Producing and Consuming Narratives
The value of fairtrade coffee
Silje Johannessen
Department of Noragric
Master Thesis 60 credits 2008
Producing and Consuming Narratives
The Value of Fairtrade Coffee
By:
Silje Johannesen
Master thesis Management of Natural Resources and Sustainable Agriculture
Universitetet for Miljø og Biovitenskap
Supervisor:
Tor Arve Benjaminsen
The Department of International Environment and Development Studies, Noragric, is the
international gateway for the Norwegian University of Life Sciences (UMB). Eight
departments, associated research institutions and the Norwegian College of Veterinary
Medicine in Oslo. Established in 1986, Noragric’s contribution to international
development lies in the interface between research, education (Bachelor, Master and
PhD programmes) and assignments.
The Noragric Master theses are the final theses submitted by students in order to fulfil the
requirements under the Noragric Master programme “Management of Natural Resources
and Sustainable Agriculture” (MNRSA), “Development Studies” and other Master
programmes.
The findings in this thesis do not necessarily reflect the views of Noragric. Extracts from
this publication may only be reproduced after prior consultation with the author and on
condition that the source is indicated. For rights of reproduction or translation contact
Noragric.
© Silje Johannessen, June 2008
silje_fj@hotmail.com
Noragric
Department of International Environment and Development Studies
P.O. Box 5003
N-1432 Ås
Norway
Tel.: +47 64 96 52 00
Fax: +47 64 96 52 01
Internet: http://www.umb.no/noragric
Declaration
I, (name), declare that this thesis is a result of my research investigations and findings.
Sources of information other than my own have been acknowledged and a reference list
has been appended. This work has not been previously submitted to any other
university for award of any type of academic degree.
Signature………………………………..
Date…………………………………………
3
ACKNOWLEDGEMENT
First of all, I would like to thank my supervisor in Norway, Tor Arve Benjaminsen, for his
guidance through the work of this thesis. Further, I would like to thank the team at
CATIE, CeCoECO for welcoming me and helping me connecting to a wider network of
actors within the coffee industry in Central America. A special thank to Dietmar Stoian
and Jeremy Heggar at CATIE, for constructive advice and guidance.
In Nicaragua, I would like to express deep gratefulness to Julio Solorzano at FondeAgro,
and Chepe (Martinez), manager of El Polo, who welcomed me and made my field work
possible. I want to express deep gratefulness to all the coffee farmers in Yali, who
devoted their time to long interviews, always greeting me friendly.
In Guatemala, I would like to express great thankfulness to Alberto de Leon at
Fedecocagua, who friendly welcomed me in Guatemala City, and helped me with the
practicalities of the field work in Guatemala. In particular, I would like to express
gratefulness to the technical advisors who assisted me with transportation and other
means. And in particular, I want to express deep gratefulness to the coffee farmers of
Guatemala, who friendly and welcoming devoted time to long interviews.
I would like to express a particular deep gratefulness to my brother, Steffen
Johannessen, who took time off from completing his PhD dissertation to assist me in the
final and most stressful phase of writing. Your devotion and enthusiasm within the field
of Anthropology has particularly inspired my work.
ABSTRACT
This thesis explores the Fairtrade network through analyzing Fairtrade coffee. The expansion of
the Fairtrade network has led to increasing pressure and competitiveness of cooperatives in the
Fairtrade market. The thesis analyze the impact of the increasingly demand of Fairtrade
products and the move of the system to mainstream market through two certified Fairtrade
cooperatives. The certified cooperatives studied are; a first level cooperative in Nicaragua and a
second level cooperative in Guatemala. Furthermore, the thesis analyzes the value of Fairtrade
coffee through exchange value, symbolic value and sign value. The economic exchange value of
Fairtrade product is analyzed using the tools of a global value chain analysis. The varieties of
meanings invested in the network, ie the sign value and the symbolic value, are explored by
investigating how the structures of narratives are constructed among producers, consumers,
and communication strategies. These I have labeled ‘commodity cultures’.
The economic income from Fairtrade coffee is found to be highly centralized in consuming
country, where importers/roasters have an income of about 74 percent, retail about 13 percent,
Max Havelaar almost 3 percent, and producers around 4 percent. However, a larger share of
income to producer country was evident in Guatemala, where the second level cooperative
received almost 10 percent of total income. However, the income did not trickle down to
producers in Guatemala, which received around the same income as producers in Nicaragua,
around three percent of total income.
The value of Fairtrade coffee is concentrated within the constructed meaning attributed the
product and verified by a label. The constructed narrative of Fairtrade is based on selective
stories of producers where Fairtrade is recognized as aid and creating connectivity between
producers and consumers. However, the narratives communicated are not general
representation of producers. According to my study, most producers had very limited
knowledge of Fairtrade and did not see any direct benefits from the system. The selective
stories are argued as communication strategies. Thus Fairtrade is not a de-fetishized product,
where the narratives rather resemble commodification of new realms.
v
vi
TABLE OF CONTENTS
Acknowledgement............................................................................................................................... iv
Abstract ................................................................................................................................................v
List of Figures....................................................................................................................................... ix
List of Tables ........................................................................................................................................ ix
List of Images ....................................................................................................................................... ix
List of Appendices ............................................................................................................................... ix
Abbreviations .......................................................................................................................................x
Measures and Exchange Rates ........................................................................................................... xii
1.0 Introduction ..................................................................................................................................................................1
1.2 Research objective ...................................................................................................................... 14
1.2.1 Specified objectives .............................................................................................................. 14
1.2.2 Research questions .............................................................................................................. 14
2.0. Background ............................................................................................................................................................... 15
2.1. History of coffee ......................................................................................................................... 15
2.2 the International Coffee market ................................................................................................. 17
2.3 Sustainability initiatives in the coffee sector .............................................................................. 21
2.3.1 History of Fairtrade .............................................................................................................. 26
2.3.2 Fairtrade in Norway .............................................................................................................. 34
3.0 Research methods ................................................................................................................................................... 37
3.1 Field work In Central America ..................................................................................................... 40
3.1.1 Development of field research in Nicaragua ........................................................................ 42
3.1.2 Nicaragua’s political economy in brief ................................................................................. 43
3.1.3 The cooperative El Polo ........................................................................................................ 46
3.1.4 Development of field research in Guatemala ...................................................................... 49
3.1.5 Guatemala’s political economy in brief ................................................................................ 50
3.1.6 The second level cooperative Fedecocagua ......................................................................... 52
4.0 Theory and analytical framework .................................................................................................................... 55
5.0 Results and diskussion I: The global value chain of Fairtrade coffee ................................................ 73
5.1 The Global Value Chain – Processing of product ........................................................................ 74
5.2 The global economic value chain - Income From Fairtrade coffee ............................................. 76
6.0 Results and discussion II: The commodity cultures of Fairtrade ........................................................ 85
6.1 Communication Strategies of Fairtrade ...................................................................................... 86
6.2 Producer narratives of Fairtrade coffee in Guatemala ............................................................. 102
vii
6.2 Producer narratives of Fairtrade coffee in Nicaragua ............................................................... 112
6.3 Consumer narratives of Fairtrade ............................................................................................. 122
6.4 Example: Lidl distributing Fairtrade Coffee ............................................................................... 131
7.0 Conclusion ............................................................................................................................................................... 133
List of References ......................................................................................................................................................... 149
viii
LIST OF FIGURES
Figure 1: premiums and standards communicated by sustainability initiatives ................................. 24
Figure 2: Price differentiation of certifications for producer cooperatives............................................ 28
Figure 3: Fairtrade as percentage of total import Norway ............................................................................ 35
Figure 4: Development of field research ............................................................................................................... 40
Figure 5: Development of field research Nicaragua ......................................................................................... 43
Figuree 6: Development of field research Guatemala ...................................................................................... 49
Figuree 7: Global Value Chain .................................................................................................................................... 58
Figure 8: Commodity Culture of Fairtrade coffee .............................................................................................. 65
Figure 9: Processing of coffee .................................................................................................................................... 74
LIST OF TABLES
Table 1: Estimated income from coffe in Toasted Coffee Equivalents ...................................................... 77
Table 2: Distribution of value, Farmers coffee.................................................................................................... 79
Table 3: value distributed of one cup of coffe, UMB ......................................................................................... 81
Tabel 4: Hypothetical Producer Income from one Fairtrade cappuccino ............................................... 82
Table 5: Consumer confidence ............................................................................................................................... 123
LIST OF IMAGES
Image 1: Map of Nicaragua .......................................................................................................................................... 43
Image 2: Map of Guatemala......................................................................................................................................... 51
Image 3: Fairtrade label ............................................................................................................................................... 89
Image 4: Farmers Coffee .............................................................................................................................................. 95
Image 5: Friele Fairtrade ............................................................................................................................................. 95
LIST OF APPENDICES
Appendix 1: Calculation of economic income, producers Guatemala .................................................... 163
Appendix 2: Calculation of Producer income, Nicaragua ............................................................................ 165
Appendix 3: Calculation of income from Fairtrade coffee, University of Life Sciences................... 169
Appendix 4: Calculation of Hypothetical producer income from one Cappuccino ........................... 171
Appendix 5: Calculation of income from Farmers Coffee ............................................................................ 172
Appendix 6: Visualized value chain analysis .................................................................................................... 174
Appendix 7: Interview Guide; Producers……………………………………………………………………………...175
Appendix 8: Survey Importers/Roasters……………………………………………………………………………180
ix
ABBREVIATIONS
ANACAFE
Asociación Nacional de Café Guatemala
ANT
Actor Network Theory
Asdi
Agencia Sueca de Cooperacion Internacional para el
Desarrollo
CATIE
Centro de Agronomía Tropical, Investigación y
Enseña
CeCoEco
Centro de Competitividad de Eco Empresas
CEH
Commission for Historical Clarification
CETREX
Centro de Tramites de las Exportaciones
CONARCA
The National Commission for Coffee Modernization
‘C’ price
Conventional coffee price based on New York Stock
Exchange
CSCE
New York Coffee, Sugar and Cocoa Exchange
CSR
Corporate Social Responsibility
EFTA
European Fairtrade Association
El Polo
Cooperativa de Servicios Múltiples El Polo R.L.
EUREP-GAP
The Euro Retailer Produce Working Group
Fedecocagua
Federacion de Cooperativas Agricolas de Productores
de Café de Guatemala R. C.
FINE
Common term for FLO, IFAT, NEWS! and EFTA
FITA
Federation of International Trade Association
El Polo
Cooperativa de Servicios Múltiples EL Polo R.L.
FLO
Fairtrade Labelling Organization International
FOB
Free on board
FSLN
The National Liberation Front
GAP
Good Agricultural Practices
GATT
General Agreement on Tariffs and Trade
x
GCC
Global Commodity Chain
GCE
Green Coffee Equivalents
GVC
Global Value Chain
ICA
International Coffee Agreement
ICO
International Coffee Organization
IDB
International Development Bank
IFAT
International Federation of Alternative Trade
IISD
International Institute for Sustainable Development
IMF
International Monetary Fund
INRA
National Institute for Agrarian Reforms
MAGFOR
Ministerio Agropecuuaria y Forestal del Gobierno de
Nicaragua
MHN
Max Havelaar Norway
MIFIC
Ministerio de Fomento, Industria y Comercio
NEWS!
The Network of European Worldshops
Oro
Green Coffee
PEC
Political Ethical Consumption
Pergamino
Parchment coffee
Platas
money
PND
Plan de Desarollo Nicaragua
SAPs
Structural Adjustment Programs
SCI
Sustainable Commodity Initiative
SHG
Strictly High Grown
SIFO
Statens Institutt for Forbruksundersøkelser
Starbucks C.A.F.E. Practices
Starbucks Coffee and Farmer Equity Program
TCE
Toasted Coffee Equivalents
xi
UNCTAD
United Nations
Development
Conference
UPE
State Production Units
VAT
Value Added Tax
VSI
Voluntary Sustainable Initiative
WB
The World Bank
WTO
World Trade Organization
on
Trade
and
MEASURES AND EXCHANGE RATES
1 quintal
100 pounds
1 kg
2.2 pounds
1 quintal green coffee
1.2 quintal pergamino (parchment coffee)
1 kilogram green coffee
1.19 kilogram toasted coffee (Talbot, 2004; ICO)
1 US dollar
5.39 NOK
1 US dollar
7.6 Quetzales (Banco de Guatemala 2006/2007)
1 US dollar
18 Córdoba
2006/2007
xii
45 kilograms
(Banco
Nacional
de
Nicaragua
1.0 INTRODUCTION
The importance of my study is based on international trade in commodities and the
unequal terms of trade created by power imbalance in the coffee commodity chain.
Profit of coffee is increasingly being made in consuming countries, which are usually
industrialized countries in the ‘North’. It is estimated that around 10 million small
farmers around the world grow coffee and produce about 70 percent of the world’s
supply. Further, around 25 million people depend directly on coffee for their livelihood
(Talbot, 2004: 128). The relevance of my study is based on the increase in Fairtrade
commodities, and how the Fairtrade commodities are viewed as a challenge to the
conventional trade in commodities. Fairtrade has increased both in sales and marketing,
where coffee is the most important product. I research the impact of Fairtrade coffee
and the value of Fairtrade coffee. The concept of Fairtrade is becoming increasingly well
known through extensive and unconventional marketing strategies. The concept in itself
is diversifying through a number of promotional activities. In Norway there are
currently 6 municipalities who have gained status as Fairtrade municipalities. Sauda
was the first municipality, currently including also Lier, Asker, Stavanger, Fredrikstad
and Kvinesdal. There are 43 other municipalities in Norway working for a Fairtrade
status (Max Havelaar Norway). In the UK, which is the leader of promoting Fairtrade
products, there are currently more than 300 Fairtrade towns, more than 4000 Fairtrade
churches and more than 70 Fairtrade universities (Fairtrade Foundation UK). Euros are
today printed on Fairtrade cotton (Max Havelaar Norway)and in major political arenas it
is currently served Fairtrade products, such as in the Norwegian Parliament (Max
Havelaar Norway) and at the World Bank headquarters (Fridell, 2004). Annually, more
than 18.3 million Euros (NOK 143.894 million) are spent on education, public awareness
and marketing of Fairtrade products (Krier, 2005).
Max Havelaar is appreciated in Norway as having the potential to benefit small scale
coffee producers through increased price, a social premium for development motives
and market access. Max Havelaar is promoted as to generate good stories and
connectivity for Norwegian consumers to the manners of production. The idea of
Fairtrade is essentially based on educating the consumer of unequal terms of trade and
1
exploitation of poor producers. The exploitative structures of international trade in
coffee originate from the colonial masters. Max Havelaar was a Dutch colonial
administrator in a novel written by Multatuli (pen name of Eduard Douwes Dekker). The
novel was written as a protest against the colonial policies of the Dutch government in
Java. Written in its narrative form, the novel marks the point of departure of the current
analysis. My analysis is framed by narratives of fair trade and a global value chain
analysis to investigate the income generated from Fairtrade coffee.
The aim of the analysis is to assess the potential of Fairtrade to challenge negative
effects of international trade and neoliberal market ideology. The potential of Fairtrade
is analyzed by looking at the value of Fairtrade coffee. Value is defined in terms of
economic exchange value, and use value, which are production centered concepts
essentially derived from Marx (1971). The economic value of a product is based on
demand and thus do not reflect use value of the product nor the value of labor or social
relations in production. However, I understand the value creation of the Fairtrade
commodity to incorporate a social constructed value, through symbols and signs.
Therefore I find theories from Appadurai (1986) and Baudrillard (1975) highly
inspiring. These theories are often related to as consumption centered approaches to
value, including sign value and symbol value, derived from Baudrillard (1975). The sign
value of a product is the value of the object in relation to other objects, such as the value
of a brand or a label. The symbolic value is the value of a product in relation to other
subjects. The consumption centered values are central within the social construction of
meaning to the Fairtrade product.
The political point of departure is within the debate of resources taken as commodities
in international trade. It is situated in the debate of fair trade as opposed to free trade,
and the fair trade movement as opposed to the fair trade network. It is the Fairtrade
network which is of particular interest, which is the international network of actors
behind the Fairtrade labeling initiative. The particularly important international actors
include Fairtrade Labelling Organization International1 (FLO), the International Fair
Trade Association (IFAT), the European Fair Trade Association (EFTA) and the Network
of European Worldshops (NEWS!), which are joined in the informal alliance of FINE
1
Including FLO Cert, the certification agency of FLO International.
2
(Raynolds and Long, 2007). The emphasis of my analysis is on FLO, which is the
standard setting and labeling initiative of the international Fairtrade network.
International trade may be seen as a contest of ecological justice where resources can be
taken as ‘commodities’ or resources taken as ‘commons’ (Byrne et al., 2006). The
response to the commons in the global system can be seen as one of commodification.
According to Byrne and Rich (1992) commodification is a process determined by
increased social capacities to produce and purchase goods and services where the
physical environment is valued directly as a commodity in the form of raw materials and
resources extracted for social use. It is the process by which something requires an
exchange value (Fisher, 2007), or the process and practice of enclosure. However,
according to van Binsbergen, commodification is (2005: 11) the ways in which things and
social relations are affected by the market. Thus, central to the commodification process
is the involvement of the market, and according to the latter theory, commodification
relates to both things and social relations. The former theories relate to a production
centered approach and the latter theory relates to a consumption centered approach.
In international trade, the process of commodification is argued as privatization of
resources, traded in the global market according to their exchange value. For many small
scale farmers, this has been a prime method of earning an income, thus they have
become dependent on ‘cash crops’ (Byrne et al., 2006). According to Hindess and Hirst
(1975), followed by privatization of certain raw materials used as ‘cash crops’ is a
process of ‘articulation’ where the producer have one foot in the global markets and one
foot in a subsistence production exchange system. Nietschmann further follows this
argument in his study of the Miskito Indians at the coast of Nicaragua, where the dual
articulation creates a predictable inequality in power and exchange (Nietschmann,
1979).
Central feature of the commodity argued by economists is that of an undifferentiated
product, competed as a race to the bottom in production price (Lewin et al, 2004).
Exchange value of the product is essentially determined by demand where conventional
agricultural products are offered at prices which do not reflect the environmental and
social costs of production. This forces communities of Southern countries to cover the
burden of unsustainable production, explained by the term ‘ecological injustice’ (Byrne
et al., 2006). Furthermore, global trade has the effect of eliminating the connection
3
between production and consumption, which eliminates knowledge of the social and
environmental cost of production (Byrne et al., 2006). In economics this is argued as
negative externalities of the free market. Marx, on the other hand, argued this as
commodity fetishism, a natural outcome of the capitalist mode of production (Marx,
1971). …’Commodities contain a double fetish that both obscures realities at the site of
production and creates cultural and economic surpluses for consumers’ (Bryant and
Goodman, 2004: 348). Central to the argument of international trade and economic
globalization is the free trade advocacy.
…’free trade seeks the unencumbered movement of goods, services, labor and capital
between markets with minimum state interference, such as in the form of regulations,
tariffs and restrictions on capital flows. Free trade is supported by claims that it best
produces economic growth and that markets without state restrictions are the most
efficient’ (Byrne et al., 2006:65).
Free trade supporters claim that economic globalization ‘lifts all boats’ – that is,
ultimately everyone grows richer from it. The anti-globalization movement counters
that it ‘lifts all yachts’ – that is, only the rich benefit (Buckman, 2004: 68). According to
the anti-globalization movement, claims of development through free trade have been
depressed by rich countries double standards. Through large international institutions
such as the WTO, WB and the IMF and TNCs, rich countries preach open markets and
force developing countries to open their markets. However, the rich countries
themselves practice protectionism through taxes and subsidies (Buckman, 2004). The
critics of free trade policies argue that free trade provides economic advantage to the
more powerful economic states and actors, where producers have little bargaining
power, and prices are depressed. Production is in many cases guided by global markets,
where farmers become increasingly reliant on ‘cash crops’ (Byrne et al., 2006: 65, 66).
Thus, with current neo-liberal market policies, wealth is argued to be increasingly
transferred to core nations. In particular, poor countries have lost out in international
trade, with policies increasingly balanced in favor of core nations. Many poor nations are
highly dependent on the export of raw materials, where the terms of trade have fallen
increasingly in later years. According to Buckman (2004) the anti-globalization
movement has been divided in two main schools; the fair trade school and the
localization school. The fair trade movement believes in a globalised economy, but
4
through restructuring current policies and trade rules, whereas the localization
movement is more radical and believes that local economies should be at the centre of
economic activities, not the global marketplace. The former argue that if world trade
was conducted fairly it has the ability to lift millions of people out of poverty. In
particular, trade should be made fair through developing country protectionism and
special treatment for poor countries. Thus, the argument is essentially about challenging
power structures in trade and restructuring global trade rules in favor of poor nations.
The localization school, on the other hand, believes in major structural change building
on principles of self-reliance. The localization school is positioned in contrast to the
ideology that increased trade will lead to development. Thus, they see a need to
minimize international trade, where development is building on economic self-reliance
nationally and regionally.
My analysis is based on the Fairtrade network, which builds on the ideology of the fair
trade movement, where trade may lead to development. It is distinguished from the
movement as it is working within the market. Thus, the Fairtrade network work in the
market and against it, therefore it is naturally controlled by market logic. The case study
within Fairtrade is built on coffee, an important commodity in international trade which
highlights many controversial debates of trade.
‘Coffee has been one of the most
important primary commodity exports of the Third World since World War II, second only
to oil in total income earned by Third World exporters. …over 90 percent of the coffee
exported by Third World producers is consumed in the core’ (Talbot, 1997:60).
The international coffee market is characterized by fluctuating prices which creates high
vulnerability and risks for producers. This is argued as a consequence of imbalance of
power in the coffee value chain causing a lack of bargaining power from the producer
side (Talbot, 2004; Gibbon and Ponte, 2005). Furthermore, structural global oversupply
and lack of regulation of price are contributing factors (Slob, 2006). More than 90
percent of coffee production takes place in developing countries, where coffee is the
most valuable agricultural product exported (Talbot, 2004). The majority of producers
are small scale farmers where 85 percent of the producers are family run farms relying
on coffee as the main source of cash return (Slob, 2006). According to Giovannucci and
Ponte (2005:285) increasing producer income of coffee have large developing prospects
as producers generate more than thirty times revenue per capita from exports than they
5
receive in aid. Thus enterprise development within the coffee sector might have a key
role in poverty reduction by promoting responsible business and sustainable livelihoods
for low income households (Mayoux, 2003).
The sustainability initiatives in coffee include certifications and standards in production,
such as Fairtrade. In recognition of the link between commodities and sustainable
development, the Sustainable Commodity Initiative (SCI) was launched in 2002 by the
United Nations Conference on Trade and Development (UNCTAD) and the International
Institute for Sustainable Development (IISD). The SCI identifies that voluntary
sustainability initiatives (VSI) have the potential to;
...’ create higher and more stable revenues through the identification of sustainable
products/markets; better farm and business management practices among producers;
improved producer awareness of market trends; reduced producer risk exposure to market
volatility; more efficient and strategic natural resource use; improved consistency, quality
and supply of products to consumers; improved consumer awareness of producer
conditions through private sector communication channels; improved coordination and
efficiency of supply chain management; and increased private sector investment for
sustainable production and consumption.’ (Sustainable Commodity Initiative, 2008).
Increasing producer income is referred to as upgrading in the value chain for coffee
producers. Searching for methods of upgrading in the value chain includes searching
reward structures of the chain, and the roles that generate rewards (Gibbon, 2004). In
other words, methods where the producers can increase power and income generated
from coffee. Upgrading on the producer side of the value chain of coffee has increased
rewards in two main methods. The first method is within the commercial market for
Robusta and hard Arabica, from large or very large grower-exporters that are able to
consistently supply high volumes, meet basic or above basic quality requirements,
guarantee proper handling, and provide efficient logistics up to the loading of a ship
(Gibbon, 2004:23). This is basically a quantitative measurement where rewards include
a higher reference price and medium to longer term commitments from buyers (Gibbon,
2004). The second method concerns mainly higher quality mild Arabica such as
‘specialty’ or ‘gourmet’ coffees (Gibbon, 2004). Upgrading within mild Arabica is
identified either through increased quality or adding credence attributes to the product
(Slob, 2006). The former refers to production method and technology for a better
6
quality product, and the latter refers to standards based on trust, usually communicated
through a label. Such voluntary standards are defined by Nadvi and Waltring (2002);
’Standards are agreed criteria… by which a product or a service’s performance, its
technical and physical characteristics, and/or the process, and conditions, under which it
has been produced or delivered, can be assessed’’ (Nadvi and Waltring, 2002, cited in
Giovannucci and Ponte, 2005:286)
Through these standards, developing country farm and business will gain market access,
in particular access to niche markets (Giovannucci and Ponte, 2005). The element of
diversifying products, or searching for niche markets, is a normal response in the neoliberal market with increasingly varied consumer demands. In the literature, the term
sustainable coffee has increasingly been referring to the method of upgrading in coffee
through quality and credence attributes. The sustainability segments, such as economic
viability, environmental conservation and social responsibility are directly attributes
from the upgraded product. Producers participate in such programs where they believe
it will bring economic benefits and market access. The standards and certifications are
promoted to improve producer income, use competitive advantage and empower the
producer. Furthermore, it is enhancing ecological production methods through
environmental standards and increased knowledge of sound agricultural practices
(Ponte, 2004; Giovannucci and Ponte, 2005).
Different types of sustainable coffees currently on the market are; gourmet or specialty
coffee, denomination of origin, organic, Fairtrade, Rainforest Alliance, Utz Certified, Bird
friendly and shade grown, in addition to private standards such as Starbucks CAFÉ
practices, Nespresso, Coop café future, 4C, among others (Ponte, 2004; Giovannucci and
Ponte, 2005).
My analysis is highly inspired by the approach of political ecology. Political ecology is a
field of critical research concerning the condition of the environment and the people
who live and work in it. It is a field which has attracted researchers from the fields of
anthropology, forestry, development studies, environmental sociology, environmental
history and geography (Robbins, 2004). It incorporates the perspective of political
economy held together by a focus on the use and management of natural resources,
combined with an interpretation of discourses, meaning and narratives.
7
Political ecology is a contested field where …’’some stress the political economy while
other points to more formal political institutions: some identify environmental change as
most important while others emphasize narratives or stories about change’’ (Robbins,
2004:5). Blaikie and Brookfield (1987) explained the concept of political ecology the
following manner;
‘’The phrase ‘political ecology’ combines the concerns of ecology and a broadly defined
political economy. Together this encompasses the constantly shifting dialectic between
society and land-based resources, and also within classes and groups within the society
itself’’ (Blaikie and Brookfield, 1987:17).
The political ecology approach has evolved in different directions. This paper will
emphasize discourses, narratives and meanings inspired by Peet and Watts (1996) and
Roe (1991, 1995). It will focus on highlighting the role of images and representations
through narratives in the struggle over natural resources (Peet and Watts, 1996). Thus,
the theoretical approach of my analysis is a social constructivist approach influenced by
Derrida’s (1966) theory on deconstruction. Essentially, I will deconstruct the concept of
Fairtrade coffee and interpret the meaning of Fairtrade within different cultures. In
particular, I deconstruct the meaning of Fairtrade through producer and consumer
cultures, and through communication strategies of Fairtrade. However, as the
deconstructed system fail to highlight the power structures in the chain, I show this by
the GVC analysis.
My paper will include two types of analysis; the global value chain analysis and the
commodity cultures approach. The GVC analysis is an economic analysis of the income
generated by Fairtrade coffee. The GVC approach is highly descriptive of the exchange
value, or the economic income generated by actors in the chain. The approach of a value
chain is a linear imagination of a chain from producer to consumer. The total income
corresponds to the retail value of the product. The GVC of Fairtrade coffee essentially
takes the Norwegian coffee market as a point of departure, where total income
generated from the Fairtrade coffee equals the retail value of the product. The main
suppliers of Fairtrade coffee in Norway is the second level cooperative Fedecocagua in
Guatemala. However, in order for comparison, a first level cooperative in Nicaragua,
which exports Fairtrade coffee to Sweden, is included. The main aim of the GVC is to
show how the economic income is distributed through the chain.
8
The commodity culture approach is parallel to the work on material cultures and builds
on methodology from the political ecology of development and from consumption
studies. It is ideally a study which makes it possible to counter the divide between
production centered and consumption centered studies. There is quite a large debate on
production centered and consumption centered approaches to understanding
commodities and their circulation from production to consumption. In trying to avoid
this debate and the implications of either approaches, I decided to use the commodities
culture approach. I use the approach in which I understand it is possible to interpret
different commodity cultures individually. The commodity cultures refer to groups of
actors central to the commodity. I have divided the commodity cultures into
representation culture, producer culture and consumer culture, which I believe are the
key commodity cultures of Fairtrade coffee. The commodity cultures approach
necessarily involves a deconstruction approach, where the key groups of actors are
separated and studied individually.
The commodity cultures approach involves rethinking the linear commodity chain or
global value chain approach to incorporate more complex circuits and networks for new
modes of understanding (Jackson, 1999, 2002). The framework is operationalized
through Appadurai’s (1986) idea of the social life of a commodity but taken further as to
expose neo-Marxist double fetishism of commodities (Bryant and Goodman, 2004). The
social life of the commodity is related to the different cultures in which the commodity
circulates. In particular, the approach highlights social relations and narratives part of
the social construction of the commodity. This is essential a Marxist idea where the
commodity contains a fetish which obscures social relations in production. By exposing
neo-Marxist double fetishism, it is possible to expose the power structures in the global
network of the commodity2 and the regimes of exploitation and the economic and
cultural surpluses this creates for consumers (Bryant and Goodman, 2004:348). The
commodity culture approach is grounded on post Marxist theories (Foucauldian and
feminist theories) and grounds support and importance through social relations based
on social constructivist approaches (Bryant and Goodman, 2004). The commodity is not
only a raw product where value is added from production, processing and final
The idea is essentially taken from the critique which came after Appadurai’s (1986) ‘The social life of
things’. The social biography of a commodity was insufficient to describe the unequal power relations in
the commodity network (van Binsbergen, 2005).
2
9
consumption. The commodity has a biography which is possible to visualize through
narratives of the actors participating in the complex network. …’ Acknowledgement of the
textuality of the material world is enormously helpful in understanding the social
significance of material objects, enabling, for example, commodity analysis to break out
from narrowly economistic approaches by breaking down (artificial) distinctions between
the 'economic' and the 'cultural, and by demonstrating how commodities (and the spaces
that supply them) are significant sites of cultural spectacle, key spaces through which we
come to understand the processes shaping society and seek to work out alternative forms
of social relations’ (Bridge, 2001, cited in Bakker and Bridge, 2006:14).
However, as Bryant and Goodman (2004) highlight the importance of exposing neoMarxist double-fetish, their analysis lacks reference to power inequalities and relations
in production3. I find commodity cultures approach insufficient to highlight the power
structures in the network, which made it insufficient to break the distinction between
the economic and the cultural, as highlighted above (Bakker and Bridge, 2006).
Therefore, I found it necessary to include the GVC analysis in addition to the commodity
cultures approach. Thereby I run the risk of a production centered approach and
production-related consumption. This is highlighted by van Binsberg (2005) and
Appadurai (2005), building on a revised approach to the book The Social Life on Things
(Appadurai, ed., 1986). Accordingly, the book, even though revealing consumption as a
central theme, is referred to as production-related consumption (Van Binsbegen, 2005;
Appadurai, 2005). Appadurai (2005) later emphasize the importance of bridging the
two fields of consumption and production.
’We need an equivalent sociology of consumption (not a mirror image) to that Marx gave
us for production. That is, we need to know the technical basis of consumption in and
across national spaces, we need to know the class-formation dimension of consumption
which recognizes that consumption creates classes in its own right’ (Appadurai, 2005:61).
However, this is a large debate within the field of anthropology. I do not intended to
dwell on the debate in this paper, where it is more related to extensive analysis of
consumption. I have mostly used consumption theories from Baudrillard, referred to in
Bryant and Goodman (2004) introduce the first production moment of the solidarity seeking commodity
culture with a few lines before they interpret the second production moment of Fairtrade coffee; the
symbolic and sign value of the product.
3
10
the above quote as mirror images of consumption, and Appadurai’s (1986) The Social
Life of Things. Though I acknowledge the importance of the debate and relate some
difficulties in my analysis to this debate.
By analyzing the Fairtrade network it is essential to highlighting the historical frame of
which the network came about, along with the different perceptions and definitions of
the active actors involved. Producers, importers, roasters, consumers, activists, NGOs
and scholars alike, have various different interpretations of what stipulates Fairtrade
coffee. A central feature of the commodity culture approach is how the meaning and
perceptions of Fairtrade coffee changes through the commodity network as different
production moments of the product4.
Particularly important when characterizing a Fairtrade coffee are the representation
narratives created by the Fairtrade network. The communication strategies and the
selective producer narratives distinguish Fairtrade coffee from a conventional coffee
(Whatmore and Thorne, 1996). Moreover, the Fairtrade coffees’ success relies on
consumer sensitivity to arguments of social and environmental justice (Renard, 1999)
which is essentially an argument of demand and whether this demand is socially
constructed (Bryant and Goodman, 2004). Thus, there is a need for a focus on social
constructs and textuality which are sensitive to cultural frames of actors and authors in
which they operate.
Discussing Fairtrade coffee in terms of consumption, Guthman (2003) argues a new
paradigm of consumer demand for socially constructed shared values such as health,
nutrition, authenticity; ecology and social justice. The ethics behind the new paradigm of
consumer demand is, according to Renard (1999:489)
…’resulting from the industrial, productivist agricultural system that prevailed during the
Fordist era-together with overproduction and the resulting financial problems-which has
placed this (the current) model in question, and has caused a lack of confidence in the
quality of food products.’’
The new consumer demand for ethical products, resisting mass consumption and
assembly lines, has been coined by the ‘reflexive’ consumer (Guthman, 2003) building
4
Economists usually refer to production moments as the steps of processing.
11
on theories of life politics from Giddens (1991). Lifestyle politics builds on the notion of
a reflexive project of the self where material products and choices form a certain
narrative of identifying self (Giddens, 1991). According to Giddens (1991) in the era of
late modernity, one identifies the self in the capacity of keeping a certain narrative
going. This is also in line with moral theory presented by Macintyre (1985), where we
understand our lives and live our lives in terms of narratives. The reflexive consumer
choose Fairtrade product as part of defining the reflexive project of the self.
However, ethical considerations of consumption is not merely reflecting consumer
behavior, it is highly influenced by marketing and representation strategies (Barnett et
al., 2005). Thus, there is a need to conceptualize ethical consumption in these terms;
…’ ethical consumption as a field of marketing, campaigning, and policy-making by which
ordinary, practical moral dispositions of everyday consumption are re-articulated by
policy-makers, campaigning organizations, and business’ (Barnett et al., 2005:29).
Thus, Fairtrade is guided not only by consumer reflexivity and producers’ search for
niche markets, but also by the social construction and marketing which gives meaning to
the product.
My paper is structured as to first give a brief history of coffee and outline structures of
the international coffee market. Secondly, I will briefly discuss certifications of coffee as
sustainability initiatives in coffee before I move on to introduce history of Fairtrade and
the Fairtrade market in Norway. This section I have named background.
The following section will outline research methodology and theory. It will firstly give an
introduction to the general research approach I have taken. Secondly, there are two field
methods sections, which are divided geographically between Guatemala and Nicaragua. I
will give a brief introduction to political issues within the countries and outline the
institutional structures of the two cooperatives I have studied. The third part within this
section is devoted to theory of the analytical tools I am using to analyze my data. I
outline the main theorists related to the approaches and justify for my use of the
approaches. I have given particular space to justify the reason behind the two different
analytical tools.
12
The next two sections are devoted analysis and representation of results. I have divided
the result section in two different chapters as I believe they differ in such fundamental
terms that it was easier to understand them separately. Thus, one chapter is devoted the
value chain analysis and a second result chapter is devoted narrative analysis within
three commodity cultures. The three commodity cultures are firstly, the representation
culture, or strategy, secondly the producer culture and thirdly, the consumer culture. At
last I have included a short example in order to highlight that these cultures are
connected.
At last, I have a concluding chapter. The conclusion brings together results from the two
analyses, draw the attention back to the objective of the study and highlight key findings.
13
1.2 RESEARCH OBJECTIVE
The key research objective is to analyze the Fairtrade system through Fairtrade coffee. I
aim to identify the meaning and value of Fairtrade coffee bought in Norway in order to
discuss the impact of Fairtrade. My research is guided by questions of whether Fairtrade
has the ability to challenge international trade and whether the Fairtrade network is
growing in accordance with, or on behalf of, the impact it has on producers. I will
identify the value of Fairtrade coffee through an economic value chain analysis and the
commodity cultures approach. The economic value chain highlights the income and
power structures in the chain. The commodity cultures approach deconstruct the
Fairtrade coffee network to interpret meaning and value through narratives within the
key cultures comprising the Fairtrade coffee network.
1.2.1 SPECIFIED OBJECTIVES
1. Carry out a global value chain analysis of Fairtrade coffee, which includes the
identification of economic benefits accrued by each actor.
2. Identify the Fairtrade narratives presented by key actors within commodity
cultures, with main emphasis on producer narratives.
1.2.2 RESEARCH QUESTIONS
1. Who are the key actors participating in the global value chain/network of
Fairtrade coffee for Norwegian consumers?
2. What is the economic exchange value of the product to each key actor?
3. What are the varieties of meanings invested in the network?
14
2.0. BACKGROUND
2.1. HISTORY OF COFFEE
Arabica coffee most likely originates from the highlands of Ethiopia. The legends have it
that coffee was discovered by the goat herder Kaldi at the horn of Africa, in Ethiopia,
probably in the province of Kaffa circa A.D. 800. Kaldi noticed his herd dancing from one
coffee shrub to the other, grazing on the red cherries, and he decided to try it for himself.
The legend further explains how a monk witnessed Kaldi eating the cherries and tried it
for himself, being very alert to divine inspiration that same night (International Coffee
Association; the story of coffee, undated). Coffee was being cultivated in Yemen at least
by the 15th century, most likely earlier. Coffee was brought in at the port of Mocha,
which was also the main route to Mecca. The Arabs followed a strict policy not to export
fertile beans5, in order to keep the profitable activity for themselves. The Arabian coffee
houses became centers of political activity. This was seen as a problem and apparently
led to their suppression. The coffee houses and coffee was banned several times, but the
coffee houses kept reappearing. The solution came as a tax on coffee and the coffee
houses (International Coffee Association; the story of coffee, undated).
By early 1600, coffee had been introduced to Europe where coffee houses spread
quickly. The Arabs controlled the cultivation of coffee and had monopoly on the desired
product. They forbade the export of fertile seeds and par-boiled the coffee before export
for the coffee not to be germinated. However, the seeds found its way to India, where a
Dutch botanist brought them further to Java, and to a greenhouse in Amsterdam. The
French eventually sent some seedling to Martinique where coffee spread to the rest of
Latin America (Talbot, 2004).
‘Almost all of the coffee trees now growing in Latin America are direct descendants of a few
seeds from Java. …Coffee was also introduced to East Africa around 1900 by Catholic
missionaries. And ironically, although it had probably originated there, the seeds for these
plantings came from the Caribbean, completing a five hundred-year journey around the
world’ (Talbot, 2004:45).
The coffee beans are the seeds of the coffee tree, but they become infertile if one strip off the outer layer
(ICA).
5
15
Robusta coffee, on the other hand, originates from Central and West Africa, and was
discovered by French colonists due to its similarity to Arabica coffee. The Robusta coffee
plant is more robust or resistant than the Arabica plant. The Arabica coffee plant is
highly susceptible to various diseases and pests due to its limited genetic stock, in
particular to leaf rust which is the main threat to Arabica coffee along with the coffee
berry borer worm (broca). In many parts of Asia, Arabica was replaced either by
Robusta due to its resistance to leaf rust, or by tea due to preferences, leaving Latin
America as the main supplier of Arabica coffee (Talbot, 2004). Talbot explains the
importance of coffee during colonial times as following;
‘Brought around the world by colonists, coffee along with other commodities became
important sources of colonial power for Britain, as well as essential consumption items for
the growing industrial working class. In Britain and other European powers, coffee and
tea, sweetened with sugar, gradually replaced beer and wine as working-class beverages’
(Talbot, 2004:46).
