growing raw materials for the narcotics industry. source: www.maketradefair.org.uk

appendix 6: rescue plan A Coffee Rescue Plan is needed, to bring supply back in line with demand and to support rural development, so that farmers can earn a decent living from coffee. The plan needs to bring together the major players in coffee to overcome the current crisis and create a more stable market. Within one year, and under the auspices of the ICO, the Rescue Plan should result in: 1 Roaster companies committing to pay a decent price to farmers. 2 Roaster companies trading only in coffee that meets the ICO’s Quality Coffee Scheme standards. 3 The destruction of at least five million bags, as an immediate measure, to be funded by consumer governments and roaster companies. 4 The creation of a Diversification Fund to help low productivity farmers create alternative livelihoods. 5 Roaster companies committing to buy increasing volumes of coffee under Fair Trade conditions directly from producers. Within one year this should apply to two per cent of their total volume, with subsequent incremental increases. The Rescue Plan should be a pilot for a longer-term Commodity Management Initiative to improve-commodity prices and provide alternative livelihoods for farmers. The outcomes should include: 1 Producer and consumer country governments establishing mechanisms to correct the imbalance in supply and demand to ensure reasonable prices to producers. Farmers should be adequately represented in such schemes. 2 Co-operation between producer governments to stop more commodities from entering the market than can be sold. 3 Support for producer countries to capture more of the value in their commodity products. 4 Extensive financing from donors to reduce small farmers’ overwhelming dependence on agricultural commodities. 5 An end to EU and US double standards on agricultural trade that squeeze developing countries into a narrow range of options. 6 Companies paying a decent price for commodities (above the costs of production). The Coffee Rescue Plan will only succeed if all participants in the coffee market are actively involved. The following recommendations include elements of what each group can do to make it work.

coffee companies Roaster companies – Kraft, Nestlé, Procter & Gamble and Sara Lee 1 Commit to paying a decent price to farmers. 2 Commit significant resources to tackle the coffee crisis (including a financial contribution to aid packages that deal with the crisis). 3 Label coffee products on the basis of their quality. 4 Commit to buying increasing volumes of coffee under Fair Trade conditions directly from producers. Within one year this should apply to two per cent of their total volume, with significant subsequent incremental increases to be determined annually by the Fair Trade movement. 5 Lobby the US government to rejoin the ICO. 6 Adopt clear and independently verifiable commitments to respect the rights of migrant and seasonal workers, including respect for ILO conventions.

Coffee retailers (supermarkets and coffee bars) 1 Demand of suppliers that the coffee they sell pays producers a decent price. 2 Promote Fair Trade coffee brands and products. 3 Insist that coffee products are labelled on the basis of their quality. 4 Starbucks to make public the findings of the commercial viability of its sourcing guidelines.

governments and institutions International Coffee Organisation 1 Organise, with the UN and the participation of the World Bank, a high-level conference on the coffee crisis by February/March 2003, headed by Kofi Annan, specifying that participation is conditional on being willing and able to make concrete commitments. 2 Work with producer countries, Fair Trade organisations, and roaster companies to define a decent income for producers. 3 Implement the quality scheme, preceded by an impact assessment on small farmers. WorId Bank 1 Identify World Bank support for producer countries to manage the short-term impact of coffee-price collapse, including rural development considerations in the Poverty Reduction Strategy Paper (PRSP) exercise. The World Bank and IMF should develop a long-term integrated strategy to tackle the problem of commodities. 2 Continue to review the HIPC process in light of the expected shortfall in export revenues resulting from the fall in commodity prices, and ensure that any country which suffers from a significant decline in commodity prices between Decision and Completion Point under HIPC automatically receives additional debt relief at Completion Point to ensure that it meets the IS0 per cent debt-to-export target. 3 Contribute to a major international conference on coffee organised by the United Nations (UNCTAD) and the ICO by February/March 2003. UN Conference on Trade and Development (UNCTAD) 1 Develop a long-term integrated strategy to tackle the problem of commodities. 2 Organise a major international conference on coffee with the ICO by February/March 2003. Producer governments 1 Co-operate with each other to stop more commodities from entering the market than can be sold. 2 Put the issue of diversification at the centre of poverty- reduction strategies. 3 Provide support to farmers who have to leave the coffee market, including attention to women left on family farms. 4 Address the immediate needs of rural farmers for extension services including: â&#x20AC;˘ technical and marketing information â&#x20AC;˘ credit schemes and debt management services These extension services should pay particular attention to the needs of women farmers. 5 Institute sanctions against anti-competitive trading practices that hurt small farmers. 6 Assess the impact of the ICO Quality Scheme on small producers, especially women farmers. 7 Protect the rights of seasonal and plantation workers to ensure that labour legislation, consistent with core ILO conventions, is enacted and implemented. Particular attention should be paid to the rights of women labourers. 8 Promote small-producer associations and enterprises to strengthen poor farmers in national coffee markets.

Consumer governments 1 Provide political and financial support to tackle oversupply, including: â&#x20AC;˘ Support and financial help for the ICO Quality Scheme, including monitoring the quality of coffee entering their markets from each producer nation, and rapidly make this information public â&#x20AC;˘ Removal of remaining tariffs â&#x20AC;˘ Destruction of the lowest-quality coffee stocks 2 Support the ICO as the forum where producers and consumers can tackle the coffee crisis. 3 Increase funding for rural development and livelihoods in Overseas Development Assistance. 4 Provide incentives for roaster companies to undertake technology transfers and to carry out more of the value-added processing in developing countries. Consumers 1 Buy more Fair Trade coffee. 2 Ask retailers to stock more Fair Trade products. 3 Demand that companies adopt pricing policies that guarantee a decent income to farmers. 4 Request better labelling on the origin of coffee from roasters/retailers. 5 Request that pension fund managers raise the questions below. Investors 1 Encourage roaster companies to adopt supply-chain management schemes and pricing policies that pay above the costs of production and protect the labour rights of coffee workers, in the interests of the longterm sustainabilitv of the coffee market. , 2 Express the view to coffee companies in which they invest that improvements in the lives of poor farmers will be the criteria applied when assessing reputation risk management on issues of price and supply-chain management. source: Mugged: poverty in your coffee cup Oxfam 2002 download: www.maketradefair.org

