Tag Archives: La Roya

Coffee Rust: La Roya threatens coffee farmers in Latin America

 

The Coffee Rust fungus is devastating coffee production across Latin America. In many areas such as Peru, production is down by 75%. Climate change is a major contributor has been widely reported (Video).

As most coffee is grown on tiny family acreages this crisis is increasing poverty amongst those with least resilience.

Yet again, it is interesting how opinions become polarised once Fair Trade is mentioned as part of any sustainability solution once dialogue starts on forums. This is a shame as there is much practical experience to learn from all sides. In my experience there are farmers affected by La Roya supplying a bit of their coffee Fairtrade (FT) certified via coops and many many more unable to sell as the market is too small. The dominant tradition is Free Trade, not Fairtrade, nor Direct trade, nor any other cheaper certification. For those lucky enough to have a FT contract it does not offer a solution to La Roya any more than a Free Trade one. Premiums are just too small as it takes seasons to address the issue. 

That debate about effectiveness is therefore about one’s business philosophy. Whether one’s business is small, entrepreneurial, unprepared to have third party scrutiny and unaccountable or large and needing a cost effective CSR programme to field company ‘ethicality’ to shareholders. Either way the issue is systemic. Farmers are rarely powerful intermediaries in the coffee trade, an ocean of sharks few understand and even fewer have the skills and resources to influence, which is only too willing to exploit weaker players. Fairtrade, for all its faults at least gives consumers some insight and some control on the outcomes however imperfect and is at last redressing the balance. Small-scale coffee farmers begin to have a voice.

Most coops are unable to sell anything like enough certified FT to provide enough reinvestment to combat the fungus. Equally, so-called ‘direct’ trade offers such small purchase volumes to specific farms and does not get coverage nor offer down side security. Consumers have no idea who to trust and who is making it up as they go. The real issue for farmers is the trade itself, pushing prices lower for competitive advantage, whether for certified or uncertified coffee. This can happen in any coffee transaction.

FT has no power to adjudicate or influence the transaction when it is above the COP. It would be most interesting for consumers to have transparency on the price /quality/volume equation. A real choice could then be made.

Fairtrade International (who set global standards) remains the only third party certification system that farmers actually have an equal stake in governance, strategy and standards development. As such it can be promoted as part of coffee farmer’s strategy to secure more of the value chain.

Free Trade is in general unable to provide an element of price security that a well-functioning coop can offer when prices fall as supply increases. Unlike Fairtrade, it cannot offer finance for coops to make critical early harvest purchases, which makes farmers price setters. Fairtrade on the other hand can also provide many examples of coop good practice and re-investment. But as a third party certifier, it does not control the transaction between buyer and seller, only certify and there are good and bad coops just as there are good and bad farmers. Most small scale farmers therefore use coops/certification as a price risk strategy, exploiting any upside by selling outside it and utilising it more when there is a perceived downside.

No doubt some excellent coffee is shipped from a few family farms via so called ‘Direct’ trade businesses. Whilst certified Fairtrade was created over 25 years ago by companies doing ‘Direct’ trade, there is now a new wave that does not buy into the values of those pioneers. ‘Direct’ has become a marketing term meaning ‘fairer than fair’ to position the new wave within the customer base created by Fairtrade. However, ‘Direct’ trade by definition has no middle men when really ‘walking the talk’. Few individuals are prepared to finance all the value-chain steps to sustain this at scale though, cherry-picking a few bags of fine coffee and leaving the farmer to market the lower grades. Fewer still are owned (like coops) by the coffee farmers and able to offer a range of services. By definition, they are small businesses which see any additional cost, especially that of independent third party scrutiny as a burden to competing.

The scale challenge remains and investment is needed to create climate resilience for small scale coffee farmers. Once the ‘Direct’ traders can sell thousands of tonnes of Fairtrade coffee, like British companies cafedirect and Twin Trading who also have farmers on their Boards, consumers, perhaps sipping a fabulous ‘Geisha’ coffee can make their ethical choice accordingly, knowing that perhaps, they are creating resilience to coffee rust too!