One of the most comprehensively description of the introduction of colonial products, in
particular coffee, to rural societies is the novel Max Havelaar by Multatouli, pen name of
Douwes Dekker;
’…der kom Fremmede vesterfra, som gjorde sig til Herre over landet. De ønskede at drage
Nytte af Jordbundens Frugtbarhed og paalagde Indbyggerne at anvende en Del av deres
Arbejde og Tid til at tilvirke andre Produkter, der vilde kaste mer af sig, naar de blev solgt
paa det europæiske Marked. …Men spørger man mig, om de javanesiske Aagerbrugere selv
faar et Udbytte, der svarer til denne Rigdom, maa jeg give et nægtede Svar. …Da det dog til
syvede og sidst gælder om at tjene noget, kan dette kun ske ved netop at betale Javaneserne
saa meget, at de ikke dør af Sult, hvilket vilde formindske Folkets Arbejdskraft6’ (Multatuli,
1901:46).
..there came unknown people from the west, which made themselves Rulers of the country. They wished
to make use of the fertile soil and instructed the inhabitants to make use of their labor and time to
produce other products, which would give more in return, when it was sold at the European market… But
if one ask me, if the Javanese farmers themselves receive a return, which corresponds to this wealth, then I
have to give a denial answer… When it in the end concerns about earning something, this can only happen
by paying the Javanese as much, as they do not die of hunger, which would have decreased the peoples’
work capacity (Multatuli, 1901:46).
6
16
2.2 THE INTERNATIONAL COFFEE MARKET
The majority of coffee is typically sold as what economists refer to as a primary
commodity, which is an undifferentiated good sold in bulk quantities. This reduces
incentives for growers to maintain or improve quality. The market for coffee is
characterized by high price volatility. High price volatility refers to ...’the inability to
predict prices before an event and the retrospective measurement of their level of
variation’ (Lewin et al, 2004:20). The reason for the high price volatility is the available
quantity of stocks (it is possible to store unprocessed coffee, parchment coffee for up to
two years in right conditions, Mitchell, 1988), sudden changes in the supply/demand
balance usually caused by natural disasters where frost in Brazil has been the main
cause of increasing prices. Additionally, there is a lack of information to producers about
the coffee market. These changes are particularly damaging when the parameters of
variation are not known in advance, which is particular the case with commodity prices
(ibid). Coffee is a tree crop which takes three to four years to produce cherries. Thus,
planting coffee trees require farmers to take a long-term view, which is difficult with
unpredictable prices and limited access to credit (ibid). Furthermore, when prices are
volatile, the actors within the supply chain with direct exposure to prices will raise their
margins in order for a certain security. When this happens at the expense of farmers,
revenue is transferred directly to traders (Lewin et al, 2004:22).
The inadequate access to information creates shocks and instability in producing
countries. The market is characterized by its ups and downs. There are good times and
there are bad times, though there are always better times in local communities around
coffee harvest. The coffee harvest proceed for about three months, and these three
months are described as the liveliest times in Yalí, a small village two hours north of
Jínotega, northern Nicaragua. People have ‘platas’ (money) during these three months,
because the whole village is somehow included in the coffee industry. They are proud of
their coffee, rumors has it that the first coffee plant in Nicaragua was brought here many
years ago (although this is only a rumor, other coffee villages claim the same). They are
also proud of the quality they have, this is coffee grown at high altitudes, which is the
first characteristic of a good quality coffee. The village is dependent on the sale of coffee;
17
the village is based on coffee, like so many other rural villages in Central America 7.
Coffee is one of the world’s most important Third World commodities and over 90
percent of the coffee production takes place in developing countries (Slob, 2006). More
than 70 percent of the coffee-producers are small scale farmers (Milford, 2004), who
produce coffee on farms of less than ten hectares (Oxfam, 2002).
Coffee was a profitable activity in producing countries from about mid 1960s to late
1980s, and profits were spread through rural areas (Talbot, 2004). The prices for coffee
are determined on the two big future or stock markets in London and New York, the
former is the benchmark for Robusta coffee and the latter for Arabica. Futures prices
reflect not just current physical market prices but also the expectation of future events
which can have impact on prices, including speculating activity from actors such as large
financial traders and speculators (Lewin et al, 2004). The coffee futures contract traded
on the New York stock exchange is called the ‘C’ contract, based on Central American
Arabica coffees. Coffee has been exchanged there since the founding of the New York
Coffee exchange in 1882. It merged with sugar and cocoa to the New York Coffee, Sugar
and Cocoa Exchange (CSCE) in 1982 (Talbot, 2004).
Like other commodities, coffee is a good which is inelastic to demand. This means that a
sharp decrease in price due to a good harvest year will not mean a significant increase in
demand. Nevertheless, coffee harvests differ enormously, where yields could be ten
times as large in good years as in bad years, resulting in very unstable coffee prices (Hira
and Ferrie, 2006). Furthermore, the prices are largely dependent on big producer
countries, such as Brazil, evident when the price soared to US 1.80/lb in 1994 when
frost damaged the coffee harvest (Hira and Ferrie, 2006).
The market is defined by its booms and busts as a consequence of natural disasters, in
particular damage of the harvest in Brazil. Under the International Coffee Agreement
(ICA), which controlled the export of coffee through quotas, a little more than half of the
total income from coffee went to producing countries, with a third of it as surplus
(Talbot, 2004). However, the 1975 Brazilian frost created an increase in surplus to
producing countries for the harvest of 1976-1977 of about 80% of total surplus
available along the chain (Talbot, 2004). After the 1976-1977 harvest the surplus was
7
Based on conversations with farmers in the community of Yali.
18
evenly distributed between producer and importer nations until the aftermath of the
Brazilian draught in 1985, which lead to price increase and temporary suspension of ICA
quotas in 1986-1987. The income of producer countries fell to about a quarter, while the
income in consuming countries rose to two thirds of the total. However, because total
surplus increased, there was a shift in distribution of surplus, now 60 percent to the
producers.
The next mayor shift was caused by the end of quotas and the price crash of 1989
(Talbot, 2004). The vulnerability in the coffee market is seen as a consequence of
structural global over supply, natural disasters in Brazil, and a shift in bargaining power
of agents in the coffee chain due to a failure to renew the International Coffee Agreement
(ICA) in 1989. The entrance of Vietnam as a leading coffee producer and Structural
Adjustment Programs (SAPs) from the International Monetary Fund (IMF) are also
important factors, which increased supply and affected coffee prices (Bacon, 2005;
Muradian and Pelupessy, 2005). Income in producer countries rose to three quarters of
total, while income of producer countries fell to about 15 percent. The Brazilian frost
shifted temporarily surplus back to producer countries, but leading to the second crisis,
almost all surpluses was retained in consuming countries. Many producers received less
than it cost them to produce (Talbot, 2004). From the late 1980s-early 1990s until 2004,
earnings of coffee producing countries in terms of export free on board (FOB) decreased
from US$10-13 billion per year to US$5.5 billion.
In the broader picture, prices of most major agricultural commodities have fallen
between 50 and 86 percent during the last 20 years. However, coffee showed one of the
greatest fall (Slob, 2006), reaching a record low in 2001 (Milford, 2004). Under the ICA
regulations, coffee was traded in the managed market. Governments in both producing
and consuming nations sought to agree pre-determined supply levels by setting expert
quotas for producing countries. The breakdown of the ICA in 1989 had many causes,
most important being the incapacity of members to negotiate a new quota allocation,
lobby actions from American firms8 and the inability of producer and consumer
countries to control extra quota in coffee movements (Muradian and Pelupessy, 2005).
The reasoning is also related to the geopolitical historical context of the Cold War. The
8
Including large coffee corporations such as Procter & Gamble and Sarah Lee (Fridell, 2004).
19
new neighbor policy of the US wanted to reward friendly governments through coffee
trade, which was impossible with the current ICA structure, therefore the Reagan
Administration decided to sabotage renewal negotiations by making impossible
demands from Brazil and Colombia (Jaffee, 2007:42).
The agreement survived, administered by the International Coffee Organization (ICO),
but it lost power to regulate the supply of coffee through quotas and the price corset
(Oxfam, 2002). The consequence of the breakdown of the ICA and liberalization policies
by the World Bank (Talbot, 2004) was an increase in coffee production followed by
rising inventories9 in consumer countries, slow-moving demand and market
concentration in trading and roasting industries (Ponte, 2002). Consequently creating a
shift in power to the roaster and retailing end of the commodity chain and falling prices
paid to the producers (Ponte, 2002; Bacon, 2005).
Thus, when the frost in Brazil drove prices upwards in 1994, growers responded by
increasing coffee planting. Before liberalization, the state would have increased taxes
and revenues which would have worked as insurance against next period of low prices.
This would also have reduced incentives to plant more coffee for producers. When the
increased production hit the market around 1998, this set off the second coffee crisis.
Media have increasingly blamed World Bank policies for funding increased production
in Vietnam for the second coffee crisis. However, according to Talbot there has been
limited evidence for this. What has been more important is the increased power of large
TNCs which have taken advantage of their position by buying larger quantities of low
quality Robusta coffee from Vietnam and blending this with higher quality Arabica
coffee. This has lowered demand of Arabica coffee, thus pressing the prices down.
Furthermore, the changed structure of the coffee chain along with privatization policies,
as explained above, has limited the producer state control. Large TNCs have currently
control of the entire chain, from producer to consumer. ‘Increasingly, small peasant
farmers producing coffee using family labor on one side of the market were directly
confronting giant transnational conglomerates with state of the art information
technologies, access to virtually unlimited financial resources, and a clear picture of the
entire global coffee situation on the other side’ (Talbot, 2004: 129). According to Eakin et
9
Inventories refers to keeping a certain amount of stock in storage.
20
al. (2006:156), revenue from coffee sales in Central America declined as much as 44
percent. The coffee market is described as oligopolistic where few large TNCs dominate
the market (Talbot, 2004). The crisis is described as a market failure due to oligopoly
and the creation of cartels or informal agreements between firms. The price paid to
farmers for both Robusta and Arabica coffee was in 2001, taking inflation into account,
25 percent of its level in 1960, which only covered 60 percent of the production cost in
many countries (Oxfam, 2002).
In 2004, the international coffee market showed some signs of recovery. The upward
trend started in the last month of 2003 and continued to 2005 (Slob, 2006). In February
2005, prices reached the same levels they averaged in 1999 of more than US 85 cents
per pound (Slob, 2006).
The value added along the chain takes place increasingly in consuming countries. In
producing countries, actors sell material coffee according to quality evaluated on export
point. While in consuming countries, coffee is sold packaged with symbolic and inperson service components where value is controlled by roasters, retailers and coffee
owners (Daviron and Ponte, 2005), creating the so-called ‘latte revolution’ (Ponte,
2002).
2.3 SUSTAINABILITY INITIATIVES IN THE COFFEE SECTOR
One of the main challenges for the coffee industry is how to sustain better market
conditions to avoid the cycles of boom and bust (Slob, 2006). The recovery of producer
prices after the coffee crisis currently makes coffee production a profitable activity for
many. However, roasters and retailers have shown capacity to add substantial value to
the green beans by targeting ever more segmented consumer markets. Roasters and
retailers capture increasingly more profit downstream. Producers have seen their total
value decline from 30 percent to 5 percent of total retail price in the past two decades
(Lewin et al, 2004:95). Farmers seek differentiated markets for better prices and
improved production methods. However, these are not easy tasks for the poorest
farmers, which demands understanding of current market trends, appropriate
technology, multiple distribution channels and financial, logistical and risk management
options. These new methods require new organizational and management capacities of
organizations such as cooperatives. But it also includes a different view of the product
21
by roasters, importers and consumers, as a commodity, according to economists, is an
undifferentiated bulk product which rewards the lowest cost of production
The practices of the differentiated coffee differ in design, standards, attributes, and
values added (Slob, 2006) and they are traded through differentiated channels. In order
to participate, producers need a differentiated product and the ability to access buyers
and to export their product. It involves a shorter supply chain, but for many, traders and
middle men are still important actors.
The term specialty or differentiated coffee is not clearly defined and has been a source of
confusion in the industry (Lewin et al, 2004:99). In particular, marketing campaigns in
the global coffee trade have imprecisely used terms like ‘gourmet’ or ‘shade grown’
coffee.
Clearly, if the industry itself is unclear (about these terms) one can only assume that
consumers are equally at loss. Consumer confusion is known to depress rather than
stimulate markets (Lewin et al, 2004:99)
Not only are consumers confused about what stipulates a specialty coffee or the
different certification initiatives in coffee; the growing increase in specialty coffee
initiatives appeal to the consumer in different ways. They differ in the information
strategies communicated to the consumer and what they actually represent (see Figure
1). Standards are important for producers in developing countries as they determine
access to new markets and new terms of participation in global value chains. Standards
set entry barriers and it provides the opportunity for the selected producers to add
value, improve their product and assimilate new functions along with a different
relationship with buyers in importing countries (Giovannucci and Ponte, 2005).
Standards can be seen as a market tool of product differentiation, market penetration,
system coordination, quality and safety assurance, brand complementing, and product
niche differentiation (Giovannucci and Reardon, 2000).
The different standards and certification of coffee communicate information about the
attributes of a product. Ponte (2004) classify these attributes according to the ease with
which they can be measured. Search attributes are verified at time of transaction, such
as the color of the coffee bean. Experience attributes are assessed after the transaction
has taken place, such as the taste. These attributes pertain to the product itself, such as
22
appearance, taste, cleanliness and absence of taints, or to production and process
methods. The credence attributes are attributes that cannot be detected based on
physical characteristics, but are based on trust. The credence attributes responds to
aspects such as authenticity of origin (geographic appellation), safety (pesticide
residues, levels of toxins) and environmental and socio-economic conditions, such as
organic, Fairtrade and shade-grown certifications (Ponte, 2004).
Furthermore, Ponte (2004) classifies standards in three broad categories; mandatory in
the form of government regulation, voluntary from a formal coordinated process, such
as eco-labels, or resulting from NGO-initiatives, such as Fairtrade labeling and other
third party certifications such as Raniforest Alliance, shade-grown certifications, birdfriendly and Utz Certification. In addition there are private standards which are
developed and monitored by individual enterprises (Ponte, 2004), such as the Starbucks
CAFÉ practices (Fisher, 2007) and Coop café futuro. However, Fairtrade seem to differ
from other initiatives in that it has widespread consumer activist support through NGOs
such as Oxfam and Global Exchange (Fisher, 2007). The different initiatives in the coffee
sector create confusion of what stipulates sustainable coffee;
Recent large-scale industry surveys in 14 major markets suggest that the specific
characteristics of certifications are confusing to the coffee industry – and especially to
consumers (Giovannucci, 2001; Giovannucci and Koekoek, 2003).
(cf. Giovannucci and Ponte, 2005, pg 285)
23
FIGURE 1: PREMIUMS AND STANDARDS COMMUNICATED BY SUSTAINABILITY
INITIATIVES
Premiums certified coffee 2006-2007
Starbucks C.A.F.E.
Practices
C' price average 2006
(FOB US$/lb)
Certification
Rainforest Alliance
Utz Certified
Fairtrade Pricefloor (FOB
US$/lb)
BirdFriendly
Organic Premium (FOB
US$/lb)
Fairtrade + Organic
Social Premium (FOB
US$/lb)
Fairtrade
Organic
0
0.5
1
1.5
2
Value (US dollar/lb)
REFERENCE 1: GIOVANNUCCI, 2007
The Starbucks C.A.F.E. practice is a private program including social and environmental
criteria, started in 2001. It is essentially a market-driven point system, which gives
points to better social, environmental and economic conditions, with a requirement of
good quality coffee. The quality requirements limit the program to Arabica coffees with
‘zero defects in grade, superior even color, and consistent bean size’. Price incentives allow
an increment of US$ 0.10/lb, for a total up to 100 points, which is then characterized as
preferred supplier (May et al, 2004). It includes an additionally USD 0.15 for organic
certification.
Rainforest Alliance is mainly an ecological certification scheme. Along with techniques
for conserving and creating protective zones to the natural ecosystem, the certification
requires a minimum of 70 individual trees per hectare that must include 12 native
species. There must be a shade density of at least 40 percent at all times and criteria
must be complied within five years of certification. There are no set economic premiums
for the producers, but importers are encouraged to pay higher prices for the certified
24
product, in addition to the ecological benefits to the producers (Rainforest Alliance
webpage).
The Birdfriendly certification is an initiative from the Smithsonian Migratory Bird
Center, and is also essentially an ecological certification scheme. The certification is
based on a minimum shade management practice, at least 40 percent canopy cover, in
support of migratory birds. Planted shade should include a high diversity of species in
support of a diversity of migratory birds, with minimum criteria of ten different species
and encourage old growth forest. The certification requires organic production
(Smithsonian Migratory Bird Center webpage).
Organic certification has a minimum requirement of no application of prohibited
substances such as synthetic fertilizers, herbicides, pesticides, growth regulators,
fungicides etc, for a period of at least three years. It encourages the use of techniques
such as composting, terrace building, and biological control (Killian et al., 2006). There
are numerous different organic certification schemes worldwide, where certification
criteria at the production sites must comply with certification in the consuming
countries. In Norway, Debio is the certification of organic production with requirements
for distribution of organic goods (Debio Norway, undated).
Utz Certified, or the former Utz Kapeh which means ‘good coffee’ in Mayan, was founded
by Arnold Coffee Company to serve its private needs. It is now an independent
foundation and certifies coffee according to its own code of conduct (Giovannucci and
Ponte, 2005). Utz Certify have adopted the EUREP-GAP (The Euro Retailer Produce
Working Group) sustainability criteria, which is a standard-setting body for
international certification and produces for good agricultural practices (GAP) (Lewin et
al, 2004). Utz also bases its standards on ILO standards. The code of conduct for
production processes includes specified criteria on maintenance of agricultural
registration, traceability, soil management, use of fertilizers and irrigation, crop
protection, hygiene, workers safety, prevention of environmental and human
contamination from planting through post-harvest, and destination and recycling of crop
residues and toxic product containers. Utz Certify does not operate with a price floor,
such as FLO, but encourage that buyers pay a ‘Sustainability Differential’ to producers at
times of low prices. The differential is not fixed, but negotiated between buyers and
sellers in reference to a perceived added value by Utz Certified (Utz Certify, 2008). The
25
code of conduct is not necessarily verified through independent third-party certification,
which makes for weaker compliance of standards (Giovannucci and Ponte, 2005).
2.3.1 HISTORY OF FAIRTRADE
‘Fairtrade is a trading partnership, based on dialogue, transparency and respect, that seeks
greater equity in international trade. It contributes to sustainable development by offering
better trading conditions to, and securing the rights of, marginalized producers and
workers-especially in the South. Fairtrade organizations (backed by consumers) are
engaged actively in supporting producers, awareness raising and in campaigning for
changes in the rules and practice of conventional international trade’ (EFTA, 2001).
The Fairtrade network10, as we know it today, is here defined by the informal umbrella
network FINE, consisting of FLO (Faritrade Labelling International), IFAT(International
Federation of Alternative Trade), NEWS! (Network of European World Shops) and EFTA
(European Fairtrade Association) (EFTA, 2001). FLO International was established in
1997 as an umbrella group for the National Initiatives of Fairtrade labeling initiatives
such as Max Havelaar, Trans Fair, or the Fairtrade Foundation (Fridell, 2004). The Dutch
development aid organization, Solidaridad, created the Max Havelaar Foundation in
1988, coffee being the first and most important commodity (Jaffee, 2007).
FLO International, currently separated into FLO-International and FLO Cert, is different
from these other organizations as the main areas of work is to develop and review the
Fairtrade standards and provide support to Fairtrade certified producers (FLOInternational; about us). FLO-CERT GMBH is responsible for certification and inspection
of producer organizations and traders after the FLO-International standards (FLO-Cert;
about us). IFAT, NEWS! and EFTA as ATOs have focused on a somewhat different role
than FLO. Whereas FLO’s main objective has been to increase the Fairtrade sales
through participation of conventional corporations in the network, IFAT, NEWS! and
EFTA have focused on enhancing marketing skills and efficiency to better compete
against conventional corporations (Fridell, 2004).
10
The Fair trade network refers to the fair trade purchasing system.
26
The core of the FLO system is the price floor, a price supposed to be fair, covering the
costs of production and stable over time (Milford, 2004). However, the price floor is an
indication of consumer willingness to pay, and must remain close enough to
conventional prices as not to discourage ethical consumers (Renard, 1999:497; Fridell,
2007:192). The price floor was US$ 1.21
11at
the time of research (2007), though will
rise to US$ 1.26 as of the first of June, 2008 (FLO International, 2008), in addition to a
social premium which was US$ 0.05 at time of research, rose to US$ 0.10 on the
31.01.2008 (FLO International, 2008). However, the futures market (New York for
Arabica and London for Robusta) is used as a reference, whereas if the ‘C’ price exceeds
the FLO price, buyers are required to pay the ‘C’ price plus the social premium. However,
the US$ 1.2612 is the fob (free on board) price for the exporting cooperative, indicating
that the seller pays for transportation of the goods to the port of shipment, plus loading
costs. The buyer pays freight, insurance, unloading costs and transportation from arrival
port to the final destination (Talbot, 2004). In general, the producers receive about 80
percent of fob price in the Fairtrade market (Fridell, 2007) whereas they receive around
60 to 70 percent in the conventional market (Talbot, 2004; Fridell, 2007). For the price
differentiation since 1996, see figure below, (Feil! Fant ikke referansekilden.) where the
‘C’ price and the Fairtrade price refers to washed mild Arabica beans. The ILO core labor
standards form a central element of FLO across agricultural products, but it plays a
lesser role in coffee as FLO criteria only permits small holder producer with little or no
hired labor supply in the Fairtrade market. The small farmers allowed certification are
described as not ‘structurally dependent on permanent hired labor, managing their farm
mainly with their own and their family’s labor-force’ (FLO-International, 2008).
Included in theory as a requirement, buyers are required to offer pre-financing of
production up to 60 percent of reference price and long-term contracts (FLO). However,
these requirements have remained largely optional (May et al, 2004).
11
Prices are given for washed Arabica from Central America.
12
Price at time of research including the social premium.
27
FIGURE 2: PRICE DIFFERENTIATION OF CERTIFICATIONS FOR PRODUCER
2007
2006
2005
2004
2003
2002
2001
180
160
140
120
100
80
60
40
20
0
2000
US$ Cents/lb
COOPERATIVES
Year
REFERENCE
2:
Fair trade + social premium
Price NY "C" (Mild Arabica)
Specialty coffee
Fair trade price floor (FOB)
FLO
INTERNATIONAL,
2007;
INTERNATIONAL
COFFEE
ORGANIZATION, UNDATED A
Furthermore, important features in the area of social development are democracy,
transparency and participation where the farmers should be able to demonstrate the
use of revenue from Fairtrade to the promotion of small farm socio-economic
development. Environmental protection is stated to be an important part of the
production methods. As a minimum requirement, producers should obey to national and
international norms and regulation for the use, management, storage and destination of
pesticide containers, protect water resources, preservation of forests and natural
ecosystems, and soil protection matters.
However, Fairtrade was not established by the foundation of Max Havelaar. Rather, the
foundation of Max Havelaar was …‘a response to arguments made by Southern Fairtrade
partners about the need to gain access to real markets’ (Fridell, 2004:419). The earliest
traces of Fairtrade in Europe dates from the late 1950s when Oxfam UK started to sell
crafts made by Chinese refugees in Oxfam shops. In 1964, the first Fairtrade
Organization was created. The Dutch third world groups started with sugar canes with
28
slogans ‘by buying cane sugar you give people in poor countries a place in the sun of
prosperity’ (EFTA, 2006). The growth of Fairtrade, or alternative trade, from late 1960s
was associated primarily with development trade, parallel to the second UNCTAD
conference (United Nations Conference on Trade and Development) in Delhi 1968,
communicating ‘Trade, not Aid’. Its founders were mainly large development and
religious agencies establishing Southern Fairtrade Organizations, importing crafts and
food and selling them in so-called World Shops. Alongside development trade was
solidarity trade, which focused on importing goods from marginalized countries in the
South (Fridell, 2004).
The first fairly traded coffee was imported in the 1960s by Fairtrade Original in the
Netherlands, from cooperatives of small farmers in Guatemala. Currently, about 25-50%
of turnover of Northern Fairtrade Organizations comes from coffee. In the 1980s, a
Dutch church-based NGO conceived the idea of a Fairtrade label as a new way to reach
the broad public. The label would make them stand out among ordinary products on
store shelves, and would allow any company to get involved in Fairtrade. In 1988, the
Max Havelaar label was established in the Netherlands, name taken from the 1860 novel
by Multatuli (Eduard Douwes Dekker) ‘Max Havelaar: Or the Coffee Auctions of the Dutch
Trading Company’, which was written as a protest against the abuse of Dutch colonial
power in Java and Sumatra (Multatuli, 1901).
The objective of Max Havelaar was to offer the label to conventional importers who met
Max Havelaar’s standards in exchange for a certification fee. …’Conventional importers
would be encouraged to participate in Fairtrade because of the ‘’added value’’ the
Fairtrade label-injected with symbolic meaning-would give them on the market’ (Renard,
1999, cited in Fridell, 2004: 419). This departure, by mainstreaming the network, is
quite significant and requires further analysis of the Fairtrade movement. It is important
to make this distinction between the Fairtrade network and the Fairtrade movement.
The Fairtrade network is the system of rules and principles of trading whereas the latter
is part of a broader Fairtrade movement (Fridell, 2004).
‘’The Fairtrade network was significantly influenced by the broader Fairtrade movement,
which set the context within which it evolved’’ (Fridell, 2004: 416).
29
The Fairtrade movement, also referred to as the Fairtrade/Back to Bretton
Woods’ school or globophilies (Buckman, 2006), emerged in the inter-war period 19181939 (Fridell, 2004) as part of the less radical policy school of the anti-globalization
movement (Buckman, 2006). It was esentually a movement to combat the rapid decline
in primary commodities-copper, tin, rubber, coffee, wheat, sugar, and cotton-as opposed
to secondary manufactured goods (Fridell, 2004). Control schemes was established
throughout the 1920s and 1930s for primary commodities through stockpiling and
restricting output of the market of these products in order to rise prices (Fridell, 2004).
An important pillar in the post-war period which both influenced the anti-globalization
movement and divided it was the Bretton Woods meeting in 194413, which established
the International Monetary Fund (IMF) and the International Bank for Reconstruction
and Development (the World Bank). Shortly after the Bretton Woods, the Havana
Charter was adopted in 1947 under the auspices of the UN as a commodity control
agreement through the use of buffer stocks in order to stabilize the price of raw material
exports (Fridell, 2004). The US refused to ratify the charter and it was finally ditched by
President Truman in 1950 (Buchman, 2006:43) The finally outcome of the Havana
conference, the General Agreement on Tariffs and Trade (GATT) was much more
minimalistic than the Havana Charter, with independent agreements on the different
commodities for five year periods. The agreements were renewed during the wartime
boom in 1950s due to the declining prices of primary commodities. The International
Coffee Agreement (ICA) was not renewed in 1989, for political-economical reasons that
will be elaborated on later, however other agreements such as sugar collapsed already
in the 1960s with the US boycott of Cuban sugar. World trade negotiations continued
and after the Uruguay Round of trade talks (1986-1993), the World Trade Orgainzation
(WTO) was established from its predecessor GATT, which included a more binding force
and included new trade-related issues (for more details see Buckman, 2006). The
collection of these public financial institutions along with the world’s transnational
corporations (TNCs) has become a major global bureaucracy and wields enormous
The Bretton Woods meeting in 1944 fixed an American dollar to gold convertibility with a related
payment system and exchange rate mechanism, and confirmed an international stabilizing fund the
International Monetary Fund (IMF) to provide short term loans with conditions to countries with balance
of payments difficulties and the International Bank for Reconstruction and Development (the World Bank)
in order to provide finance for long term loans for development projects (Buckman, 2006).
13
30
influence underpinned by the Washington Consensus, which is the label of the free
market ideology.
The anti-globalization movement rose as a reaction to the enormous influence of these
institutions. The divide of the movement is described as a divide between the radical
reformers, the localized school whose ideology stems from Schumakers ‘Small is
Beautiful’ and the Fairtrade school supportive on the philosophy of John Maynard
Keynes. Though Keynes early writing was criticized of being in favor of tariffs and
protectionism, it is argued that he sympathized ultimately with a less radical
restructuring of the international institutions such as IMF and WB (Buckman, 2006).
Another conference held in attempt to bring export earnings to southern producers was
the first United Nations Conference on Trade and Development (UNCTAD) in 1969. It
was founded by Raul Prebish; the founder of the structuralist school, challenging the
Ricardian’ notion of economic advantage of nations in production of certain goods over
other nations. UNCTAD promoted the concept of ‘unequal exchange’, also incorporated
into the structuralist school (Fridell, 2004).
The Fairtrade movement argues for a level playing field in economic globalization
through more rules and regulations in the market place, to end rich world protectionism
and differentiated trade rules for poor countries (Buckman, 2006).It is separated from
the localization school and the more radical anti-globalization movement in that it
supports the world economic system powered by the World Bank, IMF and the WTO
through major reforms. However, according to Fridell (2004) the Fairtrade movement
lost momentum as the neo liberal policies tightened its grip;
’While the 1970s were the pinnacle of the Fairtrade movement, the 1980s saw its
derailment as states and international financial organizations turned away from policies
of government intervention and market regulation’ (Fridell, 2004:416).
Importantly, parallel to the decline in the Fairtrade movement was a rapid expansion of
the Fairtrade network with exceptional sales in the era of neoliberal globalization
(Fridell, 2004). The Fairtrade network, influenced by the dependency theory, was a
parallel trading system to open alternative markets in the South. During its first phase,
believed to be in the 1940s and 1950s, it was driven by the idea that the world capitalist
system was incapable of providing development benefits to the poor, adopting the
31
slogan ‘trade, not aid’. It started as a direct purchase project by Christian mission-driven
NGOs in Europe and North America, led by Oxfam UK and a Dutch Catholic group
Fairtrade Organisatie in Europe (Fridell, 2004). In 1969, the first ‘’world shop’’ was
established in the Netherlands selling Fairtrade products. The Fairtrade network grew
steadily in the 1970s and 1980s, though in the late 1980s it underwent a significant
reorientation. It departed from the dependency theory of a new economic world order
to meet the demands of the capitalist market. According to Fridell (2004);
…’most Fairtraders has abandoned his14 focus on the nation state as a primary agent in
development, which derives from the dependency theory’s focus on the goal of national selfsufficiency… And his (Barrett Brown) focus on creating a parallel trading network that
presents itself as a distinct alternative to the existing trade. …In contrast to this, most
Fairtraders now focus on NGOs as the primary agent of development.. An important
exception to this is Oxfam International, which continues to lobby for such things as
international commodity agreements and state-enforced social and environmental
standards while at the same time promoting the Fairtrade network’s non-statist project’…
(Fridell, 2004:418).
Fridell (2004) argues that the change of course of the Fairtrade network stems from two
broad factors. Firstly, the change in the ideologically conditions under which the
Fairtrade was constructed with the rise of neoliberal globalization; where development
projects based on international market regulation and strong state have been halted by
neoliberal structural adjustment policies. Additionally, this was combined with the
perceived failure of all post-Second World War development models in the South and
the fall of Soviet-style communism. Secondly, the restructuring of the Fairtrade network
stems from the imperatives of the Fairtrade market;
’The growth of the network was hindered by lack of access to consumers, the limits of
volunteer labor, poor marketing formulas, and public perceptions about the poor quality of
Fairtrade goods. In response to these limitations, Fairtrade organizations reoriented
themselves toward gaining access to mainstream markets that they hoped to reform. To do
‘’Barrett Brown’s model for a new economic order composed of democratically controlled state marketing
boards, with grassroot control at all levels, and direct link between Northern consumers and Southern
producers… central is a trade union, designed to address Southern countries’ lack of access to hard currency
and credit needed to diversify and develop trade… The final outcome would be a decentralized economy
based on a parallel trading system’’ (Fridell, 2004:418)
14
32
this, Fairtraders stepped up their efforts at consumer research, marketing strategies, and
quality control. …Most importantly was the founding of the independent labeling initiative
Max Havelaar, which sought to expand the market available to Fairtrade commodity
producers by dealing directly with conventional TNCs in the north’ (Fridell, 2004:419).
Furthermore, the use of traditional filiere15 actors avoided the need for developing a
new infrastructure and reduced costs of penetrating the market. ‘’By adding a label to
existing brands, it is possible to take advantage of the image already created around these
brands, as well as the knowledge the corresponding industrials have with regard to the
market demand’ (Renard, 1999:496). However, the Fairtrade network was not only
pushed forward by conscious consumers. It was a point of coincidence between
conscious consumers and the interest of filiere actors as a convergence of various
interests (Renard, 1999). The filiere agents responded to demand of consumers and
benefiting from profits but also through the creation of a certain image.
To sum up, there is a clear difference between the Fairtrade network and the Fairtrade
movement though the former have grown out of the latter16 and can thus not be seen as
not in relation. The distinctive shift in ideology and manner which happened in 1988
with the introduction of the labeling initiative from Max Havelaar also highlights many
of the current limitations of the system. This shift marked the growth of the Fairtrade
network and the decline of the Fairtrade movement. The Fairtrade network is now
embraced by TNCs, public institutions such as in the European Union where all its
institutions use Fairtrade coffee and some use Fairtrade tea, and in many national,
regional and municipal institutions throughout Europe, and last but not least,
international organizations such as the World Bank who has begun promoting the
Fairtrade network and are sipping Fairtrade coffee at their offices in Washington, DC
(Fridell, 2004:426).
The filiere actors is the french equivalence to commodity chain analysis and here refer to the importers,
roasters and distributors.
15
While it is important to highlight that as though much reference on the fair trade movement is taken
from Buckman (2006), I clearly take distance from his note that the fair trade purchasing system has no
relation to the fair trade school (Buckman, 2006:171).
16
33
2.3.2 FAIRTRADE IN NORWAY
A study done by SIFO (Statens Institutt for Forbruksforskning,) of ethical-political
consumption in Norway found Norwegian values to be among the worlds’ most
politically correct; concerned about world justice, animal liberation and the
environment (Terragni et al, 2006). However, Norwegians have strong faith in the state
and assume the state to handle these cases, less so through consumer power. The sales
volume of Fairtrade coffee has been growing steady since the introduction of the Max
Havelaar initiative in Norway (see Figure 3), though only amounted to about 1 percent
of total coffee import in 2005.. Currently the market share is almost 1.5 percent in
Fairtrade coffee (Ragnhild Hammer, personal interview, 21.02.2008). In addition, there
are currently six Fairtrade towns or municipalities in Norway, and another 43
municipalities are working to obtain the status as Fairtrade municipalities (Max
Havelaar Norway).
Surveys carried out by SIFO state that one third of the Norwegian population has
boycotted particular commodities during the last year and 44 percent said they bought
particular goods due to their political, moral or environmental considerations. However,
in a survey of 1000 informants, 37 percent claimed to have bought ecological certified
goods within the last four weeks, whereas 16 percent had bought Max Havelaar certified
products. Nevertheless, it is highlighted in the report the fact that Max Havelaar certified
products are pioneers in the field with high probability of expanding (Terragni et al,
2006).
Consumption of coffee is central in Norwegian culture. Norway has been a coffee nation
since the alcohol law of 1842, which abolished the private brewing of alcohol (Stenseth,
undated). Norway has among the highest consumption of coffee in the world, with a per
capita consumption of 9.3 kilo in 2004; on average a Norwegian consumes 5-6 cups a
day. The Fairtrade certified coffee had a market share of about 1 percent, which
amounted 215 metric tons of imported green beans in 2003 (Giovannucci and Koekoek,
2003), increased to 484 metric tons in 2006 (FLO International, 2007), almost 1.5
percent of the market share in 2008 (Ragnhild Hammer, personal interview,
21.02.2008). On the Fairtrade market in Norway, 174 tons of green coffee is channeled
through the mainstream retail where the majority is owned by these three roasters. In
34
2001, about 40 tons of green coffee certified Fairtrade was channeled through the
specialized market (Giovannucci and Koekoek, 2003).
In 1996, three large roasters shared 85 percent of the market in Norway; Kaffehuset
Friele, Joh. Johannson and NKL (Coop), which are also the main distributors of Fairtrade
coffee to mainstream retail.
FIGURE 3: FAIRTRADE AS PERCENTAGE OF TOTAL IMPORT NORWAY
fairtrade as pe rce ntage of total im port
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
1999
2000
2001
2002
2003
2004
2005
t i me
REFERENCE 3: FLO INTERNATIONAL, 2007; ICO, 2007
The Fairtrade coffee for mainstream retail is largely distributed through the three
major roasters in Norway. The main coffee houses import the majority of their Fairtrade
coffee from the Fedecocagua cooperative in Guatemala (Engdal, E. et al., 2007).
Max Havelaar Norway (MHN) was established in 1997 as a cooperation project between
12 organizations. Max Havelaar Norway argues for the definition of Fairtrade in line
with FLO as a new model for trade which ensures a living wage for the producers (Max
Havelaar Norway, undated). According to Hammer, director Max Havelaar Norway
(personal interview, 21.02.2008), the practical organization of Fairtrade is organized in
the following manner; in order for Norwegian roasters/importers to distribute Fairtrade
coffee they need to become licensees of MHN. MHN would put the licensee in contact
with FLO certified producer organizations. The licensee decides on a certain producer in
which committing to a long term trading relationship is crucial. The licensees have to
pay the minimum price set by FLO for the coffee. In addition, a fee must be paid to Max
35
Havelaar (Hammer R., personal phone interview, 27.03.2007) which is NOK 1.8 per
kilogram of toasted coffee (Hammer, personal interview, 21.02.2008) The license fee
amounted in 2005 to 29 percent of the total income of the organization, where the
additional funding is mainly covered by Norwegian aid, Norad, and to lesser proportion
by other development-oriented organizations (Årsregnskap Max Havelaar, 2005).
Max Havelaar Norway place the importer in contact with a FLO certified agent or trader
who imports from different organizations in producer countries to make a particular
blend and exports this to the roaster/importer in Norway (Glavin T., general manager of
Joh Johannson, personal phone interview, 28.03.2007). The responsibility of MHN
includes quarterly controls of importing contracts, payments, volume and references in
order to secure the minimum price paid to producer.
Importers and licensees are put in direct contact with producer organizations through
FLO International following they are certified by FLO-Cert. The certification process is a
costly and thorough process where minimum standards need to be met. The cost differs
with the kind of organization, number of members or member organizations, number of
products sold under Fairtrade conditions and whether the organization is owner of a
processing installation. However, an example for a small organization with 200
members applying for coffee and one other additional product, running a wet processing
plant with 45 workers includes the following: An application fee of NOK 2000, an initial
certification fee of NOK 22 812, in addition to the initial certification service inspection
with a daily rate of NOK 3 260, all costs to be paid in the first year. The following
inspections are charged on a time and expense basis with a daily rate of NOK 3 260 (FLO
International, 2006).
36
3.0 RESEARCH METHODS
The research has taken place over a period of seven months, including a preparatory
study at a research station, CATIE (Centro de Agronomía Tropical, Investigación y
Enseña) in Costa Rica and field work with producer cooperatives in Nicaragua and
Guatemala. Consumer research is based on secondary information due to time
limitations. This section will explain the development of research, the methods used in
collecting data, give a brief detail of the study areas and outline the analytical tools used
in the research.
The epistemological concern of research is social constructivist, which considers how
social phenomena develop in particular social contexts (Bryman, 2004). I render the
particular theory of knowledge appropriate in order to understand the Fairtrade
commodity as separate from a conventional commodity. Thus, I use the concept of
deconstruction, coined by Jacque Derrida in the 1960s (Derrida, 1966), in order to
analyze the social construction of Fairtrade coffee. However, the polarized debate
between constructivist and realist epistemology is inaccurate, where the constructivist
approach disregards the material. Avoiding the conceptual use of material I highlight
that the GVC analysis is carried out based on economic exchange value. The exchange
value is different to use value, sign value and symbol value. The social constructivist
approach to knowledge highlight the social construction of value to the Fairtrade coffee.
By deconstructing the determinants of value incorporated in the Fairtrade coffee, I am at
understanding the social construction of Fairtrade coffee.
The constructivist approach to knowledge assumes we can only understand the social
world through meaning and qualitative methods of research. The research seeks to
analyze how signs and images have power to create particular representations of people
and objects. Thus, in a sense, peoples’ thoughts and experiences are part of a system of
meaning. The system of meaning is constructed socially, not individually which is the
interpretive approach to research. The underlying ontology is essentially that human life
is fundamentally constituted in language (Terre Blanche and Kelly, eds., 1999). The
epistemological grounding is based on understanding others’ experiences by interacting
with them and listening to what people say. The ontological considerations of research
are based on the assumption that people’s subjective experiences are real and should be
37
taken seriously. However, working with commodity cultures it is important to highlight
that they are subjective real within their context (Terre Blanche and Kelly, eds., 1999).
