Coffee Connection

Feature article in the Courier-Journal featuring producer partner Nahuala and a visit by Cooperative Coffees and Heine Brothers Co, in Louiville, Kentucky.

Stories by Chris Kenning
ckenning@courier-journal.com
PDF available.

The Courier-Journal
NAHUALA, GUATEMALA - Pascual Perechu threaded his way up a footpath shaded by banana and avocado trees, away from his mountain village dotted with rickety houses, pecking chickens, barefoot children and smoky cooking fires.

His sandals slapped the dirt as he walked to his daily destination dozens of 8-foot-tall coffee trees scattered under a tropical forest canopy full of birds. Perechu, a 54-year-old Mayan farmer, has spent a lifetime of long days tending, picking and hauling coffee from his tiny plot, ideal for its 3,500-foot elevation, shade and volcanic soil.

Coffee is big business globally, yet most of the small, isolated farmers growing more than half the world's coffee get, on average, just 4 to 8 cents from a $2 cup of retail coffee.

Perechu, however, has a connection to Louisville that is helping to change that.

He now sells his annual harvest of raw beans directly to a North American "fair trade" buying group that includes Louisville's Heine Bros. Coffee. By cutting out profit-siphoning middlemen known as "coyotes," fair trade can guarantee Perechu a stable minimum price that is often well above volatile market prices.

In return, he uses environmentally friendly farming practices and is part of a democratic cooperative of small coffee farmers.

It hasn't transformed his life. But it has added as much as $400 to his roughly $1,200 annual income, easing his struggles to educate his eight children, fix his bare concrete-block house and stay on his land.

 "I know I'll always get a fair price for my coffee, to feed my family," said Perechu, who has seen recent price swings force fellow farmers into debt and dire poverty or be forced to migrate for work.

Fair-trade coffee sales are soaring in the United States, and the movement is bringing real benefits to many poor, small-scale farmers in remote corners of Latin America, Asia and Africa, experts say.

Since 1998, it has returned more than $75 million to coffee workers, who earn on average three to five times more for their crop, according to data from TransFair USA, which labels such coffee in the United States.

While fair trade makes up just 2.2 percent of the U.S. coffee market, sales are growing at nearly 70 percent a year. Americans spent $499 million on fair-trade brews and beans last year, up from $48 million in 2000. More than 500,000 farmers participate worldwide.

Initially popular with college students, religious groups and small coffee shops, f air- t rade coffee is increasingly mainstream. Starbucks, for example, began buying some in 2000, and Procter & Gamble, which sells Folgers, now sells some through its specialty coffee division. McDonald's is test-marketing it at 650 restaurants.

Fair trade is "making the connection between the coffee we drink and ... how our choices a ffect the whole planet," Gary Heine said recently while visiting Perechu's cooperative, which supplies some beans sold in Louisville.

But some critics say fair-trade coffee has problems, including farmers who defect when world prices rise and rules that exclude some responsible growers.

"Unless it says 'fair trade,' people think, 'You're bad, you're evil, not paying farmers enough,'" said Dan Cox, president of Coffee Enterprises and former head of the Specialty Coffee Association of America.

And while experts agree that fair- trade agreements often help , they are not a panacea for poverty.

"The sad fact of the matter is that coffee farmers in Guatemala, even those who are selling their coffee on the f air- t rade market, are still living in poverty," said Tim Kantz, co-director of Café Conciencia, which helps such growers in Guatemala.

THE MOVEMENT

Fair-trade coffee is on the rise

It's 8:30 a.m. at the Heine Bros. Coffee on Douglass Loop, and the espresso machine is belching steam. Customers tote plastic cups and briefcases as they line up for fair- trade coffees and lattés.

Sipping a 20-ounce coffee before work, Mary Cleary downs the first of her three to four cups a day. In a year, her habit will consume the annual output of at least 27 coffee trees. She said she makes an effort to drink f air- t rade coffee.

"My understanding is it makes a big difference in farmers' ability to earn a living and support themselves," she said.

Coffee is the world's second-biggest commodity behind petroleum - Americans spent more than $22 billion on it last year, with U.S. consumers guzzling 300 million cups a day in break rooms, cars heading to work and coffee houses that spring up daily.

Yet more than half of the world's coffee is grown by peasants in developing nations working plots smaller than 2 acres. Many live in deep poverty.

One reason is the long supply chain: A picked coffee cherry must be depulped, dried, transported, processed, exported, roasted and sold. Companies that sell coffee to consumers add much of that expense to the final price.

But advocates say another big problem is that small farmers can't compete fairly because they lack clout and market access.

In Guatemala, many small farmers are cut off from computers, phones, market information, cars and loans that would allow them to feed their families until harvest time.