Weighing dried beans destined for the fair trade market, Coop Monte de Oro, Costa Rica photo: Fairtrade Foundation

appendix 7: partners’ blend Nestlé uk to launch fairtrade coffee October 7, 2005 Nestlé UK is to launch a Fairtrade certified coffee in a new sustainability initiative for smallholder coffee farmers. Nescafé Partners’ Blend is a high quality, soluble, freeze-dried instant coffee and will be on sale in the UK from the middle of October. Alastair Sykes, CEO of Nestlé UK and Ireland said: “Nestlé’s long term commitment is to develop sustainable agricultural practices in order to help alleviate hardship and poverty among small coffee farmers. “Increasingly our consumers expect us to bring this commitment to social responsibility alive in our brands and show them how farmers can be helped to have a better life. This means that we need to ensure that farmers in the developing world not only receive a fair price for their coffee, but that their sources of income are developed to support their families into the future in a manner that respects their lands and communities. These are issues that concern the consumer and which have led to increasing demand for Fairtrade products. We are therefore delighted to offer consumers a product carrying the approved Fairtrade mark.” Nescafé Partners’ Blend is a high quality coffee made from 100 per cent Arabica beans from two of the world’s renowned coffee bean growing countries, El Salvador and Ethiopia. Nestlé research indicates that the product will appeal to a new consumer group that, while not currently regular purchases of Fairtrade coffee, are predisposed to fair trade and/or sustainable products. Harriet Lamb, executive director of the Fairtrade Foundation, said “This is a turning point for Fairtrade in the UK – the first time that one of the four major coffee roasters has taken its first step in response to rapidly growing consumer demand for products independently certified by the Fairtrade Mark. Our label is increasingly trusted by the public as the only independent guarantee that disadvantaged producers in developing countries have received a better deal. We expect the addition of Nescafé Partners’ Blend to bring a new wave of coffee drinkers to Fairtrade, bringing more opportunities to more farmers in more countries.” Nestlé is the world’s largest direct buyer of coffee and has been directly collaborating with coffee farmers for over 30 years – since the first Nestlé coffee agronomist was hired to work in the field. In 2002 the company co-founded the Sustainable Agriculture Initiative and has been working closely with farmers to encourage and implement sustainable approaches to coffee growing. Over the years this work has evolved into a sustainable approach concentrating on three important areas – economic, social and environmental. Nestlé is now applying its learnings over the past 30 years in each of these three areas to help individual communities. Its farmer suppliers for Partners’ Blend are all smallholders from El Salvador and Ethiopia who have been adversely affected by the regular fluctuations in coffee prices. In El Salvador Nestlé is working with over 200 smallholders in four Fairtrade certified cooperatives to fortify their business and management skills and promote sustainable practices. In Ethiopia the company has now established a trading relationship with the Oromia Cooperative Union – a longstanding and highly respected Fairtrade producer organisation. It is also working on sustainability with farmers in the Hama area of Yirgacheffe and is exploring with the Fairtrade Foundation how these farmers might also achieve Fairtrade certification so that their beans can also be included in Nescafé Partners’ Blend in the future. The product is sourced according to internationally agreed criteria established by the Fairtrade Labelling Organisations International and the product has been approved to carrying the Fairtrade Mark which provides an independent assurance to consumers. This means the coffee comes from producer organisations that have been certified to Fairtrade social, economic and environmental standards and that the traders involved in the supply chain have been registered with Fairtrade and agree to abide by its trading standards. Fiona Kendrick, MD of Nestlé’s beverage division commented: “Nestlé recognises that Fairtrade has a useful role to play in helping smallholder producers cope in today’s global economy. By

joining forces we believe that we will help make a sustainable difference to our partner farmers. “The model we developed is based on working with some of the smallest farmers to ensure they improve their incomes through having sustainable businesses. However we recognise that stability of income is needed to help them address immediate issues as well as plan for the future.” Nescafé Partners’ Blend will retail at approximately £2.69 per 100g and will be available at all major retailers. It will also be available in out-of-home channels including the education, government and leisure sectors. source: www.nestle.co.uk

Fair Trade: Nestlé still have a long way to go 7 October 2005 Oxfam welcomes, as a small first step, Nestlé UK’s announcement that it will launch its first Fairtrade certified product into the UK market. We are pleased to see Nestlé responding to pressure from campaigners. However, Nestlé - and the other major roasters - still have a long way to go to address the coffee crisis. Twenty five million coffee growing families face destitution as a result of low or unstable prices. This launch could lead to significant changes in the future but it is disappointing that it is limited to the UK and that initial sales will only represent a tiny percentage of total global volume. Furthermore, Fairtrade is just one element of a wide-ranging strategy proposed by Oxfam to address the crisis for small-scale coffee producers. We are also calling on Nestlé and others to agree broader changes in their sourcing policy and purchasing practices for the benefit of smallscale producers. Fundamental reform of the coffee market led by decisive action by all the major roasters is urgently needed. Oxfam will continue to watch Nestlé and judge its commitment to Fairtrade, by its transparency on volume and sourcing, and its movement towards the Fairtrade buying targets set by Oxfam. We will also continue to monitor Nestlé’s wider engagement and response to the other elements of our Coffee Rescue Plan. source: www.maketradefair.org.uk

Fairtrade mark and infant health could be damaged by Nestlé application warn campaigners Press release 6 October 2005 Baby Milk Action and other leading campaigning organizations are warning of the risks of the Fairtrade Foundation awarding a Fairtrade mark to a Nestlé product. Nestlé is the UK’s most boycotted company1, recently found to be the world’s ‘least responsible’ corporation in a global internet vote2. The public announcement that Nestle will launch its Fairtrade Partners’ Blend was made on 7 October. The World’s largest food company remains with 8,500 products which are not Fairtrade. Nestlé is the target of a boycott because of its aggressive marketing of baby foods and campaigners also highlight its trade union busting activities, involvement in child labour, environmental destruction of its water bottling business, use of GM technology and other causes of concern3. The announcement of the Fairtrade mark for Partners’ Blend comes in the same month trade unionists in the Philippines mourn the death of the leader of a protest at the Nestle factory, who was assassinated last week, as trade unionists from Colombia gather in Switzerland (information in French and German) to present evidence of Nestle’s links to paramilitaries who have been terrorising activists and a Halloween campaign is launched against Nestle in the US over its alleged “involvement in the trafficking, torture, and forced labor of children who cultivate and harvest cocoa beans which the companies import from Africa”, over which legal action has been brought. Public statements from Nestlé, one of the world’s big four coffee producers, demonstrate it is ideologically opposed to Fair Trade as anything other than a niche market and the mark, if awarded to Partners’ Blend, will undoubtedly be used as part of the company’s public relations strategy to divert criticism, claim campaigners4. While even many ethical shoppers believe the Fairtrade mark indicates a company treats all suppliers fairly, it applies only to the product bearing the mark. If Nestlé captured 100% of the current global Fair Trade coffee market using its massive global marketing budget of over US$10 billion per year, this would still only represent 3% of Nestlé’s green coffee purchase. In other words if existing Fair Trade companies lost all their business to Nestlé (or Nestlé doubled the market without taking sales from other companies), 97% of Nestlé coffee would still be outside the Fair Trade system5. Patti Rundall OBE, Policy Director at Baby Milk Action, which coordinates the international Nestlé boycott, launched by groups in 20 countries, said: “To give a FT mark to a company whose baby food trade systematically violates child rights on such a massive scale, contributing as it does, to the deaths of millions of children, would make an absolute mockery of what the public believes the Fairtrade Mark stands for and would show disregard for the feeling of thousands of people who’ve worked hard to promote the Fair Trade principles. It would certainly bring the mark into disrepute – something the Fair Trade rules themselves don’t permit.”6 Nestlé is singled out for boycott action because independent monitoring conducted by the International Baby Food Action Network (IBFAN) finds it to be the largest single source of violations of the World Health Organisation and UNICEF’s International Code of Marketing of Breast-milk Substitutes and subsequent, relevant World Health Assembly Resolutions. As the biggest food company in the world, with a $67 billion turnover and thousands of brands, Nestlé is powerful. It dominates the baby food market and takes the lead in attempting to undermine implementation of these measures by governments. Nestlé operates in just about every country in the world, promoting its brands where it can in hospitals, clinics and schools. It is seen as inevitable that Nestlé will use the Fairtrade mark to try to cover up its bad practice and link its name to prestigious charities. When Oxfam launched a campaign in defence of coffee farmers in 2003 Nestlé shared the platform and claimed in public statements and to shareholders it was working in partnership with Oxfam while delivering virtually nothing Oxfam was calling for. In 1999 Saatchi and Saatchi advised Nestlé to “aggressively advertise its links with charities and good causes” precisely to offset bad publicity (Marketing Week Feb 1999) Its latest PR offensive is The Nestlé Commitment to Africa report in which Nestlé claims that it monitors its practices scrupulously and takes corrective action immediately on the tiny number