The commodity cultures consist of narratives, or the general subjective meaning of
Fairtrade coffee. Thus, the analysis seeks to understand each of the social cultures
surrounding the biography of Fairtrade coffee. The constructivist approach opens a
possibility of dismissing certain narratives on behalf of other narratives closer to a
certain reality. The certain reality would then be based on more general subjective
representation of meaning. As such, the tools of research would be open for the
possibility of constructed narratives, or strategic selective representations of a reality, to
be dismissed as constructed discourses (Terre Blanche and Durrheim, eds., 1999).
However, the narratives would not be dismissed as myths, because history(ies) are
always myths which seeks to establish identities in the present (Friedman, 1992). Thus,
more importantly is to identify general and selective representations, and the
underlying meaning and agenda of the narratives. Following the model of ‘verstehen’
(understanding) by Dilthey is to seek an understanding of how narratives and texts are
created within their social settings (Terre Blanche and Kelly, eds., 1999). The narratives
serve different purposes, which is only possible to understand within the different
cultures and contexts. The modes of understanding are separated within each context.
The textual understanding is based on analyzing narratives, be they constructed in
terms of symbols, meaning or selective representations, or be they general narratives of
producer perception. The purpose of analysis is to deconstruct the meaning and value of
Fairtrade coffee in order to analyze them, one by one, before they are placed back into
context in a new perspective.
According to Derrida, once you deconstruct a system by pointing out its inconsistencies
(or binary oppositions as he describes them), you have two options. Either you
disregard the whole system, or you keep using the structure but recognize it is flawed.
The former attributes a certain truth value to the system through disregarding the
system as untrue, the latter option prevents attributing a ‘truth’ value to the system but
rather see systems as constructs even though the central idea is flawed (Derrida, 1966).
I will interpret the system of Fairtrade through deconstructing the system. The
deconstruction should be close enough to the context so that people familiar with the
context would recognize it, but far enough away so that it would help see the
38
phenomenon in a new perspective (Terre Blanche and Kelly, eds., 1999). By this I am not
claiming a new truth to the system, but rather highlight any misrepresentations that
might be within the system and point out difficulties within the system of Fairtrade.
The relationship between theory and research has been mainly inductive, where theory
has been the outcome of research and observations (Bryman, 2004). In other words, it is
a bottom-up approach where one identifies certain instances and organizing principles
from the data collected. This is not to disregard the importance of background
knowledge and theories before entering the field (Bryman, 2004). However, the
categories of organization was not made before entering the field, thus the approach is
inductive with elements of interaction between theory and observation. Furthermore,
the interaction between theory and research has been important as the field work have
been carried out in three different geographical regions. In particular this has been
important with the research in Norway. Some background research and interviews had
to be made before entering fieldwork in Central America to be able to research the
producers who supplied the majority of Fairtrade coffee to Norway. In addition, further
research was necessary when returning from fieldwork in order to collect sufficient data
to carry out the GVC analysis in addition to the representations of Fairtrade and the
consumer culture.
The process of gaining knowledge (see Figure 4) on the subject area was done by going
through secondary information (literature review and reports), attending conferences
(Ramacafe 2007 in Managua and Second International Symposium on Multi-Strata
Asgroforestry Systems with Perennial Crops: Making ecosystem services count for farmers,
consumers and the Environment in Turrialba, Costa Rica) and through semi structured
interviews with key actors in the network of Fairtrade coffee, with particular emphasis
on interviews with producers and management board of producer cooperatives. In
addition, I spent three months at CATIE research institute in Costa Rica which was
valuable in terms of networking and dialogues with experts on the area of research on
coffee; upgrading in the value chain; and certifications of commodities. Cooperating with
the Centre for Competitiveness of EcoEmpresas (CeCoEco) was particularly educative in
the area of GVC analysis and small producer firms.
39
FIGURE 4: DEVELOPMENT OF FIELD RESEARCH
Secondary Information (Literature review,
reports and conferences)
Primary Information (Telephone interviews,
semi-structured interviews, survey and dialogues)
Validity of Information (Dialogues with key
informants)
Analysis of information
Triangulation, comparing the different analyses
3.1 FIELD WORK IN CENTRAL AMERICA
The field work took place in Nicaragua and Guatemala. The reason for the choice of two
study areas was to analyze the difference between a small cooperative and a large
secondary cooperative, because I had found that the majority of Fairtrade coffee (85
percent) was produced by a large secondary cooperative working on a national scale in
Guatemala. The method of collecting data was through qualitative semi-structured
interviews. The data was recorded and transcribed as the fieldwork developed.
Preliminary understanding of the meaning of data was shaped within the collection of
data, but further analysis was carried out when returning to Norway after fieldwork in
Central America. When returning to Norway, further data was collected. Particular
important was the collection of data on economic income from Fairtrade coffee by the
main actors in Norway, in addition to semi structured interviews with key actors both
through telephone and personal interviews. Included in the fieldwork in Norway was a
desktop analysis of representations and marketing of Fairtrade and further literature
review on similar impact studies of Fairtrade coffee. Due to restrictions of time and
resources, it was not possible to realize an extensive survey of Fairtrade consumers in
Norway, thus the analysis of consumer behavior rely on secondary sources. There is a
lack of independent surveys of consumer behavior in relation to Fairtrade buying
40
behavior in Norway. This is a knowledge gap which would be very interesting to fill in
the future and could also be interesting in relation to organic buying behavior and the
commodity cultures of these two alternative food networks.
The methods which I used of collecting data was convenience sampling and snowball
sampling, using CATIE in Costa Rica and the conferences as a starting point of building a
network. Convenience sampling is a sample method where availability of informants is
the key research strategy (Bryman, 2004). Snowball sampling is a form of convenience
sample, where key informants ‘makes the snowball roll’ by establishing contacts with
others (Bryman, 2004). Thus, dialogues with key actors and specialists in the field
became extremely important.
I encountered a number of difficulties on the road of collecting data to this analysis. The
first obstacle was to obtain data from importers and roasters on their Fairtrade coffee. It
took months before I was able to receive data on where the Fairtrade coffee was
produced, and it was not until my return from fieldwork after various emails and
telephone interviews, that I was able to obtain data sufficient for the GVC analysis. In
addition, carrying out interviews in Spanish was a challenge as my background
knowledge was limited to basic knowledge of the language, and the rural areas in
Nicaragua and Guatemala, have quite significant different accents. Language difficulties
was also experienced in relation to technical terms, which became a learning experience
both when interviewing producers, but perhaps in particularly when interviewing
roasters in Norway.
Furthermore, a lack of objectivity was felt through fieldwork in Nicaragua and
Guatemala, which may have affected my data, even though I have tried to take this into
consideration. Firstly, in Nicaragua I became to know the cooperative management
through a buyer of their Fairtrade coffee in Sweden. Thus, I became associated with the
buyer, also because I am from the same geographical region. Furthermore, about half of
my data from Nicaragua was collected with the presence of a technical advisor from the
cooperative. The presence of the technical advisor was one of the main reasons which
made the research possible, due to the geographical locations of the farms, but may have
affected my data. The farms located closer to the community centre I visited alone.
Secondly, the presence of the technical advisor was also central to the Guatemalan
context, which also became an issue of geographical location. However, I decided myself
41
which first level cooperatives to research, based on the latest coffee sold to Friele AS.
Thus, the presence of a technical advisor was also here crucial to make the research
possible, but in a few cases I had to intervene during focus groups when the technical
advisor from Fedecocagua was participating too actively.
3.1.1 DEVELOPMENT OF FIELD RESEARCH IN NICARAGUA
The development of field research (see Figure 5) in Nicaragua began at the event
Ramacafé 2007. This is an annual international conference where people involved in the
coffee sector, from producer cooperatives to representatives from Nestle, Starbucks etc.,
discuss opportunities in the coffee business. Ramacafé 2007 focused on communication
through the global value chain in coffee ‘comunicación de semilla a taza’17. At the event,
contact with key actors was established, such as a roaster from Sweden; Philippe
Barrecka from Arvid Nordquist HAB, and Julio Solórzano from Fondeagro/Magfor
(Ministerio de Agropecuario y Forestales, Nicaragua). Through these contacts I was able
to develop further contact with the cooperative El Polo, which exports Fairtrade coffee
to Sweden. Hence, a snowball sample method was used with assistance from key
informants through the work of identifying the actors in the global value chain of
Fairtraded coffee to Scandinavia.
Upon arrival at the study site in Nicaragua, convenience sample structure was used in
order to reach farmers/respondents. I reached the farmers by walking to various farms
in close vicinity of the village, the technical assistant of the cooperative assisted me by
motorbike to farms further away, and I used stationary methods of interviewing farmers
who came in to the cooperatives’ office in the village town.
17
Communication from bean to cup.
42
FIGURE 5: DEVELOPMENT OF FIELD RESEARCH NICARAGUA
Attending event
Ramacafe 2007
for increased
understanding of
the market and
establishing
contacts.
Establishing
contact with
representative
from Arvid
Norquist, and
Fondeagro through
Sr Julio Solorzano
Field trip to Yali,
Jinotega with Sr.
Julio Solorzano.
Established
contact with the
cooperative El
Polo
Snowball and
convenience
sample of farms
within the
cooperative El
Polo
Semi-structured
interviews and
dialogues with
cooperative
leaders, board of
directives and
farmers
3.1.2 NICARAGUA’S POLITICAL ECONOMY IN BRIEF
Nicaragua’s history is usually described in large parts in its legacy of political turmoil
and lack of investment in human resources. Between 1936 and 1979 Anastasio Somoza
followed by his sons ruled Nicaragua as dictators.
IMAGE 1: MAP OF NICARAGUA
REFERENCE 4: GOOGLE EARTH, 27.02.2008
43
Nicaragua experienced its most significant economic growth from 1960-1977, primarily
due to record international prices of cotton and coffee. However, the Somoza
dictatorship was a period of corruption, repression and enormous accumulation of
wealth of the elites, and a growing concentration of property (Westphal, 2002). The
Sandinista Front of National Liberation (FSLN) was founded in 1961, and the Sandinista
revolution began in 1977. With the Sandinista revolution, land and most modern
installation and machinery were confiscated from the political and economic group
supporting Somoza and made state property protected through the National Institute
for Agrarian Reform (INRA) (Westphal, 2002). The FSLN seized power in 1979, Daniel
Ortega assumed presidency from 1984. Under Ortega’s leadership, the FSLN
implemented many socialist reforms including land distribution through the Agrarian
Reform Institute, bank nationalization, and the establishment of cooperative societies,
media censorship, and a large military force. The National Commission for Coffee
Modernization (CONARCA) was formed in order to control coffee leaf rust disease,
increase coffee production to generate export earnings, compact the coffee growing
areas and create jobs for rural poor (Westphal, 2002).
During the 1980s, the area of the state and cooperative sector increased as further land
was confiscated from landowners who fled the country. Efforts were concentrated on
the state production units (UPE) until the reform package of 1981 which guaranteed the
land rights of productive farming units regardless of size (ibid). During the agrarian
reform of the eighties, the promotion of cooperatives was intensified including collective
ownership and management, ruled by an elected board with a general secretary. The
cooperatives also gained importance as a defense unit as the ‘contra war’, started by a
militant counter-revolutionary movement supported by the USA, began to threaten the
security of many rural families. …’The cooperatives were perceived not merely as
production units but also as mechanisms for political organization and entry points for
state intervention into rural society… as functions in the Sandinista development project..’
(Westphal, 2002:86)
Coffee was first introduced to Nicaragua in 1796 as a decorative plant. It developed into
an agricultural crop in areas around Managua and by 1841 small quantities of coffee was
being exported to Europe along with indigo, cotton and tobacco (Villanueva et al, 2006).
Coffee was introduced to northern Nicaragua, Matagalpa and Jinotega by 1880 and while
44
other agricultural crops such as cotton and bananas developed, coffee still remained the
most important export crop and the main source of income in Northern Nicaragua.
During the 20th Century, Nicaraguan producers in the region concentrated on increasing
productivity rather than improving quality, also due to a large ‘planting’ campaign
launched by the government during 1960-1970.
Production of coffee is still polarized where small producers constitute 72 percent of the
rural population but own only 16 percent of the land, whereas the medium and large
scale farmers constitute 28 percent of the population possessing 84 percent of the land
(Ministerio de Fomento, Industria y Comercio, MIFIC, 2003).
'The agrarian structure in Nicaragua is highly polarized and fragmented. The rural
landless, the smallholders (up 2 mz.), and small producers (2-5 mz) comprise 72% of
rural households, but they represent only 16 percent of the land. They have not only
limited land, but also low levels of schooling. Limited access to land, combined with a
low level of human capital, extensively characterize the poor living in rural areas in
Nicaragua. The medium and large producers, representing 28% of rural households,
possess 84 percent of the land18’ (Ministerio de Fomento, Industria y Comecio, MIFIC,
2005:11,12).
Thus, as the coffee crisis evolved in Nicaragua it hit the rural poor hardest. The price
received was not covering the cost of production. However, it forced the producers to
look for markets who paid better prices;
‘The crisis helped the producers to be more efficient and look for markets that paid better
prices, as an alternative to the falling prices. Those who failed to improve their production
costs and quality of the seeds had to leave the market. The latest coffee crisis faced by
producers due to the falling prices of green coffee served to improve the efficiency and
quality of the product, and currently the sector is focused on further increasing exports of
specialty coffee, which rose from 50 000 Quintals three years ago to nearly 400 000
‘La estructura agraria de Nicaragua se encuentra altamente polarizada y dispersa. La población rural sin
tierra, el minifundio (hasta 2 mz.) y los pequeños productores (2-5 mz) constituyen el 72% de los hogares
rurales, pero representan apenas el 16% de las tierras. No sólo tienen poca tierra, sino también bajos niveles
de instrucción escolar. El poco acceso a la tierra, combinado con un capital humano de bajo nivel,
caracterizan ampliamente a los pobres que viven en el área rural de Nicaragua. Los medianos y grandes
productores constituyen el 28% de los hogares rurales, pero poseen el 84% de la tierra 18’. (Ministerio de
Fomento, Industria y Comecio, MIFIC, 2005:11,12)
18
45
Quintals in the last agricultural cycle. Not only was a larger volume of specialty or
differentiated coffee exported, but new countries have been added to the exporting list,
after becoming familiar to the quality coffee from Nicaragua’19 (Ministerio de Fomento,
Industria y Comercio, MIFIC, 2005: 42).
3.1.3 THE COOPERATIVE EL POLO
The cooperative El Polo is located in San Sebastian de Yali, Jinotega department in the
central-north region of Nicaragua. This region produce de majority of coffee in
Nicaragua, with excellent growing conditions with high altitude and consequently high
quality beans.
The region produces approximately 83.80% of the national production and possesses
excellent agro-ecological conditions for the production of coffee, including the departments
of Matagalpa, Jinotega and Boaco. The region produces most coffee as Strictly High Grown
(SHG), or bean particular high altitude, with a perfectly balanced cup. This area includes
the plains of the mountains Isabelina, Peñas Blancas and the mountains of Matagalpa and
Jinotega. These conditions make for primary growing conditions for coffee’ 20 (Ministerio de
Formento, Industria y Comercio, 2005:12).
The cooperative was founded in 1996 as a cooperative of 50 small producers of coffee
divided between 47 male and 3 females under the name of
‘La cooperative
Agropecuaria de Servicios Yali RL’. It changed its name to ‘La Cooperativa de Servicios
Multiples El Polo RL’ in April of 2004. The cooperative has currently 275 member
La crisis les ayudó a ser más eficientes a los productores y les obligó a buscar mercados que pagaran
mejores precios, para tener una alternativa para sortear la caída de los precios. Quien no logró mejorar sus
costos de producción y la calidad del grano, ha tenido que salir del mercado. La última crisis que enfrentaron
los cafetaleros por la caída de los precios internacionales del “grano de oro” les sirvió para mejorar la
eficiencia y calidad del rubro, y ahora el sector está enfocado en seguir incrementando las exportaciones de
las variedades “especiales”, que subieron de 50 mil quintales hace tres años, a casi 400 mil quintales en el
último ciclo. No sólo se logró un mayor volumen de exportaciones de variedades especiales o diferenciadas,
sino que se han agregado nuevos países a la lista de compradores, después de conocer la calidad del café
nica19 (MIFIC, 2005: 42).
19
‘Esta región produce aproximadamente el 83.80% de la producción nacional y posee unas condiciones
agro-ecológicas excepcionales para la producción del café, incluye los departamentos de Matagalpa, Jinotega
y Boaco. La región central produce más que todo café Strictly High Grown (SHG) o tipo grano estrictamente
de altura, con una taza perfectamente balanceada. Esta zona incluye la llanura de montañas Isabelia, las
montañas de Peñas Blancas y las montañas de Matagalpa y Jinotega. Estas condiciones hacen de estas tierras
primordiales para la producción del cafe’. (Ministerio de Formento, Industria y Comercio, 2006:12).
20
46
divided between 234 male and 41 females. The main objective of the cooperative
includes;
‘To promote development integrated in the sector, boosting production and processing,
promoting marketing of production, strengthening the productive infrastructure,
managing the improvement of internal roads, developing agricultural techniques, animal
and vegetation health, and protection of the environment. Additionally the cooperative aim
at supporting health programs, education and sport, for the producers in the sector,
strengthening socioeconomic development and female participation’ 21(Solorzano, 2007).
The cooperative is set up of small producers with an annual production during the last
three years of 15, 750 Quintals green coffee, where more than 60% is produced in
altitudes between 1000-1200 meters above sea level, which means that it holds a high
level of quality. During the Agricultural Cycle of 2006/2007, the cooperative exported a
total of 10 472 Quintals green coffee, whereas the quantity of specialty or differential
coffee amounted to 9 462 Quintals green coffee (Solorzano, 2007).
From 1997 to 2003, the cooperative only had one buyer; Atlantic-ECOM, which is an
exporting company operating throughout Latin America. Consequently, the firm had a
large amount of negotiating power over the cooperative. However, in May, 2005, the
Cooperative El Polo obtained its exporting license through CETREX (Centro de Tramites
de las Exportaciones) holding exporting license number 179. Obtaining an exporting
license allowed El Polo to export its coffee to a differentiated market, including the
Fairtrade market (Solorzano, 2007).
However, this would not have been possible without help from FondeAgro, in particular
its component Agrobusiness. Fondeagro is an institution part of MAGFOR (Ministerio
Agropecuario y Forestal del Gobierno de Nicaragua), financed by the Swedish aid agency
(Asdi; Agencia Sueca de Cooperacion Internacional para el Desarollo). The component
‘de promover un desarrollo integral del sector, potenciando la producción y su procesamiento, fomentando
el mercadeo de la producción, mejorando la infraestructura productiva, gestando por la mejora de los
caminos de penetración, desarrollando técnicas agropecuarias, sanidad vegetal y animal, protección del
medio ambiente. Adicionalmente la cooperativa pretende apoyar programa de salud, educación y deporte,
para los productores del sector, fomentando el desarrollo socioeconómico y la participación del sector
femenino’’ (Solorzano, 2007).
21
47
Agribusiness under Fondeagro has a perspective of value chain and partnership. This is
part of The National Development Plan of Nicaragua (El Plan de Desarollo de Nicaragua,
PND), which includes a rural development strategy that seeks to change the prevailing
view from economic actors towards an entrepreneurial vision oriented towards the
necessity of the market. In particular it includes product and process innovations,
allowing upward movements in the value chain through certifications and other
innovations (Instituto Nacional de Informacion de Desarollo, 2005). The strategy has a
local and territorial approach, promoting partnerships at different stages in the
production chain in order to pursue rural development goals (CecoEco, date unknown).
After a valuation made in 2004, an action plan was created by FondeAgro, including the
following activities;
‘Support to identify the best strategy to penetrate the differentiated coffee market and
management of certification for marketing coffee in the differentiated market. Economic
support from FondeAgro to cover the initial certification of the cooperative. Support from
FondeAgro to develop trade links with coffee buyers in the differentiated market. Support
from FondeAgro to find additional sources of funding, with the aim of achieving a more
appropriate funding for the production and improve the capacity to negotiate the
marketing of coffee from the cooperative. Strengthening the administrative financial
capacity of the cooperative’ 22(Solorzano, 2007:20).
Through cooperation between the institution FondeAgro and the cooperative, direct
contact with buyers within the Fairtrade market was created. This is necessary in order
for the cooperative to launch its application of certification. In December, 2004, in the
interest of potential buyers; Arvid Norquist from Sweden and a cooperation between
Starbucks and Atlantic ECOM, El Polo logged its application for FLO certification, which
was followed up by FLO Inspector Mayra Ross on the 22nd of February, 2005. The FLO
certification was finalized in April and May of 2005 funded by Fondeagro at the initial
‘’Apoyo para identificar la mejor estrategia para penetrar el mercado diferenciado de café. Apoyo para la
gestión de certificación, para la comercialización del café de la cooperativa en el mercado diferenciado.
Apoyo económico de FondeAgro para costear la certificación inicial de la cooperativa. Apoyo de
FondeAgro a la cooperativa, para desarrollar vínculos comerciales con compradores de café, del mercado
diferenciado. Apoyo de FondeAgro para encontrar fuentes adicionales de financiamiento, con el objetivo
de lograr un financiamiento más apropiado a la producción y mejorar la capacidad de negociación para la
comercialización del café de la cooperativa. Fortalecer las capacidades administrativas financieras de la
cooperativa22.’’
22
48
cost of 2000 Euros (Solorzano, 2007). Currently, El Polo sells seven containers of coffe
through the Fairtrade market.
3.1.4 DEVELOPMENT OF FIELD RESEARCH IN GUATEMALA
The development of research in Guatemala (see Figuree 6) took a different character,
based on the institutional structure of the cooperative of interest. Fedecocagua is a
second level cooperative including 20 000 farmers within 148 first level cooperatives
spread across the nation. As the internet response from the cooperative was limited, I
visited the main office of the cooperative in Guatemala City. After various interviews
with key actors, a field trip was set up to visit different first level cooperative. The
sample of first level cooperatives under Fedecocagua was based on a systematic sample.
The decision of researching particular first level cooperatives under Fedecocagua was
based the cooperatives that had produced the recent blend of coffee which Fedecocagua
had sold to Friele AS. Together with the marketing manager of Fedecocagua and a
technical assistant, we investigated the previous mix of coffee sold to Friele AS and
decided to visit the first level cooperatives who had distributed the exact coffee as Friele
AS was distributing in Norway.
FIGUREE 6: DEVELOPMENT OF FIELD RESEARCH GUATEMALA
Establishing
contact with
Fedecocagua
Carry out semistructured
interviews with
cooperative leaders
at the Fedecocagua
main office in la
Ciudad de Guatemala
A Selection of 5 first
level cooperatives of
Fedecocagua using
convenience,
snowball and
strategic sample
methods
Organizing
fieldtrip to
visit the
different
cooperatives.
Focus
groups with
cooperative
leaders in 5
different 1st
level coops.
The schedule for field trip was set up by the second level cooperative, and coordinated
by technical assistants employed by Fedecocagua in various geographical places. The
49
first level cooperatives had been informed of the meeting, thus the cooperative boards
were prepared, including other farmers who happened to be present. The field trip
included visiting first level cooperatives in La Democracia, La Todos Santos,
Huehuetenango, La Unión, Esquipulas, Chanmagua and Acatenango. The collection of
data was carried out as a focus group discussion where all actors contributed and
together we discussed issues of trade, Fedecocagua, certifications and Fairtrade. I only
visited one first level cooperative whose first language was Mayan. This particular visit
was the only time I had to use an interpreter.
3.1.5 GUATEMALA’S POLITICAL ECONOMY IN BRIEF
Guatemala, like many of the other nations of Central America, has experienced a
turbulent past. The Guatemalan Civil War ran from around 1960 to 1996 with deepened
confrontations from 1978 to 1983. The UN sponsored Commission for Historical
Clarification published in 1999 a report of evidence that around 200 000 people were
murdered during the civil war of which 83 percent being Maya Indians. It is stated that
93 percent of the human rights violations were attributed to the state army. ’The
majority of human rights violations occurred with the knowledge of, or by order of the
highest authorities of the State’’ (Commission for Historical Clarification, 1999).
…’the CEH concludes that the reiteration of destructive acts, directed systematically
against groups of the Mayan population, within which can be mentioned the elimination of
leaders and criminal acts against minors who could not possibly have been military
targets, demonstrates that the only common denominator for all the victims was the fact
that they belonged to a specific ethnic group and makes it evident that these acts were
committed “with intent to destroy, in whole or in part” these groups (Article II, first
paragraph of the Convention). .. the CEH concludes that agents of the State of Guatemala,
within the framework of counterinsurgency operations carried out between 1981 and
1983, committed acts of genocide against groups of Mayan people which lived in the four
regions analyzed’ (Commission for Historical Clarification, 1999) .
The peace Accords in Guatemala were signed at the end of 1996. Currently, between 40
and 60 percent of Guatemala’s 12 million inhabitants are Maya, speaking one of 21
distinct Maya languages. Furthermore, the agriculture population of Guatemala is about
50
50 percent of total population. Around 80 percent of Maya live in rural areas which are
inadequately served by public services; around 60 percent live in extreme poverty
(Lyon, 2007).
IMAGE 2: MAP OF GUATEMALA
REFERENCE 5: GOOGLE EARTH, 27.02.2008
Coffee became the major primary export of Guatemala towards the end of the 19th
Century, apparently the foundation of wealth, determinant of social status and arbiter of
political power (Lyon, 2007). The cooperative movement has grown steadily from 1976,
after the historic earthquake in Guatemala. The aftermath of the earthquake and influx
of international leaders progressed the cooperative expansion to 510 cooperatives with
over 132 000 members. Currently there are 1620 registered cooperatives with 579 705
members (Lyon, 2007).
According to FITA (The Federation of International Trade Association), Guatemala is the
eight largest coffee producing country in the world. Even though the quantity of coffee
exported has decreased, Guatemala has shifted its focus in production. After a USDA
Foreign Agricultural Service report, the production of coffee was in 1980, 20 percent of
the production was hard and strictly hard beans; the higher quality beans that bring
better prices in the market. By 2005, 80 percent of the coffee production was hard and
strictly hard beans, which has increased the financial security of the industry (Tay,
2007). According to the same report;
51
‘Four years ago the Government of Guatemala authorized a $100 million trust fund to
assist coffee farmers during the price crisis. The trust fund was managed by ANACAFE and
has provided financial assistance to coffee farmers at a low interest rate. In addition,
USAID and the Interamerican Development Bank (IDB) are supporting coffee farmers with
loan programs to help them recover from the low prices of a few years ago. Guatemala’s
coffee efforts have also been recognized by the International Coffee Organization (ICO),
which will provide the sector with $ 4 million to be used in their competitiveness program,
for the following two years. ANACAFE will support the initiative with an extra $ 2 million
within this same period’ (Tay, 2007:7).
Thus, some support mechanisms were in place to aid coffee cultivators after the price
crisis. This must be understood in relation to the shift in Guatemala to focus on high
quality coffee, which receives better prices on the world market.
3.1.6 THE SECOND LEVEL COOPERATIVE FEDECOCAGUA
Fedecocagua (Federacion de Cooperativas Agricolas de Productores de Café de
Guatemala R.L.) was founded in 1969 by 19 cooperatives to improve the position of
small-scale coffee growers. Currently, Fedecocagua consists of more than 148
cooperatives on a national basis and is the umbrella organization of 20 000 farmers. The
majority of its producers are Mayan, about 70 percent are indigenous people, and there
are more than 100 000 people that are involved with Feecocagua and dependent upon
activities of cultivating coffee. The producer cooperatives are spread over different
regions of Guatemala including Huehuetenango, Coban, Verapaces, Retalhuleu, San
Marcos, and Zacapa. Fedecocagua assists the small producers with technical assistance,
credit schemes, secure transport of coffee from the cooperatives to the warehouse,
purchase, processing and export of member’s coffee, and research on opportunities in
the market (Fedecocagua homepage).
Coffee is the main cash crop and provides 90 percent of farmers’ income. The average
farm is about 10 ha, where 3.2 ha is shade-grown coffee production (Fairtrade
Foundation UK homepage). In 1997 Fedecocagua started selling to the alternative
marked, which is currently named FLO, as a second level cooperative with identification
number 189. In general almost 40 percent of its coffee is sold as Fairtrade. In addition
52
Fedecocagua have certifications as Utz Certify, Rainforest Alliance, Starbucks CAFÉ
practices, Nescafe from Nestle, program AAA from Nespresso and 4C. Fedecocagua have
70-75 percentage of its production certified within these initiatives and 100 percent is
‘certified’ Fairtrade (De Leon, A., Marketing manager of Fedecocagua, personal interview
December 2007, Guatemala City).
According to a capacity study from CecoEco and CATIE in Costa Rica in cooperation with
the World Bank, the strength of Fedecocagua lies in its structure as a professional firm
and the technical and production capacity of the firm.
‘This (the technical and production capacity) is perhaps one of the areas where the firm is
most developed. When the product is collected in the regional warehouses of the
cooperative, these are transported to the central processing station/warehouse of
Fedecocagua’23(Junkins and Yaniris, 2005:7).
Furthermore, the cooperative have the function of an external commerce, or exporting
firm for the first level cooperatives involved. According to the same capacity study, the
power is highly centralized in the leadership of Fedecocagua. The director positions
have been occupied by the same persons for about 20 years, with limited delegation of
power. …’the first level cooperatives understand the second level cooperative as an
external trader which they emphasize are looking to protect and give them benefits, even
though in reality they have doubts if this is true or not’.
However, the capacity study highlight the high business capacity of Fedecocagua, which
includes a department of commerce, of logistics, of exports (Junkins and Yaniris, 2005),
and currently developing a department of sustainability. This high capacity of the firm is
proved through long-term business relationships, some up to 20 years, and long term
contracts with various clients. Fedecocagua has been promoted in major international
forums, though its website is quite limited24’ (Junkin and Yaniris, 2005:7)
…’Este (Capacidad técnica y producción) es quizás uno de los rubros en los que la Cooperativa está
mejor preparada. Una vez acopiado el producto en las bodegas regionales de la cooperativa éste se traslada
hacia el Beneficio Central de FEDECOCAGUA…’
23
‘Capacidad empresarial: Los puestos direccionales están ocupados por las mismas personas desde hace
cerca de 20 años. Esto tiene como consecuencia que el poder esté centralizado y poco delegado, lo cual
tiene como consecuencia que las cooperativas vean a la de segundo nivel como un ente externo
comercializador, que les insiste en que busca protegerlos y darles beneficios, aunque en la realidad ellos
mismos tengan dudas de si esto es cierto o no. A pesar de ello no cabe duda de la capacidad empresarial de
24
53
Furthermore, Fedecocagua is the second largest commerce associate for the bank
BANRURAL in Guatemala, where it receives the majority of its funding;
‘FEDECOCAGUA is the second largest partner (after government) of
BANRURAL,
explaining abundant funding, although conditions were not completely satisfied. In
addition they are financed from IDB financing, Swedish Cooperative Centre, MAGA and
Oikocredit with interest fees around 8-16%. The resulting finances of the cooperative have
been positive since its foundation even during the coffee crisis
25'(Junkins
and Yaniris,
2005:7).
Findings of the capacity analysis, one of the few existing of Fedecocagua, highlight
associates see relations as good whereas evaluations assumes a lack of transparency26.
‘The associates consider the relation with Fedecocagua as good, however, it stands out
from the perspective of the associates that there is a lack of transparency, dependency, and
effort to empower the cooperatives and mechanisms for communication between them’27
(Junkins and Yaniris, 2005:7).
Thus, the cooperative Fedecocagua is a large second level cooperative working on a
national scale. It has a highly professional institutional structure, and is viewed by the
first level cooperative as an exporting company. The cooperative have been highly
successful in promoting its coffee as high quality, specialized coffee.
FEDECOCAGUA, donde un departamento de comercialización, uno de logística y el de exportaciones,
coordinan de manera permanente para garantizar que el producto llegue a su destino en las condiciones más
apropiadas de venta. Prueba de esto es que con varios de sus clientes mantienen relaciones comerciales de
largo plazo (20 años). Se promueven en los principales foros internacionales y producen abundante material
promocional, aunque su página Web es bastante limitada.’(Junkin and Yaniris, 2005:7)
‘FEDECOCAGUA es el segundo socio mayoritario (después del gobierno) de BANRURAL, razón por la cual
cuentan con abundante financiamiento, aunque las condiciones no les satisfacen por completo.
Cuentan también con financiamiento del BID, Centro Cooperativo Sueco, MAGA y Oikocredit en tasas que
rondan los 8-16%. Los resultados financieros de la cooperativa han sido positivos desde sus inicios incluso
durante la crisis del café’.(junkins and Yaniris, 2005:7)
25
26
This is also experienced in my own fieldwork.
‘Las relaciones con los socios son consideradas por ellos como muy buenas. Sin embargo resalta desde la
perspectiva de los socios la falta de transparencia, dependencia, pocos esfuerzos por empoderar a las
cooperativas y mecanismos de comunicación medianamente efectivos’ (Junkins and Yaniris, 2005:7).
27
54
4.0 THEORY AND ANALYTICA L FRAMEWORK
Fairtrade coffee is a product with a variety of invested meanings. I will analyze the value
and meaning of Fairtrade coffee from an economic and an anthropological approach to
commodities. Objects which are commoditized incorporate an economic value and a
material semiotic value. However, first of all, it is important to state what I mean by
value. The theory of value is most commonly described either within production
centered or consumption centered theories. However, I will try and address both, by
referring to the consumption centered theories from Baudrillard (1981, 1996) and
Appadurai (1986) and production centered theories from Marx (1971). According to
Baudrillard (1996), the value of objects is fourfold. Firstly, the functional value is the
objects instrumental purpose, equivalent to Marx’s (1971) use value. Secondly, the
exchange value of objects is the value of exchange; often, but not always, its economic
value. The market place value of a product is determined by the demand of the product.
These two values are the main emphasis of Marx (1971). To Marx (1971), the economic
value of exchange does not reflect the use value of a commodity; it is a direct reflection
of demand of the product. His notion of commodity fetishism runs from the perspective
that through international trade, producers and consumers have no direct contact,
therefore have no conscious agreement to provide for one another. Thus, the value
added by laborers and the social relations appear as objective properties of the
commodities. Marx (1971) typically referred to this objective property as a fetish which
masks the commodities true worth. The work of Baudrillard (1996) is consumption
centered, parallel to Marx production centered work28. Baudrillard (1996) was
particularly interested in advertisement, and the value added to products through
advertisement. His main emphasis is on the social construction of demand. Baudrillard
(1996) further included two dimensions of value to the object, thus thirdly the symbolic
value and fourthly, the sign value of objects. The symbolic value of an object is the value
that a subject assigns to an object in relation to another subject, thus the social
construction of value relative to other subjects. The sign value of an object is the value of
the object within a system of objects, thus the personal construction of value relative to
Important to note, Baudrillard in his later work distinguished himself directly from Marx in his work on
representations. One may perhaps say that they claim a different ontology where Baudrillard focus on
social constructs and representations and Marx claim a certain material worldview. Baudrillard criticize
Marx on his view on consumption as passive and the concepts of need and utility.
28
55
other objects. Baudrillard (1981) and Appadurai (1986) criticize the Marxian notion of
referencing the economy in relation to the problematic of production (Appadurai, 1986).
However, their overly focus on consumption have been criticized for lacking emphasis
on power and exploitation at production site. As Marx argued the manner of production
created classes, Appadurai argues that consumption, in the spirit of modern
consumerism, creates classes (van Binsbergen, 2005). Thus, the two theories are
fundamental different.
I believe both Marx’s (1971) production theory and Baudrillard’s (1996) consumption
theory are both important to my current analysis. However, searching for analytical
tools of analysis within similar studies, I did not find the appropriate tools which
incorporated both. The typical economic studies of a commodity are global commodity
chain (GCC) analysis and global value chain (GVC) analysis. These studies are strictly
separated from the social constructivist chains such as commodity circuits, actor
network theories (ANTs) and commodity cultures. I render either analytical tool
insufficient for my intended study; therefore I have chosen to use two distinguished
types of tools to analyze my data. Thus, I aim at incorporating both the economic and the
material semiotic through an economic value chain analysis and a social constructivist
commodity culture approach.
The economic value is analyzed through the tools of a global value chain analysis. In
general, a global value chain (GVC) analysis seeks to break down the international
structure of production, trade and consumption of commodities into stages that are
embedded in a linear network of activities (Daviron and Ponte, 2005). It describes the
range of activities which are required to bring a product or service from conception,
production, transformation and delivery to final consumers (Kaplinsky and Morris,
2000). It allows for the identification of ‘place’ where quality attributes are produced,
and how value is distributed between different actors. The GVC has been developed
following the concept of a global commodity chain (GCC) from Hopkins and Wallerstein
(1986) who discussed international chains for agricultural products. The GCC approach
follows a product from one point to the next, usually involving an analysis of price
formation at the different stages of production or processing. It is much similar to the
French filiere approach, though distinguished where the filiere approach is usually
restricted to national scale. The revised concept of GVC in replacement of the GCC has
56
come to identify a variety of products that lack commodity features, therefore it is more
correct to follow the value flow in the chain (Daviron and Ponte, 2005; Gibbon and
Ponte, 2005). Important to note, the concept refers to value in strictly economic terms,
following income and service providers. Much of the work on GVC has focused on
opportunities of upgradingat production sites in GVC for primary commodities, either
through improving quality of the raw product, or new forms of the commodity or a move
towards localizing commodity processing.
The term global in the global value chain refers to the arrangements of coordinated
activities divided among firms that in particular extend over a global scale. The use of
the term chain suggests a linear relationship between buyers and suppliers, and the
movement of a good from producer to consumer (see fig. 10, pg 46).
In the literature, GVC analysis has focused more on explicit structural elements of
production, distribution and consumption than on the social/cultural/symbolic
relations among actors (Gibbon and Ponte, 2005). Furthermore, until recently, GVC
analysis did not extend its analysis to the retail level, thus remained silent on issues of
consumption. It has also been criticized for not paying enough attention to labor
relations at the site of production. Latest contribution of GVC have started to pay more
attention to both material and symbolic aspects of exchange to tackle issues of social
embeddedness, covering horizontal aspects such as gender and labor relations and
analyzing consumption as a key dimension of governance (Gibbon and Ponte, 2005).
According to Mayoux (2003) the value chain analysis conceptualizes enterprises, not as
separate entities, but as part of chains, networks and systems of production and
exchange activities in diverse geographical areas. It focuses on analyzing chain
governance, power relationships between actors and opportunities and constraints at
the different levels. This allows for an exploration of different alternative strategies for
poverty reduction and upgraded value for the producer (Mayoux, 2003). Recent
literature of participatory value chain analysis facilitates dialogues and mutual
accountability between stakeholders in order to analyze common interests (Mayoux,
2003).
57
FIGUREE 7: GLOBAL VALUE CHAIN
Final
Consumption
Retail
Importing/
Roaster
Exporting
Company
Secondary
Transformation
Primary
Transformation
Primary
Production
Suppliers of Services (technical,
industrial, financial etc)
REFERENCE 6: DONOVAN, 2006
The GVC approach used by Gibbon and Ponte (2005) focuses on the type of governance
in the chain, power and the possibility for upgrading in the chain by the producer. The
concept of upgrading has been used to highlight the possibility by producer to increase
governance and share of surplus in the value chain. This is done by two main methods.
More value can be added to the producer by shifting to more rewarding functional
positions (Gibbon and Ponte, 2005) highlighted by Donovan (2006) as possibilities for
upgrading the level of enterprise organization, assimilation of technology and the
establishment of strategic alliances with other actors in the productive chain. Secondly,
by making products that have more value added invested in them and can provide
better returns to producer (Gibbon and Ponte, 2005). According to Donovan (2006), this
may be through an improvement of the quality and transformation of the product as
well as new forms of packaging and/or marketing. The upgrading process in the GVC
literature is examined through the lenses of how knowledge and information flow
within value chains. Upgrading is about acquiring capabilities and accessing new market
segments through participating in particular chains and learning from key lead firms in
the same functional position. However, it is sometimes difficult to distinguish product
and process upgrading in the case of agricultural products, where the introduction of
organic processes generates a new category of product (Gibbon and Ponte, 2005).
58
In particular, the conventional coffee value chain is characterized as a buyer driven
chain where producers are subordinated to lead agents controlling design and
marketing. In particular this includes the actors who controls international brand names
and retailing, where barriers to entry are high and profit is concentrated (Gibbon and
Ponte, 2005). The overall chain is buyer driven, where coffee roasters play a key role in
determining the functional division of labor along the chain. Consequently, roasters
define the key terms of participation directly for their immediate suppliers and
indirectly for other actors upstream in the value chain. Crucial for the success of
upgrading and certification of coffee is representation and marketing strategies.