Most have few other options than selling to "coyotes," predatory middlemen who can siphon off up to half the speculator-driven worldwide price of raw coffee.

The fair- trade movement, which got its start in Europe in the 1980s, got a boost in recent years when coffee prices overall fell to historic lows of less than 50 cents a pound - partly because of a flood of cheap, sun-grown Robusta beans from Vietnam and Brazil - and millions of poor farmers fell into debt, went hungry or migrated off their land.

Though prices have since rebounded some, hovering just above $1 a pound, the "coffee crisis" brought international attention to the plight of farmers - and the difference that f air t rade can make.

It works like this: Small-scale farmers, who must be organized into democratic cooperatives, are guaranteed a price of at least $1.26 a pound - $1.41 a pound if the coffee also is organic. Five cents is set aside for social projects, such as scholarships and health-care facilities. And even when world market prices rise, f air- t rade minimums are meant to float 5 cents higher. Importers also must provide pre-harvest financing.

Participating growers must, in turn, submit to annual inspections by the Fair Trade Labeling Organization, which certifies farmers; bar child labor during school; drop pesticides; and adopt other sustainable or organic cultivation methods. Most Fair Trade coffee is also organic.

TransFair USA, an organization created in 1997, tracks and labels such coffee for a fee, although some is self-labeled by smaller roasters, including Heine Bros., partly because they believe they're doing more than the label's minimum requirements.

Georgia-based Cooperative Coffees, for example, which Heine Bros. helped form with other roasters, this year paid a minimum of $1.50 a pound to meet production costs and price increases.

For Gary Heine, the decision in 2004 to sell only f air- t rade brews was rooted in a trip six years ago to a private Guatemala coffee plantation. While he dined in a fine estate owner's house, he watched workers living in dilapidated shacks 200 yards away.

"I was stunned at the difference, the way people lived. I saw how imbalanced things were," he said, noting that since he began selling f air- t rade coffee with competitive prices, his business has continued to grow.

In Louisville, f air- t rade coffee can also be found at Highland Coffee shops, some Starbucks, Breadworks, some grocery stores and other locations.

THE BENEFITS

Environment, workers stand to gain most

On the western shore of volcano-ringed Lake Atitlan, workers in worn plaid shirts and dusty jeans pluck bright red coffee cherries at the mile-high La Voz Que Clama coffee cooperative.

Like all the best Arabica coffee - and unlike coffee that's grown in rows in direct sun on large farms relying on pesticides and fertilizers, typically lower-quality Robusta beans sold in cans at supermarkets - these coffee trees are scattered in the shade of a natural high-altitude forest teeming with birds, lizards and squirrels. It hardly looks like a farm .

Workers use machetes to adjust shade high in the trees, which also produce plantains and bananas to eat, firewood, roofing materials and compost, as well as rest for migratory birds threatened by disappearing forests.

Pesticides are made from chili peppers, garlic and soap. Water runoff is clean. This system serves the farmers, wildlife and the environment.

Up the hill toward a looming volcano, there's a concrete drying patio, a depulping mill and troughs for making organic compost. At a small women's side business, funded by f air- t rade premiums, women weave intricate, bright textiles to augment the cooperative's income.

In a traditional Mayan dress, Encarnacion Hernandez Cholotillo said she was born into a family growing coffee, a highly labor-intensive crop.

She recalled rising daily at 4 a.m. to make tortillas before hiking steep footpaths with her nine siblings on volcanic slopes. She trimmed coffee trees or picked cherries. She shouldered heavy burlap bags back down trails to her village.

But the back-breaking work didn't pay much. Preying on her family's isolation, she said, local buyers paid low prices, sometimes offering only corn for coffee. Eleven family members crowded into a two-room adobe house. Medicine was scarce and food meager. Hernandez quit school after second grade.

Her family is now a member of a f air- t rade cooperative. In some years, she makes double the going price among other growers.

She still makes little more than $4 a day, but the few hundred extra dollars a year that f air t rade provides makes it possible for her four children to attend secondary schools, live in a four-room house and have access to subsidized medicine and a traveling doctor.

"Before, it was impossible," she said.

The cooperative's close relationship with foreign buyers has brought investment credit, business acumen, technical expertise and stability for its 140 member families, cooperative leaders said.

Matt Warning, an economist at the University of Puget Sound who has studied f air t rade's impact, said the practice elsewhere has brought electricity to villages, improved health care and raised education levels.

At Majomut cooperative in Chiapas, Mexico, for example, members in 2002 harvested about 1,500 pounds each and got $1,700 by selling as organic f air t rade, compared with $550 on the local market.

That was when world prices were lower, but even when world prices rise to f air- t rade levels, the partnerships still help, Warning said - spurring micro businesses and literacy programs; helping draw international aid for potable water or roads; and giving farmers clout with banks and exporters who "used to have them under their thumb."

