Economy

"Our human destiny is inextricably linked to the actions of all other living things. Respecting this principle is the fundamental challenge in changing the nature of business."
- Paul Hawken, The Ecology of Commerce

 

A SUSTAINABLE ECONOMY
- = Sustainable Economy Initiatives = -

Transfair USA

TransFair USA is the certification agency for Fair Trade coffee and tea in the US. It works to expand the number of importers, roasters and retailers of fair trade certified products, in order to guarantee a more secure and ecologically sustainable livelihood for farming communities in developing nations.

Origins

Coffee is the world’s second largest traded commodity, after oil; 20 million families (60 – 80 million people) depend on it for their livelihood. Since 1998, the world price of coffee has collapsed from around $1.20 a pound to less than 50 cents, causing millions of families to fall into poverty, and often lose their land. Around the world, many coffee growers receive as little as 10 – 40 cents a pound. More than half of the world’s coffee is grown by small family farmers who grow their coffee traditionally in a shaded, diverse agro-ecosystem that provides habitat to wildlife such as songbirds. Most of the world’s coffee is bought by the ‘big four’ companies - Proctor and Gamble (Folgers), Philip Morris, Sara Lee and Nestlé – which is often ‘technified’, involving the destruction of the rainforest canopy, followed by the use of large quantities of chemical fertilizer and pesticide, to counteract the loss of topsoil and the subsequent weakening of the coffee plants.

The fair trade movement aims to secure a decent income for third world artisans, craftspeople, producers and growers by guaranteeing a fair price for their work, in return for a commitment to human rights, social justice and environmental standards. Fair trade certification started in Holland in 1988, when the Max Havelaar Foundation was established at the request of coffee farmers in the south of Mexico, who told a Dutch development organisation that they would prefer to trade instead of receiving aid. Max Havelaar certified coffee was introduced in 1993, followed by drinking chocolate, chocolate bars, orange juice, tea, honey, sugar and bananas. TransFair USA is one of 17 national fair trade labeling initiatives, all of which are members of an international umbrella organization called the Fairtrade Labeling Organizations (FLO), based in Bonn, Germany. In Europe, over 130 brands of fair trade coffee are sold in 35,000 supermarkets. In Switzerland, 5% of the retail coffee market is certified fair trade.

A growing trend of environmentally and socially responsible shopping has resulted in the development of three distinct labels now appearing in the coffee market: fair trade, organic and shade-grown. While consumer confusion exists among the three certification labels, generally speaking, while most fair trade coffee is also organic (either passive or certified) and shade-grown, most certified organic and certified shade coffee do not guarantee fair prices for coffee farmers. TransFair USA began operating in 1998, and launched its first Fair Trade Certified product (coffee) in 1999. Fair Trade Certified tea was launched in the winter of 2001.

Aims and Objectives

The global Fair Trade Federation has seven principles which define trade as "fair". For coffee, this means that:

  • The Fair Trade Certified cooperatives receive a fair price of $1.26 /lb., or 5 cents above the world price, whichever is higher, plus a 15 cents premium if the coffee is also certified organic. This is made possible by by-passing the middlemen (or ‘coyotes’) and the corporate or government mill, and going straight from the co-operative’s mill to the Fair Trade licensed importer in the consuming country, then to the certified roaster.
  • The coffee is grown in co-operative workplaces, primarily small businesses and worker-owned co-operatives, not on large plantations. A majority of these farmers own small farms of less than 12 hectares.
  • The fair trade organizations undertake consumer education to make people in developed nations aware of the growing conditions, and the importance of fair trade.
  • The growers are encouraged to grow their coffee trees with environmentally sustainable practices. This means retaining the forest canopy (retaining habitat for songbirds and other species), and minimizing the use of chemicals. 80% of the Fair Trade certified coffee sold in the USA since 1999 is certified as organic, and most is shade-grown.
  • The growers are offered access to affordable financing and technical support, enabling them to avoid the "coyotes’ (middlemen) who prey on them as money-lenders.
  • There must be respect for local cultural traditions; and
  • The fair trade organizations must practice open, accountable book-keeping.