Standards29 communicate information about the product, such as search attributes
which includes appearance, experience attributes which appeals to taste, and credence
attributes, which must be based on trust. These attributes can pertain to the products
itself or to production and process methods, which includes geographic appellation,
safety regarding pesticide use and level of toxins and environmental and social
conditions such as organic, Fairtrade and shadegrown coffees.
I will use the tool of the GVC to analyze the income generated from Fairtrade coffee. The
structure of the analysis is inspired by the work of Talbot (1997, 2004), which have
estimated the generation of surplus along the chain of coffee in historical perspective.
However, the current analysis distinguishes itself from the former (Talbot, 1997, 2004)
as visualizing one direct chain. In such perspective it is in many ways better to indicate a
participatory value chain analysis, as the data of income generated along the coffee
commodity chain have been gathered through participatory methods such as semistructured interviews with key actors. Thus, it is not a weighted average, but the direct
income generated from Fairtrade coffee by key actors in the chain.
The analysis of income generated along the chain is divided into four main stages with
sub-stages. The first stage is the income generated by producer, which is the income at
farm gate. The second stage is the income generated in the producer cooperative.
However, in Guatemala this stage is divided into a sub-stage attaining a second level
Standards are divided into three broad categories; mandatory, voluntary and private (Ponte, 2004),
where Fairtrade standards are typically voluntary standards. Mandatory standards are usually set by the
state and private standards are typically created by private companies or initiatives.
29
59
cooperative and a first level cooperative. The third stage is the importer/roaster, where
in Norway the majority of large importers are also roasters. The fourth stage is the
income of wholesalers, retail, cafes and the state through taxation. The total income
along the chain is equal to retail prices, or the amount a Norwegian consumer pays for
the product.
As highlighted earlier, the GVC have been reformed in recent literature to engage in
issues of consumption and to incorporate social issues. However, the GVC remains
production centered and leave limited space for a understanding consumption related
issues such as marketing and symbols (Leslie and Reimer, 1999).
It is rendered
problematic to analyze a system such as Fairtrade treating retail and consumption as
unproblematic starting points for an analysis of exploitation in the production sphere.
Furthermore, according to Hughes (2000:177) the often uni-directional linearity of
commodity chain approaches, along with the culturally and geographically impoverished
nature of their system-based methodologies, imposes analytical constraints. Therefore, the
commodity cultures will define the semiotics, or the meanings and ideas of the product
within each culture, whereas the GVC analysis will highlight power structures in the
chain. The different cultures are defined as production cultures, representation cultures
and consumption cultures. The material and semiotic representation will be interpreted
within a narrative analysis. The narrative is the way of telling about the commodity and
its place within the network. Fairtrade coffee is more than the economic income
generated along the chain. The meanings and symbols created through marketing and
advertising is particularly what distinguish Fairtrade coffee from conventional coffee.
In particular, drawing on different aspects of value, such as symbolic and sign value and
the importance of advertising, I find it necessary to explore more comprehensive tools of
analysis. The idea of networks and circuits of culture allows for a more dynamic
approach to understanding relationships and meanings (Hughes, 2000, Hughes, 2006).
In particular, the second analysis is based on a theory of deconstruction, where it is
possible to pull certain links apart, and investigate the meaning of the particular product
in terms of ‘commodity cultures’ (Cook et al., 2003).
The term social deconstruction was coined by Jacques Derrida in the 1960s. Essentially
it describes how it is possible to understand social phenomenon by deconstructing ideas
and the meanings in which comprise them. Social deconstructive approach is often used
60
in discourse analysis in order to understand the construction of discourses. The
discourses are often understood through narratives which in many cases become the
discourse in practice. Scholars advancing a discursive and narrative perspective to the
analysis of environment and development includes such as Fergueson (1990), Escobar
(1988, 1995, Escobar et al., 1998), Roe (1991, 1995), Peet and Watts (eds., 1996) Bryant
and Bailey (1997) and Adger et al. (2001). Some of these scholars are situated within the
school of political ecology30, in particular within poststructural political ecology
(Escobar, 1988, 1995) which focuses on discourse analysis and the social construction of
different environmental ‘crisis’ (Adger et al., 2001). A discourse is broadly defined as a
shared meaning of a phenomenon (Adger et al., 2001). The discourse perspective has
been used in the environmental arena to characterize pervading and received wisdom,
the evolution of the environmental crisis and their social construction (Adger et al,
2001; Leach and Mearns, 1996; Roe 1991, 1995). Influential writers from Ferguson
(1990) and Escobar (1988, 1995), Escobar et al. (1998) have identified the importance
of identifying the construction and institutionalization of managerial approaches to
development (Neumann, 2005).
In particular, Foucault’s work on power, and the
relationship between power, knowledge and discourses have been influenced by the
deconstruction approach. ‘Ideas are not powerful because they are true; they are true
because of power’ (Foucault, 1980). The emphasis on Foucault and constructed ideas
through hegemonic discourses is following postmodernist lines of thought. A hegemonic
discourse is a discourse which dominates thinking and is translated into institutional
arrangements (Adger et al, 2001).
Scholars using discourse approach have analyzed the narratives which comprises in
order to identify so-called counter narratives, essentially a theory from Ferguson (1990)
and Roe (1991, 1995). They draw on policy implications of development narratives31,
where development policies are often based on arguments, scenarios and narratives
Political ecology is an approach where it is possible to explore multi-level connections between global
and local phenomenon. The approach is not limited to exploring environmental functions, but includes
social functions, decision making and hierarchies of power (Robbins, 2004). According to critics, political
ecology often goes beyond requesting more attention to political influences on human/environment
interactions than analyzing environmental change itself. Critics argue that too much emphasis has been
placed on political influence which over-socializes environmental problems (Vayda and Walters, 1999;
Jansen, 1998). Political ecology risks downplaying the natural dimension of production (Jansen, 1998)
and the ecological processes of change (Vayda and Walters, 1999).
30
31
In which sense later authors (Adger et al, 2001) identifies as discourses.
61
that do not stand to closer scrutiny. Roe (1991, 1995) explained the hegemonic
discourse within development policies as ‘blueprint development’. The development
narratives persist and continue to inform policy-maker in spite of the fact that they are
frequently being contradicted in the field. However, Roe (1991) stresses the
development narratives should not be dismissed as myths. Instead, he argues the
importance of ‘counter-narratives’ in order for a better story and practices. By engaging
with the hegemonic or outdated narrative it is possible to improve the narrative through
different views or by creating parallel narratives, so called counter-narratives, to the
hegemonic construct.
Thus, certain dominating narratives comprise a discourse, which again relies on these
narratives in order to prevail (Adger et al, 2001). For the current analysis I need to
clarify the difference between narrative and discourse. The narrative concept implies
accounts of specific cases within a wider discourse. The discourse is framed by narrative
producers’ encompassing certain power in knowledge (Benjaminsen and Svarstad,
2008). Thus as understood here, narratives are the active methods of describing the
world, whereas the discourse is more manifested in Foucault’s (1980) notion of power,
and the relationship between power and knowledge.
The narratives are understood as social representations of history (ies), how actors
perceive of certain issues in time and space. ’..we all live out narratives in our lives and
because we understand our own lives in terms of the narratives that we live out that the
form narrative is appropriate for understanding the action of others’ (Macintyre,
1985:212).
A narrative analysis is an approach to the analysis of data that is sensitive to the sense of
temporal and spatial progression that people, as tellers of stories about their lives or
events around them, identify in their lives and surrounding episodes. It employs to
answer ‘how do people make sense of what happened’ (Bryman, 2004). This is a useful
method of analysis when relating to Macintyre (1985) and his work on moral theory of
people as story-telling animals through their actions and practice;
’Just as a history is not a sequence of actions, but the concept of actions is that of a moment
in an actual or possible history abstracted for some purpose from that history, so the
characters in a history are not a collection of persons, but the concept of a person is that of
62
a character abstracted from history. What the narrative concept of selfhood thus requires
is twofold. On the one hand, I am what I may justifiable taken by others to be in the course
of living out a story that runs from my birth to my death; I am the subject of a history that
is my own and no one else’s, that has its own peculiar meaning’ (Macintyre, 1985:217).
Thus, according to Macintyre (1985) we live out narratives in our lives and we
understand our surroundings and the action of others through narratives. Moreover, he
argues that we render others’ actions intelligible by placing the particular episode in
context as part of narrative histories of the individuals and their setting. Interpreting
narratives within the commodity cultures of Fairtrade coffee highlights how each actor
renders and make sense of the product. It is further applicable in representation
narratives, or through advertising and marketing of the commodity in order to pursue
consumption purpose and how consumers act upon these narratives.
Thus, a narrative analysis is an approach to the analysis of qualitative data that
emphasizes the stories people employ to account for various events. The narrative
analysis focuses on how actors perceive and describe the particular issue or system of
interest.
Aiming at an analysis of neither production centered nor consumption centered
approaches, but a combination of the two, the work on commodity cultures is
particularly inspiring. ‘Work on commodity cultures aims to thicken descriptions of the
meanings attached to goods through a cultural analysis of different phases of commodity
circulation, including consumption’ (Hughes, 2000).
The work on commodity cultures is perhaps easiest explained as where the centre
approach is the commodity, circulating through different culture of actors. The
commodity is seen as having a social biography, moving through different realms,
inheriting different meanings through different cultures. ‘the commodity is not one kind
of thing rather than another, but one phase in the life of some things’ (Appadurai,
1986:17).
The commodity culture approach builds on similar approaches to the study of
commodities and their complex web of networks in which they acquire different
meanings and values. Similar approaches includes such as; circuits of culture associated
63
with Hall (1997), Leslie and Reimer (1999), actor network theory32 developed by
Latour, Callon and Law (Law, 2007), work on commodity networks by Whatmore and
Thorne (1997) Hughes (2000, 2001, 2006) and Cook and Crang, (1996), Lowe and Ward
(1997). In addition, the work on material cultures (Appadurai, 1986; Kopytoff, 1986;
Bakker and Bridge, 2006) have been important in defining a shift from production
centered to consumption centered analysis, with emphasis on things and their history.
The commodity culture was developed by Jackson (1999, 2002), and it runs parallel to
geography research on material cultures (Bryant and Goodman, 2004). It may seem to
contradict the work on material cultures of consumption, but it share common
characteristics through elaborating the neglected connection between consumption
studies and the political ecology of globally uneven development (Bryant and Goodman,
2004). Much work on material cultures have aimed at tracing the historical connections
through which things became things (Cook et al., 2007:1120). It seeks to tell the stories of
people and their lives as partners in producing the same product. Hence, the material
culture explores the hidden values behind seemingly insignificant commodities (Cook et al.,
2007:1120). Thus, the material cultures aims at identifying the meaning of commodities
through narrating commodity stories about global resource flows (Bakker and Bridge,
2006). The aim of the material culture is ‘lifting the veil of commodity fetishism’ through
visualizing the social connections behind the commodity (Bakker and Bridge, 2006;
Klooster, 2006).
The commodity culture approach assimilates these theories through a focus on meaning
and semiotics. Most of these approaches build on social theories where GVC is rendered
narrow in only tracing linear economic and physical flows and connections. The social or
cultural approaches aim at interpreting the narratives that surrounds the commodity or
the textuality of the commodity within different cultures. According to Appadurai
(1986:17) …’a commodity is not one kind of thing rather than another, but one phase in
the life of some things’.
Incorporating both productions centered and consumption centered studies, the
commodity is at the centre of the cultures. The cultures in which the commodity fluxes
The commodity culture bears resemblance to the ANT through the focus of complex networks and how
different actors see things differently. However, in the commodity culture it is important to distinguish
between the commodity and the different social settings or culture through which it circulates. The
concept of actors are used, not the notion of actants as in ANT (Law, 2007).
32
64
give meaning and value to the commodity (Crang et al., 2003). The term culture is here
understood in the widest sense as a collective social practice, in which the product
serves a common purpose.
According to Baudrillard (1981), Appadurai (1986) and Goodman and Dupuis (2002),
earlier attempts of analyzing commodities within a production – consumption approach
have shown limited success due to the neglected consumer culture. As such, consumer
politics have rather been confined to the worlds of production, where consumers are
passive receivers of commodities, sheltered from the exploitative social relations inherit
in the commodity by the ‘veil’ of the commodity. According to consumption related
theories, consumption is social, relational and active, rather than private, atomic and
passive which is the case of production centered studies. As shown below (
Figure 8) the approach involves rethinking the linear commodity chain to incorporate
more complex circuits and networks for new modes of understanding (Jackson, 2002).
Figure 8: Commodity Culture of Fairtrade coffee
Fair trade
network
Producer
culture of
production
and market
access
Culture of
ATOs and
expansion
Media/
Fair trade
movement
Radical
opposition to
global trade
rules
Importer/
Academia
Roaster
Culture of
knowledge and
representation
Culture of
profitmaximization
Consumer
Conventional
Culture of
knowledge,
reflexive
consumer
Coffee Prices
Fair trade logo
Culture of
narratives and
connectivity
65
market
culture
The production centered approach is usually based on Marxist theories of commodities.
According to Marx (1971) the fetish of commodities is the product of alienation between
production and consumption.
‘’For Marx, the worth of commodities is determined by the social relations of their
production; but the existence of the exchange system makes the production process remote
and misperceived, and it ‘masks’ the commodity’s true worth. This allows the commodity to
be socially endowed with a fetish-like ‘power’ that is unrelated to its true worth’’ (Marx,
1971, cf. Kopytoff, 1986:83)
Alienation is created through the exchange system, or the value chain, where the value
added by laborers appears as objective properties of the commodities. According to
Marx, the definition of a commodity is through its exchange. ’To become a commodity a
product must be transferred to another [person], whom it will serve as a use-value, by
means of exchange’ (Marx, 1971:48). This is where the capitalist system becomes
problematic for Marx, where the exchange value does not reflect use value33. The
exchange value is determined by demand of the product and does not reflect social
relations and labor at production site; neither does it reflect the use value of the
commodity. Marx argues from an essential production theory, where the value which is
not visible for the consumer was created at the production site. Thus, the social cost of
production is not inherent in the use value of the commodity, nor is the social relations
of trade. Thus the moral obligations to social exploitation in production cease to exist.
According to Bryant and Goodman (2004:348) commodities contain a double fetish that
both obscures realities at the site of production and creates cultural and economic
surpluses for the consumers’. The exchange in commodities is a transaction between
objects, creating an economic surplus for consumers. Work which focus on unraveling
the ‘veil’ of commodities highlights the hidden social relations and the properties and
meanings associated with the consumption and circulation of commodities (Bakker and
Bridge, 2006) aiming at restoring a certain moral obligation to producers (Cook and
Crang, 1996). However, this work is highly production centered. According to
The same difficulty is highlighted by Appadurai, referred to as the process of which ‘goods’ become
‘commodities33’ (the Marxian terminology of how use value becomes exchange value). Kopytoff (1986)
relate to the same notion in ’the social history of things’ where the object moves in and out of market
circuits.
33
66
consumption centered studies34 such as the work of Appadurai (1986) and Kopytoff
(1986), highly inspired by the work of Baudrillard (1975),
‘Marx was still imprisoned in two aspects of the mid-nineteenth century episteme: one
could see the economy only in reference to the problematic of production… the other
regarded the movement to commodity production as evolutionary, unidirectional and
historical. … Following Baudrillard (1981) I suggest that we treat demand, hence
consumption, as an aspect of the overall political economy of societies. Demand, that is,
emerges as a function of a variety of social practices and classifications (Appadurai,
1986:29)
Thus, consumption centered theories highlight that properties and meanings are not
intrinsic to the commodity …’Properties and meanings are seen to emerge from the
interaction of objects with social processes. As a result, the meanings attached to things
(and the identities and subjectivities produced through these attachments) are multivalent
and fluid’ (Bakker and Bridge, 2006:12). Thus, a new fetish is created by social relations
throughout the biography of the commodity. The new fetish is particularly related to the
social construction of demand and the mystique of advertisement (Baudrillard, 1981).
Needs, and thus demand are, according to Baudrillard (1981) socially constructed. This
is part of Baudrillard’s main criticism of Marx, and the concept of use value, or the
difference between need and utility. Where Marx argued that need was directly
translated into use, naturally inherent in the capitalist system of consumption,
Baudrillard argue all purpose signify a social construct. For Baudrillard, the origin of
needs precedes the production of goods, whereas Marx argued need as innate
(Baudrillard, 1981). Thus, whereas Marx argued production as the drive of society,
Baudrillard argues consumption as the drive of society. Accordingly, Marx argued
commodity fetishism due to hidden social relations in production, Baudrillard (1983)
see all purposes to signify a fetish side. In particular, he saw the mysteries of
advertisement as part of a socially constructed demand, thus by large creating a fetish.
I find it extremely important to include this theory of analysis because this is where
most studies of Fairtrade is positioned. Many scholars have analyzed Fairtrade
The approach of Appadurai (1986) Kopytoff (1986) and Baudrillard (1981) have later been criticized of
being consumption centered within a production related approach, ignorant of exploitation of production
(van Binsbergen, 2005).
34
67
commodities in relation to Marx production centered theory because the Fairtrade
product is argued to visualize many of these attribute which a conventional ‘fetishized’
product is hiding (Goodman and Cohen, 2004; Hudson and Hudson, 2003; Bryant and
Goodman, 2004; Goodman, 2004; Moberg, 2005, Fridell, 2007). The label, and the
supporting narratives, visualizes certain social relations in production and trade to the
consumer. However, these studies thus disregard the importance of marketing and
representation strategies. According to Whatmore and Thorne (1997) and Raynolds
(2000);
‘Fairtrade products are given significance and gain value because they are more than just
food. Knowledge of where the products are produced and how they are connected to wider
cultural and political trend is a critical component of consumer choice and participation
within the alternative market. The Fairtrade market is celebrated for creating modes of
connectivity and re-embedding producer-consumer relationships’ (Whatmore and Thorn,
1997; Raynolds, 2000, cf. Lyon, 2006: 457)
Through this process it is argued directly and indirectly that Fairtrade coffee
resemblance a commodity whose fetish is limited due to the social embeddedness
visible through the label and the narratives it represents (Goodman and Cohen, 2004;
Hudson and Hudson, 2003; Goodman, 2004; Moberg, 2005). However, the production
centered theory does not include the importance of marketing and symbols. Analyzing
commodity cultures does not necessarily aim at lifting a certain ‘veil’ of the commodity.
According to Goodman and DuPuis (2002), work which centre around lifting a certain
veil of the commodities is still highly Marxian or production centered. According to
Goodman and Dupuis (2002) Marx insisted that political power exist in production only,
thus the power to shape society depends on control of production. Within the
production centered approach, consumers are passive recipients sheltered from the
exploitative means of production by the commodity ‘veil’. Thus, the production centered
approach believes that by lifting the veil of commodities, consumers’ consciousness is
awakened and consumption can again claim political base (Goodman and Dupuis, 2002).
A consumption centered approach, on the other hand, aim at visualizing the social
constructed demand. According to Appadurai (1986) consumption should be analyzed
not only for sending messages, but for receiving them as well, where ‘…demand is subject
to social definition and control’ (Appadurai, 1986:32). Thus, in order for a complete
68
analysis I aim at defining the commodity cultures of production, consumption and
advertisement. I will follow the argument from Goodman and Dupuis (2002) to go
beyond the production-consumption debate. Even though the commodity has a center
stage, the use value, exchange value, sign value and symbol value is crucial for
understanding Fairtrade coffee. Inherent in the social construction of demand is a notion
of consumption being part of the biography of a commodity;
’Consumption is the phase of the cycle in which goods become attached to personal
referents, when they cease to be neutral ‘’goods’’, which could be owned by anybody and
identified with anybody, and become attributes of some individual personality, bridges of
identity, and signifiers of specific interpersonal relationships and obligations.. …What
distinguish consumption from exchange is not that consumption has a physiological
dimension that exchange lacks, but that consumption involves the incorporation of the
consumed item into the personal and social identity of the consumer’ (Gell, 1986:112).
However, arguing the consumption culture within a consumption centered approach
includes looking at the social construction of demand. According to Baudrillard (1981),
advertisement is part of the socially constructed demand. The meaning of the product is
socially constructed, in particular by communication strategies which attempt to
persuade people to consume the particular product. Consumption is not only a matter of
sending social messages, but for receiving them as well. Thus, demand is subject to
social definition and control (Appadurai, 1986: 32).
After highlighting the importance of advertisement and the social construction of needs,
it is possible to see demand of Fairtrade products in relation to Giddens (1991) notion of
the reflexive project of the self, occurring in late modernity. Giddens (1991) argue that
lifestyle politics, as opposed to ‘emancipatory politics’ is characterized by the reflexive
project of the self. The reflexive project of the self is confined by a politics of choice
where lifestyle practices give material form to a certain narrative of identifying self
(Giddens, 1991). According to Giddens (1991) how one identifies the self is …’not to be
found in behavior, nor – important though this is – in the reactions of others, but in the
capacity to keep a particular narrative going. …the ongoing story of the self (Giddens,
1991:54). …‘What to do? How to act? What to be? These are focal questions for everyone
living in circumstances of late modernity – and ones which, on some level or another, all of
us answer, either discursively or through day to day social behavior (Giddens, 1991:70).
69
Thus, by referring to the consumer culture of Fairtrade coffee necessarily includes
understanding how the constructed meaning of the product influences consumer choice
and lifestyle politics. Thus, referring to the reflexive project of the self (Giddens, 1991)
and socially constructed values of Fairtrade, it is possible to identify the consumer
culture of Fairtrade. According to Strømsnes (2005) one can define political ethical
consumption in terms of boycotting or buycotting products in order to influence politics
(Strømsnes, 2005:166). Boycott is the negative version of political consumption where
consumers choose not to buy a certain product as a protest… Buycott, on the other hand, is
a positive political consumer choice, where the consumer decides to buy certain products
based on political, ethical or environmental reasons’ (Strømsnes, 2005: 166). Thus, my
analysis will be based on buycotting a product, where consumer demand for Fairtrade
coffee is influenced by political and ethical reasons. Regular advertisement mainly
works on associating consumption with the good life, where consumption contributes to
self-satisfaction, which stimulates the volume pace of consumption (Wilhite and
Lutzenhiser, 1998). However, the complex web of actors in the Fairtrade network place
emphasis on the products characteristics, thus create a certain meaning to the Fairtrade
coffee. One may say this is a second production moment, because the factor which
separates the Fairtrade product from the conventional product is the particular meaning
of Fairtrade.
Rather than lifting the veil of the commodity, the commodity culture approach is
inspired by Appadurai’s suggestion ‘to follow the things themselves, for their meanings
are inscribed in their forms, their uses, their trajectories . . . it is the things-in-motion that
illuminate their human and social context’ (Appadurai, 1986: 5). However, I find it
extremely important to challenge the weakness of Appadurai’s (1986) theory, by
including the relation of power in production of commodities and theirs regimes of
exploitation (Bryant and Gooman, 2004). I will highlight this by using the different
commodity cultures as their own centers of production. Thus, the commodity cultures
deconstruct the Fairtrade coffee network, interpret the different cultures by themselves,
in addition to the economic value chain which highlights the difference in income, hence
the power structures in the chain. I will aim at this through also including the production
centered approach through producer narratives, and the economic GVC analysis. This is
in stark contrast to Cook and Crang (1996) and Bryant and Goodman (2004), which
argue that the commodity culture approach should rather polish the surfaces of the
70
commodity35 in order not to inhibit ethical consumption. My aim is by no means to
inhibit ethical consumption; however I see the importance of a claim to a more general
representation of producer narratives than the producer narratives which are
strategically presented by the Fairtrade network. This is also important in order to
discuss the different values of Fairtrade coffee.
In my analysis I will focus on the construction of meaning to Fairtrade coffee. By
deconstructing the idea and practice of the Fairtrade commodity it is possible to
interpret the economic income and the semiotic value of Fairtrade coffee for the
different commodity cultures involved in the network. I will use a social constructivist
approach by deconstructing the concept of Fairtrade coffee and interpret the meaning of
Fairtrade coffee within each culture. The commodity cultures are understood in its
widest sense as producer cultures, consumer cultures and representation cultures.
However, the representation culture is distinguished from the other two cultures as it
has an agenda of influencing the consumer culture, thus it is more appropriate to discuss
this culture as a strategy. The narrative analysis I will present will have main emphasis
on the key actors within the network of fair trade coffee. The narratives are separated
between material and imaginative production moments. Thus, the theoretical tools
presented above will be used to define the value of Fairtrade coffee, both economic and
semiotic, in order for a broader understanding of the Fairtrade network.
According to Cook and Crang (1996) and Bryant and Goodman (2004) there should be no claim to
reality at either stage because this only means ignoring the realm of usage altogether. …’We can apply
critical dusting to grapes..Pick up the fingerprints of oppression on them. We can expose the truly obscene
geographies, upsetting our consuming pleasure. … providing other voices and stories for consumers to hear.
…And in casting consumption as a place of choice between competing moralities.. it can only wish away
…consumer cultures’ roles in flexible self-identification and pleasurable sociality, and position itself in
opposition to the hedonistic possibilities of modern consumption, a positioning that is located nearer to some
consumer cultures than others, hence, perhaps the socially and sectorally differential adoption of ‘ethical’
consumerism’ (Cook and Crang, 1996:146,147).
35
71
72
5.0 RESULTS AND DISKUSSION I: THE GLOBAL VALUE CHAIN OF
FAIRTRADE COFFEE
‘To begin with, a commodity, in the language of the English economists, is “any thing
necessary, useful or pleasant in life,” an object of human wants, a means of existence in the
widest sense of the term. Use-value as an aspect of the commodity coincides with the
physical palpable existence of the commodity. …A use-value has value only in use, and is
realized only in the process of consumption’ (Marx, 1851)
The economic value chain focuses on use-value and income generated in the chain. As shown
below (see
Figure 9), the final product of coffee is produced in various steps. For assessment purposes they
have been divided into three main stages, firstly; the growing and initial processing of coffee in
producer country up to the green coffee stage and exporting. In Guatemala, the second level
cooperative is responsible for the initial processing stage with a major processing plant in Palin,
close to Guatemala City. In Nicaragua, the first level cooperative buys the initial services
regionally. The second stage is the importing of green coffee, along with the production and sale
of roasted coffee. This stage is located in consumer countries, necessarily close to consumption
as the final product need to be fresh. Through a global value chain analysis it is possible to
visualize the distribution of returns among the parties participating in the value chain. The basic
measure of income used in this analysis is the total value of income remaining at each major link
in the global value chain. This is also referred to as retained value (Talbot, 1997, 2004). The total
income generated in the global value chain is here equal to retail price or the total amount spent
by consumers purchasing the product.
73
5.1 THE GLOBAL VALUE CHAIN – PROCESSING OF PRODUCT
FIGURE 9: PROCESSING OF COFFEE
Central Miller
Wet or dry
processing
Drying
Level 1
Producing Country
Harvesting
(paid by
'lata')
The coffee
plant with
red cherries
Export (logistical)
Barista coffee
consumed in coffee
bars
Level 2
Consuming Country
Norwegian Coffee
Houses
Roasting and packaging
Retail coffee
In producer country, coffee cherries are harvested selective picking by hand. This is
done in order to maximize the amount of ripe cherries harvested and leave behind
74
unripe, green beans to be harvested at a later time (Coffee research Organization,
undated). The primary goal of producer country processing is to separate the bean from
the skin and the pulp of the cherrie (Ponte, 2002). Depending on location and local
resources, coffee is processed in two main ways; wet or dry processing. The wet
processing method was mostly observed during fieldwork, and the end result is Mild (or
washed) Arabica, which is traded different from ‘Hard’ coffee which is either Hard
Arabica or Robusta (Ponte, 2002). This includes pulping, were the skin and the pulp is
separated from the bean, followed by drying. Beans are also separated by their weight.
Then the coffee is placed in fermentation tanks in order for enzymes to break down the
mucilage (sticky stuff adhering to the parchment surrounding the beans) and is cleaned.
The wet parchment coffee (pergamino) contains 57 percent of moisture at this stage. To
reduce this moisture content the parchment is dried by using usually a combination of
sun drying and mechanical drying, down to an optimum of 11.5 percent (field
observations and International Coffee Organisation, undate). The Milling of the coffee
usually occurs on a centralized basis. It includes hulling, which removes the parchment
layer from the wet processed coffee (Ponte, 2002), polishing, grading and sorting. After
the milling process the coffee is classified and exported as green beans. Proper
processing in producer country, along with soil type and fertility, weather conditions
and farm practices, is the key determinant of coffee quality (Ponte, 2002).
75
5.2 THE GLOBAL ECONOMIC VALUE CHAIN - INCOME FROM FAIRTRADE
COFFEE
The coffee commodity chain is relatively simple in that very few other inputs are used in
the process from growing and processing green coffee to its manufacturer and final
consumption (Talbot, 1997). The chain has very few side branches which makes it
feasible to estimate distribution of income along the chain. The total breakdown shows
the direct value calculated by percentage in each stage. In the conventional supply chain
of coffee, Milford argues it is possible that a coffee bean change hands as many as 150
times (Milford, 2004:5). As highlighted by Slob (2006)
‘’In a report published on the occasion of the fifteenth birthday of Max Havelaar, Fenny
Eshuis and Jos Harmsen demonstrate that in 2002 the gross income of a producer (farmer)
was € 0.10 per package of mainstream coffee (250 grams) sold in the Netherlands,
compared to a retail value of € 1.57 for the same package of coffee. This means that the
producer would obtain 6.37 percent of the retail value’’ (cited from Slob, 2006:25).
Slob (2007), referring to studies from Eshuis and Harmsen (2003), highlights that in a
Fairtrade system, the gross income of the producer organization is 29.15 percent of
retail value. However, by comparing these two value chains, Slob (2006) compares the
benefits to producer in conventional chains with the benefit to producer organization in
the Fairtrade coffee chain36. The importance of cooperatives is not an outcome of
Fairtrade; it is rather a form of producer organization with long tradition in Central
America (Lyon, 2007).
Through fieldwork in Nicaragua and Guatemala, I have estimated the gross income of
producer and the gross income of producer organizations of Fairtrade coffee. Firstly, I
will present the overall income of the producers of Fairtrade coffee. Secondly, I will
present a global value chain analysis of the Fairtrade product Farmers Coffee from Joh.
Johannson AS. Thirdly, I will present a global value chain of one cup of Fairtrade coffee
from the cafeteria at the Norwegian University of Life Science. And at last I will present
The report by Slob (2006) is produced by the Centre for research on Multinational Corporations, funded
by the International Fair Trade Association (IFAT), the European Fair Trade Association (EFTA) and Fair
Trade Labelling Association (FLO).
36
76
an imaginary image of producer income of one Cappuccino in order to illustrate the
income of producers.
The producer income per kilogram of Fairtrade coffee sold in Norway is approximately
NOK 2.50 per kilogram (see Table 1). The producer income is similar in Nicaragua and
Guatemala. However, the total income in the producer countries shows higher variation.
As highlighted below (Table 1) the exporting cooperative in Guatemala have a total
income of NOK 7.24 TCE per kilogram, whereas the exporting cooperative in Nicaragua
have a total income of NOK 4.48 TCE per kilogram. Important to note though, the price is
calculated as an average of income and must be seen in relation to the producer
narratives as for evaluating the total producer benefit of Fairtrade. All the producers
interviewed in both Nicaragua and Guatemala use a system of liquidation of price.
Therefore, the amount given here is the average income of the producers37.
TABLE 1: ESTIMATED INCOME FROM COFFE IN TOASTED COFFEE EQUIVALENTS
Actors
Coffee income
Percentage of total
(NOK/kg TCE)
(percent of NOK 74)
Producers Nicaragua a
2.56
3.5 %
Producers Guatemala a
2.52
3.4 %
Total income producer country;
4.48
6.1 %
7.24
9.8 %
Nicaragua b
Total income producer country;
Guatemala
b
(See Appendix I, Appendix II and Appendix V for calculations)
Furthermore, from the above table (Table 1) there are clear differences from the
distribution of benefits from producer to producer organization. The difference is more
remarkable in the producer organization in Guatemala then in Nicaragua. The
Justified according to above where there is no highlighted price difference to producers, the fair trade
price is below ‘C’ price and a normal fact that not all coffee is exported through fair trade channels.
However, the farmers researched in Nicaragua and Guatemala have other certifications in addition to fair
trade and normally fetches higher prices. The producers in Nicaragua obtained a higher price through the
Esperanza Coffee group than they did to their fair trade buyer, but received the same benchmark price
from the fair trade coffee as with their Starbucks CAFÉ practices.
37
77
specialized second level cooperative in Guatemala receives a higher portion of benefits
than the small cooperative in Nicaragua. Furthermore, the producers in Guatemala
receive less direct benefits than the producers in Nicaragua. I believe this highlight the
increasing demand of Fairtrade products and the move to mainstream Fairtrade. The
second level cooperative in Guatemala is able to supply a large amount of coffee but the
creation of a second link in the supply chain decreases the direct economic benefits to
the producer. Not distinguishing from the table, but the second level cooperative in
Guatemala invest in producing high quality coffee and operate more as a professional
firm (de Leon, marketing manager of Fedecocagua, personal interview, Guatemala,
2007) than the small scale cooperative in Nicaragua. Furthermore, the second level
cooperative in Guatemala supply 630 containers of Fairtrade coffee annually (de Leon,
marketing manager of Fedecocagua, personal interview, Guatemala, 2007), whereas the
cooperative El Polo in Nicaragua supply 7 containers of Fairtrade coffee annually
(Solorzano, 2007).
Important to note, the current ‘C’ price is higher than the Fairtrade price floor, thereby
the Fairtrade price is supposed to follow the ‘C’ price. The main benefits one can thus
find of the Fairtrade system is the social premium. The social premium resides at the
cooperative38 in order to increase their capacity and distribute a better quality coffee.
Indirectly, this aids the producers to export more and better quality coffee, a highly
important aspect of Fairtrade benefits.
According to Slob (2006), the amount of extra benefits to the producer
...’varies
according to the cooperatives’ handling of debt servicing, co-operative expenses,
distribution of Fairtrade social premium etc’ (Slob, 2006: 28). This acknowledgement is
essential in relation to the new method of ‘doing’ Fairtrade. By mainstreaming Fairtrade,
growing consortiums of cooperatives operating on national basis have the lion’s share of
the market. They incorporate an additional link in the value chain which requires profit
and are positioned with increased potential of exerting power over the producers.
The income generated from Farmers Coffee is visualized below (Table 2). Accordingly,
the direct value to producer of one package Farmers coffee is 63 Norwegian øre,
38
In the case of Guatemala, the social premium resides in the second level cooperative.
78
whereas the importer/roaster has an income of almost 74 percent of total value. This
highlights that Fair trade does not challenge the direct power in the global value chain,
where the main share of profit remains at the importer/roaster level. The Fairtrade
network works within the market thus is not able to change the power and governance
of the global value chain. Furthermore, it is important to highlight Max Havelaar as an
expensive organization, with an income close to the total income received by producers
from the same product. It is also important to bear in mind the difference in quantity
sold. The second level cooperative is on a national scale, receiving 0.21 percent39 of
every kilogram of coffee exported from the 20 000 producers all over Guatemala,
whereas the producer have small family-run farms. The roasters and retailers in Norway
are also macro scale where three main roasters distribute to 85 percent of the
Norwegian market.
TABLE 2: DISTRIBUTION OF VALUE, FARMERS COFFEE
Direct output price
(NOK/kg
Joh Johannson AS
toasted
equivalents)
coffee
Direct output
Value added
Value
price
(NOK/kg
(percent
(Green
Bean
toasted
coffee equivalent)
total)
added
of
Equivalent)
Retail b
74
62.18
10.24
13.83%
1.8
1.51
1.8
2.43 %
Joh Johannson AS d
63.76
53.58
54.71
73.93 %
2nd level
7.25
6.09
3.92
5.97 %
1st level cooperative f
3.33
2.80
0.83
1.12 %
Producer
2.5
2.10
2.5
3.38%
Max Havelaar
Norway
c
cooperative
g
e
(See Appendix I and Appendix IV for calculation. For visual representation see Appendix
VI.)
The producer receives 3.38 percent of total value of one package of Fairtrade coffee.
Total income in producer country amounts to 10.47 percent. In comparison, the
39
Assuming on average 12 percent to the second level cooperative of total price paid to producers.
79
importer has an assumed income of 73.9 percent40 of the total value, and the
organization Max Havelaar has an income of 2.43 percent of total value.
According to Talbot (1997, 2004), the income of producers in the conventional coffee
market was about 14.6 percent in 1989/1999, decreased to 10 percent in 2000/2001
(Talbot, 2004:169). Even though Talbots’ figures are calculated as a weighted average of
prices paid to growers in each ICO member exporting country, during the time of the
coffee crisis, they correspond extremely well with the figures I have received from the
producers. However, during the same period, the value added in consuming countries
increased from 75.5 percent (1998/1999) to 79.4 percent (2000/2001). The figures are
comparable to my findings, where Talbot has not divided value according to sector.
From the distribution shown above (Table 2) the income generated by retail is extremely
low if one takes the VAT into account. According to my findings, by including VAT as
separate income, the income of retail would be negative, where VAT is 25 percent
corresponding to 19.01 percent of total retail value. However, I have included VAT
within the income of retail as they assume other benefits such as writing off other types
of costs from their tax returns. However, similar findings where retail assumes low
income from coffee are highlighted by Ponte (2001);
‘Supermarkets retail value margins for coffee have remained generally lower than for the
average food portfolio. In some countries such as the US, retailers sell coffee even at a loss
in order to generate traffic. Retailers need to stock coffee because consumers expect them
to do so. They can attract customers with relatively cheap coffee and entice them to buy
other, high-margin items during their visit’ (Ponte, 2001:19).
Thus, the general low income from retail is a general trend, where low priced coffee is a
product which attracts customers.
The distribution of income by sector of the Fairtrade coffee used on campus at the
Norwegian University of Life Sciences is shown below (Table 3). The estimation is made
of Fairtrade coffee for students, who are exempt from VAT when using their student
The value is only calculated out of value in the other part of the chain as direct value was not possible to
obtain. Other scholars have noted same difficulty, such as Talbot (2004:180) ‘Information on costs of
production (TNCs) can legally be considered a ‘trade secret’ which does not have to be disclosed’.
40
80
cards41. Producers’ gross income from one cup of coffee bought at the University campus
of UMB is 0.79 percent of total value (Table 3), or 4.7 øre. The total value which reaches
the producer organization, Fedecocagua in Guatemala, is 1.55 percent.
Needless to mention, one has to take into consideration the different cost of services and
labor in the two different countries. Even though the figure lacks comparability to a
conventional market, it is representative to impacts of Fairtrade when prices of the
international market are better. It pictures the value received by producers given prices
are better than price floor set by FLO International. In many cases, it would have been
impossible to compare the Fairtrade value chain with a conventional value chain where
coffee sometimes change hands as many as 150 times (Milford, 2004; Slob, 2006).
Nevertheless, producer income can be compared. However, seen in relation to the
perceived benefits from Fairtrade one can argue that direct benefits to the producers are
at a minimum but the social premium increase the organizational capacity of the
organization. The social premium of USD 0.05 per pound green beans is equivalent to
0.15 NOK/kg42 TCE or the coffee bought at retail. Dividing this number by four and one
has the social premium of one package of Fairtrade coffee (0.04 NOK/package 250 gr.).
The social premium has currently increased to USD 0.10 per pound GBE, thus equivalent
to 0.30 NOK/kg TCE, or 0.08 NOK/package 250 gr.
TABLE 3: VALUE DISTRIBUTED OF ONE CUP OF COFFE, UMB
Value chain UMB
Small coffee
percentage per cup
4.75
79.17 %
0.02
0.38 %
Friele AS c
1.14
18.95 %
Total value producing country d
0.09
1.51 %
2nd level cooperative e
0.05
0.82 %
1st level cooperative f
0.01
0.17 %
Producer g
0.03
0.52 %
Total
6.00
100.00 %
Siås cafeteria a
Max Havelaar
b
(See Appendix I, Appendix II and Appendix IV for calculations)
Important to note that if one buy a regular including VAT there have been added 33 percent to the total
product, whereas the rates in Norway are 25 percent of the ‘added value’ of the product, excluding value
of raw product.
41
42
Given US$1 is NOK 5.39; 1pound is 2,2 kg; 1 kg green coffee is 1.19 kg toasted.
81
The distribution of income in the value chain is shown above (Table 3) where the total
amount correlates to the NOK 6.00 per cup of coffee43, excluding taxes. The University
cafeteria receives about 79.17 percent of this value whereas Friele AS receives 18.95
percent and producer country receives 1.51 percent. Thus, from one cup of Fairtrade
coffee bought at campus, the producer has an income of 3 Norwegian øre, or the total
income in producer country is 9 Norwegian øre.