of shortfalls that occur (see Nestlé’s Public Relations Machine Exposed). Mike Brady, Campaigns and Networking Coordinator, conducted a quick survey of campaign supporters using an on-line questionnaire and has analysed the first 100 responses. He said: “Nestlé will use the Fairtrade mark as it uses its other token support of good causes, to try to divert criticism of its malpractice. Its problem is there is a great deal of overlap in the community that supports the boycott and Fair Trade. In our quick survey, 90% of boycotters also buy Fairtrade products, many of them actively promoting the Fair Trade campaign. Nestlé won’t have much joy in countering the boycott. Only 3% thought Nestlé was pursuing the mark because it cares about coffee growers and 93% said it was for public relations purposes. We do worry about Nestlé’s impact on the Fairtrade mark, however, as 50% said they would view the Fairtrade mark differently and look more closely at other companies with products bearing the mark. Only 17% of our respondents realised the mark relates only to the one product that bears it and not the way the company deals with all suppliers. A few comments support giving the mark to any product that complies with the Fairtrade criteria regardless of the malpractice of the company involved.” Baby Milk Action has asked the Fairtrade Foundation to make it much clearer what the mark does and does not signify and to remove the mark from Nestlé if it uses it to try to divert criticism from its widespread malpractice. The Fairtrade Foundation says in a Question and Answer sheet on its website posted on 7 October: “The Fairtrade Mark is only given to individual products and not to companies. The Mark indicates that the product Partners’ Blend has complied with the internationally agreed standards for Fairtrade certification. It does not refer to any other product marketed by the company. This product has undergone exactly the same certification process as all other Fairtrade products whether marketed by multinationals or smaller companies. The Fairtrade Mark guarantees consumers that those producers have received a fair and stable price for their product. The Mark is not an endorsement of any company or its activities… “Of course we acknowledge that many Fairtrade supporters have other concerns about this company’s practices. We also recognize that bringing about change in the behaviour of multinationals requires a variety of strategies and approaches… “We are not asking people to change their position on the boycott of Nestlé products, which aims to change the way the company promotes breastmilk substitutes around the world. We naturally respect the right of consumers to decide which products they purchase. “While some campaign groups use boycotts as a way of achieving their aims, the Fairtrade Foundation’s specific role is to engage with companies that are prepared to adopt Fairtrade standards and certification for particular products. They are different approaches, but with the same aim of winning positive change in the way business operations impact on people in developing countries. “Many people have supported both campaigns until now, and they will still be able to do so, as they can choose from 18 other Fairtrade certified instant coffee products.” Nestlé will pay 8 pence per kilo extra for the beans used in Partners’ Blend (33 pence rather than 25 pence). A 100 gramme tin of Partners’ Blend will retail for £2.69, which is 40 pence more than Nescafé Gold Blend. Notes The Guardian reported on 1 September 2005: “What do Nike, Coca Cola, McDonald’s and Nestlé have in common? Apart from being among the world’s most well-known brands, they happen to be the most boycotted brands on the planet. That finding came from this week’s global GMIPoll, an online opinion poll that surveyed 15,500 consumers in 17 countries. Nestlé emerges as the most the most boycotted brand in the UK because of what respondents consider its “unethical use and promotion of formula feed for babies in third world countries.” 2 Nestlé won a global internet poll for the world’s ‘least responsible company’ coinciding with the World Economic Forum in Davos in January 2005. Nestlé received 29% of the votes. This was more than twice that of joint second Monsanto and Dow Chemicals (of Bhopal infamy), each on 14%. 1

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The Corporate Watch website has a detailed report on Nestlé. The BBC Radio 4 programme Face the Facts reported on the destruction caused by Nestlé’s water bottling activities in Brazil and the US on 22 July 2005. Swiss church and campaigning organisations are holding a tribunal into Nestlé’s trade union busting activities in Colombia and other corporate crimes on 29 and 30 October 2005. Nestlé’s 2005 coffee report states: “Nestlé recognises that Fair Trade is a useful way to raise consciousness about the coffee issue and for individual consumers to express their solidarity with a group of coffee farmers in the developing world. However, if on a broad basis, coffee farmers were paid Fair Trade prices exceeding the market price the result would be to encourage those farmers to increase coffee production, further distorting the imbalance between supply and demand and, therefore, depressing prices for green coffee. Worldwide, the Fair Trade movement accounts for less than 25,000 tonnes of green coffee. Nestlé’s direct purchasing accounts for 110,000 tonnes of green coffee per year. This system enables the farmer to retain a greater portion of the price paid by Nestlé, therefore improving his income.” Note that Nestlé’s claim about buying direct does not indicate it is paying a fair price for the coffee. The farmer would receive a greater portion of the price paid by Nestlé even if the company paid less than commercial market rates. According to Nestle’s 2005 coffee report, the global Fair Trade coffee market is 25,000 tonnes. Nestle compares this to the 110,000 tonnes it buys direct. The 110,000 tonnes represents 14% of Nestle’s green coffee purchase, according to the report. Therefore, 25,000 tonnes, the entire global Fair Trade market would represent just 3.2% of Nestle’s coffee business. Excerpt from FLO Trader Application Evaluation Policy 6.2.5 Bringing FLO Fairtrade into Disrepute FLO reserves the right to exclude traders that engage in behaviours that, even though are not directly related to Fairtrade transactions, are so bad that FLO’s association with the trader would seriously undermine the legitimacy of FLO Fairtrade in the minds of consumers. FLO shall take into consideration any relevant information it receives regarding the trader from FLO National Members and others. To justify denial of the application, the behaviour would have to be severe and the trader has not taken any measures to rectify the situation. In some cases, this criteria may cause the applicant to take corrective and preventative action. FLO therefore takes a rehabilitative approach to traders, and will respond to any criticism of their acceptance in this manner. Therefore, where the applicant has engaged in serious and repeated; predatory commercial practises that resulted in disadvantage to producers, fraudulent product labelling; or contravention of core ILO covenants - Covenant 87 Freedom of Association and Right to Organise, 1948 - Covenant 98 Right to Organise and Collective Bargaining Convention, 1949 - Covenant 100 Equal Remuneration Convention, 1951 - Covenant 111 Discrimination, 1958 - Covenant 29 Forced Labour, 1930 - Covenant 105 Abolition of Forced Labour Convention, 1957 - Covenant 138 Minimum Age Convention, 1973 - Covenant 110 Plantations Convention, 1958 - Covenant 155 Occupational Safety and Health Convention, 1981 for which it has not taken any measures to rectify, then the application may be denied. The test is intentionally made difficult in order to prevent spurious denials of trader applications. All FLO Trader Contracts shall provide that the trader shall not engage in any of the above activities that might bring FLO Fairtrade into disrepute.

