Looking Behind the 'Fairtrade' Label

The following is a transcript of a radio broadcast on the Voice of America (VOA) as a Special English Agriculture report on May 7, 2007. The report offers a snapshot of the Fair Trade movement but, unfortunately, at a cost of two serious errors.

True, the Fair Trade movement calls for, among others, a guaranteed fair price for small coffee producers in poor countries. It should be noted, however, that the minimum price set by the FLO does not differentiate between fine or gourmet coffees and commodity coffees. Meanwhile, the world’s finest coffees are subjected to the same standards even though they fetch higher prices at a retail level.

The initiative to trademark Ethiopia’s best-known coffee marks is not a substitute to the Fair Trade initiative. First of all, those gourmet coffees should have earned a better price than commodity coffees. Secondly, those specialty or fine coffees are worth much more than what is guaranteed by the Fair Trade initiative. So, when it comes to the finest coffees, such as Sidamo (as in Shirkina Sundried Sidamo Coffee,) the minimum price guaranteed under Fair Trade is not the answer. It is unfortunate that the erroneous report mixes Ethiopia’s trademark initiative and Fair Trade without sufficient explanation.

The other error is in the statement that summarizes the trademark imitative: “The idea is to charge coffee sellers for the right to use those names.” The licensing agreement being signed between Ethiopia and the distributors is royalty free. Meaning, there is no charge to sellers for use of the names.

-------------

Looking Behind the 'Fairtrade' Label

The movement began in Europe in the 1980s as a way to guarantee fair prices for small coffee producers in poor countries. With praise, though, has come criticism.

Transcript of radio broadcast: 07 May 2007
VOA Special English Agriculture Report
Jerilyn Watson & Steve Ember

Coffee drinkers are not the only ones willing to pay more for products marked with the words "Fairtrade" or "Fair Trade Certified." Fair-trade teas, bananas, nuts and other products are also available. Some people see it as an act of social responsibility to buy these products.

The movement began in Europe in the nineteen eighties. Activists wanted a way to guarantee fair prices for small coffee producers in poor countries.

A group called the Fairtrade Labelling Organizations International, or FLO, was established in nineteen ninety-seven. Its responsibilities include setting prices as well as rules for working conditions and wages.

Under fair trade rules, importers must give growers technical help and let growers borrow money from them.

Until nineteen eighty-nine, an international agreement helped keep coffee prices level by governing the world supply. But then a free market agreement ended that. The supply of coffee grew higher than demand. Prices were low. Now, coffee prices are rising on the world market.

The European Parliament recognized the work of the Fairtrade movement with a resolution last year. But there were also calls to establish policies to protect the movement itself from abuses. These include growers failing to pay the required wages to their workers.

Some economists criticize Fairtrade plans in general. They say the guaranteed prices are often higher than market prices. As a result, growers produce more, and too much supply can hurt growers who are not included in the plans.

Coffee is the second most traded product on world markets after oil. And some of the finest coffees come from Ethiopia.

Now, Ethiopia wants to control the use of its specialty coffee names under trademark laws. The idea is to charge coffee sellers for the right to use those names.

The world's best known coffee seller, however, resisted the idea. But last week, after two days of talks, Ethiopia's Intellectual Property Office and the Starbucks Coffee Company released a joint statement. They said they look forward to signing an agreement this month.

Details are not yet final. But they say the agreement will recognize the importance of Ethiopia's specialty coffee names. After all, Starbucks Chairman Howard Schultz noted that Ethiopia is recognized as the historic birthplace of coffee.