Growers First Blog

Controversy within the Fair Trade organization may make Direct Trade the more obvious choice for socially conscious coffee drinkers in America. 

An internal argument between Fair Trade International and Fair Trade USA ended last week with an official split between the organizations. 

The primary motives for this division are as follows:

1) Which farmers can get Fair Trade certified? 

A. Fair Trade USA will now allow large plantations to receive certification. The group claims this decision is intended to improve the lives of plantation workers, who without land or autonomy, are generally the poorest group in a coffee community.

B. Fair Trade International is committed to keeping the FT certification for small farms and farmers. This group feels that allowing plantations to acquire certification will increase their power and profit to the detriment of small farms, who will have a harder time competing in the global market, while hardly helping the plantation worker. 

2) What constitutes Fair Trade?

A. Fair Trade USA has decided to grant certification when 10% of the beans are fair trade. They hope this decision will double sales in the US (by 2015), and that by increasing the volume of sales, they will be able to increase the impact of Fair Trade. They will also no longer be required to pay fees to the International umbrella group, an amount that topped $1.5 million last year alone. 

B. Fair Trade International will keep the standard certification requirement of 20%, and feels that the US groups' decision to dilute the standards is motivated by earning more fees (every certification is accompanied by fees that cover the necessary audits, one of the arguments against Fair Trade in general). This group is concerned that this will encourage companies to include only the minimal amount necessary for certification. 

This split has forced many companies to re-evaluate where they stand on the Fair Trade issue, including industry giants like Starbucks, Wal-Mart, Whole Foods and Green Mountain. 

Certification logos are about to change to delineate the two groups, making things more confusing for consumers, who may not be aware of how the certifications differ. The controversy may make Direct Trade models more popular, as people come to realize how much of the premium they pay for Fair Trade certification is channeled towards administrative and auditing costs, and how much of the product is actually Fair Trade.

For the caring consumer, small companies with direct and transparent relationships with growers are a good choice…..less is lost in the shuffle and more time and money are concentrated on those who really need it. You can forget about percents and buy Grower's First coffee----all the information you need about where your money is going and how your coffee was grown is right on our website!!

I hope everyone had a happy holiday weekend and gave thanks for the coffee farmers that made that post-lunch espresso possible!

This Christmas, consider a Grower's First coffee subscription for your family and friends….or even for the office…..you will be giving not just a necessary luxury of the highest quality, but the gift of hope to farmers who work hard to sell enough coffee to provide for their families and communities. 

(not coffee, but close enough!)

Growers First uses a distinctive trading model that, while sharing some of the values and methods of the Direct Trade and Fair Trade models, aims to keep the farmer at the center of the supply chain and ensure that coffee communities earn maximal economic returns for their hard work.

We call our methodology "Traceable Transformation" and it has proven to be an effective means of providing quality coffee while kick-starting agricultural and community development….all through a 3 phase process that is transparent for all parties. 

The GF organization encompasses a non-profit and a for-profit arm, and so is able to engage with coffee communities on a variety of issues, such as economic, agricultural, and community development. We may have some of the necessary tools, but the communities with which we work are in the driver seat and use democratic methods to determine their priorities and the direction of development. 

The Supply Chain:

Farmer --> Cooperative --> Importer/Roaster/Retailer --> You! 

The General Growers First Trajectory:

PHASE ONE

1) Cooperatives: Coffee communities form collectives (like in the Fair Trade model) to diffuse costs and increase selling power. A percentage of coffee revenues are also shared within the collective and directed towards agronomic or community efforts agreed upon by the group. 

2) Agronomic Development: Farmers work with GF-funded agronomists to adjust growing methods, with the goal of increasing quality, yield, and marketability. Many coffee growers are unaware of the demands and desires of the Western market, so GF has proven to be a valuable source of information and training that allows farmers to ultimately receive maximum returns from market participation. 

3) Organic: Growers team up with organic specialists to discuss how to achieve organic certification. Methods for minimizing environmental impact and maximizing soil longevity and other natural resources are discussed. 

4) Commodities Training: Growers learn about how the international coffee trade works, the market they produce for, and how to capture the highest premium for their goods.

5) Connections: GF links cooperatives to potential buyers, and this direct relationship increases farmer profits.

This list does not discuss GF's more socially-oriented programs (that post will come later), but the measures above alone have shown to increase the value of existing coffee crops by 120%, which translates to an 135% increase in grower returns. Synergy and a striving for best-practices make this remarkable increase possible. 

PHASE TWO 

Phase Two is like a reinforcement of the process developed in Phase I and gives the growers and their families the tools to grow self-sufficient, valuable businesses. 

--Expanding cooperative activities with processing facilities, nurseries, and even a roaster, which allows villagers to sell packaged coffee directly to local and regional markets

--Crop diversification (raising livestock or planting trees in addition to growing coffee, for example)

--Facilitation of micro-loans for farmers and cooperatives to pursue value-added or social projects

--Leadership and governance training to improve the cooperatives as well as business and agricultural practices

Phase Two has shown to result in an additional 300% improvement in profits, but is beneficial in countless other, less quantifiable ways for the farmer, the family, the community, the land, and the entire system involved in coffee production.