source: www.babymilkaction.org

appendix 8: robbing coffee’s cradle gm coffee and its threat to poor farmers Scientists have found a way to keep plantations ahead in the receding coffee market. A GM coffee is being developed that will make all coffee cherries on a bush ripen at the same time. This will lower labour costs. It will also create an absolute dependency on chemical companies for a harvest. Plantations may be in a position to survive such developments. Smallholder coffee farmers are not. GM ripening-control coffee is an example of a genetic use restriction technology, known as GURTs – a type of genetic modification used to control a plant’s normal traits, or functions, such as sprouting, flowering and ripening. GURTs plants have a normal trait switched off and require the application of a chemical to trigger a genetic ‘on’ switch to make the function appear again. Without the chemical the trait does not appear. The list of likely problems that will follow GM coffee is long and has serious implications for smallholder farmers. Increased poverty, hunger, dependence on chemical companies and loss of business loom large for them. Significant losses of earnings and increased foreign debt await their countries. There is no doubt that ripening controlled coffee was developed for plantations regardless of its impact on smallholder farmers. Dr Tewolde Egziabler from Ethiopia agrees and says, “Small farmers will be squeezed out of the market with GM coffee. It’s a shift from a labour intensive to a capital intensive system, from small farmers to large farmers.” If GM ripening-controlled coffee comes to market a number of effects are likely. Impacts on smallholder growers include: • those who rely on picking coffee for their income, many of whom are struggling smallholder farmers, will suffer as plantations take up mechanised harvesting and reduce their workforce • as smallholder farmers are unable to compete, they will sell up to larger concerns and move to poor urban centres to survive and plantations will grow • it will be even harder for smallholder farmers to compete as plantation outputs increase and global coffee prices drop further. Wider impacts of GM coffee include: • when smallholders are driven out of business, countries like Uganda, Ethiopia and others will then lose crucial export earnings while their foreign debts rise • social unrest may increase in coffee growing areas as incomes decrease and survival becomes more difficult – Uganda reports increases in robberies and suicides when prices are lowest • farmers growing GM coffee will become dependent on agrochemical companies for their harvests • an increasing proportion of coffee will be chemically treated as plantations use significant amounts of chemical inputs – notably herbicides, insecticides and fungicides • the high diversity of wild coffee species, important to developing new strains and natural strength in cultivated varieties, will be eroded and may be lost • monocrop plantations vulnerable to disease and environmental degradation will have unpredictable long-term productivity • the biodiversity that integrated forest systems protect will be threatened or lost; if genetic contamination of natural coffee trees occurs, those farmers will become dependent on chemicals for their crop as well • Genetic Use Restriction Technology (GURTs), already subject to international condemnation, will gain a stronger hold in global agriculture • high quality natural coffee may become unavailable to consumers as the smallholder farmers who produce it go out of business.

Coffee has a vital role to play in development strategies as a cash crop that can be grown in a sustainable manner and intercropped with food. It can improve food security, provide a source of money for health care and education and help protect biodiversity. Introducing a technology that increases the competitiveness of one set of coffee farmers against others will exacerbate existing social and economic imbalances within countries and between developing countries and others. Furthermore in a market already suffering from chronic oversupply and prices at all-time lows, GM coffee is an unnecessary and irresponsible technology. It may provide a few huge plantation and the companies that own them a larger profit, but the cost to millions will be too high to be acceptable. It is countries like Ethiopia, the birthplace of coffee and still dependent on it, which stand to lose the most. We can and must act now to stop the development of GM coffee and protect the future of coffee and its farmers… The production of the coffee we all drink is at a crossroads: it can either continue to be grown the traditional way, producing high quality coffee that supports millions of families and provides developing countries with large amounts of desperately needed income, or it can be developed in ways that are designed to help huge industrial plantations increase their profits and drive smallholder coffee farmers out of business with no significant benefits for coffee drinkers. Neither option is a foregone conclusion. We consumers who buy and drink coffee have a simple choice that can affect millions of lives. In a world of increasingly industrial agriculture, corporate control over the food chain and unfair international trade rules, GM coffee… is an unnecessary technology with a sting in its tail. While many GM companies insist that GM is an important part of feeding a growing world, the example of GM coffee shows that the irresponsible and unaccountable introduction of such technology can actually drive people further into poverty and hunger. The motives behind GM coffee are not altruistic. source: Robbing Coffee’s Cradle – GM coffee and its threat to poor farmers ActionAid 2001 www.actionaid.org.uk

Sorting dried beans destined for the fair trade market, Coop Monte de Oro, Costa Rica photo: Fairtrade Foundation