TABEL 4: HYPOTHETICAL PRODUCER INCOME FROM ONE FAIRTRADE CAPPUCCINO
Producer
benefit
Producer benefit (Percentage of
Actors
(NOK/cappuccino44)
total price of cappuccino45)
Producers Nicaragua a
0.02
0.06 %
Producers Guatemala
0.02
0.06%
country;
0.05
0.16%
country;
0.03
0.10 %
Total value producing
b
Nicaragua
Total
value
producing
Guatemala
(See Appendix I, Appendix II and Appendix V for calculations)
Only as a hypothetically case, the table above (Tabel 4) shows the income to coffee
producer of one cup of cappuccino sold. The producers receive about 0.06 percent of
total income from one cup of Fairtrade cappuccino46. This phenomenon is explained by
Ponte (2001) when discussing the ‘latte revolution’ and the ‘Starbucks factor’; coffee is
consumed more as an experience in get-away places such as cafés. Coffee in this sense is
no longer a commodity but ‘pre-packed with lifestyle signifiers’. This is further
collaborated below regarding the commodity cultures and corresponding narratives.
However, as Ponte (2001) highlights;
43
I justify not including transportation costs by neither including cost of production.
According to Barista Norway, one cappuccino includes 35 ml of espresso, which is 7 grams of fine
toasted beans.
44
45
Where one cappuccino costs NOK 32.
This is hypothetically. The large coffee houses in Norway do usually not operate with fair trade for their
espresso, for instant Friele AS buys the espresso coffee from Illy in Italy. This type of coffee is usually
referred to as specialty coffee and fetches a higher price at producer site (sales manager Friele AS).
However, since estimation of producers’ income includes a small part sold as specialty coffee it is possible
to assume similar benefits.
46
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‘What difference does it make to a smallholder if a consumer can buy a ‘double tall low-fat
soy orange decaf latte’ or if specialty beans are sold at USD 12 per pound in the US if
he/she gets less than 50 cents for the same product’ (Ponte, 2001:20,21).
The marketing manager of Fedecocagua (de Leon, personal interview, 2007) claimed
farmers receive 88 percent of the Fairtrade price, in which at time of research
responded to USD 1.21, Fedecocagua thus keep 12 percent of total income47. The
average price received directly by producers was actually USD 1.15 per pound of green
coffee. The percentage of the average ‘C’ price for the corresponding period was USD
128.64 (International Coffee Organization, undated; indicator prices). One can draw two
speculative conclusions out of this; either the producers received 89.40 percent of the
corresponding market price, or the second level cooperative received a price bonus for
quality and/or certifications and distributed this equally to producers which amounted
to an increase in price received by 1.40 percent48. The latter is more likely when,
according to Norwegian roasters, coffee from Guatemala is not usually used in regular
mixed coffee brands due to its high price49 (Purchasing Manager, Coop Norway
Kaffebrenneri). Nevertheless, the calculations presented above is based on a higher
price than the Fairtrade price, therefore one would find a smaller portion reaching the
producer when the FLO price floor is active. On the other hand, depending on amount
sold through Fairtrade channels, the difference from conventional market price would
be higher. However, according to Fridell (2007);
‘…When viewed historically the Fairtrade price is relatively low and consistent with
conventional prices. From 1976 to 1989 and from 1995 to 1998, a total of sixteen years, the
international price for Brazilian Arabica beans was generally close to or well above USD
1.26 per pound (Fridell, 2007:86). ..It would be untenable, given the historically
exploitative conditions under which coffee producers have lived and worked, to make the
claim that during these years the price of coffee beans was fair (Fridell, 2007:86)… The
47
This is correct according to FLO system because the fair trade price is given as FOB price
It was not possible to receive the exact price of Guatemalan coffee sold by Fedecocagua, but see the
narrative section for how the second level cooperative distribute the social premium.
48
The cooperative El Polo, on the other hand, received at the corresponding time period US$ 1.26 cents
per pound of green coffee for the majority of their harvest. This was through Arvid Nordquist HAB in
Sweden and Starbucks CAFÉ practices, which paid equal price. The cooperative sold a small amount of
coffee as specialty coffee through The Esperanza Coffee group where they received US$ 138 per quintal.
49
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basic minimum price of USD 1.26 per pound has not changed in over ten years, and,
according to one calculation, has lost 75 percent of its value to inflation in Mexico during
that time ...Even taking into consideration that Fairtraders receive a greater percentage of
the FOB price than conventional farmers, for most of these years conventional farmers
received a final price that was higher or equivalent to the Fairtrade price. … It would be
untenable… to make the claim that for these years the conventional prices for coffee beans
(equal or higher than the current Fairtrade price) reflect the social and environmental
costs of production (Fridell, 2007:192, 193).
According to above calculations, FLO International and Max Havelaar is a rather
expensive organization. Placing the numbers in perspective; the total income generated
by producer countries of one package of Fairtrade coffee sold in Norway is, in Guatemala
NOK 1.81, or in Nicaragua NOK 1.12. The total income of producers in Guatemala and
Nicaragua is NOK 0.64. However, the total income of the Fairtrade organization is NOK
0.45 of the same product. Even though the numbers lack comparability to a conventional
market, it is important to highlight that currently, due to the high conventional price of
coffee, the only direct economic benefit of Fairtrade is the social premium. Thus, at time
of research, the total extra income of one package of Fairtrade coffee compared to
conventional coffee was NOK 0.038, or 3.8 øre. This amount has currently increased to
NOK 0.073, or 7.3 øre, still more than six times the direct income from the Fairtrade
organization.
84
6.0 RESULTS AND DISCUSSION II: THE COMMODITY CULTURES
OF FAIRTRADE
‘’For the economists, commodities simply are. That is, certain things and right to things are
produced, exist, and can be seen to circulate through the economic system as they are
being exchanged for other things, usually in exchange for money. This view, of course,
frames the commonsensical definition of a commodity: an item with use value that also has
exchange value. ..From a cultural perspective, the production of commodities is also a
cultural and cognitive process: commodities must be not only produced materially as
things, but also culturally marked as being a certain kind of thing. ..the same thing might
be treated as commodity at one time and not at other… the same thing may, at the same
time, be seen as commodity by one person and as something else by another’’ (Kopytoff,
1986:64)
My following analysis will focus on the narratives surrounding Fairtrade. The narratives
presented here are separated between the material and imaginative production
moments of Fairtrade coffee. The material production moments are divided
geographically between the two cooperatives in Nicaragua and Guatemala and the
imaginative production moments are divided between the different representation
strategies. At last, I will present the consumer narratives, though due to limitations of
research they are not given the full attention they ought to have as I had to rely on
secondary data. The imaginative production moments are analyzed through
communication strategies. The communication strategies are the main difference
between the Fairtrade commodity50 and the conventional commodity. The complex
network of Fairtrade actors are referred to as a ‘lengthening51’ of the network, as
compared to networks of conventional coffee.
50
The fair trade commodity is referred to within alternative geographies of food.
‘Alternative geographies of food are located in the political competence and social agency of individuals,
institutions, and alliances, enacting a variety of partial knowledge and strategic interests through networks
which simultaneously involve a ‘lengthening’ of spatial and institutional reach an a ‘strengthening of
environmental and social embeddedness’ (Whatmore and Thorne, 1997:294,295).
51
85
6.1 COMMUNICATION STRATEGIES OF FAIRTRADE
According to Lamb (2007:55), the director of the Fairtrade network, it is indeed the
‘marketing methods which are unique to Fairtrade and which seek to realize the core
objective of bringing the organized consumer closer together with disadvantaged,
organized producers. …these techniques have helped make Fairtrade fashionable’.
The communication or marketing of fair trade reflect a certain power to formulate ideas
and communicate them effectively52 (Mare, 2007). It is indeed difficult to relate to
communication narratives as marketing strategies due to the moral power the Fairtrade
network embark on, which I will come back to later. However, basing these data on
visual representations of Fairtrade in Norway, grounded in text from the Director of the
Fairtrade Foundation in the UK about marketing strategies of Fairtrade, I find the term
‘marketing’ justified. The Fairtrade mark has embarked on various different marketing
strategies. It is important to highlight these in order to gain a fuller understanding of
Fairtrade as a network.
The first communication strategy is the name Max Havelaar, which represents the
Fairtrade Labeling Organization International (FLO). The name Max Havelaar and
Fairtrade implies a certain moral grounding. The second communication strategy
presented is the label. The label is a symbol representing a narrative which is
communicated to the consumer. Thirdly, the organization Max Havelaar is the
communication face of Fairtrade in Norway. Max Havelaar is promoting Fairtrade
through their webpage and various different campaigns. Fourthly, the international
organization FLO, along with its partner Alternative Trading Organizations (ATOs), is
the administrative hierarchy above Max Havelaar Norway, promoting the Fairtrade
network through various different channels. In particular, recent campaigns have been
the promotion of Fairtrade towns, schools, churches and universities.
Such as the idea of Fairtrade; ‘Fairtrade seeks to challenge historically unequal international market
relations and transform North/South trade from a vehicle of exploitation to a means of empowerment.
Fairtrade works to alleviate poverty in the global South through a strategy of ‘trade, not aid’, improving
farmer and worker livelihoods through direct sales, better prices, and stable market links as well as support
for producer organizations and communities. This movement also works to educate Northern consumers
about the negative consequences of conventional trade, offer fairly traded alternative products, and promote
the selection of more ethical purchases’ (Raynolds and Long, pp. 15).
52
86
Other more independent marketing initiatives include the importers/roasters and
distinguished NGOs. The importers and roasters are the vehicles of Fairtrade. They are
realizing Fairtrade certified products through their expertise and position as established
actors in the market. The independent organizations such as NGOs and development
organizations support Fairtrade financially, or with a symbolic economic amount. In
Norway, Norad is one of the main financer of Max Havelaar, whereas other organizations
support with a symbolic amount. However, the value of their contribution must also be
seen in terms of the symbolic value in terms of legitimacy and publicity due to their
established position in the society.
The first communication method is the name; Max Havelaar, taken from a novel by
Multatuli (pen name of Douwes Dekker) written in 1860 as a protest against colonial
policies. In particular, the enforcement of a new cultivation system where Indonesian
farmers at the former Dutch colony of Java were forced to grow commercially tradable
crops such as tea and sugar instead of staple foods. Taxes were collected by the colonial
powers, resulting in abject poverty among the Indonesian population (Mutatuli, 1901).
Multatuli saw the importance of writing the story, through a novel he wanted to bring
attention to the exploitative powers of the Dutch colonies;
…’’Sagen var den, jeg indsaa, der var en Fare, som truede med at ødelægge det hele
Kaffemarked, og som alene kunde afværges, hvis samtlige Mæglere slog sig sammen. …som
om ligeledes Skibsrederierne paa en vis Maade er interesserede i Sagen, ikke at tale om
Koffardiflaaden. Og ogsaa Sejldugmageren og Finansministeren, Embedsmændene og de
øvrige Ministrene… Min bog vedrører ogsaa Møllerne og Præstene, Apotekærne,
Brændvinsbrænderne… Ogsaa Kongen, ja fremfor alt Kongen! Min bog maa ud i
Verden53…’’ (Multatuli (Douwes Dekker), 1901:30, 31).
Multatuli’s words became well known. According to the Danish translator Carl
Michelsen (Multatuli, 1901); ‘teksten vakte baade ved sin Form og sit Indhold, en
umaadelig Opsigt. …Hans bog, der anses for det betydeligste Værk I Holland i nittende
The case was this, I realized, there was a danger, which threaten to ruin the complete coffee market, and
which alone could be averted, if all Brokers collectively joined… as if also the shipownersin a certain
manner are interested in the case, not to mention the coffee fleet. In addition to the sailcloth maker, and
the minister of finance, the senior state officials and the other ministers… My book also affects the Millers
and the Priests, the pharmacists and the liquor makers… And the King, above all the King! My book must
reach the world.
53
87
Aarh. …ved sine Skildringer af Javanesisk Tilstande og sin Satire over amsterdamske
filistre54.
Thus, the name Max Havelaar have played on a fictive figure who whose main aim was to
point out the exploitative and unfair trade relationship between a colonial power and
the local situation on the Dutch colonial island of Java. The weight of moral symbols in
the name is extremely influential.
Secondly, the most visible symbol on the package and in retail is the label. Engdal et al
(2007)55 highlight that the label represents a story for the consumer, the Fairtrade label
create and communicate stories. The stories, or narratives, involve poor people in
cooperatives, which increase their capacities through Fairtrade. The narratives are also
communicated through photos. According to Engdal et al. (2007) the narratives are
highly appreciated by consumer and play a central role in motivating behavior. ‘’The
consumer buys consciousness, and receives a narrative. People in the West enjoy stories
and narratives’’ (Engdal et al, 2007:40). The main distinction between a Fairtrade coffee
and a conventional coffee, as will be collaborated later, is the label. The label of Fairtrade
products is standardized and recognized in most European nations as the one below
(see Image 3). Next to the image below is the original explanation of the logo given by the
Norwegian Max Havelaar56;
His book, which is regarded the most prominent writings in the Dutch 19th Century… through its
description of the Javanese situation and its satire of Amsterdams’ philistine.
54
In an interview with James Calcagnini, the president of East Coast Option Service Inc, a large broker firm
at the New York Stock Exchange (Nybot).
55
Original tekst; Symbolet er tidligere logoer smeltet sammen til en jublende person som representerer folket
bak Fairtrade, både forbrukere og produsenter. Friske og positive farger er valgt til symbolet, som skal vise
forbrukere og produsenter som knyttes tettere sammen gjennom forbruk av Fairtrade-merkede produkter.
Årsaken til at den er såpass abstrakt er at den skal fungere på tvers av både kulturer og tid (Max Havelaar
Norge webpage).
56
88
IMAGE 3: FAIRTRADE LABEL
The symbol of previous labels melted together
to form a cheering person representing the
people behind Fairtrade; consumers and
producers. Fresh and positive colors are
chosen to the symbol showing that consumers
and producers are in closer connection
through consumption of Fairtrade products.
The reason of such an abstract Figure is the
Reference 7: Max Havelaar Norway
use across cultures and time
Thus, the label symbolizes a connection between consumer and producer where the
connectivity is created through consumption of Fairtrade products. According to Bryant
and Goodman (2004:360) the narrative romanticizes a connection reflecting a need for
the consumer to be linked to the processes and effects of consumption on local ecologies
and communities. The connectedness reflects a virtual engagement with ‘others’ relying
on the structures of differences. Thus one may note the primary creation within the
feminist dichotomies of self and others, North and South, poor and rich, consumption
and production. According to Whatmore and Thorne (1997) the creation of connectivity
is explained as the mode of ordering of connectivity. It is primary produced by the
mediators. The aim of the label is to establish a connection between those who grow and
those who buy coffee. However, the connection is based on dichotomies which are
highlighted, or visualized, and then they diminish through ‘acting at a distance’, carried
out by consuming Fairtrade coffee. The difference between the Northern consumers and
the ‘others’ is rather celebrated in what Goodman suggest a ‘commodification of
differences’ (Goodman, 2004:905). However, this commodification of differences is
somehow sold to consumers as commodification of closeness. The product is more than
coffee, more than core versus periphery, and the label is promoting a certain charity at a
distance (Lyon, 2007). According to Max Havelaar Norway; ‘Fairtrade products create
good stories’. Fairtrade-merkede produkter skaper gode historier. Noen historier er bedre
enn andre. Og viktigere. Varer med Fairtrade-merket skaper gode historier, både blant de
som har laget varene og de som forbruker dem (Max Havelaar Norway, undated;
produkter). According to Lyon (2006) consumer demand might be grounded in
relational ethics and the ability to care over distances, which is the narrative most often
communicated through the label (Goodman, 2004).
89
Thirdly, the most visible actor of the Fairtrade network in Norway is the foundation Max
Havelaar. According to Hammer (personal interview, 21.02.2008), director of Max
Havelaar Norge, Fairtrade is ’an alternative trading system which enable the producer to
support themselves and their family57’. Hammer believes Fairtrade is empowering the
producers. They are empowered to understand the markets better and to understand
the importance of product quality. Fairtrade enables the producers to improve their
quality and improve their bargaining power on price, which strengthens the producers
to become stronger partners of trade in the conventional market. ‘It is not the aim of
Fairtrade to certify all the producers in the world, but to raise the floor’, expresses the
inspired director of Fairtrade Norway (Hammer, personal interview, 21.02.2008).
‘Fairtrade is a certification and a niche market. We are a label system, we buy and sell
products. But I mean we are creating a market opportunity. First and foremost for them
who produce the products, but also for those who sell the products, it is opening a
market opportunity. But we do not deal with the commercial part58 (Hammer, personal
interview, 21.02.2008). The director recognizes that many Fairtrade producers do not
know what Fairtrade or Max Havelaar stipulates and the difficulties of communicating
information on such a level.
‘Few producers have knowledge of what stipulates Fairtrade. This is a familiar
phenomenon which relates to many people being analphabetic, relating to an
international market is abstract. Learning the world is round, north and south, coffee
which end up in Norway, where is Norway? They are used to a coyote which squeezes them
for what they are worth. It is various examples; where is this Max Havelaar, have never
seen this Max Havelaar, never been here. This is quite foolish; the system is so much more59
(Hammer, director Max Havelaar Norway, personal interview 2008).
57
Det er et alternativt handelssystem som setter produsenter i stand til å forsørge seg selv og sin familie.
’Fairtrade er en sertifisering og et nisjemarked. Vi er en merke ordning, vi både kjøper og selger produkter.
Men jeg mener at vi er med å skape en markedsmulighet. Først og fremst for de som produserer produktene,
men også for de selger produktene, det åpner seg jo en markedsmulighet. Men det er jo ikke vi som driver det
kommersielle’ (Hammer, personal interview, 21.02.2008).
58
’Få produsenter vet hva fair trade er. Det er et kjent fenomen som handler om at mange er analfabeter, det
å forholde seg til verdensmarkedet, det er helt abstrakt. Det å lære seg at verden er rund, nord og sør, at kaffe
havner i Norge, hvor er det? De er vant til en Coyote som tyner dem for det de er verdt. Det er mange
eksempler, ja hvor er nå denne Max Havelaar, har aldri sett denne Max Havelaar, aldri vært her. Det er så
59
90
Thus, according to the director of Max Havelaar, apart from price is the importance of
empowerment through producer organizations; learning their rights; strengthen the
women, and creating possibilities where children do not have to participate in
production; where the parents earn enough to send their children to school, buy
schoolbooks and pay intuition fees. Hence, the complete Max Havelaar is more than the
price. Fairtrade has managed to place focus on trade, and through Fairtrade the
producers have increased their awareness. This awareness raising is an important part
of Fairtrade, where traders need to take responsibility. They have a responsibility of not
exploiting the producers. The goal of Fairtrade is not to be the ruler, but to exploit itself
to the point where there is no use of continuing (Hammer, director Max Havelaar
Norway, personal interview 2008).
Accordingly, Max Havelaar has reached its goal the day producers are empowered to
bargain against the traders, when they have built quality laboratories supplying quality
coffee at a better price, keeping their children in school and families have enough and
varied food on the table. Essentially, Max Havelaar is a development strategy. The root
to development is a social premium for the cooperative to increase their capacity and a
price floor for producer stability60. Thus, the initial development narrative is increased
market access through aid, where the aid is the social premium.
Fourthly, the most visible international actor is FLO-International and FLO-Cert, part of
the network of ATOs named FINE. According to FLO-International ‘Fairtrade is a trading
partnership, based on dialogue, transparency and respect, that seeks greater equity in
international trade. It contributes to sustainable development by offering better trading
conditions to, and securing their rights of, disadvantaged producers and workers –
especially in the South’ (FLO-International; about us).
Fairtrade is a new strategy of development through consumption following the concept
of ‘trade, not aid’. Fairtrade creates awareness about unequal terms of trade and about
fordummende, for dette systemet er så mye mer’ (Hammer, director Max Havelaar Norway, personal
interview 2008).
Long term contracts have proven only to work in theory (Smith, 2007) and pre-finance of the coffee
harvest by traders have been difficult due to domestic and international laws (Barrecka, 2007).
60
91
difficult situations for producers. Through consumption of a Fairtrade coffee the
consumer is reassured the minimum price and the social premium reaches the producer.
When one log on to the website of FLO Cert, the mission is quite clear;
CERTIFICATION FOR DEVELOPMENT
FLO-CERT GmbH is an independent International Certification Company offering
Fairtrade Certification services to clients in more than 70 countries.
As such a company we assist in the socio-economic Development of producers in
the Global South and help to foster long-term relationships and good practice
with traders of Certified Fairtrade products.
Our Certification provides a guarantee to consumers of Certified Fairtrade
products that they are contributing to the Social-Economic Development of
people through their purchases
(FLO-Cert; about us, 2008)
The certification is sold as a guarantee to the consumer that he/she is contributing to
socio-economic development of people through his/her purchase. The consumer, most
likely in the Global North, is buying a narrative of charity at a distance, or economic,
social and environmental development of the producers in the Global South. FLO
International and FLO Cert seem to promote a more radical ideology than Max Havelaar
Norway. The radical string would like to see Fairtrade result in a fundamental
transformation of capitalist society (Jaffee, 2007). Goodman (2004) have presented a
narrative of Fairtrade where consumers seek to fill the emptiness left by Northern Civil
Societies distrust in aid by promoting ‘trade, not aid’. Fairtrade in this context is
described as ‘a form of alternative development which has become the moral business of
latte drinkers and other reflexive consumers in the North’. It is portrayed through a
politics of redistribution, or Robin Hood in disguise of a coffee bean; ‘Robin Hood comes
to town, latte in hand’ (Goodman, 2004:896). The ethical praxis of Fairtrade is
knowledge intensive imaginary of aid through consumption practices (Goodman, 2004).
The general narrative of Fairtrade coffee is the contribution to alternative development
for the producers through more equitable relations of trade. It is building on the notion
of the failure of blueprint development projects (Roe, 1991) and the need for alternative
92
development through trade. This is essentially a view pursued by ideologically
motivated NGOs such as Oxfam61, many Southern civil society groups and consumer
activists (Jaffee, 2007) that argue the market to be structurally unfair; it is broken and
needs fixing. This is essentially a market-redesign ideology where the problem is the
unequal terms of trade; markets in rich countries have been closed up by ‘rigged rules
and double standards’ (Oxfam, 2001). However, it does not seek to challenge the
existence of the market, but to the way markets are administered and constructed and
how they deliver economic benefits to participants. Usually the skeptics are cynical of
whether the value added reaches the producer (see Table 5: Consumer confidence, pg. 123).
Accordingly, the narrative communicated of the producer via the label creates a demand
for the particular product. The political ethical consumer is somehow buying the
narrative of the producer.
The representations shown above are key distinguishers of how the network is
promoting itself. According to Lamb (2007), Director of the Fairtrade Foundation;
‘In all these differing activities and promotions, the Foundation has sought to emphasize
the individual stories of farmers and workers and to ensure that they are as centre-stage in
the marketing of Fairtrade as they are, of course, at the heart of the concept itself.
Together with strikingly personal photos, examples of producers’ stories appear on posters,
leaflets on product packaging and, importantly, on the Foundations’ well-visited website.
The message has focused on the most tangible benefits of Fairtrade. Producers tell their
stories in direct quotes, focusing on the difference Fairtrade has meant to them, their
families and their communities. They have, for example, often spoken of investing the
premium in specific projects such as schools, wells and primary clinics. The main focus has
been on the Fairtrade pricing mechanism and the resulting concrete community
achievements of which the public can readily relate’ (Lamb, 2007:73).
Thus, the conscious marketing of narratives has been at the heart of Fairtrade. In
addition, the network has placed much emphasis on the media and multiple different
modes of representation. By mid-2006, there were registered 200 Fairtrade towns, 29
Fairtrade Universities and around 2000 churches, along with a network of Fairtrade
61
Although I argue Oxfam is both in the radical transformative group and the pragmatic group.
93
schools (Lamb, director of the Fairtrade Foundation, UK, 2007). According to the
director;
‘Clearly, the Foundation is succeeding precisely by maximizing the effectiveness of this
grassroot strategy. Word of mouth and community networks have added value, local flavor
and personality to the range of networking strategies and promotional offers developed by
the licensees and retailers themselves. …The broadening appeal of the Fairtrade story has
also contributed to rising year-on-year media coverage. Fairtrade has human interest,
business and trade interest, consumer appeal, political and economic reach, and an
international development agenda, but it also commands a strong presence,
simultaneously pushing a wide variety of buttons for media outlets. The local activities of
the Fairtrade towns and universities and churches give the story - which is international in
intent - a local angle. The foundation and the licensee companies have also worked hard to
ensure journalists have the information they need and above all, the chance to visit
producers in developing countries whenever possible so that they can see firsthand the
impact of Fairtrade for the farmers and workers themselves’ (Lamb, director of Fairtrade
Foundation, 2007:68).
In September 2005, the Fairtrade Foundations’ achievements in building consumer
awareness of the Fairtrade Mark were recognized by the Superbrands panel of brand
experts. The Fairtrade Mark was named the winner of the Superbrands Special
Recognition Prize in the Media and Service Category. According to the Chairman of the
Superbrands Council, Stephen Chelioties; …’the Fairtrade Mark has gained considerable
media and consumer awareness in recent years, owing to the persistent efforts of its
founders and supporters’ (Lamb, 2007:64, 65).
Thus, the promotional activity carried out by the Fairtrade network is recognized as
very successfully promoting their brand. According to the director of the Fairtrade
Fundation in UK; …‘while the Fairtrade Foundation’s overall vision is to promote a general
awareness of Fairtrade and to encourage the purchase of Fairtrade products - thereby
boosting opportunities for disadvantaged farmers and workers in developing countries - a
more specific objective is to focus on the critical role of the Fairtrade Mark as an
independent consumer label (Lamb, 2007:69)
94
The first independent marketers of Fairtrade are the importers and roasters. They are
the vehicles of Fairtrade but also contribute in developing a certain perception of
Fairtrade. The importers and roasters have an independent interest in selling Fairtrade
products in order to increase their market share. In addition, the Fairtrade product gains
a marketing bonus promoted at their webpage according to social responsibility.
When one log on to a webpage of a roaster/importer, their social responsibility is
marketed in the form of certified products from Max Havelaar or other types of
certifications. These products are products with a label, but often represented as a total
product (see Feil! Fant ikke referansekilden. and Feil! Fant ikke referansekilden.)
as the images below.
IMAGE 4:
FARMERS COFFEE
Kaffebønnene som er benyttet i FARMER’s er
dyrket av kaffefarmere som mottar en
minstepris for sin kaffe. I en tid med meget
lave kaffepriser vil det for mange mindre
kaffefarmere bety en mulighet til å overleve
som kaffeprodusent. FARMER’s kaffe er en
blanding av de beste kaffebønnene som
kommer fra disse små farmene, og har etter
hvert blitt favoritt-kaffe for mange; både på
grunn av den gode smaken , - og for sakens
skyld.
REFERENCE 8: JOH
JOHANNSON AS
IMAGE 5: FRIELE
FAIRTRADE
Fairtrades logo garanterer
deg at små-produsenter av
kaffe i fattige land får gode
handelsbetingelser og
tryggere sosiale kår.
Gjennom ordningen får
bøndene direkte tilgang til
vestlige markeder, og en
garantert minsterpris for sin
kaffe. Denne minsteprisen
fastsettes av FN.
REFERENCE 9: FRIELE
AS
95
In this sense it is not just a small label which speaks to the consumer of fairness, it is the
entire product. Thus here one marks a new brand product, which is a social responsible
product. The product is distinguished from other products where the consumer pays a
premium for solidarity. The two images as shown above (Feil! Fant ikke
referansekilden., Feil! Fant ikke referansekilden.) speak to the consumer in similar but
different manners. Joh Johannson AS has highlighted the minimum price in terms of low
coffee prices, and has further highlighted good quality coffee as a mix from different
small farm. This is the case for Joh Johannson AS as they buy Fairtrade coffee from an
agent in the Netherland, A van Weely. They mail a recipe to the agent and receive the
flavor they are searching as a blend from different large suppliers of Fairtrade coffee
(Glavin T., general manager Joh Johannson AS, personal phone interview, 28.03.2007).
On the other hand, Friele AS highlights the logo guarantees the small producers in poor
countries receive good terms of trade and more social security. Friele AS has a more
direct contact with the certified second level cooperative Fedecocagua in Guatemala and
procures all their Fairtrade coffee directly from the particular cooperative. However,
incorrectly the company claim the minimum price is a price set by the UN.62. The
argument is based on a niche product, a differentiated good quality social product.
A competing private initiative on the Norwegian market is Coop’s Café Futuro63, which is
also a brand solidarity coffee imported from Fedecocagua. According to Hansen
(Purchasing Manager, Coop Norway Kaffebrenneri), Coop Norway use their own private
initiative due to the high cost of the organization Max Havelaar; ‘Vi har valgt å fremme et
eget privat merke da Max Havelaar er en kostbar organisasjon og ikke nødvendigvis alle
pengene går tilbake til produsentene’ (Hansen, personal telephone interview
06.03.2008). One first level producer cooperative under Fedecocagua highlighted that
they export coffee as Café Futuro to Coop Norge …’ This year we sold to Futuro. It is good
because we obtained a much better price. The price was 750 Quetzales per quintal
The minimum price is set by FLO Standard Committee and FLO Board in consultation with a number of
producer organizations, roasters and importers in accordance to consumers’ willingness-to-pay (FLOInternational; standard setting). Eventually, the fair trade price must remain close to conventional price as
not to discourage ethical consumers in the north, thus not following an objective assessment of the ‘real’
costs of production or a living wage (Renard, 1999, Fridell, 2007).
62
63
Coffee for the future.
96
pergamino64. This represents a price increase of about 11 percent compared to their
average price from Fedecocagua of 669 Quetzales per quintal.
Some critical authors and scholars argue the importers and roasters connect the
Fairtrade label to other initiatives of Corporate Social Responsibility (CSR) where the
commercial interest is the underlying principle (Fridell, 2007). Fairtrade is an adjunct to
the market or a useful image-enhancement tool (Jaffee, 2007). Talbot (2004)
characterizes this as ‘bluewash’; one of the main contradictions of Fairtrade which
happened when the network went more mainstream. The term ‘Bluewash’ is derived
from the more common term ‘greenwash’, but it differs from its predecessor as it
symbolizes the color of the UN and mainly aims to counteract the negative social and
human rights responsibility of corporations, but also environmental responsibility.
Among others, Starbucks, Nestle and Sarah Lee have been criticized for using Fairtrade,
along with their private initiatives, as ‘bluewashing’ their business. When the Coca Cola
Company launched their coffee concept ‘Premium Brewed Beverages (PBB) in March
this year Fairtrade was a recognized promoter of their coffee which is currently sold in
the Deli de Luca chain in Oslo (Max Havelaar Norway).
In a discussion of coffee and Fairtrade with the manager of the US based coffee
cooperative Patchamama with similar purpose as an importer, the manager highlights
the value (economic) of the coffee is in the narrative. Accordingly, the main profit
remains with those who create the narratives65. The cooperative was set up in 2001
with the aim of facilitating transaction and information flow in order for more direct
partnerships between producers in Peru, Nicaragua, Guatemala, Mexico, and Ethiopia.
Este año logramos a Futuro. Esta bueno porque logramos un precio bastante mejor. El precio fue 750
Quetzales por quintal pergamino’.
64
‘I think last year the price we paid to the farmer was US$1.85 per pound for greens. This year it is quite a
bit more, it is going to be over US$ 2, prices are going up, actually, for everyone. But this is all the alternative
market, we are buying the quality here, this is well above fair trade pricing, this price is based on the quality,
and we are competing with all the other specialty coffee buyers here in North America. …I will give it (cost of
roasting) to you as about 17% of our revenue. Well, this is in effect the cost of roasting. Well, no, I tell you; it
is US$ 1 per pound. It is a dollar a pound and I sell that to the retailer for US$ 6 per pound, and so you got
another dollar in shipping and packaging and maybe some high lurching cents for fair trade. In the end of the
day, I am paying US$ 4 for the coffee. The cost per pound is going to be US$4 dollar per pound, a little bit
more, for good coffee to the retailer who then pays me US$ 6. So this is a pretty good margin there. I mean,
this is where the profit is, we are talking about US$2 per pound in profit.’ ( Patchamama Cooperative, General
Manager, California, personal telephone interview Oct. 2007)
65
97
The cooperative is distributing specialty coffee in the US from its producer members, in
addition to Fairtrade and organic labeled coffee. According to the general manager of the
Patchamama cooperative based in California;
‘It is not just coffee but it is the whole experience that goes with it. It is about the customer
service and the marketing, the packaging, of course the quality of coffee, well the story, and
nowadays, the value is not in the coffee, the value is in the story, it is in the
brand’(Patchamama
Cooperative, General Manager, personal phone interview, Oct.
2007)
According to the sales representative from Friele AS who comprise the main
responsibility of supplying Fairtrade coffee to the Norwegian University of Life Science;
‘I believe personally it is modest what reaches the farmer [with Fairtrade coffee]. Usually
about 25 percent reaches the farmer; still there are too many links in the chain and a very
expensive organization. I believe there are more social benefits with our education centre
in Brazil66’ (Eide, S. sales consultant Friele AS, personal phone interview 21.04.2008).
The sales representative from Friele AS further claim that Friele AS usually charge the
Fairtrade coffee NOK 3-4 more per kilogram to wholesaler than conventional coffee67.
However, the Fairtrade coffee is a higher quality coffee and single origin (Guatemala)
than their regular ‘Friele Frokostkaffe,’ which is a mix from eight different countries. The
single origin coffee is typically characterized as specialty coffee with higher quality
(Giovannucci and Ponte, 2005). Furthermore, Friele AS promotes their certified coffee,
including Utz Certify and Fairtrade, as their social responsibility along with their
educational centre in Brazil.
As a second group of independent promotional actors, the NGOs behind Fairtrade are
important in distributing knowledge and promoting the label of Fairtrade. Oxfam is an
NGO active in campaigning for Fairtrade. Oxfam is behind the Fairtrade network
’Jeg mener personlig at alt for lite går til bonden. Det går gjerne 25 prosent til bonden, da det fremdeles er
for mange ledd og en meget dyr organisasjon. Det er nok flere sosiale fordeler med vårt utdanningssenter i
Brasil66’ (Eide, S. sales consultant Friele AS, personal phone interview 21.04.2007).
66
Similar amount was found in wholesale price-list, where fair-trade coffee was charged NOK 1 more per
package amounting to NOK 4 per kilogram. The extra cost needs to cover fair-trade license fee of NOK 1.8
and the additional premium to the farmer, in addition to extra expenses of being channeled through
Fairtrade.
67
98
simultaneously as the organization is campaigning for reformist strategies in the
international policy arena such as the WTO. Oxfam argues for a restructuring of
international trade rules for a ‘pro-development’ deal in international trade.
International negotiating processes have been undemocratic and untransparent
resulting in ‘rigged rules and double standards’ through limited market access and
forced liberalization of own markets, among other issues (Oxfam International, 2001).
Furthermore, the ‘Coffee Rescue Plan’ launched by Oxfam in 2002 have, according to the
director of the Fairtrade Foundation, had a large role in boosting the sales of Fairtrade
coffee. Oxfam focused on problems in mainstream trade, highlighting the crisis in low
coffee prices and the damaging policies and practices of major multilateral companies in
particular. It published the report ‘Mugged: Poverty in Your Coffee Cup’ (Oxfam, 2002)
explaining how falling prices affect the livelihoods of 25 million coffee producers. After
explaining the falling prices and the coffee crisis Oxfam proposed a ‘Coffee Rescue Plan’
in 2002, to re-stabilize the market by encouraging the purchase of Fairtrade coffee
(Lamb, 2007:66).
Furthermore, Max Havelaar Norway is represented by organizations such as the
Norwegian Church Aid, SAIH, the Development Fund and Norad, where the latter is the
main sponsor of the Fairtrade organization. These organizations are well established
and recognized in Norway, and strengthen the credibility of the Fairtrade network. The
Director of Fairtrade Foundation UK highlight regarding the supporting organizations;
..’from the outset, these organizations gave the foundation its moral authority, its
credibility and its base in civil society, and they remain central to the trust placed in the
Fairtrade Mark’ (Lamb, 2007:65).
According to Renard (2003) the ambivalence of the Fairtrade labeling model is reflected
in the tension between different actors of what stipulates Fairtrade. It may lead to the
compromise of ethical principles, and doubts arise about Fairtrade’s role in inducing
social change. In particular, this is reflected in the two main strains of perception; the
radical transformative conception and the more pragmatic mainstream-retail
perception. It is argued that the former perceives the label as a tool of transition, more
politically and ideologically weighted where the challenge consists of making Fairtrade
the general rule. The latter group of perception aims more at increasing share of
Fairtrade products and strengthening southern producer organizations (Renard, 2003).
99
’The social agency of the Fairtrade network as a whole, rests on the mobilization of a mode
of ordering different from that of cost-minimising, self interested individual of neoclassical
economic theory’.
The network rests marketing initiatives, of which Whatmore and Thorne (1997) discuss
as network lengthening. The concept of network lengthening refers to the network of
communication agents which distinguish Fairtrade from conventional trade (Whatmore
and Thorne, 1997). Even though the aspiration and communication of mediators differ,
their presence is indeed what makes the network durable.
According to Hammer, Fairtrade is more susceptible to critics as it is growing, but
Fairtrade is able to handle this, unlike some other particular businesses. The exploitable
manners of trade need to be visualized68 (Hammer, director Max Havelaar Norway,
personal interview, 21.02.2008).
The narrative represented through public relations of Fairtrade is essentially an
ideological narrative of exploitative trade relations which creates low income from
coffee in producer countries. The marketing of Fairtrade aims at identifying exploitative
relations of power within international trade and highlight the exploited position of
farmers. It is positioned within a development narrative of low coffee prices which is to
be corrected by a social premium, identifiable with aid. The communication strategies
include a selective representation of the voices of farmers. The narrative pursues to
create a ‘feel good’ factor from the consumer when buying the particular product. The
main consumer targets are educated consumers and consumers with integrity. In
particular, Fairtrade target educated consumers at universities, but also youth and
politicians. The aim of marketing Fairtrade products is to convince the consumer to buy
both the good and the narrative. Thus, the outcome of selling such a product has two
possibilities, one active and one passive. Either the narrative serves a purpose to
encourage consumer debates concerning international trade and exploitative trade
’Fairtrade blir utsatt for kritikk etter hvert som de blir større. Og det er helt greit det. Vi er absolutt ikke
noen bistandsorganisasjon eller noe nødhjelp, eller subsidiering av ulønnsomme produsenter. Nei, dette er
markedsstyrt fra ende til annen. De som sier vi driver og grønnvasker selskap, vel, Fairtrade sertifiserer ingen
selskap, vi sertifiserer produkter; produsenter. De som kommer med slik kritikk de må sette seg litt inn i hva
Fairtrade er. Men det er klart, det blir jo en trussel etter hvert. Måten mange har drevet og handlet på må
frem i lyset. Om du driver en handel som ikke tåler verdens lys, så er ikke dette særlig bra. Det er krevende,
utfordrende og bra fremover. Men Fairtrade tåler dagens lys, absolutt’ (Hammer, director Max Havelaar
Norway, personal interview, 2008).
68
100
relations, or the product becomes a ‘pillow’ in which one may rest instead of active
participation in reforming exploitable trade relations. However, the production of sign
value and symbol value is highly visible. The creation of sign value is particularly
highlighted where the functional benefit of Fairtrade coffee does not differ from a
conventional coffee if one relates to a conventional coffee of equal quality, but the sign
value of the coffee includes the narratives of aid and development. In addition, the
symbolic value of Fairtrade coffee is highly constructed through the media and
marketing of Fairtrade coffee, where a consumer may be influenced by the symbolic
value of the coffee in relation to other subjects. Most important, through Fairtrade the
responsibility of exploitable trade relations has been shifted to the consumer.
101
6.2 PRODUCER NARRATIVES OF FAIRTRADE COFFEE IN GUATEMALA
‘Café es el consume hermano69’
(Member of first level producer cooperative)
When asking the producers how they perceived their situation as producers of coffee,
they often highlighted similar views as the following quote;
’Well, in all, the problem of coffee is that the price of coffee is very unstable. One year it
increases and the other year it decreases. There is another problem as well; when the price
increase a lot, everything increases; fertilizer, labor, grains, everything. And suddenly, the
coffee [price] decreases, and the demand decreases, but everything is still expensive. It is a
special characteristic of the coffee. All the work is hard at the farm, and one has to pay the
workers. The prices are like this, low, and we have to pay the workers. When we receive
low prices we have to reduce the salary of the workers. ..We pay the workers 40-50
Quetzals (USD 5.3 – 6.6 per day). We try to help the workers a bit because the work is really
hard, and they have families, they are poor as well
70(focus
group, Fairtrade producers,
Guatemala).
