Does Fair Trade Work?

Does Fair Trade work? This is the frequent question I asked myself while I was in Nicaragua, and I’ve been asked by others since I’ve been back. My answer is: Yes.

Reason #1- Perhaps most importantly, given low market prices, Fair Trade ensures farmers a fair price, Equal Exchange ensures a minimum of $1.41 per pound of organic coffee. For the high quality coffee which comes from their cooperative partners in Nicaragua, the company often pays considerably more. For small-scale farmers, a fair price is just the beginning of the benefits of Fair Trade. “We do not want people to buy our coffee, to pay a fair price, because we are poor. We want you to buy our coffee because of its quality,” said Blanca Rosa Morales, the President of Cecocafen, the coffee co-op visited by the group. “And this quality translates into many other qualities: not just the quality in your cup, but our quality of life, the environment, and of our children’s education – it is total quality.”

Reason #2- By trading directly with farmer co-ops, Equal Exchange cuts out layers of “middlemen,” who small scale farmers are usually forced to sell to because they are isolated from markets. This ensures that more money reaches the people who do the hard work of growing and harvesting coffee.

Reason #3- Another important Fair Trade standard is to provide the cooperatives with loans so that the cooperatives can pay their members for the coffee well before the coffee is shipped to the U.S. This provides the farmers with funds between harvests – money for farm improvements, seedlings, and training programs, as well as family expenses such as medicines, clothing and school supplies – helping them to stay out of debt. In 2005, Equal Exchange arranged for pre-shipment financing of $1.7 million to its cooperative partners. This was one of the most frequent benefits of Fair Trade that we heard in the cooperatives we visited. Especially since the Central American Coffee Crisis hit Nicaragua about six years ago, where sales went down significantly, the instability of the coffee market haunted our hosts. One story that is still burning inside me is a testimony about a nearby community that suffered the deaths of 25 children because of the Coffee Crisis. Therefore, Fair Trade in some instances even means the difference between life and death.