appendix 9: behind the mask the real face of corporate social responsibility All day a steady file of people make their way up and down the potholed main road running through Umuechem, going to and from a polluted stream that is now their only source of water. Large trucks thunder by at regular intervals, on their way to and from the oil pumping station on the outskirts of town. For, despite the lack of basic amenities, this is the oil-rich Niger Delta of southern Nigeria. As well as taps that are dry, this town of 10,000 people also has a hospital that has never treated a patient, a secondary school where no lessons have ever been taught, a post office that has never handled a letter and a women’s centre that has never held a meeting. All were supposed to have been supplied under ‘community development’ schemes, funded from oil money – local wells produce 15,000 barrels a day. But all have failed or remain unfinished. Four of these projects were ‘generous’ gifts from the Shell Petroleum Development Company of Nigeria – the oil giant’s subsidiary that runs the flow station near Umuechem and is the country’s dominant oil company. The others, including the water system, came from the statefinanced Nigeria Delta Development Corporation, which works alongside Shell – to similar effect. Sadly, this story of failure is not new. In 1990, when the country was under military rule, local young people mounted a protest about the lack of such facilities. Shell called in the police, most of the town was burned to the ground and 80 people were killed. To this day, no one has received a penny in compensation and the basic amenities are still missing. This is the story of corporate social responsibility – or CSR – writ large. Certainly, it is a story that stands in stark contrast to Shell’s professed commitment to ‘core values of honesty, integrity and respect for people’. Outside certain areas of business and investment and supporters in the public sector, few people will know much about what CSR is, where it comes from and how it works. If they have ever heard of it, they will probably just think that it sounds like a good thing (which it does, that is part of the point). But this is now a big, and growing, industry, seen as a vital tool in promoting and improving the public image of some of the world’s largest corporations. In simple terms, companies make loud, public commitments to principles of ethical behaviour and undertake ‘good works’ in the communities in which they operate. It sounds and looks like a modern version of selfless philanthropy and no doubt in many individual cases is motivated by a genuine wish to help and has led to some benefits. The problem is that companies frequently use such initiatives to defend operations or ways of working which come in for public criticism. ‘We can’t be so bad,’ would go a company’s clichéd CSR-backed response. ‘Look at all the nice things we do.’ CSR, in other words, can become merely a branch of PR. Sometimes this looks like the only reason for spurts of development activity by large companies. Shell, for instance, was at the forefront of CSR in Britain, following the joint public relations disasters of the Nigerian government’s execution of human rights activist Ken Saro-Wiwa and the row over the company’s plan to dump the Brent Spar North Sea oil platform – both in 1995. Certainly for some, such as those living in Umuechem, Shell’s CSR programme has brought no tangible benefits. Christian Aid, of course, supports responsible and ethical action by business. The problem with CSR, we say, is that it is unable to deliver on its grand promises. The case studies in this report highlight that the corporate world’s commitments to responsible behaviour are not borne out by the experience of many who are supposed to benefit from them. In some cases, the rhetoric and the reality are simply contradictory.

• Shell claims that it has turned over a new leaf in Nigeria and strives to be a ‘good neighbour’. Yet it still fails to quickly clean up oil spills that ruin villages and runs ‘community development’ projects that are frequently ineffective and which sometimes divide communities living around oilfields. • British American Tobacco stresses the importance of upholding high standards of health and safety among those working for it, and claims to provide local farmers with the necessary training and protective clothing. But contract farmers in Kenya and Brazil say this does not happen and report chronic ill-heath related to tobacco cultivation. • Coca-Cola emphasises ‘using natural resources responsibly’. Yet a wholly owned subsidiary in India is accused of depleting village wells in an area where water is notoriously scarce. Christian Aid is saying that CSR is a completely inadequate response to the sometimes devastating impact that multinational companies can have in an ever-more globalised world – and that it is actually used to mask that impact. Those who suffer the most as a result are the poor and vulnerable people in developing countries and the environments in which they live. Business, moreover, has consistently used CSR to block attempts to establish the mandatory international regulation of companies’ activities. Its basic argument is that CSR shows how committed corporations already are to behaving responsibly and that introducing mandatory regulation could destroy this good will. Business leaders are also constantly saying that regulation is bad for their profits – the two statements are, of course, not unconnected. Modern CSR was born during the 1992 Earth Summit in Rio de Janeiro, when UN-sponsored recommendations on regulation were rejected in favour of a manifesto for voluntary selfregulation put forward by a coalition of companies called the World Business Council for Sustainable Development. Its version of events was endorsed by the US, the UK and other western governments. The British government, for example, is still a vocal supporter of voluntarism. Such resistance to regulation, this report argues, has left the worst corporate abusers effectively unrestrained, and the victims of their actions without adequate means of redress. Whatever responsible initiatives companies choose to carry out on their own behalf, binding international standards of corporate behaviour must be established to guarantee that the rights of people and the environment in developing countries are properly protected. ‘There are some companies that will only take social responsibility on board if they have to,’ one retail sector source told us. ‘You’ve got to use regulation to make them.’ This is not pie-in-the-sky wishful thinking. There is already a model of how such regulation could work in moves currently being made to curb bribery. Since 1997, some 35 rich countries of the Organisation for Economic Cooperation and Development (OECD) have signed up to a convention that outlaws the bribery of foreign public officials by business people. This is the first modern example of internationally agreed, legally binding regulation for non-financial reasons. Britain, after a bit of OECD prodding, has now fulfilled its obligation by enacting new antibribery laws. More than 100 UN member states appear likely to take this one stage further and have already signed a UN convention on bribery. These activities have already led business to take a far greater interest in tackling bribery. Christian Aid is now calling for a similar framework of international regulation, backed up by national legislation, to ensure the enforcement of real social responsibility on the corporate world. Introducing the threat of prosecution and legal action, with resulting detailed disclosure of company documents, would create a powerful incentive for companies to behave responsibly. At a national level, we want the UK government to: • adopt new laws to make corporate social and environmental reporting and disclosure mandatory for British companies – including the disclosure of payments to overseas governments, information on the social and environmental impact of overseas operations and details of legal actions against companies • frame new responsibilities for company directors to give them a ‘duty of care’ for communities and the environment, making them legally accountable for the actions of their companies overseas

• change the law to enable people harmed by British companies’ overseas operations to seek redress in UK courts and to provide the resources to enable them to do so. The European Union also has a critical role to play internationally, as its member states are home to some of the world’s largest and most influential multinational corporations. Christian Aid, then, wants to give companies’ ethical commitments ‘teeth’ by underpinning them with binding regulation. We are advocating a move beyond corporate social responsibility to corporate social accountability – meaning that companies in future will have a legal obligation to uphold international standards. Then and only then, we believe, will the corporate world as a whole be able to live up to its professed commitment to high standards and sustainable development in its dealings with some of the world’s poorest people.

illustration: Public Interest Research Group (India)

source: Behind the mask: the real face of corporate social responsibility Christian Aid 2001 www.christianaid.org.uk