Thus, the respondents highlight the situation as problematic, with uncertainty in the
coffee market and unstable prices. The current price for coffee is quite good, but
producers are used to the unstable prices and thus expect prices to vary. However, the
quote above illustrates the importance of growing coffee for producers. Furthermore, it
is important for them to receive a good price for their coffee in order to provide the
basic needs for their families and to pay a decent price to the workers. The minimum
wage in Guatemala is 44.58 Quetzals (USD 5.94), which is in the range of what farmers
pay their workers. However, according to the Report on Human Rights Practices 2007
69
Coffee is a brotherly consume.
‘Pues, de todo manera, el problema de café es como el precio de café son inestable. Un año se sube otro
año se baje. Hay otro problema tambien, que cuando el precio de café sube mucho, todo sube; fertilizante,
mano de obra, granos básicos, todo. Y de repente, el precio de café se baja, y todo de demanda baja, pero
todo queda caro. Es un cárstica especial de café’ Todas los cosas son duro en el campo, y una tiene que
pagar los trabajadores. Los precios vienen así, como bajo, y nosotros tenemos que pagar los trabajadores.
Quando tenemos precios más bajo tenemos que miniar los salarios de los trabajadores. …40-50 Quetzales
pagamos los cortadores. Pero tratamos de ayuda un poco los trabajadores porque el trabajo es muy duro,
y ellos tienen su familia, son pobres también’. .. (Member of first level cooperative board).
70
102
‘The minimum wage is not providing a decent standard of living for a worker and his
family’ (Country Report on Human Rights Practices 2007, 2008).
In the quote ‘café es el consume hermano’, it is highlighted that coffee is a social
production system. However, in order for the farmers to act out according to their social
obligations, such as paying the workers a decent wage as highlighted above, the farmers
rely on a decent price for their coffee. According to one producer; ‘mentally, coffee is our
life’71. Thus, the respondents define themselves as coffee farmers, where many of them
have inherited the land through generations. Coffee is a social and cultural commodity,
very important to the farmers.
When I asked the producers represented at first level cooperative in Guatemala, why
they started with the certifications, a common perception was as highlighted below;
‘Since we already have coffee, we want to look for ways to improve, to sell more in order to
improve our economic resources. If there is no market, or if there is no business, there is no
sale72’(focus group, Fairtrade producers, Guatemala).
‘Every day the situation becomes more difficult, right. But we have been told that certified
coffee will always be better. But FLO is only operated through Fedecocagua. But similarly,
Fedecocagua demand a good quality coffee’
73(focus
group, Fairtrade producers,
Guatemala).
The respondents in Guatemala define their situation as difficult where coffee prices and
market access are the key determinants for enhancing their economic resources. The
response signifies that they have been told that the certifications will bring benefits,
therefore they believe in it. They highlight that according to Anacafe 74, all coffee have to
be certified in order to find a buyer for the product. Hence, they are responding to an
ethical or certified demand from consumers.
71
‘Mentalmente viven nosotros solo por café’
‘Como tenemos café, queremos ver como mejoramos para vender más para obtener nuestros recursos
económicas. No hay mercado, no hay negocio, no se venden.’
72
…’Porque cada día el situación es más difícil verdad. Pero hemos dicho que el café certificado siempre va a
estar mejor. Pero FLO es solamente lo que trabajan Fedecocagua. Pero es la misma de que Fedecocagua nos
exige de hacer un buen café’.
73
74
The national Coffee Association in Guatemala.
103
The farmers in the area had different certifications of their coffee. When I asked about
their perception of Fairtrade, or FLO, the producers highlighted similar views as the
quotes below, highlighted from two separate cooperative focus groups;
‘We have Utz (Certify) and Starbucks (CAFE practices), they are the certifications. We sell
to Fedecocagua and Fedecocagua sell to a fair market’75.
…’well, it is Fedecocagua that exports the coffee, and sell to the fair market. The (our)
cooperative, the associates deliver (coffee) here in the cooperative. We sell to Fedecocagua,
and Fedecocagua distribute to the consumers’76.
By saying this, the farmers highlight that Fairtrade is not a certification, it is a fair
market. When we collectively discussed certifications, the farmers referred to other
certifications they had, such as Utz Certify, Rainforest Alliance and Starbucks CAFÉ
practices. Fairtrade, on the other hand, is not a direct choice from the producers or the
first level cooperative. Fairtrade is managed through the second level cooperative, and
all producers sell their coffee to their local/first level cooperative which sells to
Fedecocagua. Therefore, discussing Fairtrade, producers usually referred to the Fair
market. This is not just a matter of language; one may just as well say ‘comercio justo77’
as ‘el Mercado justo78’. Furthermore, FLO Central America, the providers of Fairtrade
certifications, uses the term ‘Fairtrade’ or ‘comercio justo’. The use of the term ‘fair
market’ is directly a result of the producer’s experience. Fedecocagua is the exporting
cooperative, thus when Fedecocagua is the certified Fairtrade cooperative, the
producers perceive Fairtrade as a fair market. In Guatemala in particular, the first level
cooperatives felt separated from Fairtrade, the other certifications which had more
standards in production they also had more knowledge about. Furthermore, the second
level cooperative in Guatemala does not differentiate between a conventional coffee and
a Fairtrade coffee when they buy it from the producer. This is evident due to the fact that
Tenemos Utz y Starbucks, son las certificaciones. Nosotros vendemos por Fedecocagua que venden por una
Mercado Justo75. (Cooperativa Nuestro Futuro)
75
‘’…bueno, Fedecocagua es que exportan el café, y vende a mercado justo. La cooperativa pues, los socios
entrega aquí en la cooperativa. Nos vendemos a Fedecocagua, Fedecocagua distribuye a los consumidores 76
(Cooperativa La Todosanteria).
76
77
Fair trade
78
Fair market
104
firstly, all producers are certified Fairtrade, which is not the case for the other
certifications. Secondly, there have not been any specified differences in price. Thirdly,
Fairtrade coffee is not separated from conventional coffee at the processing plant, or the
miller, where all coffee exported by Fedecocagua is processed. This is further not the
case for other certifications where Fedecocagua have one processing plant for
conventional coffee and one processing plant for certified coffee.
Therefore, one can argue that direct certified coffees, such as Utz Certify, Starbucks and
Rainforest Alliance, do hold attributes directly in the production. The attributes are due
to a differentiation of product, not price79. The general narrative of Fairtrade by the
producers in Guatemala is Fairtrade as a fair market, not a certification. One can
therefore argue that the production site of Fairtrade coffee is at the second level
cooperative, where the buyers distinguish and demand Fairtrade coffee.
However, if the certified product is differentiated according to product, one should also
find a difference in exchange value. When I asked the producers of the difference in
economic exchange value, they responded in the following manner;
…’ we started three years ago with the certifications. With FLO more years, but Utz and
Starbucks are the certifications. We are still waiting for something (benefits) in return; if it
does not come we’ll see what we will do. We have to learn because we do not have much
knowledge of this. One have to ask to learn... Well, this (FLO) is another thing that confuses
us. It’s not clear; we don’t know the benefit that the cooperative receives. It goes directly
through Fedecocagua, they have not told us anything apart from this price of coffee80’
(focus group, Fairtrade producers, Guatemala).
According to Kopytoff (1986) it is possible to trace attributes of the commodity where the product is
distinguished as differentiated.
79
80…’iniciamos
desde tres años con las certificaciones. Con FLO más años, Utz y Starbucks son las
certificaciones. Estamos esperando de que se viene algo (beneficio), si no, vamos a ver de qué vamos a hacer.
Porque tenemos que aprender, no sabemos muy bien. Una tiene que preguntar para aprender… ..Pues, eso
(FLO) es otra cosa que estamos confusos. No es claro, no seamos el impacto que se vengan directamente a la
cooperativa. Se venga directamente a través de Fedecocagua, entonces, no han dicho alguna aparte de ese
precio de café80.
105
‘Well, I cannot say this (that there is a difference in price). Because to say, the price we sell
for; we pick up the telephone to sell the coffee the day it is sold. They say that today (the
price) is high, and one sells it’ 81(focus group, Fairtrade producers, Guatemala).
The producers and representatives of first level cooperatives often expressed a sense of
hope that they would receive a difference in exchange value. Essentially, this was the
reason that they initiated the certifications. However, they are still waiting for economic
benefits. They initiated the certifications in the spirit of receiving a better price and
improve conditions, though they are still waiting for the economic incentives from the
certifications.
Furthermore, the quote above highlight that Fairtrade is separated from the other
certifications. This is further highlighted below, where producers told me they had sent
a letter requesting information;
‘We
sent a letter as well, where we demanded explications of why we they did not give us a
surcharge. They did not respond. This was for CAFÉ practices and Utz. We did not reclaim
to FLO because this started many years ago. In reality we do not understand this, well, I
don’t understand really what this FLO is. I think that FLO works well, it is good what they
do, but here - , in theory - , well, in practice it is nothing’
82(focus
group, Fairtrade
producers, Guatemala).
Accordingly, the producers have requested and would like more information concerning
the certifications. However, FLO is not understood as a certification in which they have
something to claim. Therefore, Fairtrade has been left out in the quest of information.
Fairtrade, or FLO83, is not part of the discussion of the certifications. FLO is managed
through Fedecocagua and the farmers feel separated from FLO. They do not understand
Pues, yo no sabría de decir bien (que hay una diferencia en precio por los certificaciones), porque sea, el
precio de nosotros vendemos, el día de venden damos el teléfono para vender el café. Dicen que el día de hoy
(el precio) es tanto, y se venden.
81
Enviamos una carta también, una carta donde exigíamos explicar, de que porque no damos un sobreprecio.
Y no han respuesta. Eso es lo que es CAFÉ practices y Utz. Ya lo que es FLO no reclamado de nada porque eso
ha venido desde muchos años. No entendemos en realmente, bueno, yo no entiendo realmente lo que esta
FLO. Lo que parece yo es que FLO trabaja bien, es bien lo que hacen, pero aquí, - Pues en la teoría pues - En
práctica no es nada.
82
83
The term FLO (Fair trade labeling International) is used in order to refer to the fair trade system.
106
it, nor do they receive any direct benefits. In addition, they were requesting more
information; some more knowledge of the system and a higher price floor. A few of the
cooperative managers were interested in the fair market during discussions. They
calculated on the price floor and the social premium. They concluded that the fair price
was really low; the prevailing price in the conventional market was USD 1.36, whereas
the fair price is USD 1.21. ‘FLO is really low,… here we are waiting for a price more fair,
right. Against what are they setting the price84?’ Out of the given price the cooperatives
subtract 15 percent which is the fee paid to Fedecocagua for transportation and security.
However, the fee is 30 percent for a certified coffee, which adds to the costs of certified
coffee. But it also highlights the separation of certified coffee from Fairtrade coffee,
where the fee for Fairtrade is only 15 percent. Furthermore, the certified coffee is sold in
sacks with different colures, in order for easy separation at the processing station.
Fairtrade coffee is not in the differentiated sacs. However, if the social premium would
be given directly to first level cooperatives they would have been able to see some
benefits, perhaps invest in social causes and appreciate the fair market system.
However, do the producers feel content about the certifications and about Fairtrade in
other terms, not only economic? A central inquire includes; ¿Se vale la pena85? This is a
term commonly used in Central America, but due to its directness it was difficult for the
respondents to answer.
Well, the certifications (Utz and Starbucks) have good effects on the farms, for the
environment, we use good farming practices. It is good practices, and we benefit from it.
But economical, we have not received any economic benefits. Not as of yet. We are in the
second year of Utz and Starbucks, but we have not received any economical incentives’
86(focus
group, Fairtrade producers, Guatemala).
FLO se queda abajo. … Pero ahí nos esperamos un precio más justo, verdad. ¿Sobre qué se marquen el
precio?
84
85
Is it worth it?
Pues, las certificaciones (Utz y Starbucks), en el campo si tienen un bueno efecto, por el medio ambiente,
utilizamos diferentes buenas prácticas agrícolas. Son buenas cosas, nos beneficiados bueno. Pero económico,
no ha ido un beneficio económico. Hasta ahora, no. Estamos en la segunda año con Utz y Starbucks, pero no
ha ido un incentivo económico.
86
107
On one hand, the key responses, as also highlighted above, to this phrase were usually
presented chronologically. Firstly, ‘yes, well, I think it is worth it’. Secondly, ‘the
certifications are worth it because we are learning to take care of the environment’.
Thirdly, in economic terms the certifications are not worth it. The certifications are
recognized as receiving the same price as for the conventional coffee and include more
work. On the other hand, it is important to highlight that these responses points at the
certifications, not Fairtrade. Fairtrade is not really understood, they do not feel any
requirements nor do they experience any direct benefits. However, the respondents
mention that they have been told certifications are the future. They give the impression
that they are scared of missing out, and that certified coffee is what the current
consumers are demanding.
The lack of knowledge regarding FLO is present for most producers in this research.
However, it is important not to draw any immediate conclusions. Responding to the
relation they had to Fedecocagua, most producers highlighted the following;
‘Fedecocagua is a lot better than the people that only would like to make profit. Currently,
Fedecocagua gives us a better price. We can say that we receive 30-35 Quetzales above the
(New York) Stock Exchange (NOK 21.3-24.8 per quintal/100 pounds of coffee
pergmino)’87(focus group, Fairtrade producers, Guatemala).
Thus, there are indirect benefits to the producers, such as an overall better price and
access to markets through Fedecocagua. The producers feel content and appreciative
about working with Fedecocagua. Indeed, the coffee from Guatemala usually fetches a
good price and the producers are content about selling to Fedecocagua, highlighting that
the overall price is better than the conventional price.
However, if there are economic benefits of the certifications and the fair market, there is
a need to highlight them for the producer cooperatives. In one focus group, they
Fedecocagua es muchísimo mejor que este gente que solo quieren hacer dinero. En ese momento,
Fedecocagua nos dan un mejor precio. Podemos decir que hemos tenido 30-35 Quetzales arriba la bolsa.
87
108
collectively desired the following; ‘Put in your papers that the cooperatives would like to
receive the social premium directly88’.
This was mentioned by all the focus groups carried out with first level cooperatives in
Guatemala. However, according to one group;
‘Well, another issue is that, like when you come here to do research. Then, with all the
negative responses that you might get, or at least here, other places you might find positive
things. But all this that we are discussing might result in that they may remove the
certifications from Fedecocagua. What we are saying is that they should continue with the
certifications but perhaps manage it a bit different so that we receive something directly
89(focus
group, Fairtrade producers, Guatemala).
The anticipated higher price as mentioned before makes the respondents somehow
scared of telling the truth about the certifications and Fairtrade. It is a certain scare of
missing out, of losing the certifications or of losing the FLO market. Thus the
certifications and FLO gives them a certain hope. They want to continue with the
certifications, but they would like to see some direct economic benefits.
The marketing manager of Fedeocagua explained how they used the economic benefits
from Fairtrade and the social premium. He highlights that this is used to improve the
quality of the coffee or to be able to compete with conventional prices from coyotes
where money laundering from drugs or other dirty business is becoming a problem of
offering high prices for coffee;
‘Until now, the numbers have been red. In order to improve the standards the producers
need to do additional inventions, additional strengths, which is not necessarily
compensated in the price. The only price which is compensated is Fairtrade. This is due to
two fundamental reasons; One because it has a guaranteed minimum price. The other is
because of the social premium, which today is ten (US cents) but used to be five. The social
premium that we receive, we are not able to use for hospitals, schools or similar because it
88
‘Ponga ahí que las cooperativas les gustaría que el premio social venga directamente’.
Pues, otra cosa es que, como Usted viene aquí para hacer investigaciones. Entonces, con todas las
respuestas negativas que tal vez va a encontrar. O por lo menos aquí, en otros lugares podría encontrar cosas
positivas. Pero todo eso lo que estamos hablando puede hacer que algún día los quitan estas certificaciones
de Fedecocagua. Lo que decíamos es que siga la certificación pero mejor que se manejan un poco diferente
para que vengan a nosotros algo directo.
89
109
is not significant in macro terms. Then, two things happen; if the local speculation in
Guatemala raises (We have speculation of that someone thinks that the price will increase
due to washed money from drugs and other illegal business) we use these five or ten cents
and give it to the producer in the price.. In order to compete… The other thing is that the
social premium goes to the operation of Fedecocagua, and to improve our office and
processing plant. …Every year we receive between USD 300 000 and 450 000 from the
social premium. This volume goes to the operation of Fedecocagua, about USD 30 000, in
addition to improve our office and processing plant/warehouse. This in order for our
producer of 2 hectares, insignificant in production, can obtain high quality coffee and be
able to present the coffee in the Scandinavian market, which is a market that recognizes
high quality coffee. The coffees that we sell to Joh Johannson, Friele, Coop, have passed an
exam regulated by quality. In addition we have a department of sustainability and
technical assistants that work with producers in the fields’
90(Personal
interview, de Leon,
marketing manager of Fedecocagua, Guatemala).
In short, the social premium is used for the operation of Fedecocagua, to improve the
quality of the coffee through improved technology and technical assistance in the field
and for competitive prices so that producers are not offered higher prices by the
coyotes. It is not used for hospitals or schools because the premium is not significant
enough. Fedecocagua have been criticized for their use of the social premium, including
penalties such as suspended certifications;
… ‘Hasta ahora, los números están rojo. Porque para mejorar los estándares el productor tiene que hacer
invenciones adicionales, es fuerzas adicionales, que no está compensando necesario en el precio. El único
precio que esta compensado es fair trade. Por dos razones que esta fundamentales: Una porque tiene un
precio mínimo garantizado, que ahora no está funcionada porque el precio mínimo esta menor de el
mercado. La otra cosa es el premio social, que hoy es 10 que ante serán 5. El premio que recibimos no
podemos utilizar en hospitales, escuelas o cosas de ese tipo, porque no es significante, digamos en términos
macros90. Entonces, dos cosas pasan; si en Guatemala el especulación local sube (Tenemos especulación que
alguien piense que el precio va a subir, dinero lavado de producto de drogas o cualquier otro negocio ilícito,
que significa que dinero negro va a comercio normal, si café) tomamos ese 5 o 10 sentados, y damos al
productor en el precio… para puede competir. ... La otra cosa que pasan es que el premio va a la operación de
Fedecocagua y mejorar nuestra bodega y nuestro beneficio…’Año por año puede recibir entre US$ 300 000450 000 por premio social. Ese volumen va a la operación de de Fedecocagua de US$ 30 000. También hemos
mejorada nuestro bodega y nuestro beneficio. Para que nuestro pequeño productor de 2 hectáreas,
insignificante en la producción, puede obtener una muy alta calidad de café y puede presentar el café en el
mercado Escandinavia, que es un mercado que conoce una muy buena calidad. ..Digamos, los cafés que nos
vendemos a Joh Johannson, Friele, Coop, son pasada por un examen régulos por calidad. También tenemos el
departamento de sostenibilidad y asistencia técnicas que están trabajando con los productores en el campo’
(de Leon, marketing manager of Fedecocagua, personal interview Dec. 2007).
90
110
‘They criticize us, saying ‘You are large, you sell commercial and professional’. True, but if
we do not have income we are not able to go to school, or to the doctor, nor to move. Then,
sometimes people are confused, because they do not see any social causes; they see us as a
business. I might be idealistic, You as well, but without income we are not able to change
anything’91(Personal interview, de Leon, marketing manager Fedecocagua, Guatemala).
According to the marketing manager of Fedecocagua, technical improvement is the first
step of development for the producers; therefore the social premium is used for this.
This view is in direct opponent to the general perception of the farmers, who only wish
to receive something directly. Their suggestions for improvement of the certifications
and Fairtrade were the first level cooperative to receive the social premium directly.
Thus, to summarize the general narrative of Fairtrade by the producers it is important to
highlight why they initiate the certifications. On one hand, the producers are told by the
ANACAFE that the certifications will bring economic benefits and contribute to market
access. On the other hand, Fairtrade is not a choice by the producers at this level because
the FLO certification is initiated by Fedecocagua. Thus, the producers are disappointed
they do not receive any economic benefits from the certifications where they require
more work. However, the disappointment is not as large regarding Fairtrade. They do
not see any direct benefits from Fairtrade, but they do not have any obligations in
production, less knowledge, thus in general they do not understand Fairtrade more than
a market termed fair, which Fedecocagua export to. They have knowledge of the
minimum price and the social premium, but they do not understand it as the minimum
price is as low as not to have any impact, even during times where low coffee prices
dominates the coffee market. Furthermore, they do not understand the social premium
because they cannot see it. However, indirectly, they are able to sell their coffee through
Fedecocagua for better prices and are content about the relationship to Fedecocagua.
…nos critican porque dicen que; ’Ustedes son grandes, Ustedes se venden comerciales y muy profesionales’.
Sí, pero no tenemos ingresos no podemos ir a la escuela o al médico, o mover. Entonces, alguna veces se
confunden los personas, porque no se ver alguna cosas social, nos vemos comerciales. Yo puede hacer muy
idealista, Usted también, creemos en el mundo, en la naturaleza, pero sin ingresos no podemos cambiar (de
Leon, marketing manager of Fedecocagua, personal interview Dec. 2007)
91
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6.2 PRODUCER NARRATIVES OF FAIRTRADE COFFEE IN NICARAGUA
The story from the cooperative in Yali, Nicaragua must be read recalling the difference in
organizational structure from the cooperative in Guatemala. The Fairtrade certified
cooperative in Guatemala worked on a national scale, whereas the cooperative El Polo in
Nicaragua works on a local scale, perhaps more the size of the first level cooperatives
under Fedecocagua. The organizational structure is very different as the cooperative El
Polo is directly certified Fairtrade as a first level cooperative with exporting license.
Furthermore, the cooperative El Polo has been certified Fairtrade for only two years,
whereas Fedecocagua has been certified Fairtrade for ten years.
When I asked the producers how they perceived their situation as producers of coffee,
they often highlighted similar views as the following quote;
‘…with the current prices of coffee, if it was not devaluation here in Nicaragua, would have
been excellent. But currently it (the coffee) has surpassed the beans, almost equal to 2
quintals of coffee. 1 quintal of beans is about the same as 2 quintals of coffee. Rice as well.
The oil which we buy to fry the food for the workers and ourselves, is about double the
price as well’ 92(personal interview, coffee producer, Nicaragua).
…’Currently, the life in Nicaragua is very hard. We depend on the coffee market, right. All
living expenses are really high. …we hope the harvest this year will be good’ 93(personal
interview, coffee producer, Nicaragua).
…’the price (of coffee) is not connected to the costs in Nicaragua… At least, last year the
beans costed 1000 Cordobas, and the coffee have to cover all of this, the food – beans and
rice. …it is difficult because it is very expensive, everything Then, we are looking for other
methods in order to survive. Coffee is good to combine with livestock, potatoes and other
products. It is good to cultivate because it is an area with shade. Yes, one has to adjust to
…’los precios que están ahorita del café, se no viene una desvaluación aquí en Nicaragua, podría ser
excelente. Pero ahorita ha despajado (surpassed) el frijol, casi al mismo de 2 qq de café; 1 qq de frijol sale
como 2 qq de café. Si, el arroz también. El aceite que compramos para freír la comida de los trabajadores y de
nosotros, sale por el doble también
92
Ahora hablamos, la vida en Nicaragua es muy duro ahorita. Nosotros dependimos de mercado de café,
verdad. Todos los costos de vida esta muy alto. ..este año esperamos que tenemos un mejor cosecha.
93
112
the situation here. This is nice, but the prices will not be good because everything has
increased in price’94(personal interview, coffee producer, Nicaragua).
All the producers highlighted the difficult situation they currently experienced. The
coffee producers were extremely preoccupied with explaining the current situation of
inflation and highlighting the importance of receiving a higher price for their coffee.
Visiting the producers and living among them, I also experienced the difficult situation
firsthand. The storm Felix destroyed the local harvest, and in addition inflation and
increasing petrol prices pushed the prices through the roof. Vegetables were almost
impossible to find and the village survived on corn and beans, or frijoles and tortillas.
The price of rice, the remaining staple, was unaffordable.
‘You see, the beans are very expensive. The beans are about 1300 Córdoba. In addition,
corn, rice, everything has increased almost 100 percent. It means that this year we are
going to sell the coffee cheaper than last year. Cheaper because everything is more
expensive such as food, labor, diesel, everything. One bag which was worth 5 Córdoba last
year, we buy for 10 Córdoba this year. Everything was cheaper; 1 kg of beans was 400
Córdoba’s last year. The farm is expensive as well, and how much is the coffee worth in the
end? After investments of cleaning, of foliating, of meals, of paying the cook, of food, it is
nothing left95’(personal interview, coffee producer, Nicaragua).
This was the main concern of the producers. They claimed the current price of coffee to
be good in relation to earlier years. However, in relation to the current situation with
inflation, it was very difficult. According to the media, the inflation rate was the highest
experienced in seven years. The two national newspapers that reached the village had
different explanations for the causes of the inflation;
El precio no esta conectado los costos en Nicaragua. …Por lo menos el año pasado los frijoles cuesta
1000 Cordoba, y el café tiene que gastar todo eso, el comida – frijol y arroz. …Es difícil porque es tan caro,
todo. …Entonces, estamos buscando otros medios para sobrevivir. Con el café es bien con ganadería, papas
o otros productos. Es bueno para cultivar porque es un area con sombra. Ya uno se acostumbre ahí. Es
bonito, pero si los precios no va a estar muy bien porque todo ha subido.
94
El frijol es caro, mire. El frijol sale como C 1300. También el maíz, el arroz, todo ha subido casi 100
porciento. Significa que este año vamos a vender el café más barato que el año pasado. SI, mas barato porque
todo va más caro; el insumo, el mano de obra, diesel, si todo. Un saco que valía el año pasado 5 Córdobas,
ahorita nos estamos comprando a 10 Córdobas. Todo fue más barato, un kilo frijoles valía 400 Córdobas.
…Una finca esta costoso también, y cuanto sale al final un carga de café? Cuando hay invertido en limpias, en
foliar, en comida, en pago de cocinera, en alimentos; no queda por nada.
95
113
‘The Central Bank recognizes that inflation reaches its highest level in seven years. The
inflation has accumulated in October this year up to 10.7 percent. Increases in the prices of
basic foodstuffs and fuel are situations that will undoubtedly be paid by the consumer. The
hurricane Felix and the rain which has plagued the country in recent weeks have been
determining factors for inflation’ 96(Hoy Nacionales 13.11.2007).
The situation of inflation is an international trend related to the price of fuels on the world
market and is confirmed where all of the continent's economies recorded increases in
inflation rates. … Nicaragua is the country which recorded the highest inflation rate of the
Central American region, followed by Honduras with 8.3 percent, Costa Rica with 7.65,
Guatemala with 5.74. … Furthermore, this pressure is forcing an extension of the
agricultural frontier in the world, where every day it requires more land to grow inputs for
ethanol and biofuels97’ (La Prensa 13.11.2007).
The newspaper ‘Hoy Nacionales’ recognizes natural domestic causes of the inflation,
whereas ‘La Prensa’ recognizes the inflation as an international trend related to the
international increase of fuel prices and pressure for more land to grow ethanol and
biofuels. To the rural producers, very politically interested, this was the main subject on
the porch in the evenings; along with speculation of which price they could liquidate for
their coffee. Would the coffee prices be high enough to supply their families with rice,
beans, corn and oil for the next year, of what they did not grow themselves? More often
than not the respondents would show great remorse for the seasonal workers that came
with their families to pick coffee cherries during harvest. The expression which always
came during questions of the pickers and their salary was ‘Pobrecitos’. It is an
expression meaning you feel sorry for them. However, the ending of the word –citos,
directly translated as small, means so much more than that. It means you feel sorry for
El Banco Central reconoce que inflación llego a su nivel más alto en siete años. La inflación acumulada
hasta octubre de este año al 10.7 por ciento. Los aumentos en los precios de los alimentos básicos y del
combustible son situaciones que sin lugar a dudas pagara el consumidor. El huracán Felix y las lluvias que
han azotado al país en las últimas semanas han sido factores determinantes en el proceso inflacionario’ (Hoy
Nacionales 13.11.2007).
96
La situación de la inflación es una tendencia internacional relacionada con el precio de los combustibles en
el mercado mundial y afirmo que todas las economías del continente registran aumentos en los niveles de
inflación. … Nicaragua es el país que registra en índice de inflación más alto de la región centroamericana,
seguido por Honduras con 8.3 por ciento, Costa Rica con 7.65, Guatemala con 5.74. … Además, esta presión
está obligando a una ampliación de la frontera agrícola en el mundo, ya que cada vez se requiere de más
tierra para sembrar los insumos para etanol y biocombustibles (La Prensa 13.11.2007).
97
114
the workers in a personal sympathizing matter, genuinely remorse. The producers were
often expressing a hope of higher coffee prices so that they were able to pay the workers
sufficient to survive. The increased food prices had hit the workers hard too, even
harder as they did not own any land to grow food for themselves. At the moment of
research the producers of coffee would normally pay the seasonal pickers 12 cordobas
(USD 0.66) per ‘lata’, which is a measurement system referring to a certain size basket
(the size of the basket varied from Nicaragua and Guatemala) with red coffee cherries,
including one meal. A good picker would, during a long working day, usually fill three
such baskets, depending on the coffee plant and the amount of mature cherries. Other
respondents reported paying seasonal pickers 35 Córdoba a day (USD 1.94) including
one meal and permanent workers 50 Córdoba (USD 2.7) per day including one meal.
Total income from coffee was difficult to estimate, but around 30 000 Córdoba (USD
1666.66) annually for a farm producing 30 quintals, which is twice as much in terms of
volume as the average farm in El polo. A further subtraction of costs was difficult to
estimate for respondents. According to the Human Rights Report (Country Reports on
Human Rights Practices 2007, 2008), there are no universal minimum wage in
Nicaragua, but a minimum wage scale. In the agriculture sector this is 1 025 Córdoba
(USD 55) a month. Thus, permanent workers receive within the minimum wage scale
but not the seasonal workers. According to the Country Report on Human Rights
Practices 2007 (2008), ‘the minimum wage is about 25 and 67 percent below estimation
of basic urban family’s need’.
When I asked the farmers about Fairtrade, and if they perceived Fairtrade as a means of
improving the current situation, they highlighted the following;
‘The fair market means a good price and focus on the environment. We have been working
with this more or less five years. But we are hoping that maybe the politics of fair market
will increase the price. In our country now, everything is very expensive’98(personal
interview, coffee producer, Nicaragua).
’I am in agreement with the fair market, it is a good market. The difference to the
conventional market is that they give us a bit more. But the problem we have here is
‘El mercado justo significa un bueno precio y enfocado al medio ambiente. Tenemos más o menos cinco
años trabajan con eso. Pero, esperamos que tal vez las políticas de comercio justo se suba. Porque aquí en
nuestro país ahora, todos los cosas son carísimo’.
98
115
perhaps the country we have. Our government, there are no incentives for the producers
like in Costa Rica. The government is not preoccupied with this. In Costa Rica and
Honduras it is different because they subsidize and have technical assistance’99
Thus, the producers say Fairtrade is good100. However, they do not claim any direct
economic benefits from the fair market. By highlighting their situation and government
policies it is easy to understand that they do not believe Fairtrade could be a viable
instrument to improve the current situation. The unnoticeable difference in price is also
evident where the conventional price has been equal to the Fairtrade price for as long as
they have had the Fairtrade certification. In addition, as noted above, the producer
above who claims five years of cooperation with Fairtrade, which in reality it is only two
years. Furthermore, it is a small amount which is sold to the Fairtrade market. The
producers seemed shy to express negative aspects of Fairtrade. They associated me (the
interviewer) with the buyer from Sweden101, and I was many times relying on
transportation, thus I was accompanied by the technical assistant. The quote below
highlights the view of one producer without the presence of a technical assistant;
‘No, everything is the same price. I am seeing that in other departments they pay
according to quality. They pay the excellence of coffee. Why don’ t we have quality, I say.
And on the other hand, the fair price, the fairness for us is nothing. All the companies, the
private companies, are paying the same price. Because with Fairtrade, the only fair they
can do for us is that if the coffee (price) falls they will maintain it. But first the coffee
(price) has to fall. Now I do not see any advantages for us. The cooperative receives
assistance directly from Fairtrade, but we don’t receive assistance. A fair price for us, it has
Yo estoy en de acuerdo con mercado justo, es un buen Mercado. Porque la diferencia de mercado
convencional es que nos andamos poco mas. El problema de nosotros es tal vez el país que nos tenemos. El
gobierno de nosotros, no hay incentivos por los productores como en Costa Rica. El Gobierno no preocupe
por estos cosas. En Costa Rica y Honduras, son diferente porque son subsidiado y tienen asistencia tecnica.
99
It is important to highlight that the research I was conducted was not understood by the farmers as
objective. One of the main reason for this is that I came to know the cooperative through one of their main
buyers from Sweden. Thus, for the members of the cooperative board it became important to highlight
they were pleased with Fairtrade because the importer from Sweden is currently the main buyer of their
Fairtrade coffee. However, for the rural producers I visited who had no relation to the cooperative board,
this was less important as they had no knowledge of the consumer, less so the international market.
100
I was often told to say my Greetings to Philippe Barrecka, the representative from the coffee company
Arvid Nordquist in Sweden.
101
116
to depend on the cost of production. With the premium we have, it does not compensate for
the cost per quintal of coffee’102(personal interview, coffee producer, Nicaragua).
Thus, the respondent quoted above was expressing his feeling towards the concept of
Fairtrade. He strongly disagreed with the use of the term ‘Fair’ market, where he had
experienced other buyers paying quality premiums on the coffee. Thus, he did not
understand why selling to a fair market could be any fairer than other farmers which
received a direct price incentive on their coffee due to good quality103. The private
commercial company Exportadora Atlantic was able to confirm that there was no price
difference between the Fairtrade price and the commercial price at time of research104,
where the conventional price was above the Fairtrade price floor adding the social
premium within105. All informants reported liquidation of prices based on New York
prices. This is not peculiar as the cooperative only have been certified with FLO for two
years, and during these two years the NY price has been far above the Fairtrade price.
However, the difficulties experienced by the villagers highlight the low price floor
operated by FLO. This is, as explained before, in adjustment where the price floor will
increase by USD 0.05 by June 2008.
When discussing Fairtrade with producers who was not active participants in the
cooperative, or who did not attend the annual assembles, the views as highlighted below
from three different producers was a general view;
No, todo es el mismo precio. Estoy mirando que en otros departamentos le paguen por calidad, le pagan la
excelencia de café. Porque no tenemos calidad, digo yo. Y por el otro lado, el precio justo, la justo para
nosotros no hay nada. Porque todas las empresas, los comerciantes que son privados, están pagando el
mismo precio. Porque por el comercio justo dice que lo único justo que puede hacer por nosotros es que
cuando el café se caiga, se mantiene. Pero, primero tiene que caiga el café. Ahora no digo ninguna ventaja
para nosotros. … La cooperativa esta reciben ayuda directamente de comercio justo, pero nosotros no
recibimos ayuda. …Un precio justo para nosotros, hay que depender de los costos de producción. Con este
premio que tenemos, no compensan los costos por quintal de café
102
Particularly interesting to note from the above quotation is how the producers distinct themselves
from the cooperative. Currently, the manager of the cooperative received a new truck sponsored by
FondeAgro with aid assistance from the Swedish aid agency. This created a sense of jealousy in the small
community of Yali which further divided the gap between the cooperative leaders and the producers.
103
They confirmed the same price as the producers were able to liquidate at that point ‘ El precio son 1720
Córdoba la carga. O 860 Córdoba por quintal.’
104
Thus, it is plausible the Fairtrade price floor was calculated as a set price including social premium, not
then following the conventional Price and adding the social Premium on top. The cooperative sold their
Fairtrade coffee for USD 1.26 last year, which was the lowest price they received but equal to the price
paid by Starbucks. A third quantity was sold at the specialty market for a higher price.
105
117
‘Some say that this, the fair market, will raise the price a bit for the members, but no, who
knows. We are not with this now, I do not think so. But this year I have not gone to the
reunion because I do not hear what they talk about. That’s just how it is’ 106( personal
interview, coffee producer, Nicaragua).
‘The
fair market, at least if the coffee price decreases it is a price which is stable. And if the
price increases they pay that price. But if it does not, they would pay the current price.
That’s the fair market107’(personal interview, coffee producer, Nicaragua).
Social obligations, what? It is only the price in the fair market. Premium? The premium is
this cap and this t-shirt. But what you are saying is that they will pay more? Hehe, it will
not happen. I believe that the fair market is how you buy it over there, right? 108’(personal
interview, coffee producer, Nicaragua).
The quotes highlight how some farmers, situated further away geographically and with
fewer resources, had close to no understanding of the fair market. The far distance and
lack of resources made it particularly difficult to attend the annual meeting. The latter
quote highlights an important aspect of the fair market. The fair market is how it is
bought ‘over there’. The fair market is in the North, it is the Northern consumers who
demands fairness, who are willing to pay for fairness. Therefore, they produce for the
‘fair market’; according to market demand.
When I asked about obligations in production, farmers usually responded in a similar
manner as below;
‘There are requirements of things that we need to do. No child work, and many things that
they require. And it is certain that we will do that. But there (with FLO), it is not an
‘Alguna dice que este, mercado justo, va a subir un poco al socio, pero no, quién sabe. Ahora no estamos
con eso, creo que no. Pero este año no he ido a la reunión porque no escuche que están hablando allí. Así es la
cosa’.
106
‘Mercado justo, por lo menos, si baje el café, hay un precio que está estable. Y si sube, pues, lo pagan el
precio que esta, pero si no, siempre lo paga el mismo precio. Eso es el mercado justo’.
107
¿Obligaciones sociales, como de qué? Solo es el precio en el mercado justo. ¿Premio? El premio es esta
gordita y una camiseta. Pero que le va a decir, ¿qué les van a pagar más reales? He he, no le sale. ¿Lo que
parece es mercado justo es como le compran allá verdad?
108
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obligation yet. I feel obliged to do it as a person, but it is not required of me 109’ (personal
interview, coffee producer, Nicaragua).
Obligations in production were unknown to the majority of producers. However, the
cooperative managers viewed the system as promoting good agricultural practices. This
was extended to the field in terms of technical assistance provided by the cooperative. In
terms of direct environmental and social standards in production, the perception was to
follow this where opportunities and resources were available. However, the producer
quoted above highlights an important aspect which perhaps defines the situation for the
farmers with one foot in subsistence farming and another foot in the international coffee
market. Their main aim is not to increase profit, but rather to have enough income from
coffee as to afford what they cannot grow themselves. Be able to afford cooking oil, rice
and beans for their family, and be able to pay their workers enough money to survive.
The lack of knowledge and democratic representations are seen as a consequence of the
low levels of education prevalent in the rural village. According to the manager of the
cooperative;
‘We still have people that do not know how to read or write. FLO and all the certifications
need registers. Then, we need to bring many registers to the farms. And the problem is that
if they do not know how to read or write, we have difficulties when we bring these registers
to the farms110’( personal interview, cooperative manager, Nicaragua).
The manager further explains the confusion according to the high levels of poverty and
low levels of education in the area. Not all producers are interested in meeting at the
assembly. For some, it includes taking a day off work, organizing transportation and
then be present at a meeting where they may have difficulties to hear and understand
the discussion. Some of the producers also acknowledged shyness as a reason for not
attending or not asking questions regarding FLO and the social premium at the annually
assembly.
‘Si hay requisitos por cosas que tenemos que hacer. No trabajo de infantil, muchas cosas que les piden,
pues. Y es cierto que vamos a hacer. Pero por ahí, no es una obligación ahorita. Me siente obligado hacerlo
como persona, pero no es algo me obligue.’
109
‘Tenemos todavía gente que no saben de leer ni escribir. Entonces, FLO y todas las certificaciones
necesitan registros. Entonces, en la finca tenemos que llevar mucho registro. Y el problema es que si ellos no
saben escribir sino leer, tenemos dificultas cuando lleva esta tipo de registro en la finca.‘
110
119
When asking the manager of the cooperative about Fairtrade, he highlighted the
following;
‘It is a practice very good and convenient for the producers. Well, for the producers, for the
environment, for everyone, because it is a chain. But the problem we have here in this zone
is the low level of education. We still have people that do not know how to read and write.
In addition, currently, with the high costs of production, the minimum price is very low.
They have to correct it regularly. If they do not, the future will not be
sustainable111’(personal interview, manager El Polo, Nicaragua).