TransFair USA is the only fair trade certification agency in the USA. Its objectives are to empower and assist the coffee growers by expanding the market for fair trade coffee, undertake consumer education, build partnerships with industry and grassroots organizations, and bridge the gap between environmental sustainability and economic development. While TransFair certifies and monitors importers and roasters in the US, certification of the producer cooperatives is done by staff of the Fairtrade Labeling Organization (FLO), based in Germany with regional offices in the producing countries, which maintains the global standard. Half a million coffee growers are represented by the 300+ co-ops on FLO’s International Coffee Register. FLO gives the information about the registered fair trade growers to its affiliate organizations, including TransFair USA.

Activities

There is more fair trade coffee being grown in the world than is being consumed. In 2001, fair trade certified cooperatives globally produced about 165 million pounds of green coffee, of which about 30 million was sold on fair trade terms; the rest was sold at conventional prices, pointing to the need for increased consumer demand for these products. The US is the single largest coffee consuming nation, consuming 20% of world coffee production, offering a tremendous potential to increase fair trade sales. A 1993 market assessment indicated that 66% of US consumers would switch brands to support a cause they cared about, and 49% of specialty coffee drinkers would buy Fair Trade coffee if they knew where to find it. TransFair’s work, therefore, focuses on expanding the market. They do this by running a comprehensive promotions campaign, by building strategic alliances with NGOs, consumer groups, environmental groups, students and churches, and by working with the large coffee retailers such as Safeway and Starbucks to persuade them to sell Fair Trade coffee.

Structure

TransFair USA is a tax-exempt, non-profit organization, incorporated in 1996. It is governed by a Board of Directors, and run by a staff of 12 full-time workers.

Finance

Every Fair Trade roaster pays TransFair USA a licensing fee of $0.10 cents/pound of green coffee purchased from a Fair Trade Certified importer. This license fee is used to support certification efforts in the US and producing countries, through FLO, and to support marketing efforts to build demand for Fair Trade Certified products. TransFair USA’s goal is to achieve financial self-sufficiency through the fees. While getting established, it is being financed by grants from foundations, alternative investments, and individual donations.

Performance

In 1999, TransFair USA certified 2 million pounds of green coffee. In 2000, the organization certified 4.25 million pounds of green coffee. This amounts to around 1% of the specialty coffee market (which is 15% of the overall US coffee market), or 0.2% of the total US coffee market. In 2001, Seattle’s Best Coffee, a certified roaster, agreed to supply its entire line of organic and shade-grown coffees to Safeway’s 1,400 stores across the USA, including Fair Trade certified brands. In April 2000, Starbucks agreed to offer Fair Trade beans in over 2,300 retail coffee houses in the USA, and to brew a Fair Trade coffee once a month in their stores. Also in 2000, Peet’s Coffee, with 57 retail outlets and a major e-commerce presence, started selling Fair Trade Coffee, and ran a comprehensive marketing campaign in Boston in conjunction with an educational campaign run by TransFair USA and Oxfam America.

The most important index of performance, however, is on the world’s small coffee farms. Globally, 300 Fair Trade co-operatives and farms, representing 550,000 farmers and their families, receive $1.26 or more for their certified Fair Trade coffee. In Nicaragua, the Promotora de Desarollo Cooperativo de las Segovias (PRODECOOP), consists of 69 member co-operatives with over 2,420 families. In 2001, PRODECOOP was able to generate over $600,000 in premiums from the sale of Fair Trade coffee, which they used to pay off bank debt, invest in farm improvements, and improve nutrition. In Mexico, the Union of Indigenous Communities of the Isthmus Region (UCIRI), a village-based cooperative of over 5,000 families, has used its Fair Trade premiums to help create the region’s only bus-line, along with a hardware and farm supply center, health-care services, cooperative corn mills, an agricultural extension and training program, accounting training, and the region’s only secondary school. For the farming families, the Fair Trade relationship has enabled them to double their income since 1996, which allows them to keep their children longer in school, among other changes.

Future

By 2003, TransFair USA aims to sell 12 million pounds of Fair Trade coffee. They are also planning to expand sales of Fair Trade certified tea, and branch out into new products such as cocoa (chocolate), bananas, and other produce.

For further information contact :

Nina Luttinger, Communications Manager
TransFair USA
1611 Telegraph Ave, Suite 900
Oakland, CA 94612

Tel (510) 663-5260
Fax (510) 663-5264

www.transfairusa.org


Written by Guy Dauncey for The Planning Exchange, Glasgow, Scotland.

guydauncey@earthfuture.com