PHASE THREE

By Phase Three, things have stabilized and improvements can be implemented at the discretion of the community. Seller-Buyer relationships have been cemented, income has become dependable, and communities are more aware of the opportunities and tools available for development in all aspects of life. 

Most importantly, these communities have found their voice and with it, the ability to demand fairness in the marketplace. Empowerment and hope are the real goals of what we do, because with them, the coffee communities themselves can take over their own transformation. 

So, while the Grower's First Model is much more than simply a trade relationship, we think it's a pretty good--and effective-- prototype for improving the lives of coffee farmers and communities and, as a result, the coffee in your cup!

our growers first manifesto

We are passionate about coffee and remote, small-plot coffee growers.

We believe that real, lasting relationships are essential.

We believe in the dignity that comes from helping growers choose their own path out of poverty, improve their own businesses and fulfill their own dreams.

We believe that as consumers we have the power to change the world.

We believe in transparent, direct trade with coffee farmers and co-ops.

We believe that claims about life transformation should be documented, tracked and made available to the consumer.

We believe that cooperation is the new competition and that creative entrepreneurial business can build a better world.

THE COFFEE TRADE

Fair Trade and Direct Trade are two different models for getting coffee beans from their growing place to the Western cup. There is some confusion over the differences between these processes and how they affect both the growers and the consumers of this popular commodity.

So here we go, a quick-and-clear guide to how your espresso made its way from Mexico to Massachusetts (and everywhere in between!)

IN GENERAL….

The conventional trading process is a lengthy one, but begins with the farmer and his beans. Unless this farmer runs a large plantation or is involved with one of the trading models described below, his beans will most likely be bought by anexporter [code name: coyote]. The amount the grower is paid is loosely based on prices set by the New York Coffee Exchange, (more on that later!) but all too often, coffee is grown in remote locations far from up-to-date market information and the grower is forced to sell for an amount far lower than the going rate, allowing coyotes to reap the real rewards for a years' worth of hard work. The coyote exporters take these low priced beans and sell them in bulk to importers, who turn around and sell the beans (in smaller loads) for an even higher profit to roasters. This is where the real money is made, as roasters take the green beans, convert them into a drinkable form and then sell them in packaged form to retailers (coffee shops, stores, mail-order).

The Supply Chain:

Farmer → Exporter → Importer → Roaster → Retailer → You!

By the time that coffee hits your cup, its “value,” or price, has increased by 1200 to 1500%, one of the highest markups in any market. As the first step in the supply chain, farmers receive very little profit for the importance of their efforts.

The number of steps in the supply chain limits the farmers’ market power, often forcing them to sell beans for less than it cost to grow them. This is a driving force in the growing debt and impoverishment of coffee farmers all over the developing world.

THE FAIR TRADE MODEL EMERGES….

…in an attempt to remedy pricing discrepancies and provide farmers with a living wage [that is, more than the $1 a day received by most coffee farmers].

Fair Trade differs from conventional trade models by taking the exporter (the coyote) out of the equation, allowing farmers to sell directly to importers. Under this arrangement, farmers ally together in democratic cooperatives, receive Fair Trade certification, gain direct access to credit and international markets, and are thus guaranteed a minimum price for their beans.

Should the New York Coffee Exchange dictate prices higher than the Fair Trade minimum, the growers receive an additional premium. This pre-arranged security agreement between grower and buyer means that coffee farmers are financially insulated from price volatility in the market.

The Supply Chain:

Farmer →  Cooperative →   Importer →Roaster→ Retailer→ You!

Some of the farmer’s funds are pooled by the cooperatives and directed towards agricultural and community development, including schools, medical clinics, business support and best-practices, and environmental safeguards.

THE DIRECT TRADE MODEL ENTERS THE FRAY….

 Instead of working with cooperatives, the Direct Trade model encourages roasters to partner directly with growers to negotiate a contract that will allow high quality coffee to be exchanged for a fair price. The key word here is transparency, and roasters make a point of revealing their trading relationships.

The Direct Trade model attracts roasters who seek specialty coffees that will sell for a premium in Western markets. These roasters work directly with growers to improve quality and environmental and business sustainability. This is a flexible market based on the demands and capacities of individual roasters and growers, but one that realizes and rewards efforts to increase quality.

So, as your morning cup becomes more delicious, the grower and the roaster involve in its production are earning higher wages. The average income for coffee growers’ under the Direct Trade model have been roughly 25% higher than the Fair Trade minimum!

The Supply Chain:

Farmer → Roaster→ Retailer→ You!

The Direct Trade model does not demand that the price premiums paid to producers be used for community development, although they often are. Growers First is in a unique Direct Trade arrangement, therefore, by working with both individual producers and also with cooperatives established in coffee growing communities. This arrangement is cost-effective for the producer and allows for community-driven and directed improvements across the board. A more thorough explanation of the Grower’s First process will be outlined in the next post!

That's It!!

If you’ve gotten this far, congratulations! Your coffee consumer education is well on its way! Feel free to post any questions or clarifications, and stay tuned for the next installment in how coffee really gets from bean to bag!