According to Martinez de la Cruz, the manager of the cooperative, the main problems
with Fairtrade are the lack of demand; the lack of economic incentives for quality; the
inflexible nature of the system regarding price and instance of selling in addition to the
evolution of stricter obligations in production and the low minimum price. Furthermore,
the many forms and registers that need to be filled out by producers are very
complicated due to low levels of education and illiteracy. However, he is very satisfied
with Fairtrade and the progression made by the cooperative in recent years112.
Thus, to summarize the general producer narrative of Fairtrade in Nicaragua, Fairtrade
is insufficient to engage in the challenges that face the producers. The Fairtrade price
floor is low and it does not correspond to the costs of production. Furthermore, they sell
a low quantity of coffee through the Fairtrade channels, which is actually less important
as there is no difference in price. The producers highlight the importance of Fairtrade
mainly through market access. However, in general they are preoccupied with political
challenges within their country. It is mainly upon their government to improve their
situation, not a Fair market. They highlight the importance of stability through a
minimum price by referencing to the coffee crisis, but these prices are seen as an
exception to the rule. The current problem is the high food prices of which the coffee
prices are not able to compensate. Though the fact that they had not seen any direct
’Es una práctica muy bonita y muy conveniente para el mismo productor. Para los productores, para el
medio ambiente, para todo el mundo, porque es una cadena. …Pero el problema que tenemos en esta zona es
el bajo nivel de escolaridad. Tenemos todavía gente que no saben de leer ni escribir. …También ahorita, con
la tan de costos de producción, el precio mínimo está muy bajo. Tiene que corregirlo regulatoriamente.
Porque si no, en el futuro no va a hacer sostenible’.
111
As explained earlier, the progression made by El Polo is indirectly through fair trade, but directly
financed through SIDA with technical assistance from FondeAgro.
112
120
benefits due to the currently high ‘C’ price made discussing Fairtrade quite diffuse.
However, they highlighted that a fair price for them needs to correlate o the costs of
production, the current FLO price is not fair. It is by no means related to the current
living expenses and costs of production.
121
6.3 CONSUMER NARRATIVES OF FAIRTRADE
‘’Demand emerges as a function of a variety of social practices and classifications,
rather than a mysterious emanation of human needs, a mechanical response to social
manipulation (as in the model of the effects of advertising in our own society) or the
narrowing down of a universal and voracious desire for objects to whatever happens to be
available’’ (Appadurai, 1986:48).
Appadurai (1986) emphasize the importance of the consumer in the social
biography of food, demand being socially regulated. Unfortunately, my analysis of
consumer narratives relies on secondary data such as consumer analysis in Norway by
Research International (2006), and Medborgerundersøkelsen113 (2001) (c.f. Strømsnes,
2005 and Terragni et al., 2006). In Medborgerundersøkelsen carried out in Norway in
2000, the archetypical ethical political consumer is well educated, usually female and
young adult, living in cities. Additionally, youths and university students are frequent
buyers of fair or ethical coffee. Political ethical consumption (PEC) is part of a society
with a high standard of living, where primary needs are covered (Strømsnes, 2005).
Therefore one can argue PEC is part of post-material values, (Terragni et al., 2006)
limited to certain members of the society.
According to a quantitative market analysis of Norwegian consumption of
Fairtrade products (Research International, 2006) there have been an increase in
knowledge of Fairtrade products from 30 percent of the population in 2004 to 40
percent of population in 2006 (n = 1000). Furthermore, the percentage of population
with knowledge of Fairtrade coffee who never buys the product has decreased from 36
percent to 11 percent. Around 17 percent of those who have knowledge of Fairtrade
associates this with more equitable trade relations with producers in producing
countries, whereas 5 percent associates Fairtrade as trade with developing countries
(see also Table 5). The share of respondents who is familiar with the Fairtrade logo is 46
percent (n=1189). The most important reasons of Fairtrade buying behavior is a desire
to support a good case (47 percent), a desire to support the producers (44%), causal (29
percent), due to good savor (19 percent), environmental considerations (12 percent)
(n=467). However, 6 out of 10 respondents who did not buy Fairtrade coffee responded
113
Norsk Samfunnsvitenskapelige Datatjeneste’s medborgerundersøkelse, 2001
122
it was not likely they would buy Fairtrade products in the future. The reason for this is
not given in the analysis (Research International, 2006).
TABLE 5: CONSUMER CONFIDENCE
Agree
Statements of consumer confidence
(percentage
total,
Disagree
of
(percentage of total,
n = 1186)
n = 1186)
Max Havelaar improves living conditions for poor
53 %
6%
48 %
7%
40 %
11 %
43 %
8%
producers in developing countries.
Max Havelaar and Fairtrade makes international trade
fairer
When a product is labeled Max Havelaar I know that the
producers benefit from the money.
Max Havelaar is a trustworthy certification which
guarantees Fairtrade.
REFERENCE 10: RESEARCH INTERNATIONAL, 2006
According to the same analysis (see Table 5) more than half of the respondents agree
that Fairtrade improves living standard for poor producers in developing countries, and
close to half of respondents have confidence in that Fairtrade makes global trade fairer.
The main motivation for buying behavior was to support a good case and to support the
producers. The results further show that motivation of Fairtrade consumption is
grounded in a connectedness to the poor. The Fairtrade product engenders a connection
between Southern producers and Northern consumers. Thus, it reflects a desire for the
consumers to be linked to the processes and effects of consumption on local
communities. It is possible to identify a consumer culture based on social justice, where
the Fairtrade label has received high credibility at the consumers. By consuming a fair
coffee, more than fifty percent of the consumers are confident they improve living
conditions in poor countries. Thus, the label ‘Fairtrade’ is identified with aid to the
producers.
The complex network of actors promoting the Fairtrade network gives high credibility
to the product. These actors are not regular marketing actors. In relation to Wilhite and
Lutzenheiser (1998), advertisement is only one element which creates demand. Demand
is also created by agencies, community structures, cultural system of meanings, habits
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and practices, and institutionalized professions. There was no demand of Fairtrade
coffee within the producer countries of Guatemala and Nicaragua. Thus, the demand of
Fairtrade coffee is constructed within consumer societies with a highly constructed
consumer demand, situated geographically far away from production.
The communication strategy is based on a certain connectivity between the consumer
and the producer, appealing to a certain relational ethic for the consumer (Bryant and
Goodman, 2004), where the narratives play a key role. Goodman (2004) argues that by
consuming Fairtrade one consume a narrative. The narratives the consumer connects
with are stories of producers which are handpicked by the Fairtrade foundation.
Highlighted above, the most influential medium of information about Fairtrade in
Norway is the media (Research International, 2006). According to Lamb, director of the
Fairtrade Foundation; …’the marketing methods …seek to realize the core objective of
bringing the organized consumer closer together with disadvantaged, organized
producers. Together, these techniques have made Fairtrade fashionable ’(Lamb, 2007:55).
Thus, through various mediums of communication strategies, as explained in earlier
sections, the consumer culture of Fairtrade coffee has been constructed. Furthermore,
by building the Fairtrade mark around moral issues, it has created demand on a certain
‘feel good’ factor, where it is possible to use consumption in the reflexive project of the
self as a person who is resisting the international forces of economic globalization.
..’On the basis of focus group research conducted by Dragon Brand Agency, ‘There are no
barriers to the concept’. While many people have many questions about how Fairtrade
works, practically no one ever disagrees with the fundamental proposition of a fair deal for
poor producers. Both Dragon Brand Agency and repeated qualitative research have found
that belief in the cause and the resulting emotional feel-good factor that consumers receive
by purchasing a Fairtrade product is a key driver to grow the Fairtrade market … Focus
group research by Research Works Limited found that the main motivation for buying
Fairtrade was a willingness ‘to do my bit’ (Lamb, 2007:59)
Thus, consumer demand of Fairtrade coffee is influenced directly by the extensively
marketing of Fairtrade. According to Bryant and Goodman (2004: 355, 356) the moral
discourses are produced through narrative strategies on the labels. The Fairtrade
network actors’ are functioning as go-betweens and are the main suppliers of
information about the producers to the consumers (Whatmore and Thorne, 1996). Thus,
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in a network where ‘caring at a distance’ becomes the main motivation of buyer
behavior, this is directly attributed the mediators who are the suppliers of the
connection or connectivity (Whatmore and Thorne, 1996). This is also highlighted by
Lyon, in her study of the Fairtrade market in the US (2006:455);
‘During the past 6 years, US Fairtrade advocates followed the lead of other consumer
campaigns and advocacy groups and used the rhetoric of globalization as a symbolic
resource (Cunningham, 1999:599). Fairtrade market advocates and non-profit organizers
at Global Exchange and Transfer USA consciously framed (Keck and Sikkink, 1998)
Fairtrade as a means to channel consumer anti-globalization sentiment into concrete
action’ (cf Lyon, 2006:455).
Thus, marketing strategies have played a great role in defining the Fairtrade product, of
which consumers are influenced. Thus, it is simplistic to claim the Fairtrade market as a
direct result of political choices and consumer reflexivity. The narrative most Norwegian
consumers identify with is the narrative of aid and development, which is an indirect
attribute of the representation narrative as described above. However, it is important
not to draw any conclusions out of the consumer behavior research presented here as it
does not state the reason behind skepticism of Fairtrade, nor does the analysis discuss
independent perceptions of Fairtrade114. According to other consumer studies of
Fairtrade, the most important determination of Fairtrade buying behavior is the quality,
not quantity, of Fairtrade information, and the overall attitude towards Fairtrade (De
Pelsmacker and Janssen, 2007; De Pelsmacker et al., 2005). Thus, better and more
credible information of Fairtrade stimulates buying behavior.
According to theory from Macintyre (1985); ’There is no such thing as ‘behavior’ to be
identified prior to and independently of intentions, beliefs and setting. …And what would be
utterly doomed to failure would be the project of a science, say political behavior,
detached from a study of intentions, beliefs and settings (Macintyre, 1985:208, emphasis
in original). Thus, in order to draw the narrative of Fairtrade consumption one needs to
look at the intention of behavior. The above section on representation strategies has
highlighted the diverging ideologies of the network incorporating Fairtrade, in which the
This is most likely due to the quantitative nature of the research. However, the reason for the chosen
statements should be provided.
114
125
consumers are motivated. Moreover, according to Jaffee (2007) the perception of the
nature, goals and practice of Fairtrade differs in more than ideological terms; they reveal
fundamentally different conceptions of alternative trade to the larger global market and
to free trade policies (Jaffee, 2007). The diverging ideologies represent a challenge for
the Fairtrade system, but also play a role in maintaining its inclusiveness. The Fairtrade
market ideology works against the neo-liberal market simultaneously as it works in the
neo-liberal market. This becomes an important factor where it becomes possible to use
consumption in the reflexive project of the self and as protesting against the market.
Essentially Fairtrade is based within the ideology and logic of consumption as the basis
of society. Consumption is central to the contemporary life-worlds and the creation of
society (van Binsbergen, 2005). Lifestyle politics may contribute to an understanding of
the reason behind such a buying behavior. Lifestyle politics reflect the social and cultural
construction of consumption as the medium of influence. The Northern consumer
chooses a Fairtrade product over a conventional product despite the fact that the
Fairtrade product is more expensive. However, the price difference is also an important
contributing factor of the validation of the label where the Northern consumer identifies
the extra crown spent on a Fairtrade coffee as ‘aid’ to the producer (Hammer,personal
interview, 21.02.2008).
Avoiding a discussion of identity (see Brubaker and Copper, 2000) it is more
appropriate to discuss how the consumer identifies with the product. According to a
study by De Ferran and Grunert (2005) of French Fairtrade consumers, the main
consumption motives was a desire for equity between humans and in human
relationships, secondly a desire for hedonism by the consumption of good products and
thirdly, a wish to protect oneself and the environment (De Ferran and Grunert, 2005:
226). The analysis use means-ends approach, which focus on escalating results therefore
avoiding pre-determined statements such as the former study presented on the fair
trade market in Norway. Even though the results by no means can be externalized115, it
is important to note that the desire for self-indulgence by consumption of Fairtrade
products and a wish to protect oneself and the environment were results that differed
from the Norwegian analysis. I will use the results of this independent study in order to
The analysis was carried out on French Fairtrade coffee purchasers (n=54), thus not to be externalized
but important to note in terms of future studies of Fairtrade consumers in Norway.
115
126
argue the intention of Fairtrade buying behavior. Thus, the following arguments will be
based on Fairtrade consumption in relation to equity, hedonism and the wish to protect
oneself and the environment.
Firstly, the wish by consumers to protect oneself and the environment is, according to
Goodman (2004 b), attributed a turn by consumers away from industrial food provision
towards quality. Such a quality turn includes the move to organic and Fairtrade
practices, new premium quality food production, place based production, marketing
initiatives and farmers markets (Goodman, 2004 b: 4). According to Goodman (2004 b),
these developments are attributed episodic food ‘scares’, and enhance reflexivity by
consumers (Guthman, 2003). ‘Mistrust of standardized foods produced by industrialized
agriculture, and processed and distributed by highly concentrated, globalised agroindustrial corporations, it is suggested, has given added salience or weighing in consumer
knowledge practices to transparency. …This is met by schemes to assure quality
provenance and traceability’ (Goodman, 2004 b: 4, 5).
Thus, the argument of protection is attributed the mass production of food and the
impact this has on local ecologies and ourselves. It is related to Fairtrade as many
consumers relate Fairtrade to ecological and environmental products, as was evident in
the study of Fairtrade consumers in Norway.
Secondly, the equity argument is highly constructed because it is, as argued above,
directly an influence of the representation narratives. The Fairtrade network and the
media are the main providers of information which motivate Fairtrade buying behavior
(Fridell, 2007; Lyon, 2006). According to Fridell (2007), at the heart of the Fairtrade
system is essentially a certain perception of consumer sovereignty and consumer
power; the willingness to buy justice. Thus, in a sense, Fairtrade consumption creates a
feeling of stepping out of the system (Fridell, 2007), based on the ideology of Fairtrade
working in and against the market.
The argument of hedonism is related to consumption within the post-modern society.
According to van Binsbergen (2005) consumption is a strategy used to delay the
incomplete construction of meaning within the current society. Thus, Fairtrade may be
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seen in relation to the concept of ‘narcissism’116 (Fridell, 2007; Gould, 2003). According
to Lasch (1979) against the feeling of narcissistic anxiety and loneliness, capitalism
offers consumption as the cure. Thus, consumers accept Fairtrade as they have also
accepted consumption, but the use value of Fairtrade to consumers seems to be strong.
Voting with our trolley becomes central in a society where economic system is based on
consumption. Gould (2003) highlight the new consumer demand, searching selfimprovement with means of life-style centers, eating organic and ethical food and
getting in touch with some inner self through practice of yoga among other117. This is
related to Giddens (1991) work on late modernity, and the project of self reflexivity118.
Thus, in relation to Fairtrade one may discuss demand rising out of a notion of a
reflexive consumer, where consumption becomes a political act, or passive resistance. In
discussing the reflexive consumer, the consumer necessarily have the choice to choose a
Fairtrade product over a conventional product. This is in accordance of Giddens (1991)
‘lifestyle politics’ which is essentially a politics of choice. The reflexive project of the self
(Giddens, 1991) is related to how consumption becomes a material extension of the self
(Wilhite and Lutzenhiser, 1998). Consuming a Fairtrade product becomes part of the
personal narrative of identifying the self as an ethical responsible person. Thus, it is only
meaningful to discuss Fairtrade consumption within the reflexive project of the self by
recognizing the importance of symbolic and sign value. Symbolic value is the value that
a subject assigns to an object in relation to other subject. Hence, within the consumer
culture, the symbolic value, or the social construction of value relative to other subjects,
is indeed of very high importance when the consumer chooses a Fairtrade product. The
’Operating within the context of conventional consumption patterns, many ethical consumers likely
purchase Fairtrade goods in part for the same reasons that they or others purchase ‘unfair’ commodities
produced by conventional corporations; to buffer up their own sense of self validation. Awareness of this
psychological motivations lies at the heart of contemporary advertising strategies and is frequently depicted
by corporate marketing experts as deriving from people’s allegedly ‘natural inclination towards selfishness’’
(Fridell, 2007:88, argument originally from Dawson, 2003).
116
‘’Feeling powerless and anxiety-ridden, ethical consumers can turn toward purchasing Fairtrade goods on
the market, both to somewhat appease their feelings of powerlessness and to construct their own self-identity
as ‘ethical’ people. In essence, Fairtrade entails the commodification of social justice and allows consumers to
channel their desire for a more just world into purchasing goods on the market to validate their own selfesteem’’ (Friell, 2007:89).
117
‘Each of us not only ‘has’ but lives a biography reflexively organized in terms of flows of social and
psychological information about possible ways of life. Modernity is a post-traditional order in which the
question, ‘How should I live?’ has to be answered in day-to-day decisions about how to behave, what to wear
or what to eat’ (Giddens, 1991:14).
118
128
narrative of the self becomes important in relation to others (Macintyre, 1985). The sign
value is the value of the object in relation to other objects, thus the sign value reflects the
narrative of aid, which is one of the most important determinants of ethical buying
behavior in Norway. The symbol and sign value is very high in relation to the Fairtrade
product. These values do not necessarily reflect the typical exchange value of the
product, but have interestingly been quantified by the Fairtrade network through
various willingness-to-pay analyses of consumers. Thus, one have come up with the
conclusion that the price need to be higher in that consumers need to feel they pay a
certain aid, but it needs to be close enough to the conventional price as not to scare off
potential consumers. Thus, the quantified symbolic and sign value set the stage for the
fair price to the producers119.
Both Fridell (2007) and Gould (2003) highlight the magnitude of Fairtrade to the
consumers. The discursive narrative of connectivity and aid provided by the broader
Fairtrade network is essential for consumer demand (Whatmore and Thorne, 1997;
Raynolds, 2000, Lyon, 2006; Goodman, 2004). Thus, it is significant not to neglect the
value of Fairtrade to the consumer when discussing the impact of Fairtrade. As
described above, the economic value of Fairtrade to the producer is modest, but the
symbol and sign value highly increases the use value of the product. Perhaps Goodman
(2004) indirectly argue for this value when he highlights the importance of only
‘polishing the surfaces’ of commodities for not to inhibit demand of ethical products120.
The consumer culture is important in understanding the impact of Fairtrade coffee.
Coffee is of high importance to Norwegians with one of the world’s highest consumption
per capita (Giovannucci and Koekoek, 2003). Simultaneously, the new consumer culture
is valuing consumption of narratives and a sense of ‘doing the right thing’, where the
consumption of Fairtrade coffee may be just as meaningful for the consumers as it is for
the producers. Giddens (1991) argue the project of self-actualization, where the focal
questions of existence become everyday praxis through ethical consumption. However,
this is probably only possible through the existence of mediators. The narratives and
This is because the total income in the chain is reflected by the exchange value at initial point of sale,
here related to retail. The minimum price must therefore stay close to conventional price due to the
consumers’ willingness to pay for the product.
119
But how then, are we able to search for improvements of the system, when academics are supposed to
‘polish surfaces’?
120
129
assumption regarding Fairtrade consumption need to be recognized in order for a
comprehensive project of reflexivity and identification. According to Giddens (1991)
people rely on expert knowledge (which in this sense referred to as imaginary) when we
create, maintain and revise our biographical narratives. Our biographical narratives are
the stories of who we are, our roles and lifestyles (Giddens, 1991).
Fairtrade have in many cases been studied as to lift this ‘veil’ of commodity fetishism,
accordingly placing politics at consumer surface where the consumer is to act upon
(Goodman and Cohen, 2004; Hudson and Hudson, 2003; Bryant and Goodman, 2004;
Goodman, 2004; Moberg, 2005). However, the argument of lifting the ‘veil’ of
commodities is continuing the production-centered approach (Goodman and Dupuis,
2002). Thus, if one argues Fairtrade as de-fetishizing the commodity one necessarily
neglect the importance of marketing and the creation of demand. According to
Baudrillard, it is rather consumption which creates classes. Thus, when the Fairtrade
network obviously target educated people, universities and people involed in advocacy
work of development and Fairtrade, one may see the creation of a class. By targeting
certain segments in the society, the social construction of demand becomes obvious.
Those who seek a narrative of themselves as reflexive, educated consumers will
appreciate the product, in many cases perhaps feel obliged to the product. Thus, it seems
that the Fairtrade network rather add a new fetish to the product. This may be seen as a
moral fetish such as commodification of new realms, which are created through symbol
and sign value of the product. Importantly, through Fairtrade consumption, the
producer and consumers are connected. These two actors are perhaps the most passive
actors in this chain. Through selective representations of producers and extensive
marketing campaigns, the chain disappears. The Fairtrade network are not marketing
agents, pushing certain buttons for consumer demand, they are knowledge providers.
The roasters and importers are rarely mentioned, and they are passive in the network
where the Fairtrade product has become a new brand. The producers are at the front at
the network, without mentioning that currently the majority of certified cooperatives
are second level cooperatives working at national levels. The two visible actors in the
chain are the consumer and the producer, where the responsibility of unequal terms of
trade and exploitation is left at the consumer.
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6.4 EXAMPLE: LIDL DISTRIBUTING FAIRTRADE COFFEE
The Fairtrade chain, presented above through commodity cultures, is by no means
separated as such. I will bring in a short example of a large actor within the Fairtrade
debate to highlight the interconnectedness of the chain. The large transnational discount
store Lidl (The Schwarz Group) started selling Fairtrade products in 2006 (Network on
European Worldshops, 2006). This is a highly controversial issue as Lidl have been
criticized in regard to breaking basic labor rights. A Joint project between UNI
Commerce (Union Network) and ver.di., the world’s largest independent trade union
(German Service Sector Union ver.di., undated), investigated employment conditions
and labor relations in Lidl (Union Network Commerce, Global Union, 2004). The
investigation resulted in the publication of ‘The black book on Lidl’ (Harmann and Giese,
2005) where commerce unions have accused Lidl on serious labor rights violations and
violations on trade union rights (Union Network Commerce, Global Union, 2007). This is
particularly in Lidl’s home country Germany, where workers have been denied the right
to organize in unions and a strong surveillance apparatus of employees have been used.
Evidence of the same strategy has been found in other European countries, particularly
in Eastern Europe. Norway is one of the exceptions as Lidl workers were able to get
collective agreements (Union Network: Global Unions, 2007). The entrance of Fairtrade
products in Lidl stores came shortly after the publication of the Black Book on Lidl, and
was highly appreciated by FLO International, which is mainly concerned with the
creation of new markets for Fairtrade products.
The director of Fairtrade (Max Havelaar) in Norway, commented by highlighting the
system is open for everyone. If an actor requires selling Fairtrade products, the actor has
to fulfill the criteria; to pay the price of the product. The director comments that it is
better they are with ‘us’ then against ‘us’, ‘if we have to decide who is politically correct
for the system it would be extremely complicated’ (Hammer, personal interview, 2008).
This is quite controversial to the constructed meaning of Fairtrade, which indeed seems
political. Apparently, the concept does not apply to the complete supply chain. However,
as Lidl is a transnational company, Fairtrade in Germany encountered a different
problem when Lidl requested Fairtrade products. The discount store demanded such a
large quantity that Fairtrade Germany had to negotiate the price up in order for the
consumer to understand the price difference of the Fairtrade product. Lidl was paying
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the price they should, but the large quantity they requested resulted in a minimum price
difference of the products (Hammer, personal interview, 2008). According to Hammer
‘In order that the customer was to understand that it was a Fairtrade product, that one
pays some more, Fairtrade Germany needed to discuss this with Lidl 121’ (Hammer,
personal interview, 2008).
Thus, the case highlights five difficulties with the system of Fairtrade. Firstly, the
Fairtrade criteria are criteria of a minimum price, not a fair supply chain. Thus, the
Fairtrade product does not imply fair trade criteria to all parts of the supply chain, only a
minimum price and a social bonus to the producer cooperative which is certified.
Secondly, the interest in buying large quantities follows market logic, thus pressing the
prices down. The fair trade price floor acts as a strating point of bargaining price. But the
Conventional coffee price is usually higher than the Fairtrade price floor, this becomes a
bargaining issue related to volume. This leads to the fourth argument; large importers
who control the majority of the coffee supply chain are interested in buying large
quantities of coffee. Therefore, second level cooperatives distributing large quantities of
Fairtrade coffee with good quality and trace records will supply the majority of the
Fairtrade market. Smaller first level cooperatives are not able to compete and will
eventually lose out. This leads to centralized effects of the Fairtrade system if not any
special measures are put in place and. Fourthly, the price of Fairtrade coffee needs to be
higher than conventional coffee in order for the consumer to believe the extra amount
paid for the coffee reaches the producer. However, the price must not be as high as to
scare off consumers. Thus the price does not reflect costs of production, but consumer
willingness to pay. Fifthly, the producer and the consumer are in the foreground of the
chain, which strengthen the alienation of the rest of the supply chain. This is highlighted
by the strategy from Lidl, when beginning to distribute Fairtrade products after major
criticism of unfair trade relations.
Hammer express she does not know how Fairtrade Germany and Lidl resolved the particular case.
However, such an increase in price leads to increased profit somewhere in the supply chain and is a
thought of consideration when discussing large actors’ impasse with Fairtrade certifications.
121
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7.0 CONCLUSION
In the conclusion I would like to draw attention to the objectives and the intent of my
study. I wanted to interpret the value of Fairtrade coffee and how the value has been
created. The Fairtrade network is growing, claiming a larger share of the market for
products, in addition to Fairtrade towns, schools, universities and churches. However, is
the Fairtrade network growing on behalf of the impact it has on producers or in
accordance with the impact it has on producers? Does Fairtrade have the ability to
challenge the exploitative manners of international trade? The study uses coffee as an
example, which is also the product with most attention and largest market share within
the network of Fairtrade products. Thus, by bringing the results of this study together, I
argue that as the Fairtrade network has evolved and increased its share in the market,
the value of Fairtrade coffee has increasingly been created, and remains, in consuming
countries.
I have interpreted Fairtrade according to the production or construction of value. The
production of Fairtrade coffee occurs in different stages, though what separates the
Fairtrade coffee from a conventional coffee is the narrative of aid, produced through
communication strategies. The economic value was explored through the global value
chain. The global value chain recognized the income generated throughout the chain by
each key actor. The economic organization of the network showed that the economic
income from Fairtrade coffee is mainly made in producing countries. According to the
GVC analysis I have carried out, about 90 percent of the total income of Fairtrade coffee
remains in Norway, whereas the income remaining in producer country was around 10
percent. However, this was according to a supply chain involving the second level
cooperative in Guatemala. According to my analysis there are clear differences in income
and distribution of benefits between the cooperative in Nicaragua and in Guatemala. A
larger percent of income remain in Guatemala (about 10 percent) compared to
Nicaragua (about 6 percent), however, the producer income in the two countries are
very close. Actually, the producer income in Nicaragua (3.5 percent) is slightly higher
than the producer income in Guatemala (3.4 percent).
During the study, the direct economic premium to the producer cooperative from the
Fairtrade network was NOK 0.038, or 3.8 øre per package of Fairtrade coffee sold. This
has currently increased to NOK 0.073, or 7.3 øre. However, the direct income of the
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Fairtrade organization per package of Fairtrade coffee is NOK 0.45, or 45 øre, six times
the amount received as bonus by the producer organization. Furthermore, the
comparison highlighted is in terms of the producer organization; the producers
themselves did not see any direct economic incentives from the Fairtrade network. The
reader should keep these figures in mind while reading the remaining part of the
conclusion.
The varieties of meaning invested in the network have been explored by investigating
how the structures of narratives are constructed among producers, consumers and in
marketing strategies. These I have labeled ‘’commodity cultures’’. From the producer
culture one can draw lines between geographical similarities and differences. There are
certain main similarities that require prominence in order to draw a common producer
narrative. I will also draw parallels to similar results from empirical studies. Even
though running the risk of presenting certain realities at production sites (Cook and
Crang, 1996; Goodman, 2004), I see the importance of drawing a conclusion rather than
‘polishing the surfaces of commodities’ (Cook and Crang, 1996; Bryant and Goodman,
2003; Goodman, 2004). There cannot be any ‘myths’ because history(ies) are always
myths, or subjective interpretations (Friedman, 1992).
The effect of professionalization of Fairtrade, or the growth of Fairtrade within market
logic, is central in comparing the two Fairtrade certified cooperatives. The centralized
effects of Fairtrade becomes clear where some cooperatives have been highly successful
selling the majority of their coffee through the Fairtrade market and smaller
cooperatives, most in need, are losing out. According to Smith (2007:90) ’The unevenness
of impact is not intentional but result from the way the Fairtrade market works. Fairtrade
only certifies producing cooperatives and purchasing companies122, and leave producers
and purchasers to contact one another’. Thus, through market logic, and as a response to
increased quantity demanded, more experienced and larger producer cooperatives seem
to dominate the Fairtrade market. This is due to effective communication strategies,
experienced Fairtrade producers, track records through websites or other vendors,
established record of consistent delivery and high quality products. The result is highly
efficient second level cooperatives distributing Fairtrade coffee through importing
122
According to Ragnhild Hammer fair trade do not certify purchasing companies.
134
agents. However, according to Fridell (2007) this has been rather one of the barriers to
enter the Fairtrade market instead of a result of the Fairtrade market. However, it may
be further strengthened through the Fairtrade market, where the social premium is used
to increase competitiveness both in the conventional market and in the Fairtrade
market. Thus, those first level cooperatives that do not have the capacity to organize
themselves within consortiums of national level cooperatives will be weakened in this
relation.
The centralized benefits are evident by looking at the market of Fairtrade coffee in
Norway, where 85 percent of the Fairtrade certified coffee originates from effective
second level cooperative, a majority from the cooperative Fedecocagua in Guatemala.
The key to the success of Fedecocagua is, according to the marketing manager de Leon,
the institutional capacity and structure of Fedecocagua. It resembles a professional
company in structure, and the producers usually refer to it as the federation.
Fedecocagua is headed by Ulrich Garner from Switzerland, have a highly professional
institutional structure and is experienced in dealing with international markets.
Fedecocagua sell almost 40 percent of their production under Fairtrade, limited only by
consumer demand. They also hold certifications such as Utz Certify, Rainforest Alliance,
organic certification, the program of Starbucks CAFÉ practices and 4C in addition to
smaller private initiatives such as Coop’s café futuro. About 75 percent of total
production is under these other certifications whereas 100 percent is Fairtrade.
The structure of Fedecocagua, the view of the certifications and the use of the benefits
draws a narrative culture of professionalization123 of certifications as a niche market.
Similar finding are highlighted by Smith (2007) and Fridell (2007). The former in her
study of the cooperative COOPABUENA under the consortium of cooperatives named
COOCAFE in Costa Rica, and the latter in his study of UCIRI in Mexico, the co-founder of
the Fairtrade network. Smiths’ (2007) findings show the failure of Fairtrade to deliver
the promised benefits for the producers and the increasing demand of the Fairtrade
market, whereas Fridell (2007:220) highlighting the success of UCIRI with Fairtrade,
acknowledging the importance of already highly developed institutional structure
According to Escobar (1988:430), the term professionalization refers to a set of techniques and
disciplinary practices through which the generation, diffusion, and validation of knowledge are organized,
managed, and controlled; in other words, the process by which a politics of truth is created and maintained
(Escobar, 1988:430).
123
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before entering the Fairtrade network and ‘an international interlocutor’ for gaining
access to the Fairtrade network and developing contact with Northern partners.
Furthermore, according to Fridell (2007) UCIRI shows the greatest achievements that
the Fairtrade network has thus far been able to attain, as well as the most significant
limitations that the network faces (Fridell, 2007:221) The limitations are seen as market
limitations, pressure for efficiency and productivity in a satisfied Fairtrade market
where strong established cooperatives like UCIRI share the main benefits. In addition,
the fair trade price floor is limited by market imperatives; although the price has
increased income for its producers it has not been significant to combat general poverty.
It is important to highlight the success of Fedecocagua and UCIRI, along with other
consortiums of cooperatives such as COCLA in Peru. The consortiums of cooperatives
have in common that they have professional management and are associated more as a
firm than a small cooperative. They professionalize Fairtrade and other certifications,
evident in the following example of Farmers Coffee. Large second level cooperatives such
as Fedecocagua in Guatemala, COCLA in Peru, Huatusco in Mexico and APECAFEQ,
Quincha, export certified Fairtrade coffee through an agent, A. van Weely in Holland.
Collectively their coffee is present in the latest Fairtrade ‘mix’ called the ‘farmers’ coffee’
from Joh Johannson AS in Norway (Glavin, marketing manager Joh Johannson AS,
personal telephone interview, 28.03.2007). Joh Johannson AS mail a recipe to the agent
in Holland and receives a particular blend of Fairtrade certified coffee from different
consortiums of cooperatives in different regions. The blend is roasted and packaged
following Norwegian savor, the license fee is paid to Max Havelaar, and the coffee is
readily distributed to retail packed with ethical responsibility. Thus, what one note is
that; ’some producing cooperatives are big winners, selling the lion’s share of their coffee in
the Fairtrade market, whereas others remain on the outside looking in, trying to break into
this lucrative and promising market’’ (Smith, 2007:97).
In comparison, the cooperative El Polo in Nicaragua have established, through
assistance from FondeAgro, direct contact with an importer; Arvid Nordquist in Sweden.
The main concern of El Polo is the lack of demand. Whereas Fedecocagua in Guatemala
exports 630 containers annually, El Polo exports seven containers through Fairtrade
channels. Fedecocagua sell Fair trade coffee to many large importers, including in
Norway; Friele AS, Joh Johannson AS, Den Gyldne Bønne AS, Pals AS and Coop Norway
AS, whereas El Polo sells Fairtrade coffee to Arvid Nordquist in Sweden. In addition, El
136
Polo sell coffee to Starbucks CAFÉ practices, about 40 percent they sell through the
conventional market. According to Martinez de la Cruz, the manager of the cooperative,
the main problem with Fairtrade is the lack of demand, the lack of economic incentives
for quality, the inflexible nature of the system regarding price and instance of selling in
addition to the evolution of stricter obligations in production and the low minimum
price. However, he is very satisfied with Fairtrade and the progression made by the
cooperative in recent years124.
According to marketing agents, Fairtrade makes international trade fairer through a
certain aid to the producer, which is associated with development. It is crucial for the
Fairtrade product to have a higher retail price in order for the consumer to believe the
product brings aid to the producer (highlighted above in the example from Lidl). The
impact of the aid is presented by selective producers’ stories, or certain ‘success stories’
by the Fairtrade network. This is highly a marketing strategy rather than the general
perception of Fairtrade among producers. Fairtrade does not challenge international
trade because, firstly, the potential social benefit of the Fairtrade system lies in the
cooperatives ability to distribute benefits. Fairtrade does not directly benefit the
producer, more the producer cooperative, or in many cases the national consortium of
cooperatives. Drawing on empirical evidence, similar findings about the cooperatives’
central role in distributing social benefits have been reported from different producer
impact studies (Milford, 2004; Lyon, 2007; Giovannucci and Ponte, 2005; Murray et al.,
2006; Giovannucci and Ponte, 2005; Fisher, 2007; Smith, 2007; Slob, 2006). Secondly,
the two case studies highlight market access as the key producer benefit, which have
been reported from other studies (Lyon, 2006; Raynolds, 2002; Renard, 1999). This is
further highlighted by farmers using the term ‘fair market’, contradicting FLO Central
America, the main transporters of knowledge, who employs the concept ‘Fairtrade’125.
Thirdly, due to inflation and high prices in both the study in Nicaragua and Guatemala,
the Fairtrade price floor is insignificant. The Fairtrade price floor is inactive because the
current conventional price of coffee is higher; producers are surprised of such a low
‘fair’ price which did not reflect the name. However, the fair price is more connected
As explained earlier, the progression made by El Polo is indirectly through fair trade, but directly
financed through SIDA with technical assistance from FondeAgro.
124
125
The concept of a ‘fair market’ is also recognized in the study by Whatmore and Thorne (1996).
137
with consumers than it is with producers. This was highlighted in the example from Lidl,
the Fairtrade price is essentially restricted by market logic. The Fairtrade price
necessarily needs to stay close to the conventional price in order to obtain a large
enough demand for the product. The controversy of a fair price is acknowledged by
other impact studies where Fairtrade is argued to only have short term financial gains
during periods of really low conventional coffee prices (Raynolds et al., 2004;
Giovannuci and Ponte, 2005, Killian et al., 2006; Zehner, 2002). Fourthly, the short term
financial gains are not significant during coffee crises for achieving development
objectives due to the little amount sold through Fairtrade channels (Ponte, 2002; Fisher,
2007; Smith, 2007; Slob, 2006; Bacon, 2005). Nevertheless, in accordance with most
empirical research, Fairtrade create indirect benefits through increased institutional
capacity of the cooperative. Some empirical evidence highlights direct producer benefits
through higher prices at the farm gate (Giovannucci and Ponte, 2005; Lawson, 2004;
Bacon, 2005; Slob, 2006; Raynolds et al., 2004).
According to market agents, Fairtrade works for trade justice. According to the
presented data from the economic value chain, the power imbalance which is evident in
conventional coffee trade still persists in the Fairtrade network. Thus, in line with
empirical evidence and as a preliminary conclusion, Fairtrade does not challenge
conventional trade where the basic problem reflect power conditions from importers
and roasters (Hira and Ferrie, 2006; Lyon, 2006; Fisher, 2007; Smith, 2007; Zehner,
2002; Ponte, 2002). The power gap between producers in the South and Northern filiere
actors (importers, roasters and retail) is particular evident from the impasse of large
TNCs, marking the shift when Fairtrade went mainstream.
According to Starbucks; Starbucks and Fairtrade share the common goal ‘…to help
ensure that farmers receive an equitable price for their coffee and strengthen their farms
for the future’ (Starbucks homepage, undated). This is done as; …’Starbucks works with
several organizations to make credit available to coffee growers, which enables them to
postpone selling their crops until the price is favorable’ (Starbucks homepage, undated).
Starbucks do not note for which particular partner the price is favorable. According to
the manager of El Polo, the favorable partner becomes very clear; ‘I believe, for what
concerns Starbucks, Starbucks always sends contracts when the New York ‘C’ price is at the
ground, when the prices have fallen. When the New York ‘C’ price is high, Starbucks never
138
sends contracts. This year, when the price has been this high they have not sent me a
contract. Today the price is USD 127-128, when it was USD 140, I asked Atlantic to bring
me the contracts so that we could affirm it. They could not bring them to me because the
price was too high. It is the tricks of the market. They (Starbucks) are specialists on the
market126’(la Cruz, manager of El Polo, personal interview, 2007, Nicaragua). The
specialists in the market have the majority of power in the coffee market and receive the
majority of income from the coffee market, in the conventional market as well as the
Fairtrade market.
The Fairtrade network argues the low prices of coffee are the cause of producer’s
poverty. Highlighted by Zehner (2002), low prices is the symptom of the imbalance of
power in the value chain. The Fairtrade network is not able to combat the imbalance of
power where it is positioned within the conventional market (Hira and Ferrie, 2006;
Lyon, 2006; Fisher, 2007; Smith, 2007; Zehner, 2002; Ponte, 2002). Seemingly, there has
been some confusion between the Fairtrade network and the Fairtrade movement as a
reformist social movement campaigning against the imbalance of power in international
trade. The evolution of the Fairtrade network from the Fairtrade movement and the
different routes they have taken where both continues to exist seems to have produced
differentiated perceptions and expectations for the two. The different positions not only
creates confusion for the consumer, it also represent challenges as for evaluating
success of the Fairtrade network and the aim of the movement as part of or distinguished
from the network; whether Fairtrade should constitute an alternative to the market, a
transformative alternative within the market, or a strategy to use the market to improve
the lot of those it has long excluded (Jaffee, 2007:30). It is particularly difficult to
distinguish these two when an NGO as influential as Oxfam is ideologically working in
both areas promoting the network and the movement (Fridell, 2004) without separating
the two by concepts. Consequently, the information communicated through the same
label differs because the movement and the network are mistaken as one and the same.
…’pienso yo, de que lo está pasando con Starbucks es que Starbucks siempre manda contractos cuando la
bolsa de Nueva York esta por el suelo. Cuando el precio están caída. Cuando la bolsa de Nueva York están por
arriba, Starbucks nunca manda contractos. Este ano, cuando la bolsa está arriba, no me han mandado… …
Hoy está como 127-128, cuando llega a 140, yo le dije a Atlantic, traerme un contracto de Starbucks para nos
afírmanos. No, no me puede traerlo porque la bolsa esta tan alta. Entonces, son tricos de mercado. Son
especialistas en mercadeos ellos.’’
126
139
…’the Fairtrade movement is comprised of a set of groups which are linked through their
membership associations-the Fairtrade Labeling Organizations International (FLO), the
International Federation of Alternative Trade (IFAT), the Network of European
Worldshops (NEWS!), and the European Fairtrade Association (EFTA)… together identified
as the FINE network’’ (Raynolds et al., 2007:4).