teaching resources These resources are all available through mail order from: RISC, 35-39 London Street, Reading RG1 4PS, t: 0118 958 6692, admin@risc.org.uk. Bananas & (Cocoa) Beans – KS2 RISC 2004 £5 Curriculum links: PHSE/PSE/PSD, Citizenship, Literacy. Geography This pack is for anyone who has ever been shopping! It investigates our links with people across the globe through trade in food and drink products. The pack is divided into four parts, each of which can stand alone, be used in sequence, or be used to build a new dimension into existing schemes of work. It starts by raising awareness of our global links, and then goes on to look at the negative impact these links can have. Fair trade is introduced as a positive alternative, and ways in which we can all take action for positive change follow on from this. Each part includes teacher information, pupil activities and photocopiable materials – and has been designed for minimum teacher preparation and maximum pupil participation. Chocolate by Fairgame Theatre An excellent theatre production about chocolate which can be hired by schools or youth groups – ‘a fast moving story of love, money, morals and twenty first century slavery’. Contact: Sarah Blowers, Fairgame Theatre, Frost Cottage, Washpool, Horsley, Glos GL6 0PP, t: 01453 834798, e: sarah@fairgametheatre.com. Chocolate Game – KS 3-4, 16+ Leeds DEC 1999 £4.25 Curriculum links: Citizenship, PHSE, Geography, RS A game for 18-50 players based on the global cocoa trade. It takes 60-90 minutes to play, with participants divided into 9 different groups. Each group represents a family involved in the international chocolate industry. Players discover how their lives are interlinked through the chocolate trade and feel for themselves the influence purchasing power has on the lives of cocoa producers world-wide. The booklet includes information on the chocolate trade, fair trade, instructions and resources for the game, further resources and links. Chocolate Trade Game (from Pa Pa Paa pack) – KS 2-3 Christian Aid £3.50 Curriculum links: Citizenship, PHSE, Geography, RE, ICT, Literacy and Numeracy Coffee Chain Game – KS 3-4 Oxfam 2004 £4.50 Curriculum links: Citizenship, PHSE, Geography, RE, ICT, Literacy and Numeracy Update of the classic fair trade role play which asks participants to put themselves in the position of stakeholders in the coffee trade – farmers, buyers, roasters, supermarkets. Uses case study material from Uganda. Coffee Culture – KS 2-4, 16+ RISC 2002 £32 Curriculum links: PHSE/PSE/PSD, Citizenship, RE, Geography Board game printed onto a 1m2 wipeable tablecloth. Beautifully hand lettered and illustrated, and builds on the familiar snakes and ladders format in order to create a user-friendly resource for all ages. The game explores some of the trading issues that effect coffee producers in Nicaragua and illustrates the benefits of Fair Trade. It is entirely self-explanatory and comes with counters and dice, contained in an attractive cloth bag. Computer Game – KS 3-4 CAFOD 2004 free Curriculum links: Citizenship, PHSE, Geography, RE, ICT Very welcome alternative to games which explore primary commodity production. The pack explores the working conditions in a Mexican computer factory. The game simulates an 8-hour shift in a factory where workers assemble component parts for computer manufacturers, and an employment agency where workers are recruited. From CAFOD: t: 020 7326 5571, e: resources@cafod.org.uk, ask for Issue 27 of Fairground for secondary schools. * out of print, but may be available from your nearest Development Education Centre or teachers’ support centre

Fair Trade in Action – KS 3-4 Fairtrade Foundation 2002 £15 Curriculum links: Citizenship, PHSE, Geography An interactive resource which introduces Fair trade as an alternative to conventional trade. It encourages students to participate as active global citizens, while raising awareness of world trade issues. The pack can be used across the curriculum, and includes: • a video, Forum on Fair Trade, with differentiated worksheets • producer case studies and activity sheets ready for photocopying • five copies of a board game, including role cards, student instruction and record sheets • A Teachers’ Guide including background information, curriculum links, how to use the pack, action ideas, further resources and useful contacts. Fair Trade Chocolate Campaign A how-to guide that shows what you can do to promote fair trade for cocoa farmers – downloadable from: www.globalexchange.org/cocoa/ChocolateActionPack.pdf Locococo – KS 3-4 Humanities Education Centre 2000 £15 Curriculum links: Citizenship, PHSE, Modern Foreign Languages (Spanish and English versions) Locococo was an outcome of the ‘Spanish Voices’ Project, which brought together young people from Guatemala, Spain, Western Sahara and the UK via the Internet. Using the UN Convention on the Rights of the Child as a framework, Locococo includes a lively whole class game and supporting activities. It enables students to explore and develop an understanding of Human Rights and other Development Issues. It raises awareness of inequalities, and ways in which they can be addressed – for example through the purchase of fair trade goods. The activities and game have been developed to encourage young people to become ‘active citizens’, by taking action themselves. Looking Behind the Logo – KS 3-4 Oxfam 2004 £4.95 Curriculum links: Citizenship, PHSE, Geography, RE, ICT, Literacy and Numeracy Role play activity which contrast the Olympian ethos of fair play with the unfair conditions endured by sportswear workers in many countries. Participants put themselves in the position of people in the global supply chain, connecting shop shelf to factory floor. Pa Pa Paa* – KS 3 (KS2 version also published) Comic Relief Free Curriculum links: Citizenship, PHSE, Geography, RE, ICT, Literacy and Numeracy The pack provides a case study of the Fairtrade cocoa growers in Ghana. Pa Pa Paa, ‘the best of the best’, is their trademark. Activities, to suit all abilities, enable students to understand links in the cocoa chain, from cocoa farmer to chocolate eater. A trading game develops the concept of Fairtrade, showing how students’ own choices affect the farmers in Ghana and other parts of the South. The pack includes a colour poster, set of photos, and activity sheets. RISC 2003 £5 Passion for Fashion – KS 2-4, 16+ Curriculum links: PHSE/PSE/PSD, Citizenship, Literacy, Art; Global Youth Work – enabling young people to explore their links with contemporaries in the South. This pack is available in both school and youth work versions. It outlines the programme for an action-packed one day event which enables participants to explore the global fashion industry, and find answers to issues of ethical trade and workers’ rights. Although it’s presented as a one day event, each of the activities in the pack can be easily adapted for use in different situations. Seeing Through the Spin – KS4, 16+, FE, Youth & Community Baby Milk Action 2001 £15 Curriculum links: Citizenship, PHSE, Business Studies, Geography, Media Studies, Key Skills Seeing Through the Spin looks at issues of corporate responsibility, ethical consumerism, Fairtrade and sustainable development. It examines the role of Public Relations in our perception of TNCs and NGOs, and how these organisations affect development. It develops students’ abilities to deconstruct PR messages from companies and their critics. The pack contains instructions for 14 different activities that can be selected to suit the participants. Each activity has discussion points, a summary of key ideas and suggestions for follow-up. There is an extensive glossary of terms, with a list of contacts and resources.