THE CRITICS

Some see flaws in fair-trade model

Just beyond the ramshackle sprawl of Guatemala City, coffee trader and taster Roberto Stahl hunched over a round table with Gary Heine and other Cooperative Coffees members.

Nearby, machines hummed as they processed beans heading to the group's coffeehouses. Shirtless workers stacked bags of them in a large warehouse.

Dipping a metal spoon into soup bowls of black coffee, Stahl slurped loudly before spitting into a bowl. He closed his eyes to taste for acidity, aroma, body and flavors from black currants to chocolate. "If the coffee doesn't hold up, it'll tell you when it's cold," said Stahl, who, along with partner Karla Diab, helps growers find foreign buyers.

Guatemalan f air- t rade, organic coffee is of high quality and is highly sought . Yet Diab said "a lot of exporters in Guatemala don't want anything to do with" f air t rade, partly because some cooperatives have failed to deliver on contracts.

When world prices rose unusually high to near f air- t rade levels, some cooperative families sold instead to "coyotes" who offered similar prices and free transport. Fair t rade's overhead and fees then put some cooperatives at a competitive disadvantage.

"We had to remind (farmers) that the prices will fall, and then we'll need f air t rade," said Julio Tambriz, 38, president of Cooperativa Nahuala, which saw 50,000 pounds sold to coyotes.

Diab said she also has seen a few cases of corruption at f air- t rade cooperatives - where a manager might improve his own quality of life before other farmers.

Experts point to other challenges and shortcomings.

Cox, the former head of the Specialty Coffee Association of America, said simplified marketing often fails to convey how much benefits can vary. That's because a nation's cost of living, co-op efficiency and market prices vary while the floor price doesn't, making it tough for consumers to know how much it's actually improving lives. The minimum price doesn't rise with inflation, he said.

Cox said Fair Trade's rules about who can participate exclude too many growers, including privately held coffee farms, which don't qualify even though some "exercise considerably more care and attention to their employees and their crop."

"Many good coffee companies purchase (high quality) coffee at higher prices than f air t rade and yet get no public credit, and may in fact get grief because they're not labeled 'f air t rade,'" he said.

Laura Raynolds, co-director of Center for Fair and Alternative Trade Studies at Colorado State University, predicted that f air-t rade coffee's own popularity could dilute its effectiveness.

Big corporations now rushing into the market can't maintain the same kinds of close ties to growers that groups such as Cooperative Coffees do, she said.

Fair t rade's challenges and problems, however, do not negate its benefits, she said.

"Is it living up to its promise? To farmers selling to f air t rade, I think it is," she said.

THE FARMERS

Former guerrillas turn to trade partnership

Rigoberto Agustin, a former guerrilla "commandante" during Guatemala's 36-year civil war, stared recently at the floor with a worried look on his face.

With a former comrade in a Che Guevara T-shirt standing glumly nearby, he told Gary Heine, Cooperative Coffees president Bill Harris and others that the situation at their Santa Anita coffee cooperative was not good.

It had been eight years since Agustin and 31 other guerrillas of the Guatemalan National Revolutionary Unity, along with their families, bought the abandoned, 130-acre Santa Anita coffee plantation for $270,000 in the wake of a peace treaty.

It's a remote place of deep gorges, thick tropical forests and steep dirt trails, where they've built simple homes of concrete and wood planks, and initially subsisted on a diet that included beans, bananas and eggs.

In 2001, facing low coffee prices, they joined the f air- t rade movement and become certified as an organic grower to protect the land, rid themselves of "coyotes" and earn better wages. But last year, old coffee trees required radical renovation and some crops were damaged by Hurricane Stan.

Production fell short and workers were paid $3.25 a day after f air t rade-related overhead costs, about the same as the conventional market.

They were struggling with debt payments, a contract they couldn't fill and worries about feeding their families until the next good harvest.

"We are in partnership ... we'll see what we can do to get you through this difficult time," said Harris, who later said his organization would work to ensure the families didn't suffer or lose their land.

A smile of relief spread across 53-year-old Agustin's face, and that of Santa Anita president Angel Moreno, who said that "at least we have some friends out there who are willing to give us a hand."

Harris said it's an example of how the partnerships - and not just the financial premium - are critical to aiding the coffee growers.

Back at Louisville's Heine Bros. coffeehouse, where some Santa Anita coffee will be sold, Greg Pope, a 38-year-old pastor, said he thinks a lot about the struggles of people like Agustin.

Fair trade may not be perfect, he said, but it at least helps in "making sure (workers) are treated fairly. If I can help to do that, then I want to."

Reporter Chris Kenning can be reached at (502) 582-4697.