According to Fridell (2004:421) these are the organizations working for the Fairtrade
network. As outlined before, these are the ‘professionalization’ of Fairtrade, the actors
whose main aim is to gain participation of conventional corporations and TNCs in the
network and enhance managerial and marketing strategies common to mainstream
corporations. Consequently one needs to divide between the network and the
movement, where the former is a network consisting of many marketing agents
promoting certain Fairtrade products, unable to challenge the power relations of
international trade of coffee. The latter is a social movement with an aim of reformist
strategy within the relations of international trade.
The Fairtrade movement has declined radically over the last few years, parallel to the
growth of the Fairtrade network (Fridell, 2007). However, it is important not to draw
any preliminary conclusions of impacts between the two. The Fairtrade movement has
been shrinking as a reformist movement of reconstruction and limiting power of TNCs
and powerful international institutions. One recall the aftermath of Seattle in shrink or
sink the WTO, that future WTO negotiations are to be made ‘democratic, transparent and
inclusive’ (Buckman, 2006, Barlow and Clarke, 2002). Furthermore, requirements of
major overhauls of the WB and the IMF were made, of openness and accountability of
the Bretton Woods institutions, not a silent whisper of drinking a certified coffee
(Fridell, 2007). The movement calls for regulation and accountability of TNCs whereas
the Fairtrade network embraces partnerships with TNCs. As explained earlier, the
breakdown of the ICA had many causes, but one very important cause was lobbying
from TNCs such as Procter & Gamble and Sara Lee. These large TNCs currently show
growing support for Fairtrade coffee. Furthermore, Sara Lee owns 49 percent of Friele
AS, one of the main coffee importer and roaster in Norway, and one of the main
suppliers of Fairtrade coffee. The distinction between the movement and the network
needs to be addressed in order to discuss the effectiveness of the two. Needless to say,
the movement may still support the network but the network cannot claim the radical
140
movement as it embraces partnerships with global financial corporations. Similarly
explored by Mare (2007) ‘…the narrative of trade justice, which informs the fair trade
movement, influences the practices of people involved in the Fair Trade partnership,
leading to a diversity of individual Fair Trade stories’ (Mare, 2007:70). Challenging global
market power is in the nature and the aim of the Fairtrade movement.
Importantly, one cannot think of the movement and the network as static concepts; they
are both evolving and responding to demand and participation. The Fairtrade network
has, as noted before, grown as a response to success measured as growing demand for
their products. The number of coffee producers in certified cooperatives has increased
rapidly, from 374 077 in 1999 to 684 077 in 2004 (Transfair USA 2006:4, cited in Smith,
2007:90). According to FLO-International and FLO-Cert; ‘FLO-CERT certifies products
with a retail value of about 2 Billion € per year, representing close to 2000 clients in more
than 70 countries around the Globe, empowering over 1 Million farmers and wage
workers’ (FLO Cert-about us, 2008). …‘To ensure that producers comply with the
standards, FLO-CERT works with a network of over 60 independent inspectors that
regularly visit all producer organizations and report back to FLO-CERT’ (FLOInternational, about us, 2008). According to Hammer, director of Max Havelaar Norway,
it has been a challenge to respond to the growing demand for Fairtrade products and
certifications127. However, it is somehow misleading to represent this challenge as a
problem in past tense. Certainly it is demanding for the 60 inspectors to visit the 2000
clients or one million farmers and wage workers in more than 70 countries around the
globe. The FLO organization has not responded to enquiry regarding this issue128.
According to the Fairtrade network, producers and consumers are brought closer
together through Fairtrade; the consumers receive connectivity with the producers.
Obviously, this is a symbolic notion, where consumers rarely go and visit producers and
vice versa. The importance of the connectivity is in the North. The mediators bring the
producers ‘home’, or close, through selective stories. The producers, on the other hand,
are not given the same opportunity to stories of Northern consumers drinking their
… ‘Antall sertifisører øker hele tiden, i takt med økningen. Men det har vært litt vokseproblemer i
organisasjonen, fordi organisasjonen har vokst så fort. Og så er det jo også dette med å få finansiering, for å
holde tritt med veksten i etterspørsel. Det har vært en utfordring’ (Hammer, Personal interview 21.02.2007)
127
128
The author has requested information concerning the issue via electronic mail.
141
excellent quality coffee giving an extra crown for more equitable trade, without
assuming they would like such a narrative.
During fieldwork only few of the informants knew what Fairtrade was. Those who did,
characterize it as a ‘mercado justo’, a fair market. Many informants shared the same
view as Fairtrade is something which is bought ‘over there’, accordingly in consumer
countries. Similar findings are also reported by Lyon (2007). Furthermore, during
discussions with producers on the meaning of the Fairtrade label, all farmers
communicated that they had good quality coffee due to their high altitude. Some
mentioned improved methods of production, where only the few mentioned the
consumer should think about the fairness issue. However, the general issue was quality
and market access; that the consumer buy more of ‘our’ coffee because ‘we’ have a really
good coffee. It was evident, however, that the first level cooperatives sought more
information regarding Fairtrade, even though they did not in particular request
information regarding the consumer.
Thus, a rather obvious finding needs clarification; the Fairtrade narratives created by
the Fairtrade network serve a purpose for consumers. According to Gould (2003), an
enthusiastic supporter of Fairtrade, expressing his personal account of Fairtrade
consumption; ‘Having met in person producers like Mario, I wonder if they truly realize
what they are doing for us in terms of joy and confirming our own humanity’ (Gould,
2003:). Goulds’ (2003) notion is supported by empirical research of Fairtrade
consumption which highlights its importance in terms of hedonism (De Ferran and
Grunert, 2005).
Even though producers were not given the experience of connectivity with consumer,
they experienced closer contact with traders. Still, a clear distinction can be made from
experiences of the cooperative Fedecocagua in Guatemala and the cooperative El Polo in
Nicaragua. In Guatemala, the marketing general of Fedecocagua reported that
representatives from Friele AS had visited producer farms. However, none of the first
level producer cooperatives that I visited during fieldwork mentioned the connection to
a Norwegian company129. In Nicaragua, the El Polo cooperative increased their closeness
Even though most producer cooperatives knew about Norway, which was connected to the fertilizer
they buy. Most producer highlighted that Norway is where their very expensive fertilizer comes from, the
one with a Viking ship on.
129
142
to consumers when the manager participated in a trade mission to Scandinavia in 2005
among other representatives from cooperatives in Nicaragua. The trade mission was
organized by AgroNegocios under FondeAgro to promote coffees of Nicaragua. A similar
mission was carried out in 2006, organized by FondeAgro in cooperation with
‘Asociación de Cafés Especiales de Nicaragua130’, where delegations from Swedish and
Icelandic companies visited producer cooperatives in Nicaragua, including the El Polo
cooperative (Solorzano, 2007).
However, the closeness of producers to consumers in this regard cannot be seen as
directly attributes to Fairtrade, more in cooperation with Fairtrade. It was sponsored
and organized through FondeAgro, a government organization in Nicaragua funded by
Swedish Aid, SIDA. On the other hand, it does show promising opportunities for
cooperation between developing organizations and Fairtrade. Importantly, one should
not take the desire of connectivity between producer and consumer as two dimensional.
The producers did not in particular pursue connectivity to the consumer, rather more
knowledge of the system and perhaps confirmation of their coffee being high quality.
Following the argument of connectivity is the claim of Fairtrade coffee as a de-fetishised
product. By analyzing Fairtrade coffee from a production centered view, the demand for
Fairtrade product is inherent in the capitalist system. Thus, the consumers would like to
pay more for a product due to the argument of connectivity and visible social relations.
The consumers are educated about their producers and trade becomes more as a
relationship between people. In some instances, the environmental aspect have also
been a reason, thus the consumer pays more for less damaging environmental practices.
However, it is insufficient to argue Fairtrade consumption within a production centered
view due to four main reasons. Firstly, consumer demand for Fairtrade products is not
inherent within the society. Consumers are highly affected by advertisement and
marketing. Secondly, the Fairtrade network is not educating the consumers, because the
representations of farmer’s voices are not general representations, they are selective
representations. Thirdly, the connectivity is created through communication strategies,
and is only for the consumers, thus there are no direct relationships between the
consumers and the producers. Fourthly, and most importantly, Fairtrade obscures the
130
The Association of Specialty Coffee in Nicaragua.
143
power gap within the chain. Fair trade does not challenge the transfer of surplus to
consuming countries; controversially Fairtrade hides the transfer of surplus to
consuming countries by placing the responsibility of fair trade upon the consumer. Thus,
within a production centered approach, Fairtrade coffee is not a de-fetishized product,
even though it is constructed to resemblance a de-fetishized commodity.
Analyzing consumption through a production related approach includes looking at the
social construction of demand. The role of public relations, or marketing, is central to the
Fairtrade network. The existence of the marketing actors and the network of agents
working to promote Fairtrade is what distinguish Fairtrade from capitalist commerce 131.
However, the purpose of these particular actors is the essence of understanding
Fairtrade. According to actors involved in the Fairtrade network, and by winning the
‘Superbrand’ marketing competition, the main role of these actors has been to increase
sale through marketing. Through research on consumer demand, the Fairtrade network
has promoted Fairtrade through various different channels. In particular targeting
educational institutions and educated people in the society, gaining power and influence
through institutions such as Norad and other developing agencies. The purpose of the
network is to promote a sense of closeness and awareness to consumers, in order to get
them to buy the Fairtrade product.
The Fairtrade networks’ role can thus be seen as provider of narratives, and one may
draw connection to other alternative geographies of food such as the organic and health
food market. The narratives are representations of the farmers. Nevertheless, the view
does not go unproblematic. If one accepts the view of the narratives created by the
Fairtrade network as such, the view is compatible with producers’ narrative. However,
because the narratives are produced separately it becomes necessary to agree with the
commodification of new realms132. The commodification argument have been discussed
as commodification of activism (Fisher, 2007), commodification of social and
‘It is the modes of network strengthening that are analytically distinctive between the orderings of
Fairtrade and capitalist commerce and that open up economic and political possibilities for configuring
alternative geographies of food. …In this mode of ordering, stories are told of partnership, alliance,
responsibility and fairness, but performed in very different ways to the neoliberal encoding of these terms.
This is a mode of ordering concerned with the empowerment of the marginalized, dismissed, and overlooked
voices, human or non human’ (Whatmore and Thorne, 1997:295).
131
Commodification has been argued within the production centered approach as a process of which
something requires an exchange value (Fisher, 2007).
132
144
environmental values (Byrne et al., 2006), commodification of morality (Fisher, 2007),
commodification of differences (Bryant and Goodman, 2004; Goodman, 2004) and
commodification of social justice (Fridell, 2007).
The narratives presented, or produced by the Fairtrade network, be it any recommodification narrative, is necessarily positioned parallel to the narrative of the
capitalist cost-minimizing, self interested neoclassical economic theory of the market
(Whatmore and Thorne, 1997). The social agency of the Fairtrade network depends on
the mobilization of a different narrative in order to exist and distinguish itself from a
conventional product. Nevertheless, there is a substantial tension between the
presented narratives and the narrative of market logic in which they operate, being
incompatible in several manners.
Firstly, the low amount of coffee sold through Fairtrade channels and the required high
quality is not necessarily compatible with the narrative accrued by the Fairtrade
network. If the coffee is of low quality (reasons like rainfall, pests, fermentation) it will
not be suitable for the Fairtrade contracts and farmers are forced to sell to the
conventional market.
Secondly, if the conventional price is high, where for example the coffee harvest in Brazil
is devastated by frost, or the coyotes offer high prices due to speculation and money
laundering, farmers see limited benefits in selling to the cooperative. In particular they
do not see direct economic benefits from selling to the fair market. In the latter case,
which was evident in Guatemala, the social premium is spent by the cooperative in order
to compete with coyotes, thus not in democratic decision by producers. Hence, the two
narratives become incompatible.
Thirdly, the social premium is currently the key difference for the producer cooperative
selling to a fair market. Indirectly, the social premium strengthens the institutional
capacity of the cooperative in order to become more competitive. However, even for a
large scale producer such as the cooperative in Guatemala, the social premium is not
significant in macro terms for developing social causes. Producers highlighted that they
would appreciate the fair market if the social premium went directly to the first level
cooperative. However, as long as it is not required that the social premium goes directly
145
to first level cooperatives, the economic incentive of Fairtrade is not directly visualized,
and the narrative of connectivity becomes one dimensional.
Fourthly, the increase in the Fairtrade market highlights the ineffective nature of
Fairtrade working within the market. As the demand of Fairtrade products is increasing,
the pressure on certified cooperatives regarding quality, volume and reliability makes
small first level cooperatives not able to compete against large consortiums of
cooperatives. Thus, the large consortiums of cooperatives will supply the majority of the
Fairtrade coffee which concentrates the benefits, and further strengthens large
cooperatives and their competitiveness in the market.
Thus, a second preliminary conclusion is that Fairtrade works in the market, based on
an ideology of working against the market, but as it grows it is limited by the market.
The increase in Fairtrade products and the increased demand have occurred due to its
placement within the market, but on behalf of the benefits to producers and will
continue if not effective strategies are put in place. Thus, Fairtrade is limited by market
imperatives.
Continuing from the above conclusion, Fairtrade is a product constructed within our
current consumer society. Analyzing consumption through a consumption related
approach includes looking at commodification as the ways in which things and social
relations are affected by the market133 (i.e. are commodified) (van Binsbergen, 2005:11).
Thus, the social construction of demand is not only attributed by advertisement and
133
Van Binsbergen (2005: 45, 46) defines a commodity as:
1.
a domesticated object, i.e. a part of the physical world that has been defined, classi-fied, and
appropriated by humans.
2.
The domesticated object becomes a commodity, is commoditized, through ‘ex-change’,1 i.e. through
a process of detachment, in space and time, from the immediacy and multiplex nature of the total
network of social relations in which a person’s spe-cific form of access to a specific item in the
surrounding world is generally embedded, – replacing such access by generalized exchangeability
and convertibility. The latter become thinkable, once (beyond the horizon of the local community, its
network of so-cial relations and its system of classification and evaluation) a much wider, in principle unbounded space of circulation is conceived. Here the object, released from the social context in
which it was originally domesticated, and shedding its original meaning, becomes socially and
culturally placeless, ready to be appropriated in po-tentially distant and unknown meta-local
contexts, and to be measured there – not against the particularising evaluations of a historic local
social network, but against the universalizing standards of a meta-local medium of exchange (of
which money is the principal example), thus being endowed with a new meta-local meaning.
146
marketing as such. According to Appadurai (1986: 31) demand is the economic
expression of the political logic of consumption, drawing attention to consumerism as the
major factor of economic growth. Then the political logic of consumption must be
understood as a constructed concept. According to van Binsbergen (2005:18)
consumption is a strategy to defer being confronted with the incomplete and unconvincing
construction of meaning that is typical for global, mediatized society today. Accordingly,
we use consumption to postpone being confronted with unconvincing constructions of
meaning within the current society. We place meaning on things, or we construct
meaning to things, as well as the things themselves become important for our identity
creation. Thus, in relation to Fairtrade coffee, we use consumption as a means to obtain
meaning within a materialistic society. We place moral meaning to a product and define
our narrative as a moral person (Macintyre, 1986). In the end, it is clear that we are not
challenging power relations in the chain which actually is the reason behind unethical
trade relations. But we use consumption both as a means to incorporate moral issues
into the narrative of ourselves and as the method we have to influence systems. Thus,
consuming Fairtrade products become a passive protest within the political logic of
consumption.
Fairtrade works within the market, building on a narrative of working against the
market, and is limited by market imperatives as the network is growing. The Fairtrade
network does not challenge unequal terms of trade, the network rather obscures these
power inequalities through placing the responsibility upon consumers. The majority of
the value (exchange value, sign value and symbolic value) of the Fairtrade product is
produced and maintained within consuming countries. However, one should not neglect
the benefits of consuming Fairtrade products for the consumer. The feel-good factor is
very important, in addition to the educative work on trade channeled by the the
Fairtrade network. However, it is important to understand the narratives created by the
Fairtrade network and the purpose they serve. The narrative of Fairtrade of working in
the market and against the market, is a narrative limited to imaginary. The narratives
may perhaps be accredited as Max Havelaar itself; a novel. As the opening of Multati’s
Max Havelaar;
‘’Jeg er Kaffemægler og bor I Amsterdam ved Lavrbær Kanal Nr. 37. Det er ikke min Vane
at skrive Romaner eller sligt… Ikke blot har jeg aldrig skrevet noget, der smagte af roman..
147
Jeg har i en lang Aarrække spurt mig selv, hva sligt skulde være godt for, og jeg undrer mig
over den Frækhed, hvormed en Digter eller Romanskriver drister sig til at binde en noget
paa Ærmet, som aldri er sket og for det meste aldrig kunde være sket 134 (Multatuli
(Douwes Dekker), 1901:1).
I am a coffee trader and live in Amsterdam, by Lavrbær canal No. 37. It is not my habit of writing novels
or the like… never have I written anything which assimilates a novel, I have for years wondered what a
novel would achieve, or the impudence in which a novel writer would bind something up his sleeves
which never have happened and most likely never could happen.
134
148
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Vayda, A.P. and Walters, B.B. (1999) ‘Against Political Ecology’, Human Ecology, Vol. 27,
No. 1, pp. 167-179.
Villanueva, L., Maradiga-Blandon, F., Goh, K., Broughton, P.D. and Gerwin, L. (2006) ‘The
Nicaraguan Coffee Cluster: History, Challenges and Recommendations for Improving
Competitiveness, Microeconomics of Competitiveness, available internet;
160
http://www.isc.hbs.edu/pdf/Student_Projects/Nicaragua_Coffee_2006.pdf accessed
26.04.2008
Westphal S.M. (2002) When change is the only constant: Coffee Agroforestry and
household livelihood strategies in the Meseta e los Pueblos, Nicaragua, Ph.D. dissertation,
International Development Studies, Roskilde University.
Whatmore, S. & Thorne, L. (1997) ‘Nourishing networks: alternative geographies of
food’. In Globalising Food: Agrarian Questions and Global Restructuring, Goodman D. and
Watts M. (eds), pp. 287-304. Routledge, London.
Wilhite, H. and Lutzenhiser, L. (1998) ‘Social loading and Sustainable Consumption’,
Advances in Consumer Research, Vol. 26, pp. 281-287.
Zehner, D.C. (2002) ‘An Economic Assessment of ‘’Fair Trade’’ in Coffee’, Chazen Web
Journal of International Business, Columbia Business School.
Årsregnskap Max Havelaar (2005) Brønnøysundregisteret
161
APPENDIX 1: CALCULATION OF ECONOMIC INCOME, PRODUCERS GUATEMALA
Cooperative
Production
2006/2007
(qq
pergamino)
1. Price
(Quetzal/qq
pergamino)
2. price
(Quetzal/qq
oro)
3. price
(US$/lb
oro)
4. price
NOK/lb
oro
5. price
NOK/kg
oro
6. Price to
producer
of toasted
coffee
NOK/kg
7.Subtracting
interest of
pre-finance
NOK/kg
8.Assumed
exporting
price
9. Assumed
exporting
price
10. Assumed
exporting
price
Fedecocagua
US/lb GBE
Fedecocagua
NOK/kg GBE
Fedecocagua
11.
First
level
coop
NOK/kg TCE
Cooperativa
Nuestro
Futuro
6884,41
674,25
842,81
1,11
5,98
2,72
3,23
2,42
1,33
3,25
3,86
0,81
Cooperativa
la
Todosanteria
10200
739
923,75
1,22
6,55
2,98
3,54
2,66
1,45
3,55
4,22
0,89
Cooperativa
El Milagro
1900
640
800,00
1,05
5,67
2,58
3,07
2,30
1,26
3,09
3,68
0,77
Cooperativa
Adelante
Chanmagua,
CADECH R.L.
21903
669
836,25
1,10
5,93
2,70
3,21
2,41
1,32
3,22
3,83
0,80
Cooperativa
el Pensativo
1080
740
925,00
1,22
6,56
2,98
3,55
2,66
1,45
3,55
4,23
0,89
Cooperativa
integral
agricola
Acatenango
R.L.
20000
710
887,50
1,17
6,29
2,86
3,40
2,55
1,39
3,41
4,06
0,85
Average
10327,90
695,38
869,22
1,14
6,16
2,80
3,33
2,50
1,37
3,34
3,98
0,83
Method;
1. Price given by producer per quintal pergamino.
163
2. The given price is multiplied by 1.25 in order to get the price per quintal green coffee (Where 1 qq green coffee is 1.25 qunital pergamino).
3. The price is calculated over to US dollars per pound, with an exchange rate for Guatemalan Quetzal of 7,6 (average for the period Nov.-Feb.
2006/2007 from el Banco de Guatemala) to the dollar; and where 1 quintal green coffee is 100 pounds of green coffee or 45kg) (Ex:
(842.81/7,6)/100 = 1.11)
4. This is then converted to NOK per lb of green coffee with the exchange rate of 5.39 to the US dollar.
5. This is then converted to NOK per kg by dividing by 2.2 (1 kg = 2.2 pounds)
6. This is then multiplied by 1.19 in order to see the price paid to producer of the toasted coffee, all other variables held constant. Where 1.19 kg
green coffee is 1 kg toasted coffee (Talbot, 1997, 2004).
7. Then, subtracting pre-finance, which is 25 percent (focus groups, managers of first level cooperatives, Guateamala, 2007).
8. The exporting price Fedecocagua is calculated from the income of 1st level cooperative in UDS/pound oro (step 3), adding 15 percent of
transportation and insurance fee and social premium (USD 5 0.05), as stated by first level cooperative members. Not including costs of processing or
domestic transportation (de Leon, marketing manager Fedecocagua, 2007).
9. The assumed exporting price Fedecocagua is converted from USD/pound to NOK/kg by multiplying with 5.39 and dividing by 2.2.
10. The assumed exporting price Fedecocagua is converted to toasted bean equivalents by multiplying by 1.19.
11. Income of first level cooperative is calculated as the 25 percent pre-finance paid by cooperative, the difference between step 6 and step 7.
164
APPENDIX 2: CALCULATION OF PRODUCER INCOME, NICARAGUA
Name
Total
production
(2006/2007)
QQ oro
1. Price
Cordoba pr.
200 carga (1
qq) pergamino
2. price
Cordoba por
quintal oro
3.
US/qq
oro
4.
price
US/lb
5. price
NOK/lb green
coffee
Vidal Mendez Lumbi
160
1700
2125
118,056
1,18
6,36
Alejandro Zeledon
Vargas
150
1700
2125
118,056
1,18
Brihido Senteno
Zeledon
40
1600
2000
111,111
Davis Zeledon Vargas
15
1700
2125
Raol Elias Rodriguez
Zeledon
150
1700
Elvir Rodriguez
Zeledon
200
Freddy Adulfo Torrez
Zelaya
8,50
Guillermo Veralta
Castro
6. price
NOK/kg green
coffee
7. Price to
producer of 1
kg toasted
coffee NOK
8. Subtracting
interest of
pre-finance
2,89
3,44
2,58
6,36
2,89
3,44
2,58
1,11
5,99
2,72
3,24
2,43
118,056
1,18
6,36
2,89
3,44
2,58
2125
118,056
1,18
6,36
2,89
3,44
2,58
1700
2125
118,056
1,18
6,36
2,89
3,44
2,58
100
1700
2125
118,056
1,18
6,36
2,89
3,44
2,58
Rosiendo Rodriguez
Tinoco
600
1700
2125
118,056
1,18
6,36
2,89
3,44
2,58
Jose Rodolfo Ojuala
Donodon
180
1850
2312,5
128,472
1,28
6,92
3,15
3,75
2,81
Siro Manuel
Monetengro Cruz
50
1850
2312,5
128,472
1,28
6,92
3,15
3,75
2,81
Mantonio Duarte
80
1500
1875
104,167
1,04
5,61
2,55
3,04
2,28
NOK/Kg TCE
165
Fuentes
Lucio Otillia Duarte
100
1600
2000
111,111
1,11
5,99
2,72
3,24
2,43
Agner Mendozo
20
1500
1875
104,167
1,04
5,61
2,55
3,04
2,28
Fernando de la Cruz
Airate Rivera
30
1800
2250
125,000
1,25
6,74
3,06
3,64
2,73
Buena Ventura Zeledon
Varga
300
1700
2125
118,056
1,18
6,36
2,89
3,44
2,58
Benito Zeledon Arau
14
1700
2125
118,056
1,18
6,36
2,89
3,44
2,58
Trinidad Medarlo
Sentena Zeledon
25
1700
2125
118,056
1,18
6,36
2,89
3,44
2,58
Rafael Ridera Zeledeon
80
1700
2125
118,056
1,18
6,36
2,89
3,44
2,58
Hector Perez Vlandon
35
1730
2162,5
120,139
1,20
6,48
2,94
3,50
2,63
Pedro Paulo Perez
Melgara
15
1600
2000
111,111
1,11
5,99
2,72
3,24
2,43
Hilbert Antonio Perry
Hiron
45
1800
2250
125,000
1,25
6,74
3,06
3,64
2,73
Exportadora Atlantic
0,00
Erwin Horedon
Zeledon
20
1500
1875
104,167
1,04
5,61
2,55
3,04
2,28
Eric Zeledon
10
1450
1812,5
100,694
1,01
5,43
2,47
2,94
2,20
101,1458333
1669,41
2091,30
116,184
1,16
6,26
2,85
3,25
2,54
Average
166
Method;
1. Price given by producer per quintal pergamino (parchment coffee).
2. Multiplied by 1.25 in order to get the price per quintal green coffee (Where 1 quintal green coffee is 1.25 quintal pergamino). Calculations excludes
price of processing and transportation.
3. Then the price is calculated over to US dollars per quintal green coffee, with an exchange rate for Nicaraguan Córdoba of 18 (average for the period
nov-feb 2006/2007 from el Banco Nacional de Nicaragua) to the dollar.
4. The figure is then calculated to pound by multiplying with 100 (where 1 quintal green coffee is 100 pounds of green coffee).
5. This is then converted to NOK per lb of green coffee with the exchange rate of 5.39 to the US dollar.
6. This is then converted to NOK per kg by dividing by 2.2 (1 kg = 2.2 pounds)
7. This is then multiplied by 1.19 in order to see the price paid to producer of the toasted coffee, all other variables held constant (1.19 kg green
coffee is 1 kg toasted coffee)
8. Subsequently, subtracting interest of pre-finance, which is 25 percent, leaving the price paid to producer in TCE.
9. The producer difference in price is calculated out of an average price to cooperative for the agricultural cycle 2006/2007, given by Solorzano and
the manager of the cooperative (see Agricultural Cycle 2006/2007), converted to TCE by multiplying with 1.19.
9. Producer coop difference in
price NOK/kg toasted coffee
10. Producer interest NOK/kg TCE
11. Producer coop total
income NOK/Kg TCE
0,332
0,86
4,439
10. The producer interest is the 25 % pre-finance interest, which becomes income of the cooperative.
11. The total income of the cooperative is calculated as adding step 9 and 10, in addition to total producer income.
167
AGRICULTURAL CYCLE 2006/2007
From
Solorzano;
productivity
2006/2007
Price and
quantity
exported
socios
area
manzana/productor
Productividad
total qq oro
produccion
total qq oro
Produccion
exportable
qq oro
produccion
qq oro
imperfecto
QQ oro
exportable
acopiado
Venta en el
mercado
volumen
qq oro
Venta al
mercado
differenciado
260
4,88
14,02
17793,41
14 946,46
2846,95
10471,7
(no
acopiado
4474,70)
9450
8475
Average
price to
coop
Producer
coop
difference
in price
US/qq
Difference
in NOK/lb
Difference
NOK/kg
127,5693527
11,386
0,613693425
0,28
Esperanza
Coffee
group S.A
Exportadora
Atlantic
Arvid
Nordquist
1237,50 qq
oro * US
138/qq oro
5750 qq oro * US
126/qq oro
2475 qq oro *
126/qq oro
170775
724500
311850
(Solorzano, 2007)
168
APPENDIX 3: CALCULATION OF INCOME FROM FAIRTRADE COFFEE, UNIVERSITY OF LIFE SCIENCES
Value Chain UMB
1. Price
(pr cup ex. VAT)
Price coffee
Price per liter coffee (one
cup =2 dl)
6
4.
Small cup of coffee
2.
3.
Total price per kg coffee (1kg
coffee=16liter coffee)
30
Direct price
(NOK/kg TCE)
5.
Total income
(NOK)
480
6.
value added (percent of total)
Siås cafeteria a
480
380
79,167 %
Max Havelaar license fee b
1,8
1,8
0,375 %
Friele AS c
100
90,95
18,948 %
2nd level cooperative d
7,25
3,92
0,817 %
1st level cooperative e
3,33
0,83
0,173 %
Producer f
2,5
2,5
0,521 %
1.
2.
3.
4.
Price per cup of coffee bought at Siås cafeteria (ex. VAT).
Price per liter of coffee, multiplied by 5 (where one cup is 2 dl.)
Total price per kg of coffee, multiplying price per liter by 16 (where 1 kg of coffee is 16 liters of coffee). Not including costs of processing.
The income is calculated from NOK/Kg.
a. Total price, Siås cantine as described in previous steps (step 1-3).
b. Max Havelaar license fee is NOK 1.8 per kg of toasted coffee sold (Hammer, manager of Max Havelaar, 2008).
c. Friele AS direct output price is given as NOK 20 per 250 gr. (Edie, Friele AS sales consultant, personal telephone interview, 21.04.2008).
d. Direct output price calculated out of average value received by 1st level cooperative, adding 15 percent transportation and insurance fee
and the social premium.
e. The price given by cooperative as stated by the cooperative management, following calculations as Appendix 1.
f. The price given by cooperative as stated by the cooperative management, subtracting 25 percent pre-harvest finance.
169
5. The total income is calculated in NOK TCE from direct difference in input and output price, all other factors held constant.
a. The given total output price, subtracting cost of coffee (not including cost of processing).
b. Max Havelaar license fee is NOK 1.8 per kg of toasted coffee sold (Hammer, manager of Max Havelaar, 2008).
c. The difference between ‘wholesale price’ and import price, where import price is calculated as in Appendix 1, from the income given by
producers. Converted to TCE by 1.19 (Where 1.19 pound of green coffee is equal to 1 pound of toasted coffee).
d. The income generated by the second level cooperative is calculated as the 15 percent pre-harvest and security paid to second level
cooperative by producers, adding the social premium (De Leon, marketing manager Fedecocagua, personal interview, 2007, Guatemala
City).
e. The income generated by first level cooperative is calculated as the given income from coffee (or the price sold), converted as in Appendix
1, subtracting total income of producers (focus group, Guatemala, 2007).
f. The income generated by producers is calculated as given by the 1st level cooperative board, subtracting pre-harvest finance.
170
APPENDIX 4: CALCULATION OF HYPOTHETICAL PRODUCER INCOME FROM ONE CAPPUCCINO
1. Average income
NOK/kg TCE
Actors
2. Average price NOK per
gr. Toasted coffee
3. Price to producers
cappuccino (7 gr. coffee)
4. Percentage of total
cost of cappuccino
(32NOK)
Producers Nicaragua
2,54
0,00254
0,01778
0,056 %
Producers Guatemala
2,5
0,0025
0,0175
0,055 %
Total value producing country;
Guatemala
7,25
0,00725
0,05075
0,159 %
Total value producing country;
Nicaragua
4,48
0,00448
0,03136
0,098 %
1.
2.
3.
4.
The average income NOK/Kg TCE from coffee is calculated in Appendix I and Appendix II.
This is converted to average income per gram TCE by dividing by 1000.
This is multiplied by 7, where it takes 7 grams of coffee to produce one cappuccino (Barista Norway).
The percentage of total cost of cappuccino is calculated where the price of one cappuccino is NOK 32.
171
APPENDIX 5: CALCULATION OF INCOME FROM FARMERS COFFEE
Joh Johannsson
1.Direct price
NOK/kg TCE
VAT a
14,1275
retail b
74
Max Havelaar Norway c
2. Green Bean
Equivalent (NOK/Kg)
3. Value added
4. Value added
(percentage of total)
14,1275
19,091 %
62,185
10,24
13,838 %
1,8
1,513
1,8
2,432 %
Joh Johannson AS d
63,76
53,580
54,71
73,932 %
Agent e
n.a.
#VERDI!
2nd level cooperative f
7,25
6,092
3,92
5,297 %
1st level cooperative g
3,33
2,798
0,83
1,122 %
Producer h
2,5
2,101
2,5
3,378 %
#VERDI!
1. Direct price NOK/Kg TCE is calculated where
a. Value added tax is calculated as 25 percent of the value added by Joh Johannson AS (though not distinguished within the value chain as
this is only an assumption.
b. Retail value as of March 2008.
c. Max Havelaar license fee NOK 1.8 per kilogram coffee sold.
d. Wholesale price given by Joh Johannson AS (Glavin, personal telephone interview, 2008).
e. The figures from agent A van Weely in the Netherlands where not available, thus absorbed within Joh. Johannson AS.
f. Direct output price calculated out of average value received by 1st level cooperative, adding 15 percent transportation and insurance fee
and the social premium.
g. The price given by cooperative as stated by the cooperative management, following calculations as Appendix 1.
172
h. The price given by cooperative as stated by the cooperative management, subtracting 25 percent pre-harvest finance.
2. The Green bean Equivalent is calculated as dividing the numbers by 1.19 (1.19 kg green coffee is 1 kg toasted coffee).
3. The value added is calculated where
a. The VAT is the same as given above (1. A.), here absorbed within retail value due to indirect benefits from tax.
b. The retail value is calculated by subtracting cost of coffee (wholesale price) from direct output price.
c. The value added Max Havelaar is constant NOK 1.8 per kg of coffee sold.
d. The value added Joh Johannson AS is calculated as the difference between the export value of second level cooperative (see Appendix 1)
and wholesale price.
e. The figures from agent A van Weely in the Netherlands where not available, thus absorbed within Joh. Johannson AS.
f. The value of second level cooperative is calculated out of the difference between income from second level cooperative and first level
cooperative as calculated in Appendix 1.
g. The value of first level cooperative is calculated as the difference between producer income and first level cooperative as calculated in
Appendix 1.
h. The value of producers is the income generated from coffee, not subtracting cost of production.
4. The value added as percentage of total is calculated as the value added divided by total income (retail price).
173
APPENDIX 6: VISUALIZED VALUE CHAIN ANALYSIS
Value added (% of total)
1%
0%
5%
retail (13.84%) b
3%
14 %
3%
Max Havelaar Norway (2.43%)
c
Joh Johannson AS (73.93%) d
agent (n.a.) e
2nd level cooperative (5.30%) f
1st level cooperative (1.12%) g
74 %
producer (3.38%) h
INCOME BY SECTOR: FARMERS COFFEE (RELATING TO TABLE 2, PG.79)
0,173 %
0,817 %
Value chain UMB: small coffee
0,521 %
18,948 %
Siås cantine (79.167%)a
Max Havelaar (0.375%)b
Friele AS (18.948%)c
2nd level cooperative (0.817%)d
1st level cooperative (0.173%)e
producer (0.521%)f
79,167 %
VALUE BY SECTOR OF FAIRTRADE COFFEE SOLD AT UMB (RELATING TO TABLE 3, PG.81)
174
APPENDIX 7: INTERVIEW GUIDE; PRODUCERS
Guía de Entrevista: los pequeños productores
Introducción:
Soy una estudiante de Maestría en Manejo de Recursos Naturales y Agricultura Sostenible en la
Universidad de Agricultura en Noruega. Estoy haciendo mi investigación para el grado de
Maestría en la Universidad en colaboración con el Centro de Investigaciones Tropicales (CATIE)
de Costa Rica y el Centro de Competitividad de EcoEmpresas (CeCoEco), CATIE. La investigación
se refiere a los estándares de sostenibilidad del café, y cómo los estándares y normas se
comunican, desde la producción en América Central hasta el consumo en Noruega y Suecia.
Estaría muy agradecido si pudiera pasar algún tiempo conmigo, en respuesta a mis preguntas.
Sus respuestas serán totalmente confidenciales y no se puede trazar a usted. No voy a utilizar su
nombre en mi informe.
Cuestiones Económicas (entrevista estructurada de la información
cuantitativa)
Número de Cuestionario
Fecha
Nombre del entrevistador (e
intérprete)
Silje Johannessen
Hora de inicio, tiempo de terminar
Nombre de la aldea
Distrito / condado
Café
Método de producción
Nombre
Producción Total QQ oro (Ciclo Agrícola 2006/2007)
Total venta a la cooperativa
El precio por quintal de café, de la cooperativa
Hay una diferencia en precio (por cualidad) para su café
175
en la cooperativa
Precio venta afuera cooperativa, ultimo ano?
El precio ha mejorado en los últimos anos, si o no?
Total costos anual
Fuentes de financiamiento
Total anual ingresos procedentes de café?
Otra ingreso aparte de producción de café?
Cambio en la calidad y cuantidad del café, ultimo anos?
Cambio en los ingresos de café, ultimo anos?
Tiene Servicio de;
Agua
Electricidad
Letrina
Comunicación (cell)
Acceso a servicio de salud
Escuela cerca
Método para moverse
Beneficio Húmedo o seco
Factores para determinar los
costos:
Cantidad
Costo
Mano de obra
Regulacion de sombra
Poda (recepto)
Resiembra
Aplicación de Fertilizantes
176
Aplicación de pesticida
Fertilzante (nitrogena/urea,
foliar, Glifosato)
Mantenimiento-cercas,
caminos y drenajes.
Seguridad de finca
Insumos completo
Servicios
Transporte de insumos
Transporte de agua
Asistencia técnica
Beneficio húmedo
Beneficio seco
Limpia (de terrena)
Preparación de bolsa
Conservación de suelos
Preparación de plantacion
Resiembra (5%)
Combustibles (Gasolina,
Diesel)
Aceite
Costo producción de cafe
Corte o cosecha
Salario de cortadores
Capataz
Apuntador
Canastro
Sacos
Transporte de cortadores
Transporte interno
177
Transporte a beneficio
humedo o seco
Caminos interno
Equipos y maquinarias
Edificios
Otros
Administración (10% de
costo)
Financiamiento pre corte
Financiamiento corte
Financiamiento industrial
Comercializacion
Captación y certificación
Transporte a cooperativa
Costo Total
Percepción agricultores (Semi – estructurado, parte la información
cualitativa)
1.
2.
3.
4.
5.
6.
7.
¿Usted tiene certificaciónes en producción de café, cuáles?
¿Costos o gastos anuales de certificaciones?
¿Porcentaje de café que se vende como Comercio Justo?
¿Como fue el cambio con la certificación para Usted?
¿Como fue la comunicación de los estándares y el implementación por la organización?
¿El Comercio Justo, se vale la pena?
Lista 3-5 principales temas o preguntas que Usted quisiera mas información con
respecto a los impactos de las iniciativas de sostenibilidad.
8. ¿Como se decidió a aprobar los estándares de sostenibilidad?
9. ¿Alguna problemas?
10. ¿Conoce a este etiquete?
178
11. ¿Qué le gustaría que se comuniquen a través de los estándares de sostenibilidad o comercio
justo?
12. Lo que sería un precio justo de su café?
179
APPENDIX 8: SURVEY IMPORTERS/ROASTERS
Questionnaire-English (original in Norwegian)
I am a student from the Agricultural University of Norway and I am doing research for my MSc
degree in Management of Natural Resources and Sustainable Agriculture, in collaboration with
CATIE and the Centre of Competitiveness of Eco-Enterprises in Costa Rica. My research aims to
better understand the value chain in fair-traded coffee and each actors’ perception of the system.
I would be grateful if you would answer my questions (this will not take for than 15 min. of your
time). The information will be used for mapping the value chain in fair traded coffee. Your
answers will be confidential and cannot be traced back to you. I will not identify your name or
the company in my report.
Importers/Roasters in Norway
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Name of company and contact person:
Name of Fairtrade product sold:
Is the product(s) also certified organic?
What FT-certified raw materials do you source and who are your suppliers (s)
What are your requirements for supplies regarding (quality, volume, price, certification,
contractual arrangements, others?)
Services / incentives that you offer to your suppliers for completion with these
requirements?
The produced quality and volume of your Fairtrade product
The price of purchase and sale (ie, per kilogram of Fairtrade coffee) to date
Fluctuations of demand and price over past 5 years
What are sources of friction/conflict with your suppliers?
What are you limitations to expand purchases of Fair Trade coffee? And how do you plan
to address these limitations?
What does the Fairtrade certified coffee represent for your company (increased sales,
marketing, preferential access to raw materials, etc.)?
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