Spilling the Beans* – KS 4, 16+ Oxfam 1999 £12.99 Curriculum links: Citizenship, PHSE, Geography, Economics 18 minute video and activity booklet provide a case study of cocoa farmers in Ghana. Des Coleman presents the background to cocoa production, and the problems faced by growers. He meets people who rely on cocoa for their livelihoods, and finds out why Fairtrade is so important to them. The booklet contains information on the world trade system, Fairtrade, producer stories, facts about Ghana and a ‘cocoa timeline’. It develops students’ understanding of fair trade, through a Ghana quiz, and ‘Fair Shares’ role play, where participants take on the roles of different people in the ‘chocolate chain’, from grower to consumer. XChanging the World – KS4, 16+, FE, Youth & Community RISC 1997 £12.95 Curriculum links: Citizenship, PHSE, Geography, General Studies XChanging the World is designed to raise consumer awareness, encouraging participants to consider their responsibilities towards producers.There are 15 activities, exploring the broader structures that govern world trade, leading to poverty and inequality. Activities can be selected to suit the needs of the group. They include lively ways of introducing the issue of trade, as well as exploring issues such as the impact of TNCs as they move from one location to another, and the pros and cons of tourism for countries in the South. The pack promotes change by enabling participants to appreciate how they can make a difference, eg through supporting fair trade.

illustration: Pip Hall, fair trade board game Coffee culture – www.risc.org.uk

background reading* Behind the mask: the real face of corporate social responsibility Andrew Pendleton download: www.christian-aid.org Christian Aid 2001 Exposes the gap between claims of ‘corporate citizenship’ and the reality for poor communities affected by their operations. Calls for corporate social accountability backed by legal binding regulation rather than voluntary codes. Behind the Scenes at the WTO: the real world of international trade negotiations Fatoumata Jawara & Aileen Kwa 2003 Zed Books £12.99 How the world ‘s powerful countries impose their agenda on the poorest. Big Business, Poor Peoples John Madeley 1999 Zed Books £14.95 Examines the impact of corporate activities on the main economic sectors where they operate and argues for international regulation. Bitter coffee: how the poor are paying for the slump in coffee prices Celine Charveriat Oxfam 2001 download: www.maketradefair.org Paper prepared for the 2001 World Coffee Conference which drew together main players in the coffee industry to find a solution to the crisis… except small farmers and labourers! Summarises winners and losers in the coffee supply chain and identifies possible solutions. Coffee: what a difference a penny makes Co-op 2003 Glossy booklet outlining the Co-op’s response to Oxfam’s rescue plan – a move to fair trade for all its own label coffee. The Coffee Book: anatomy of an industry from crop to the last drop Gregory Dicum & Nina Luttinger The New Press New York 1999 $15.95 Very readable look at coffee – from its cultivation and social history to the international trade and the ‘conscious coffee’ market. Full of fascinating facts, anecdotes and cartoons. The Coffee Cycle Nestlé 1999 from Corporate Affairs, Nestlé UK, St George’s House, Croydon CR9 1NR, t: 020 8686 3333 Glossy booklet which describes the story of coffee from bean to cup, especially the operation of the ‘free’ market. Defends its position with the arguement that “it should not be assumed that coffees which do not carry a fair trade mark are in any way unfair”. Coffee: futures & options New York Board of Trade 2004 download: www.nybot.com Booklet providing relatively simple explanation of the futures and options markets, hedging… The Coffee Paradox: global markets, commodity trade and the elusive promise of development Benoit Daviron & Stefano Ponte Zed Books 2005 £16.95 Serious analysis of the coffee market and changes in the value chain. Cooking With Coffee Lucas Rosenblatt, Judith Meyer & Edith Beckmann New Internationalist 2003 £10.99 Over 60 tempting recipes using fair trade coffee, from asparagus with coffee orange butter to mocha torte.

downloadable resources are also in RISC’s online reading room: www.risc.org.uk/reading room/coffee.html

The Coffee Trader David Liss Abacus 2003 £7.99 Historical novel set in Amsterdam in the 1650s when coffee started to be fashionable in Europe and speculation on the futures market began. Faces of coffee Nestlé 2004 download: www.nestle.com Nestlé’s answer to criticism of big coffee companies – the limitations of fair trade and its own initiatives to manage the crisis by improving quality and supporting crop diversification. Fair Trade: Market-Driven Ethical Consumption Alex Nicholls & Charlotte Opal Sage 2005 £21.99 Thorough analysis of the evolution of fair trade and its future development. Globalization and its discontents Joseph Stiglitz Penguin 2002 £7.99 Critique of WTO and IMF by former Chief Economist at the World Bank. Growing a better future for coffee Kraft download: www.kraftfoods.co.uk Glossy booklet outlining Krafts’s efforts promote sustainable coffee, especially its links with the Rainforest Alliance and Save the Children Fund. Holding Corporations Accountable: corporate conduct, international codes, and citizen action Judith Richter 2001 Zed Books £15.95 Case study of the struggle to make corporations involved in infant feeding more accountable. Hungry Corporations: transnational biotech companies colonise the food chain Helena Paul & Ricarda Steinbrecher 2003 Zed Books £15.95 How a few TNCs are using genetic engineering as a tool for control of the global food system. Hungry for Trade: how the poor pay for free trade John Madeley 2000 Zed Books £9.99 Exploration of how ‘free’ trade undermines the livelihood of small farmers in poor countries. Mugged: Poverty in your coffee cup Oxfam International 2002 download: www.maketradefair.org Comprehensive report which examines the roots of the coffee crisis. No Nonsense Guide to Fair Trade David Ransom New Internationalist 2001 £7 Exactly what it says on the cover! Robbing Coffee’s Cradle ActionAid 2001 download: www.actionaid.org.uk How GM coffee will accelerate the trend to large plantations at the expense of small farmers. Thriving in a Hostile Environment: fairtrade’s role as a positive market mechanism for disadvandownload: www.fairtrade.org.uk taged producers Alex Nicholls Fairtrade Foundation 2005 A brief summary of the case for fair trade including a useful section on what is unfair about the existing global trading system. Walk the Talk Oxfam International 2003 Update of Mugged report.

download: www.maketradefair.org

download: www.newint.org/features/index.html The wrong label New Internationalist special Reflection on Nestlé’s ‘Partners’ Blend’ coffee brand and corporations’ use of fair trade in niche marketing.

“

Father, don’t be so unkind! If I can’t drink my cup of coffee three times a day I’ll become a straggly goat, to my great dismay Oh! how sweet the coffee’s taste is, sweeter than a thousand kisses, smoother far than Muscat wine. Coffee, coffee, give me mine, and if someone wants to treat me let them offer me a coffee. from the Coffee Cantata, 1732, Johann Sebastian Bach

”

useful contacts Anti-Slavery International www.antislavery.org The Stableyard, Broomgrove Road, London SW9 9TL, t: 020 7501 8920 Campaigns for the abolition of contemporary forms of slavery including child labour. Banana Link www.bananalink.org.uk 38-40 Exchange Street, Norwich NR2 1AX, t: 01603 765 670 Campaigns for small producers in the Caribbean and workers' rights in US-owned plantations. British Association for Fair Trade Shops (BAFTS) www.bafts.org.uk Unit 7, 8-13 New Inn Street, London EC2A 3PY, t: 020 7739 4197 Network of independent Fair trade and World Shops across the UK. It seeks to raise the profile of fair trade. Links to fair trade outlets. Christian Aid www.christian-aid.org.uk PO Box 100, London SE1 7RT, t: 020 7620 4444 Development agency which also produces educational materials and campaigns on fair trade and the global supermarket. Ethical Trading Initiative www.ethicaltrade.org 2nd Floor, Cromwell House, 14 Fulwood Place, London WC1V 6HZ, t: 020 7404 1463 Coalition of trades unions, business and NGOs working together to identify and promote good practice in the implementation of codes of labour practice. The Fairtrade Foundation www.fairtrade.org.uk Suite 204, 16 Baldwinâ&#x20AC;&#x2122;s Gardens, London EC1N 7RJ Promotes and administers the Fairtrade Mark. Campaigns include Fairtrade Towns Initiative. International Coffee Organisation www.ico.org 22 Berners Street, London W1T 3DD t: 020 7580 8591 The main intergovernmental organization for coffee, bringing together producing and consuming countries to tackle the challenges facing the world coffee sector. Just Business www.jusbiz.org c/o NEAD, 38-40 Exchange Street, Norwich NR2 1AX, t: 01603 610 993 Encourages a global and ethical dimension in the teaching of Business Studies and Economics in UK schools. Oxfam www.oxfam.org.uk Oxfam House, John Smith Drive, Oxford OX4 2JY, t: 01865 311311 Development agency which also produces teaching materials and campaigns for trade justice. Reading International Solidarity Centre (RISC) www.risc.org.uk 35-39 London Street, Reading RG1 4PS, t: 0118 958 6692 Largest selection of teaching resources on global and development education in Britain. Available through mail order. Traidcraft Kingsway, Gateshead, Tyne and Wear NE11 0NE, t: 0191 491 0591 Distribute fair trade food and crafts.

www.traidcraft.co.uk

War on Want www.waronwant.org 37-39 Great Guildford St, London SE1 0YU, t: 020 7620 1111 Development agency â&#x20AC;&#x201C; campaigns include calls for change to the world financial system. World Development Movement www.wdm.org.uk 25 Beehive Place, London SW9 7QR, t: 020 7737 6215 Campaigns for political changes which directly benefit the poor, especially trade justice.

weblinks The Useful contacts page also includes sites of NGOs involved in trade justice. Actionzone www.actionzone.cc ActionAid’s site for young people. Includes ‘Brand Nasty’ campaign for laws to enforce CSR. Cafédirect The UK’s first fair trade coffee brand, launched in 1991.

www.cafedirect.com

Coffee Kids www.coffeekids.org Raises funds for children and families who live in coffee-growing communities. www.cooponline.coop/about_campaigns.html Co-operative Group Supermarket chain which now uses fair trade coffee in all its own-brand products. Common Code for the Coffee Community www.sustainable-coffee.net Joint German project between the coffee trade, GTZ (the government development agency), producers, trade unions and NGOs. Corporate Responsibility Coalition www.corporate-responsibility.org Campaign to ensure the British Government addresses the failures of the voluntary approach with binding rules for companies. Corporate Social Responsibility Forum www.csrforum.com Initiative of International Business Leaders Forum to promote the virtues of corporate citizenship. Good for links to the burgeoning consultancies offering their services. Corporate Watch US anti-corporate watchdog with valuable information and links. Corporate Watch UK equivalent of above.

www.corpwatch.org www.corporatewatch.org

ECOM Coffee www.ecomtrading.com Swiss/Spanish commodities trader – now world’s third largest coffee trader. Equal Exchange Fair trade coffee producer. Fairtrade Foundation Good background information about fair trade, including coffee.

www.equalexchange.co.uk www.fairtrade.org.uk

FTSE4Good www.ftse4good.com/ftse4good/index.jsp Investment index based on “globally recognised corporate responsibility standards”. Global Exchange www.globalexchange.org A highly informative website containing key facts and downloadable resources, signposting how you can make a difference. US based, so not everything is relevant to the UK. Global Eye www.globaleye.org.uk Online interactive magazine on development issues for young people. Secondary Issue 22 focuses on Colombia and puts the coffee trade within a wider development context. Global Trade www.tradewatch.org Promotes government and corporate accountability in the international commercial agreements shaping the current version of globalisation. Impactt Limited www.impacttlimited.com Consultancy which promotes CSR and carries out audits for leading UK businesses. Institute for Agriculture and Trade Policy www.iatp.org Promotes resilient family farms, rural communities and ecosystems around the world through research, technology and advocacy.

International Coffee Organisation www.ico.org Main intergovernmental organisation for coffee. Excellent background information and weblinks. Kraft www.kraftfoods.co.uk One of the top four coffee roasters. Search under ‘coffee sustainability’. Louis Dreyfus www.louisdreyfus.com Processor and trader in agricultural commodities – one of the largest green coffee dealers. Nestlé The world’s largest coffee roaster.

www.nestle.com/Html/Responsibility/coffee.asp

Neumann Kaffee Gruppe www.nkg.net One of the world’s largest coffee traders involved in all stages of the supply chain. Oneworld Online www.oneworld.net/campaigns/wto Good general site for exploring development issues, including useful updates on the WTO. Oxfam Oxfam campaign to make international trade regulations more fair. Partners’ Blend Nestlé site promoting their first fairtrade accredited coffee.

www.maketradefair.com

www.growmorethancoffee.co.uk

Percol Fair trade coffee producer.

www.percol.co.uk

Positively Coffee www.positivelycoffee.org ICO initiative supported by roasters which aims to increase world consumption by creating a positive image through research and promotion. Includes research into health benefits. Procter & Gamble www.pg.com One of the top four coffee roasters. Site has links to top brands – Folgers and Millstone. www.ra.org/coffee Rainforest Alliance International conservation organisation. Promotes sustainable forest-grown coffee production. SAI Platform www.saiplatform.org Food industry funded NGO which supports and promotes sustainable agriculture. Includes a coffee working group which coordinates 14 pilot projects in coffee growing countries. Starbucks Icon of the 1970s cafe revival. Interesting section on CSR.

www.starbucks.com/csr

Starbucks Icon of the 1970s cafe revival. Interesting section on CSR.

www.starbucks.com/csr

Tchibo www.tchibo.com German conglomerate based in Hamburg, one of the major coffee and warehousing ports. Expanding in the growing Eastern Europe market. Trade Justice Movement www.tradejusticemovement.org.uk Alliance of UK NGOs concerned with the negative impact of international trade rules on the poorest people in the world, on the environment, and on democracy. Volcafe One of the world’s largest coffee traders based in Switzerland.

www.volcafe.com

World Trade Organisation (WTO) www.wto.org Regulates world trade and promotes liberalisation of markets and corporate agendas.

logos from left: WTO, IMF, World Bank

feedback form Developing this pack has been a long process of research, consultation, discussion and trialling of materials. Feedback from participants and other facilitators has been an essential ingredient in trying to make issues accessible for young people. It would be useful for us to know how far we have succeeded in developing a resource which meets your needs. Your comments will help us to make revisions in future online and hard copy editions. Use a separate sheet if necessary. 1 Name 2 Address

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illustration: Pip Hall, from the fair trade board game Coffee culture â&#x20AC;&#x201C; www.risc.org.uk